How I Invest with David Weisburd
00:10:18 · Jack Selby, David Weisburd
[00:10:18] S1: I completely respectfully disagree with that premise. And so people will often allude to this network effect that exists in Silicon Valley, and I think it's a false narrative. Here's why. So it is a network effect, but it's a different type of network effect. It is not a human capital network effect. There are plenty of smart people that live in these other places. What is the network effect is a financial network effect, because that's where the money Yes. That's where the capital formation is taking place, and then the argument becomes circular. So if there's no money in Milwaukee, and you wanna build the next Carvana, you feel as if you have to move to Palo Alto, not because there are other smart people there that will help you build that Carvana. There are plenty of those types back in Milwaukee. You move to Palo Alto because that's where the money is. So you get stuck in the circular argument that's impossible to get out of. [00:11:01] S0: It's similar to the Thiel fellowship, which the Thiel fellowship, their whole thesis was, well, the reason all the smart people come from Ivy League schools and graduate from there is because there's this signaling effect where you must go from that big... From those schools in order to to build something great. And the Thiel fellowship, their thesis was that we could posit that. We'll give you that same signaling effect, and you don't have... Actually have to go to the university. So the education is not the necessary condition. It's the branding and the social proof that you need in order to become successful.
00:11:33 · Jack Selby, David Weisburd
[00:11:33] S1: I think that's right. And so this is actually part of my pitch when I meet an entrepreneur in one of these noncoastal places. And so to be precise, what I say to him or hers, I say, listen. I can give you the advantage as if you were living in Palo Alto as you build your company without actually having to live in Palo Alto. So what do I mean? So for example, if you wanted to hire a c suite level person, I could help you do that. I could dip into my Rolodex from Silicon Valley and help you find that person. If you wanted to sell into one of the big public or private companies, Myard Network knows most of these people. We could help you do that. If you wanted to go open the doors with one of the Sand Hill Road firms, which otherwise is very hard to do, even if you lived in Palo Alto, much less if you lived in Milwaukee, I can help you do that. So the list goes on and on and on. So I bring the optionality, the bridge back to Silicon Valley, but again, without actually having to live there. [00:12:19] S0: Just to push a little bit more on this. So you mentioned Milwaukee. Let's just double click on that. Mhmm. How many Anthropic or OpenAI level engineers, let's just call it STR? They used to be called the 10 x engineers. How many even live in a metropolitan area like that? [00:12:35] S1: I don't know. And not to be flippant, but I don't care because I'm not trying to find you the next Anthropic or the next OpenAI. [00:12:40] S0: So you think unless you're doing fundamental research lab type type businesses, you don't need that level of talent?
00:12:40 · David Weisburd, Jack Selby
[00:12:40] S0: So you think unless you're doing fundamental research lab type type businesses, you don't need that level of talent? [00:12:48] S1: I am trying to find the next Carvana esque type company, and that's the vast majority of technology startups. Anthropic and OpenAI are in the vast minority, and again, I would concede those types of businesses should be built in Palo Alto, but that is less than 1% of the startup universe. So I'm not focused on that. Investing in those types of companies is a sandbox that is all about access. I don't have that access. I have no edge in that, and that is also an extremely expensive sandbox. So that is the polar opposite of what I try to do with Copper Sky. [00:13:17] S0: So maybe we could define these Carvana type businesses. What exactly are you looking for? [00:13:22] S1: So we're sector agnostic, So we are looking for truly rock star entrepreneurs. So if I can wrap my liberal arts, classics economics major around whatever an entrepreneur is doing, then we'll take a look. The job is almost as if you're a talent scout. Like you work for CAA or WME, and you do enough of the kind of the ten thousand hours of sitting across the table from aspiring actresses, musicians, whatever it may be, you get a sense of who has that kind of sparkle in their eye or that spring in their step. That's what I'm looking for. And what that actual person does is a secondary conversation if you can find that sparkle in the eye.
00:13:22 · Jack Selby, David Weisburd
[00:13:22] S1: So we're sector agnostic, So we are looking for truly rock star entrepreneurs. So if I can wrap my liberal arts, classics economics major around whatever an entrepreneur is doing, then we'll take a look. The job is almost as if you're a talent scout. Like you work for CAA or WME, and you do enough of the kind of the ten thousand hours of sitting across the table from aspiring actresses, musicians, whatever it may be, you get a sense of who has that kind of sparkle in their eye or that spring in their step. That's what I'm looking for. And what that actual person does is a secondary conversation if you can find that sparkle in the eye. [00:13:55] S0: Speaking of ten thousand hours, how does somebody become this world class entrepreneur in a noncoastal context? And I guess the distinction is, obviously, they are very high IQ, very smart people, but the premise is that they're not... They... They're LLMs. Their personal LLMs have not been trained on what greatness looks like. That... That's the premise. [00:14:14] S1: There's greatness in all these places. And so, again, there are plenty of talented entrepreneurs amongst this 290 subset population. So they're everywhere. And so the idea that they're getting less than 10% of the early stage risk capital is preposterous. So the the opportunity set... I mean, I I I refuse to believe that the opportunity set is not sufficient for more venture capital, and we could debate how much more that is, but it is so outrageously imbalanced. That's what we're trying to alleviate with Copper Sky.
00:14:14 · Jack Selby, David Weisburd
[00:14:14] S1: There's greatness in all these places. And so, again, there are plenty of talented entrepreneurs amongst this 290 subset population. So they're everywhere. And so the idea that they're getting less than 10% of the early stage risk capital is preposterous. So the the opportunity set... I mean, I I I refuse to believe that the opportunity set is not sufficient for more venture capital, and we could debate how much more that is, but it is so outrageously imbalanced. That's what we're trying to alleviate with Copper Sky. [00:14:43] S0: Just to kind of agree with you for a second. I think that, certainly, one one metric that you could go off of is top engineering talent in terms of undergrads. And, certainly, those three states do not have 90% of the top engineering students graduating colleges and graduating from from these places. So certainly from an engineering standpoint, my concern is just on the training, is that you need that training in order to to become world class. [00:15:10] S1: Sure. You have universities like Carnegie Mellon. I was in Pittsburgh last week. You have University of Illinois where I think half of our founding engineering team at PayPal came from. [00:15:18] S0: And Mark Andreessen from University of
00:15:18 · David Weisburd, Jack Selby
[00:15:18] S0: And Mark Andreessen from University of [00:15:20] S1: The list goes on and on and on. Again, there are tons and tons of world class universities in these noncoastal places, but if there was more capital there, like one of my... I I've been an investor in Cleveland, for example. I won't mention his name, but he's very involved in the community. So the Cleveland Clinic, Cleveland Foundation, Case Western is his alma mater, and so my pitch to him and said, okay, if you participate as an LP in my fund, what percentage of your beloved alma mater, Case Western, what percentage of that graduating class can we keep in Cleveland? I'm not saying it's a 100%, but it's definitely not 0%. [00:15:50] S0: You're trying to prove the counterfactual, which is if there's a lot of brain drain going on in the area, what would happen if [00:15:56] S1: you were problem because otherwise, we can go back and forth, and it becomes a circular discussion. It's very difficult to disprove, which I would concede. So I'm not trying to be argumentative, but I guarantee you the number is not zero in terms of the number of the Case Western graduating class that I could keep in Cleveland if there's more venture capital in Cleveland.