This Week in Startups
00:46:02 · Elana Gold, Thomas Tunguz, Jason Calacanis
[00:46:02] S2: I had to check the numbers and it's like, okay, sure, you're able to automate a lot of the manual tasks, maybe some of the editing that's made for your podcast, some of the preparation, but there still needs to be hands on. And I think some people forget that, especially as we continue to grow. [00:46:15] S3: But on this local inference point, Jason, I think you're right. In an era or a year in 'twenty seven when GPUs are limited, local inference will become really big. We're investors in a company called Ollama that has about 10,000,000 people using local inference. Of course. Stanford released a study that 90% of the work that non coders do with AI can be executed on a local model. So I think this is a really big wave, and you'll start to do stuff locally, and then when you need a cloud model, you'll spike, and this is one of the ways that we'll maintain cloud. [00:46:40] S0: I would have no problem, D. A, buying everybody in the company, a Mac studio or NVIDIA, Windows, Spark enabled computer. I would spend 20 ks per person, Because if I'm spending on average right now, 2 ks per person per year, it's going to kind of net out eventually, know, if I sell them in five years for half the price.
00:46:40 · Jason Calacanis, D.A. Wallach
[00:46:40] S0: I would have no problem, D. A, buying everybody in the company, a Mac studio or NVIDIA, Windows, Spark enabled computer. I would spend 20 ks per person, Because if I'm spending on average right now, 2 ks per person per year, it's going to kind of net out eventually, know, if I sell them in five years for half the price. [00:47:05] S1: I agree. And I think it's like, as they used to say in the Internet 1.0 era, information wants to be free. The Internet wants to be free. I think intelligence wants to be free. Yes. And hardware can't be free. And so I don't know how long this takes, but ultimately, you're going to have to, to Thomas's point, you're going to have to have hardware companies that earn a big enough profit to attract the people who know how to do these crazy complicated things. Right now, margins are maybe people are over earning. You've got a situation right now where Elon is financially incented to put literal rocket engineers on general contracting type jobs. Right? Because it's just so valuable to build these data centers as quickly as possible. That isn't steady state. Mean, it's not what we want those rocket scientists doing over the long run, but still someone's going to have to be assembling those ASML machines. Someone's going to be having to produce all the stuff that we need to make this work over the long run. And that I think is the most durable business in a way.
00:48:18 · Jason Calacanis
[00:48:18] S0: Yeah. Elon Web Services came out of nowhere. SpaceX all of a sudden has Colossus two going four times bigger than Colossus one. Who better to build real stuff in the real world like factories and data centers than Elon? He's got really great engineers working for him, but yeah, they're shifting key talent, I think, over to Elon Web Services because it's such a money printing business. When we get back from this quick break, I want to talk about changes at Sequoia, my alma mater, where I started and I was the first scout. The scout program has now been retired at Sequoia. I have feelings about it. Before we do that, I want to just give a shout out to my friends at Fintrx, F I N T R X. This is a great subscription that applies to all of us in the venture business. We started a forward motion. We wanted to meet a bunch of family offices. We looked for a database of them. Didn't exist. Then I tweeted, Hey, is there a database of this? And the founder of Fintrx contacted me, and we got this incredible database. They have... They are tracking tens of thousands of decision makers across the four or 5,000 family offices there are. I started doing late stage deals, Elana, from my syndicate. We did Zipline. We did Vast Space. We did Atoms, Travis's new company. But I needed bigger check sizes, not the average check size from angel list level syndicates that I was doing early stage, those were 5,000 to $50,000 checks. I needed $250 to $2,000,000 checks for those allocations, got on Fintrix, built a database, built some AI, queued everybody up, started doing family office meetings myself personally and with my team, and it worked. Go to fintrix.com to learn more. An incredible database if you want to meet family offices. And the detail they had in there was crazy because I found my family office in there, which was like a family office of two, me and my wife, which we just started allocating stuff in a little more of a thoughtful way. They had details of us. So thanks to Fintrix for supporting the show and supporting my syndicate, syndicate.com. All right. Let's talk about Sequoia. And I'm obviously close to this. Roelof Botha, I met him. He invested in my company. He's no longer there. And a number of the projects he set in motion, along with the rest of the team there, now that he's not leading it anymore, have been retired.
