The Exchanges

Q Let's dive into affordable housing. I'm like selling my Apartment right now. So it's sort of top of mind. Um, I saw that Joe Gabbia, the co-founder of Airbnb is building. He raised like, I think like. Fifty million bucks or something to build. 40 or fifty million bucks to build these, a startup around small prefab houses. What's your thought on the whole prefab housing opportunity?

A We're looking for a company that doesn't use a ton of money to figure out how to make it work. And, you know, the problem with a lot of these businesses is you're taking a really big bet that prefab housing is going to be the future. They raise a ton of money and they consume a lot of capital, but we haven't really seen any of them kind of go through that J curve and get out of it. And we're looking for a more capital efficient way to approach the space. You know, from a financing perspective, it's sort of a weird credit problem. Because let's imagine I wanted to fund construction. I could fund regular way construction, like general contractors. Um, and you know, that seems like it might be risky because have you ever heard of anybody having a good experience with their contractor and feeling like they didn't go over budget and pass time and get the permits done on time and all that stuff. Like I haven't. Um, and so the prefab homes might be easier because they're sort of copy and paste. The problem though, is like your severity of loss on a prefab home is quite high. So let's imagine, you know, I don't, I don't know Joe Gabbia, but let's imagine he came to us and he said, Hey guys, like, you know, I agree with you. Starting these companies is incredibly capital intensive. It's really difficult to get a venture outcome if I'm going to have to raise hundreds and hundreds of mill…

AI assessment note: “the problem with a lot of these businesses is you're taking a really big bet”

Q Yeah. Um, I'm trying to think, like, who, who's the most successful private vocational school? Like, who's done really well?

A I mean, there's obviously, like, the University of Phoenix is, but, but, but really, like, there's, like, the dev shops, and I'd say, like, General Assembly at least had an outcome, and I don't know enough of the story of, like, what happened, why it didn't become bigger, and sort of where they hit their, like, constraints, because I remember at one point, they ended up pivoting from being, like, sort of, like, a school, like, To being like a B to B business where they were like consulting for big organizations. I think they kind of just became like a consulting firm at some point. Um, I don't know how Lambda is doing. I mean, obviously Lambda had seemed like it was having a lot of success in the beginning.

AI assessment note: “University of Phoenix is, but, but, but really, like, there's, like, the dev shops”

Q business, like more about your business and And like the business of you starting it, you know, like why did, why did you see the opportunity? Cause in a lot of ways, like I brought you on here, not cause you're an investor, more cause I feel like you're an entrepreneur. So talk us through what you actually do, what your business is and why you think it's an opportunity.

A Well, first off on whatever you want me to be, um, you know, for sure, for sure, for sure. Um, I'm, I'm a hundred percent sure I'm going to end up like investing in that company in a much higher markup at some point now. Um, and I'm going to like think back at this moment and it's going to be embarrassing. Um, Sweet. Our business, so we started the business about 10 years ago, and, you know, when I, when I was in college, I did a startup, and I caught the bug, and, you know, I was kind of building apps and web applications for people, and, um, and wanted to start angel investing with some of the money that I had saved, and wanted to be a venture capitalist. I feel like everybody who does a startup and fails wants to be a VC next. Like, that's like the rite of passage, and I was no different. Um, And, you know, I made a couple of investments and I thought, well, gosh, aren't, isn't everyone going to realize how, how great I am at this? And that's not what happened. Um, it takes a really long time to see if your startup investment is going to go well. And, and one of the ways that we have been doing it too, is we had also like taken some of the money that we were going to invest. We hired a bunch of developers and we're starting to like code applications for non-technical founders. We wanted to be called a VC fund. Everyone called us a dev shop. We just, we did whatever we needed…

AI assessment note: “We hired a bunch of developers and we're starting to like code applications”

Q you know, there's, there's something here. If you were an entrepreneur and you were started and you, you know, you believed in the space, you saw the opportunity, obviously trillion dollar plus market, you know, uh, asset class, you know, how would you go about building, you know, this company is called Samara. How would you go about building a Samara that might fit your model a little bit more?

A By the way, tomorrow might work. I'm talking about some business that I've never even looked at. So gosh, you know, hopefully, hopefully Joe Geffi is not like listening to this and be like, what is this idiot talking about this business that I've never talked to him about? I apologize. Um, No, but yeah, one, he may have some insight that I don't know about where he's going to be able to build it in a more capital efficient way. The second is, you know, there might be a, a fund that, you know, is like a two, three billion dollar venture capital fund where they can take many different bets of 20, 3040, fifty million dollar equity financings. And, you know, a few of them don't work out, but the, the TAM on the outcome is so big that how great would it be if one of them works? Like there, there's a reasonable investor out there for this type of business. We're just not it. And so the answer might be do exactly what he's doing, which is go build this really capital intensive business. Um, for the founder, by the way, it might still be a good idea. Even if for the venture capitalist, they, they end up getting so diluted or they have to put so much money in that the only outcome they could possibly have after getting a hundred fifty million dollar cost basis into the deal, you know, is 10 times their money. If they fund it, it becomes worth five to ten billion dollars and they own 10,…

AI assessment note: “the answer might be do exactly what he's doing, which is go build”

Q It was free to go, right? And, but they would just take a percentage of your salary, uh, for a certain amount of time.

A And I wonder if they need some level of incentive where, like, it's not quite free, but, like, you don't have any cash outlay, except, like, maybe, like, you, you either, either it's free as long as you end up getting, like, choosing to take a job in that space, um, or, like, as long as you graduate. But I feel like if you give something, someone to something for free, like, they end up treating like it was free. And it ends up becoming like this free option as opposed to like a dedication or like a, like, like if you're a doctor and you go through like however many decades of schooling you need, like you're going to end up being a doctor. Like very rarely be like, well, You know, now that I've done that.

AI assessment note: “I feel like if you give something, someone to something for free, like, they end up”