Invest Like the Best with Patrick O'Shaughnessy
00:36:33 · Eric Vishria
[00:36:33] S2: sitting in a board meeting and this thing- The thing is, it's melting. It's like, "Fucking melting, okay? " And we've raised five hundred million dollars or something, and it's like, "Wait, what? It's melting or it's burning or something? " And like we're looking at it, and I'm like, "Holy shit! " I realize like five hundred million dollars isn't that much in today's era, but I was just like, "We're gonna lose all this money. This isn't gonna work. " And what that team did Insane. They're built differently, and I have so much respect and thanks to them for what they've done. There are efforts that make you really proud to be a venture capitalist, because you're funding something that makes a difference and matters. I'm an investor because that's a means to work with companies, not because I fundamentally love investing or something like that. I like working with companies, that's my favorite part of it. Working with teams like that and companies like that is so special on these giant ambitious efforts. And I said this well before twenty eighteen or whatever, whether ServiceWorker didn't, I think it was an effort that was worth venture capital. That was the kind of thing you should do. You should try to build something that people have tried for fifty years and haven't been unable to, but now we think we could do, and there's a reason and application for it and everything else. I love that. I do like those kinds of things, joking aside, and we do have a robotics company and then this CPU. Project that we're talking about. I think these kinds of things are actually really fun and interesting and good use of venture capital, but they definitely aren't
00:37:57 · Patrick O'Shaughnessy, Eric Vishria
[00:37:57] S0: easy. The productive naivete that you described there. It's probably a virtue that you didn't know more than you knew, otherwise you wouldn't have done it. This is certainly my experience with, like, in any of these fields, you ask experts, they're gonna tell you don't do it. It sucks, it's too hard, the base rate's too low, young people can't do it, there's forty-seven reasons. All of those things, yeah. Is there anywhere where that is just a bridge too far that could be like bio or something like this where you just aren't willing to invest if you're naive? You know [00:38:24] S2: what's so They're not correct three times out of four, they're correct nineteen times out of twenty, maybe ninety-nine times out of a hundred, like they are correct. The thing that Bruce, one of our founders, always says, "What could go right? We have to ask ourselves, what could go right? And do we see that path? Yeah, young people can't build chips or you shouldn't do a no-semi company or you shouldn't do this or like whatever. All of that stuff is actually totally right, except when it isn't. Apparently there's a saying that someone said to one of my partners, which was, "If it doesn't work, it'll be for all of the reasons that your partner said. If it does work, it will be because those reasons didn't matter. " It's just such a good example of this whole thing, which is, yeah, most of the time when we lay out the reasons that a It's right, but then sometimes they just don't matter.
00:38:24 · Eric Vishria, Patrick O'Shaughnessy
[00:38:24] S2: what's so They're not correct three times out of four, they're correct nineteen times out of twenty, maybe ninety-nine times out of a hundred, like they are correct. The thing that Bruce, one of our founders, always says, "What could go right? We have to ask ourselves, what could go right? And do we see that path? Yeah, young people can't build chips or you shouldn't do a no-semi company or you shouldn't do this or like whatever. All of that stuff is actually totally right, except when it isn't. Apparently there's a saying that someone said to one of my partners, which was, "If it doesn't work, it'll be for all of the reasons that your partner said. If it does work, it will be because those reasons didn't matter. " It's just such a good example of this whole thing, which is, yeah, most of the time when we lay out the reasons that a It's right, but then sometimes they just don't matter. [00:39:18] S0: You and I are both interested in robotics. It's not controversial that if robotics works, it might dwarf what we're currently living through. What do you think has to be true for it to work? Obviously it's exciting. I want a robot in my house folding my laundry. It sounds great. It's kind of one of these classics, it's always ten years away, and it's been that way for a long time. What do you see happening? What has to happen for this to actually be a thing in the near to medium term?
