Invest Like the Best with Patrick O'Shaughnessy
· Josh Kushner, Patrick O'Shaughnessy
[00:00:00] S1: We are very much oriented not towards transactions, but companies or ideas that we want to be a part of. I've known Demis for quite some time. After AlphaFold came out, I expressed to him that I would be very excited to support him in whatever way I could around his efforts within Isomorphic. A lot of the products that are being created within the AI ecosystem, whether it be around robotics or coding – are going to lead to tremendous transformation in the world that we currently live in. We view Thrive as enabling technology for the world that we wish to see. The idea of creating a company that's end goal is to cure disease is probably the most important thing that we could ever be a part of. I feel very honored and grateful to have the opportunity to partner with him and the rest of the Isomorphic team. [00:00:00] S0: You and I have talked a lot about the difference between the enablers and the artists themselves. A24 and Dan Katz, who I'm an enormous fan of, is building something really interesting and really special that I think has some elements in common with how you think about Thrive. Can you tell us about the relationship and why you made an investment and parallels that you see that you think are useful?
· Patrick O'Shaughnessy, Josh Kushner
[00:00:00] S0: You and I have talked a lot about the difference between the enablers and the artists themselves. A24 and Dan Katz, who I'm an enormous fan of, is building something really interesting and really special that I think has some elements in common with how you think about Thrive. Can you tell us about the relationship and why you made an investment and parallels that you see that you think are useful? [00:00:00] S1: It's really important that we understand our place within the ecosystem. Our founders are our heroes. We're not DaVinci, we're Medici. And it's our opportunity to enable the artists that we're fortunate enough to support to create their masterpieces. I've always been fascinated by A24 because there have been a lot of analogs to Thrive's story. They have captivated Hollywood by being based in New York. They keep to themselves, they're very focused on the director, the actor – in the same ways in which I think we're very focused on the founder. It's very input driven around, "How do you create the best work? How do you support the people who are actually the creators in this ecosystem?" I've learned a lot from him and the team as they have gone on to make extraordinary art by supporting the people that are making it.
· Josh Kushner, Patrick O'Shaughnessy
[00:00:00] S1: It's really important that we understand our place within the ecosystem. Our founders are our heroes. We're not DaVinci, we're Medici. And it's our opportunity to enable the artists that we're fortunate enough to support to create their masterpieces. I've always been fascinated by A24 because there have been a lot of analogs to Thrive's story. They have captivated Hollywood by being based in New York. They keep to themselves, they're very focused on the director, the actor – in the same ways in which I think we're very focused on the founder. It's very input driven around, "How do you create the best work? How do you support the people who are actually the creators in this ecosystem?" I've learned a lot from him and the team as they have gone on to make extraordinary art by supporting the people that are making it. [00:00:00] S0: The notion of investing in Fifth Avenue, in the very best assets in a given category is something we talked about a lot last time. I want to expand upon that around OpenAI as a specific example. It's such an interesting thing to me that so much of the power and the value can accrue to the number one player. I heard Peter Thiel say recently, if he was to go back and rewrite any part of "Zero to One" – he has that chapter on the four types of monopoly – that he would maybe give scale its own chapter, separate from the other three. And this notion of all the resources accruing around the leader – maybe say a little bit about that ongoing education you've had on that concept, and then we'll use it to talk about OpenAI.
· Patrick O'Shaughnessy, Josh Kushner
[00:00:00] S0: The notion of investing in Fifth Avenue, in the very best assets in a given category is something we talked about a lot last time. I want to expand upon that around OpenAI as a specific example. It's such an interesting thing to me that so much of the power and the value can accrue to the number one player. I heard Peter Thiel say recently, if he was to go back and rewrite any part of "Zero to One" – he has that chapter on the four types of monopoly – that he would maybe give scale its own chapter, separate from the other three. And this notion of all the resources accruing around the leader – maybe say a little bit about that ongoing education you've had on that concept, and then we'll use it to talk about OpenAI. [00:00:00] S1: There's two things that we have historically focused on as a firm. I think it's the products that companies are building and the people that are running them. Our product-first orientation and our people-first orientation has led us to partner with these businesses that have the characteristics, that have the capacity, to compound on themselves over very long periods of time. Ultimately, at the end of the day, I think the beauty of our world is that you can put a product out into the market, but the universe ultimately decides as to whether or not they like it or not. We've tried our best to intuit these things as much as possible, but once these things start to have velocity, it's very hard for them to slow down. And ultimately those things become wedges into much larger opportunities over time.
· Josh Kushner, Patrick O'Shaughnessy
[00:00:00] S1: There's two things that we have historically focused on as a firm. I think it's the products that companies are building and the people that are running them. Our product-first orientation and our people-first orientation has led us to partner with these businesses that have the characteristics, that have the capacity, to compound on themselves over very long periods of time. Ultimately, at the end of the day, I think the beauty of our world is that you can put a product out into the market, but the universe ultimately decides as to whether or not they like it or not. We've tried our best to intuit these things as much as possible, but once these things start to have velocity, it's very hard for them to slow down. And ultimately those things become wedges into much larger opportunities over time. [00:00:00] S0: So OpenAI, I want to go first back to the moment that you had your personal "aha" moment. Speaking of products, most magical product of the last 20 years probably. What did you see? What did you feel? How did you think about it in those early days? This is I guess before the $29 billion valuation round that you led, which I think was your first investment in OpenAI. Bring us in the room around how you came to it, how you were thinking about it, and the moment you had a realization.
· Josh Kushner
[00:00:00] S1: I feel really grateful to have the opportunity to partner with the company. I've learned a tremendous amount from being in the trenches with them. It's really opened my eyes to new things that I've had to learn in order to be the most supportive partner to them. I believe that this was the most important prize worth winning. It was the best team going after something that we had always believed had the possibility of taking shape in the world. But historically, we've always been excited about artificial intelligence and ML, but the only companies that truly had the capacity to build these models were those with existing distribution. I originally approached Sam, who I had known for the previous decade because of his role in YC, about investing in OpenAI in March of 2022. We had played with it quite a bit at Thrive and started to get excited about the concentration of talent, but also our core belief that in this moment – if compute and research was all that mattered, they were most set up to ultimately succeed. A couple of months later, Sam gave me access to the ChatGPT preview, which is all it was meant to be. It wasn't meant to be the product that has captivated the world. It was really meant to be something that could show the world what these models were ultimately capable of. I just couldn't unsee it. One night I was sitting at our kitchen table, it was probably one or two o'clock in the morning, and Karlie had woken up and she came to the kitchen and asked what I was doing, and I showed her and I expressed to her that I thought that this was going to change the world. The combination of research, talent density, access to compute, but more importantly a product that I thought could reach distribution is what gave us the confidence that we should ultimately make the investment.