This Week in Startups
01:01:36 · D.A. Wallach, S0
[01:01:36] S2: Both. All of the above. Yes. Yes. Yeah. Mean, look. I I will see... You know, we we we alluded to the the debt situation a minute ago and the cost of financing for these neo clouds and stuff. That is the other thing that's happening right now is just this macro context, right? And we may be now for the next couple decades in a sort of inflationary rising rate environment, very different place to be doing business. So the bull case for crypto at this point probably does fall away from this speculative Ponzi scheme thesis and is merely a debasement trade thesis. And I think the question then, Jason, is like, has Bitcoin after, you know, fifteen years earned its place next to gold and the other debasement trade assets? And will it be durable in that regard? I mean, one interesting thing, past six months, gold's gone down. So this has been an environment that hasn't been favorable to assets that are focused on debasement. And the question is whether the secular outlook is such that has the wind at its back over the longer run. [01:02:47] S0: Yeah. There's only a certain amount of money in the world, it seems. I mean, we keep printing some more here. But yeah, it is where does money go, right? I guess is the question. Rational money, irrational money. And I think this is the last thing on people's mind that I... Because if Bitcoin just keeps hovering in this range and it never makes new all time highs, this concept, Dave, of the million dollar Bitcoin is seeming unimprobable now.
01:02:47 · S0, Dave McClure, Lon Harris, Ben Black
[01:02:47] S0: Yeah. There's only a certain amount of money in the world, it seems. I mean, we keep printing some more here. But yeah, it is where does money go, right? I guess is the question. Rational money, irrational money. And I think this is the last thing on people's mind that I... Because if Bitcoin just keeps hovering in this range and it never makes new all time highs, this concept, Dave, of the million dollar Bitcoin is seeming unimprobable now. [01:03:18] S3: I think you're on target that stablecoin has a really solid use case and that's clearly going to be something that people are putting money into. I think we're already seeing that. I think another area that's possibly not bullshit is tokenizing real world assets and, you know, having something that [01:03:36] S0: Robinhood's doing that. [01:03:37] S3: Maps to real... Yeah. I think even DeFi in the long run is not crazy. I think, you know, lending, makes sense. But I do think a lot of the other speculative stuff, there's just, you know, hard to understand what is driving the value of those assets. There's no underlying asset to underwrite in many cases except, you know, belief in hype. [01:03:56] S0: Which makes giving a loan to a neocloud seem like a better option because you have the... You you you have the I think I think we need assets. You have the data center, and you have the chips. And you have the memory chips, and you have the GPUs. It's worth something. Alright. Let's wrap [01:04:10] S1: up, folks. [01:04:11] S4: Can I can I have
01:04:11 · Ben Black, Dave McClure, S0, D.A. Wallach
[01:04:11] S4: Can I can I have [01:04:11] S3: one more thing that I wanna, like, talk about that Ben and I were arguing about before is [01:04:16] S0: Okay? [01:04:16] S3: I think [01:04:16] S0: that we're This isn't a backdoor promo, is it? It's not a backdoor promo. [01:04:20] S3: Oh, absolutely. I would never try and do that. [01:04:22] S0: It's okay. We'll cut it up there. Cut it in post, guys. [01:04:24] S3: I I think there's a big [01:04:26] S0: issue new financial product, D. A. I would have [01:04:29] S3: Okay. Go ahead. So at the top of the market, there's 10 VC firms, maybe 20 that are taking down 75% of all the capital or say huge amounts of capital going. Small funds are under pressure. A lot of emerging managers, Ben Ben runs the RAISE conference, which just happened, are having trouble. Maybe not maybe not Ben's precious, you know, top 100. Maybe they don't have trouble, but a lot of other emerging managers are having trouble raising funds, and they're shifting to SPVs. And I think, this was my tweet from just yesterday is SPVs are killing the VC radio star. Little bit, music connection for D. [01:05:04] S4: A. Here. [01:05:05] S0: God. Hey. When is this commercial? Keep going. [01:05:08] S4: That's it. [01:05:08] S3: Holy fuck. That's it. Well [01:05:10] S0: That's it. Oh, okay. [01:05:10] S3: I think we'll have more to announce about this in the future. Ben and I will. [01:05:13] S0: Okay. Alright. Well, there's a bunch. [01:05:14] S2: I gotta comment on this, Jason. [01:05:16] S0: Get in here. [01:05:16] S2: Can. I gotta comment.