00:39:46 · Eric Vishria
[00:39:46] S2: And they're all over the place and they're on assembly lines and manufacturing lines and all these things where you're doing repetitive tasks in controlled environments. Repetitive task in controlled environments is like more or less solved and like, you know, that'll continue to happen. But having tweaked tasks in real-world environments, that's where you need the AI, that's where you need the AI plus the robots. The trick with it all is, you need a model That can do that. Of course, the first problem is there is no internet-scale data to bootstrap the whole thing, right? Algorithms are all bootstrapped on the internet, which is a ton of human knowledge, and the equivalent for that for robots doesn't exist. And people are trying different things with videos and simulations and teleoperation, so like there's a lot of different ways. But if you kind of think about, take teleop as an example, how much you need to teleop robots? To get to an internet scale data, this first step is like getting a good set of data to bootstrap the model. One of the, I think, insights that you can have is with the internet, there's like a lot of slop data. Even before AI generated all this stuff, there was also a bunch of junk data, and some data was more valuable than others. Like you may value, okay, certain things on Reddit more valuable than other things, you might value Wikipedia more than like other forums, you might value GitHub more than other things, and all of the model Companies did that, right? They prioritized data that was more valuable and less valuable and ran that through the model. I think one of the most interesting things that these AI robotics companies are doing is saying, "Okay, well, let's just go after the high value data to start. If we go after the high value data, then we can kind of bootstrap this model." Now, once you do that, then can you, through that pre-training process, get to a place where you can have Very small auxiliary examples of data that you add in post-training and all of a sudden it works for that. That's the magic we have with LLMs, is you have this giant pre-trained base and then you add a little magic on it in RL and post-training and you teach it a new thing that it wasn't in the pre-training set and you kinda go from there. And I think the exact same thing is happening in robotics.
00:42:02 · Eric Vishria
We're investors in Sunday Robotics, which is going after this exact pipeline company. It's a cool company, and they're doing household robots, but the key part, before you get to household and all that stuff, matters much less actually than can you get this training pipeline to work and how do you do that? And one of the lessons I learned, and I look back, I try to learn from history, 'cause it doesn't repeat but it rhymes, and if I look at autonomous vehicles as an example, which is they're robots basically, they're AI plus robots. You look at Waymo and you look at Tesla. They were both designed vertically integrated in their own way. You have a Tesla, you have a fleet of Teslas that everybody owned, it was collecting data on the Teslas, and it was used to train the models to drive the Teslas. Same thing with Waymo. I think part of the lessons is they gathered very, very high quality data, they did their pre-training, and then they worked off of that. That was a simplification to allow you to get to a complete. Product or complete solution, which of course is gonna continue to improve and ultimately will generalize, I'm sure it'll generalize in some way so you'll be able to strap it onto any car and everything else. So I think the same thing's happening in robotics where you have companies like Sunday and others who are using techniques where they're vertically integrating the robot and the model, the data collection around the robot. Sunday uses gloves That are designed with the robot hand, so they're perfect, so you get very good data transferability from one to another. You do this pre-training, and you have a great pre-training dataset, you have a good model, and then you start adding these examples in your RL and post-training on top, and you get cool emergent behavior. Do you have a most visceral moment when we invested in Sunday the first time? We saw them, partner Peter arranged. A demo, we went down into the basement at the Stanford lab, and they had like this totally janky cardboard glove thing. You see a few evolutions of it. The last time we saw a demo, we went down in the basement of their now office building, and there was like a dozen robots just folding arbitrary laundry.
00:44:11 · Eric Vishria, Patrick O'Shaughnessy
It wasn't in the demo, it was just trial and error, and then they have people like taking the clothes and then measuring them to make sure that they were folded properly and creating a rigorous baseline and evaluation criteria. And I was like, "Oh my god, this is happening. [00:44:27] S0: " Do you ever worry about how to pick the right customer for these companies? Every one of these things folds laundry, which, like, I don't think anyone likes folding laundry, so it seems like a good use case, but it feels like we don't actually understand the demand for what these things will be used to do. You're worried about that they were sort of building solutions that will then be in searches of problems.