Invest Like the Best with Patrick O'Shaughnessy
00:51:54 · Sarah Guo
[00:51:54] S2: I, like, wanna spend my time when I'm learning about the world from somebody who is making it happen, our portfolio founders or the many founders who are doing amazing things outside of portfolio who are doing something that surprises me or advances their frontier or like really smart believe something I don't. There's like three different categories. And I'll give you an example. Mikey Schulman at Suno is building an amazing business doing music generation. Shame on me. I knew Mikey, a mutual friend of ours who's an investor asked me to invest and I stupidly said no. But I was just like, oh, I don't think that many people want to make music. I make music. But can you turn it into a social network? How much consumption is there gonna be? A lot of questions. My intuition is just wrong. It's been actually somewhat wrong because I have underestimated the amount of expression or entertainment and creation for a lot of AI tools. I've learned something here by talking to Mikey about his business and what people are trying to do. So if it is founders who have companies that are creating a behavior you don't understand, somebody working on research and an interesting direction, businesses that are like, here's my plan for AI, all that is super educational. I think the circular logic sometimes of what do people believe about the big lab strategy today, How can any of the applications live? It's actually not that instructive for your decision making. The way I think of it is any organization has a couple key priorities. Let's assume the priority for OpenAI and Anthropic and DeepMind is AGI or ASI in a safe way where they capture a lot of profit. The priorities that ladder into that probably look like chat GPT, ads, coding. Maybe there's an expansion after that. Cowork, the ability to get different types of users to do richer tasks and more interfaces. I think you have to judge the actual competitiveness of any of those efforts, the reasonable scope of them, and then look at them relative to each of our companies or opportunities that we're looking at. Coming up with some grand strategic framework for, like, what layer is gonna win here, I think is not useful to me. And I feel like people spend so much of their investing energy thinking about versus I wanna spend my energy figuring out if we're 1% of the way in, what is the next 99% of diffusion?
00:54:23 · Sarah Guo, S3
That's where we try to direct our energy. [00:54:26] S3: For fun, as we wind down here, understand this is like a purely speculative question, and it's meant more fun than raw prediction. What are some things you think are true a year from now based on all these incredible people that you're close with, the research community, the entrepreneurs like the Sunday founders, you add it all up, things are moving fast. A year is a long time and it's like reverse dog years now. What do you think is notably different about the world of technology a year from now? [00:54:52] S2: I'm hopeful that a year from now, we see Jevan's paradox in practice as we have agents and products that do more of the mundane more effectively in all the domains of our lives. It should look like the transformation that has happened in software engineering. You have companies. I have companies where they're like, we're just going way faster. I expect that some analogy like that will happen [00:55:21] S3: For everywhere else.
00:55:21 · S3, Sarah Guo
[00:55:21] S3: For everywhere else. [00:55:22] S2: Everywhere else. And we see it in our companies where I'm thinking about in one of our portfolio companies, the marketing department is like a person in the house. This is a company that serves lots of customers. They need to do very traditional things, sales enablement content. What happened was the guy in charge of marketing is interested in creating leverage for himself. And he's like, I made an autonomous marketing department for us, the company. In every function as you learn faster, do less of the mundane, you will repurpose that time somehow. Do you work less now that you are more productive with AI? Yeah. I work more. And I think this is like a core wisdom of Jensen's, which is we're all gonna be more employed. And we need to make sure that people are given access and education to the tooling that will allow that to happen. [00:56:21] S3: What you've built is incredible. We've loved through the Colossus side getting to know your whole world. It's so distinctive. You are a great example that there's always room for great. Meaning, there's plenty of early stage investment firms when you started conviction. And yet here we are four years later or whatever and if you ask the people you've worked with, you've made a real huge difference in their lives. There's just always room for great. I think that's like a great awesome lesson, especially because I love how you described the early pitch was not like here's how we're differentiated every level of the funnel. We're just gonna run at this thing.
00:56:21 · S3, Sarah Guo
[00:56:21] S3: What you've built is incredible. We've loved through the Colossus side getting to know your whole world. It's so distinctive. You are a great example that there's always room for great. Meaning, there's plenty of early stage investment firms when you started conviction. And yet here we are four years later or whatever and if you ask the people you've worked with, you've made a real huge difference in their lives. There's just always room for great. I think that's like a great awesome lesson, especially because I love how you described the early pitch was not like here's how we're differentiated every level of the funnel. We're just gonna run at this thing. [00:56:52] S2: By the end, I got so frustrated that I was just like it's an execution game. [00:56:55] S3: Totally. I ask everyone the same traditional closing question. What is the kindest thing that anyone's ever done for you?
00:57:00 · Sarah Guo
[00:57:00] S2: I love this question. I'm gonna give like a collective answer. I think there are so many people who are extraordinarily accomplished in Silicon Valley who care very little for pedigree as soon as they have conversation with you. And they're like, maybe you can help me or you have an interesting idea or maybe I just think you're promising. And the dominant factor in their own willingness to invest in a relationship or a person is just their assessment of the idea in the person. I think that's amazing. That is not how most ecosystems work. And so Ashim Chaudhna and Anil Busseri and Joseph Fansonelli and Reid Hoffman who hired me at Greylock, I started when I was 23. People love to make fun of young VCs where they're like, what a barnacle on the ecosystem. It's a terrible experience for entrepreneurs. They don't know anything. They're trying to advise people. Who gave this kid money? And I'm like, well, one, my job is just to make other people successful at the time. You can take any task in any job and just try to be great at a task with mimicry and first principles thinking. We hire earlier career people at my firm, but I do think, oh my goodness, thank you for taking a shot on some random person and then investing the time to like teach me how to be an investor. I think there were a few people who gave me advice starting the firm who I think they would think of this as entirely trivial. I'm just giving you my opinion. But Ravi Gupta who is now co CEO of a new thing called Ithaca, Dylan Field and Elena Nadelinski, John Lilly who's been a longtime partner and friend. There are a few folks who were just like, you can definitely do it. I was gonna do it either way. But having the encouragement of people who believed that there was room to be great and including some of our first LPs, I will be forever grateful to, I guess, the people who took risk with me.
00:58:56 · S3, Sarah Guo
[00:58:56] S3: It's beautiful the world runs on faith, belief without evidence yet, and still conviction in someone's ability to do something. Pretty cool. [00:59:03] S2: It's faith in people. And we talked a lot about how people's ideas and our opinions of them are intertwined. But I think that's a beautiful thing because you don't need any particular advantage to have an idea. The fact that folks will evaluate that and put faith in us, I could not be more grateful. [00:59:22] S3: I've learned a lot watching you operate and talking to you. This has been really fun. Thanks for having me. [00:59:28] S2: Thanks.