01:05:16 · D.A. Wallach, S0, Dave McClure
[01:05:16] S2: Can. I gotta comment. [01:05:17] S0: Please. Get in there. [01:05:18] S2: I understand the incentives that drive asset managers. Those indeed have led to secondary funds, you know, closed end funds in the public market with private stuff. We need the equity. Stage. We need the equity. Megatrons. But let's again zoom out to the ten year, twenty year view as venture capitalist guys. Twenty year. Here's what the AI is doing, man. The AI is making it so cheap and high leverage to be an entrepreneur. Okay? The best entrepreneurs of the next few years are going to raise less money than the best startup founders have ever raised. Okay? Because they don't need it. And the... And and so, you know, the pendulum of history is gonna swing right back in the other direction. The people who are gonna make the money off the next Anthropics are gonna be these people who are running small funds, writing small checks to entrepreneurs who don't need a $100,000,000 seed. Love [01:06:20] S3: it. I'm not saying the emerging managers are out of business. I just think a lot of their money is going to SPVs, not funds. I think that
01:06:26 · S0
[01:06:26] S0: was I my think, D. A, I'm gonna go with you on this because here's the thing. The game on the field was, you know, hey. If you do an SPV in SpaceX, you know, it's... It always goes up into the right. And that was true, and Elon's amazing. There was money to be made there. Right? But now if everybody's doing it, is there money to be made there? And is your little 5 or $10,000,000 allocation any different than the other person's? And is it a race to the bottom? And when you go talk to family offices with your $10,000,000 allocation and you're trying to get 2% a year in fees and you're, what, your 20% carry, they're just gonna grind you down because they have other places to buy it from, and it's becoming a bit of a fluid market there, which means it's gonna be commoditized. Now you go to the early stage, and nobody wants to do that work. When I talk to young founders, it is so hard for them to raise that first round that they're willing to do a $10,000,000 valuation, a $5,000,000 valuation, a $20,000,000 valuation, and get the right people on. And they are now becoming alicorns. Alicorns are the next unicorns. An alicorn is a unicorn with wings, the Pegasus wings. And this is the future. The future is alicorns because they become unicorns because they get to billion dollars. This is it, it's the future is alicorns. They get to a billion in revenue by flying over funding rounds. They are more capital efficient, and they use their Pegasus wings to fly over a funding round. They skip their series b. They skip their second pre seed, post seed, pre series a nonsense convertible because they have revenue. The ability to get your revenue DA, which which you left out of your thesis, but is implied in it, they get to revenue quicker. And then they... When they go talk to VCs, they're like, I don't need to raise around. Have now had to go to three or four of my alicorns and say, your your valuation's going up very fast. Can you please just take $1,020,000,000 off the table so we just have a rainy day fund at a 250,000,000, a billion dollar valuation? And I have to walk them through that economics, D. A, to just like... We're diluting 5% here.
01:08:38 · D.A. Wallach, Dave McClure, S0
[01:08:38] S2: These eight to the 16 year olds right now in their in their bedrooms who are building all this shit with agents, and they're token maxing, and they're starting companies, and they have no money and no one's permission. [01:08:52] S3: Token max. [01:08:53] S2: These are gonna be the these are going to be the greatest fucking entrepreneurs in human history. These are a these are a different species. Okay? Different species. When you get... When you... You're getting all these automated emails, I'm sure all of you all day, it's from these kids in, you know, Pakistan in their parents' bedroom using clauderware. I don't even know what they're doing. [01:09:12] S0: Yes. [01:09:13] S2: But I can tell you, they're amazing, and they're gonna crush, and Lightspeed has no interest in talking to them. [01:09:19] S0: There it is. The big have gotten too big, folks. This has been another amazing episode of This Week in VC. Lon, let's thank our guests and give them a proper plug.