00:50:45 · Jason Calacanis
Sequoia published a long post this morning, the Sequoia of Tomorrow, making one year since its generational transition that occurred. The firm is closing its London office, which Sequoia says means, several people will be leaving. The firm says this is not about the team. It's sunsetting its batch accelerator arc, which a lot of people really love. They were doing their own high end bespoke version of Y Combinator instead of a couple 100 people, a dozen companies, I believe. And the scouts program, which famously myself and Sam Altman started our investment careers in, me doing Uber, him doing Stripe in that very early stage, and one of their most profitable programs. And they also... They're shutting that down. And they've removed much of the complexity associated with the Sequoia Capital Fund, which is how they held shares post IPOs for their LPs if they chose to do that. And they got rid of early and growth stages, which were two different groups there that would focus on those different stages. And now there's back to only one Sequoia. Doug Leone, who's been super invigorated, a friend of mine, friend of the program, is, back in the seat. So they have him, making investments and driving the firm, and they've raised 10,000,000,000 in new funds. They also, got rid of the forty year old, Monday morning partner meeting cycle. And, they're gonna go twenty four seven like their founders. Tomas, what do you think of these changes? You know people over there, you know the firm in its history. When you look at these changes, is it just the standard thing that happens when you have a change in management? People, you know, have their projects they want to work on, or do you think it's a streamlining that has something to do with maybe Andreessen Horowitz, which is also... That's a bunch of different fiefdoms. But what do you think about what's going on at Sequoia?
00:52:42 · Thomas Tunguz, Jason Calacanis
[00:52:42] S3: Yeah. I mean, obviously, legendary firm, clearly have terrific people leading the operation. I think a couple of different... The things that stood out to me, one was the unification of the early and the growth. Why is this? Well, it's because if you call a seed stage company a seed stage company, the odds are that it's a $5,000,000 investment, a $50,000,000 investment, or a $500,000,000 investment are roughly equal. This is a bit tongue in cheek, but the idea that we had T shirt sized financing rounds ten years ago, now any one of those can be a seed. And so the structure of an early fund versus a growth fund no longer really applies applies in this ecosystem because if you have a team of wonderful PhDs or researchers coming from a new lab, they might need 300 to $500,000,000 just to prove the idea, the same way that say a biotech would in order to reach that first milestone. And so you need really big funds in order to supply them, hence the unification of those two funds. I think that's a really smart move. [00:53:40] S0: Elana, you have a thought there about what's going on at Sequoia and the emergence of these mega funds. Sequoia fought it off as long as they could. They wanted to stay small, bespoke, stick to their knitting, but they had to raise growth funds. They had to do bigger things with other players. Yeah, Menlo, Andreessen Horowitz, etcetera, going big. If everybody's going big, you kind of get left out, right?
00:54:07 · Elana Gold
[00:54:07] S2: And I think over the past kind of five years, a lot of these venture funds have become incredibly complicated businesses. They have their accelerator, they have their scout fund, like kind of everything that you just discussed. And I think at the end of the day, if you look back at their returns, their job is to find exceptional founders and then continue to invest in them over the course of the series A, the series B, etcetera. And so I think what they're saying is, first off, you still have to continue to make those decisions. Even if you invest in a company at the series B company, it could still make generational returns. You invest in SpaceX at the Series B price, your fund would have done great. And so I think by combining that all, they're saying, Hey, those decisions are just as important as the early stage companies as they are the later, because they'll just write a bigger check for the same ownership. I think the one part that was really interesting about this is shutting off their scout program. And you probably have a lot of thoughts here because you're like, Hey, me and Sam found great companies. Like, why would you ever kind of take this away? Because there's some people who don't necessarily want do VC full time, or maybe they do in this as their step in, or there's some founders in your network that could really find these. Why take away those specific people that you have early on? Because what do you really get from doing that? You just had people going out and finding the best company as if they work great if they didn't. I'd be super curious to know the numbers that came from this. I mean, they must have done a lot of research to be like, Hey, we have these scouts. Maybe they weren't the best companies in our portfolio. So like, why are we doing this? And I think there had to be something that came from this decision that ultimately led them to decide not to do it.