01:18:43 · Jordi Hays, John Coogan
[01:18:43] S1: What's the what's the what are the upsides and downsides of being in this business from Baltimore versus living, you know, in in SF? I can I can imagine I can imagine a lot of a lot of, honestly, alpha and, you know, you you and being able to actually understanding like diffusion? [01:19:04] S0: Yeah. Like the real world. [01:19:05] S1: But but what what's your view?
01:19:05 · Jordi Hays, Hunter Somerville
[01:19:05] S1: But but what what's your view? [01:19:07] S3: Yeah. We have parts of our team in California, in San Diego, in Palo Alto, in New York, in London. Biggest part is actually still in Baltimore, which does seem counterintuitive. We like it that way. I I think our culture is predicated on grit and grind. Behind me, I have a bunch of Cal Ripken merchandise, the Ironman, and that's sort of how we think. Go to work every day. Work your ass off. Crush it, don't be complacent, and don't get caught in the echo chamber. This is a cyclical asset class. It's a cyclical business. It's easy to get caught up in euphoria all of the time and feel like momentum is never going to stop. I think being in Baltimore where things are tough and not always easy and there's challenges beyond what we do on a day to day basis grounds us. When it comes to difficulties, you know, I'm on a plane four days a week going all over the country or internationally to meet with founders, to meet with funds, to meet with our investor base. And so, it creates sacrifice, but I mean we're blessed to be in this business. There's nothing I would rather be doing to back innovative founders taking risk, embracing the American dream, going hard at things and to be able to do it, you know, still in a small blue collar environment like Baltimore is pretty special.
01:20:28 · John Coogan, Hunter Somerville
[01:20:28] S0: Love it. Have I have two more questions. I'll I'll leave time for you, Jordy. But one, the liquidity wave. There were a ton of breathless articles about the wave of liquidity coming to early stage managers, late stage managers across SpaceX, OpenAI, Anthropic. Some big IPOs coming. How real is that? How significant is that? I mean, SpaceX is a $2,000,000,000,000 company. It's holding. You mentioned the IPO window potentially continuing to be open. But how much does that actually change the calculus of what you do and others in the category do? [01:21:09] S3: Yeah. Awesome question. And we haven't talked about that yet. So The biggest issue, I think, with venture is duration. It takes forever to go from seed to eventual exit. Yeah. The bar to go public is 500,000,000 or whatever people think these days on the banker side, 400,000,000, 500,000,000 of top line. AI businesses are obviously growing faster than anything we've ever seen, but the duration is still long. Yeah. And you need to be able to distribute capital back to investors in order to get them to invest in your next funder. That cycle is not sustainable overall. And so, people have been waiting four or five years for liquidity. DPI has been in short supply. Mhmm. And it does feel like that is changing both with M and A. We saw Hugging Face, obviously. Yeah. Most recently, we saw the SpaceX IPO. [01:21:58] S0: Reversive a
01:21:58 · John Coogan, Hunter Somerville, Jordi Hays
[01:21:58] S0: Reversive a [01:21:59] S3: bunch of other IPOs happening in the fourth quarter and hopefully into the first half of next year, which would be awesome. Yeah. And so hope that continues. But you're you're right. It it's actually an interesting thing to think about on the secondary side because if there's a massive kind of environment around liquidity generation, I would say that is a negative for the secondary side, but not a huge one overall because there's still what we described before where people are going to offer tender offers on an annual basis, start putting that in place ahead of time Mhmm. And creating an environment where that's iterative over time. And for our asset class and the endurance and long term viability of it, I welcome a lot of capital coming back to all of the hardworking pensions and endowments, and that'll give them a lot more flexibility to be able to invest in new funds, new innovation, continue and start to do more on the emerging manager side again, and broaden out holistically what they're considering within venture. I'd say it's a double edged sword, but but we'll we'll root for liquidity anyway. [01:23:04] S0: Yeah. Yeah. Yeah. That makes sense. [01:23:05] S1: You have one more? [01:23:06] S0: I have [01:23:06] S1: I have one more. Yeah. Go for it.
01:23:06 · Jordi Hays, John Coogan
[01:23:06] S1: I have one more. Yeah. Go for it. [01:23:07] S0: I'm interested in how much you think thematically. Obviously, AI is driving headlines every single day but there's these interesting knock on effects of deeper in the supply chain, energy, hard tech you mentioned, but also there's some excitement among early stage managers that we talk to for the coming potential of AI to accelerate biotechnology. And so maybe that looks like writing more checks into biotech companies. Maybe the bio VCs, the flagship pioneerings do better, but maybe there's more crossover from the traditional tech investors that dabbled in crypto and did some hard tech and then also do AI. Maybe they will figure out bio. But how do you think about guardrails either at the manager side or at your level of there's a way of coming, when do we need to start paddling?
01:24:01 · Hunter Somerville
[01:24:01] S3: Yeah. No. Totally. And all of our partners focus on different areas when it comes to the direct investment side. We're not like a traditional VC firm because the GPs are the core of what we do and so they lead us in the direction of where we want to go. But then we develop thematic points of view. Me, personally, I've covered more of the hard tech, deep tech categories that you're alluding to. I like those businesses. It's probably because I'm more old school and appreciate a moat and a multiyear advantage. I think a bunch of those areas you mentioned, energy specifically, mining, anything touching rare earths, refining, production of magnets, around defense, specific areas around aerospace that SpaceX may not be competitive in. All of those are places where I've liked to spend more time and I feel more comfortable. It feeds into the fun side of things because I also cover a lot of the smaller emerging managers that are doing it in deep tech and hard tech. You get the recognition of what's working at a seed level before it's overtly obvious to the rest of the market, And then you can build those relationships on the primary and secondary side more proactively. And unlike some of these massive seed and Series A AI rounds, it doesn't happen that way and as quickly and linearly in deep tech and hard tech. The seed investors can invest in one or two rounds and then people realize it's technically de risked. It's crossed the chasm. It's interesting. And then you will have very large check writers blessing that and doing really meaningful meaningful check sizes at that point in time. There are other bites at the apple that are more attainable than a really hot AI company at the very beginning. Don't get me wrong. We love both. I have other partners that are equally active on that side. The key is blending it and not making sure you're doing too much of one thing and that you're being thoughtful and bobbing and weaving accordingly. Biotech is a weird category, I would say, overall. I think over the past few years where it's been most interesting is on the crossover side because there's an ability to become pretty aggressive, almost predatory at the very late stages of some of these businesses overall and get good value or put structure in place. You've also had the ability to go public earlier and more aggressively in those categories.