Invest Like the Best with Patrick O'Shaughnessy
01:06:32 · Patrick O'Shaughnessy, Gavin Uberti
[01:06:32] S0: Why did TSMC believe, do think? [01:06:34] S1: Oh, this is a great story, even before you joined in, at earlier conference, a semi event, and I was one of the only young CEOs of semiconductors, and I think that's kind of a novelty. They asked me to come in there and speak. I got to the semi event, and I am the only speaker there under 40 and only person there under 30. I was at the time of 22. I go up and I speak. There was a speakers dinner afterwards. And by pure luck, happy to connect to this very senior TSMC VP. It was a very nice dinner. There was, like, the former CEO of ARM there. It's very bougie, everyone's in a suit. And I'm there with this VP, and it turns out we both studied math in college. We go and get a little piece of paper, and we begin talking in great detail about how do modern AI models work at the actual per tensor by tensor level. And the guy just gets it. And we begin talking about, hey, how do you run this very effectively? Why is Low Voltage such a critical technology to make this work? And the following day, get an email from TSFC saying, Gavin, I want to work with ETCH. Find a way to make it happen. Chris, they've been a great partner ever since.
01:07:37 · Patrick O'Shaughnessy, Rob Wachen
[01:07:37] S0: It's amazing to think about some of the tropes and obviously like should break the fourth wall here like I'm a big Etch investor, I've been involved for a long time, I think the absolute world of you guys, so like I'm incredibly biased in this conversation. I'm trying to ask questions that are broader and interesting and could be objections to what you're doing, and we'll keep doing that. But it's so interesting to me that when you read about investing, everyone cites this idea of contrarian and right as the quadrant that makes all the money. And it sounds really nice, but contrarian means everyone else thinks you're stupid. And so when you go and you get immediate nos from literally everybody, it is a fascinating quadrant to exist in before you become consensus. [01:08:18] S3: What was it like for you? I'm super curious.
01:08:18 · Rob Wachen, Patrick O'Shaughnessy, Gavin Uberti
[01:08:18] S3: What was it like for you? I'm super curious. [01:08:20] S0: Well, it's interesting at the time, it was the largest by a lot first check that I had written. Suffice it to say, I am not a math expert or a semiconductor expert or an AI expert really at the time. And so it was much more of a believed in the concept of this market potentially being huge, you having made very, very clear bets on how the future was going to look, having positioned the company in order to attack those things in a hardcore way. And then just the two of you and what I felt about you was the majority of the reason why we made the bet when we did in 2023 or whatever it was. But at the time, it was the biggest. And I think the same thing you said about naivete applies to investing as does to maybe building a semiconductor startup, which is like I didn't know what I didn't know. And when I called experts, they were basically like this is stupid. They laid out in very logical terms like why this wasn't going to work and why it was such a low probability bet. And I think one of things I've learned from it is just you kind of have to damn the base rate. If you invested on base rates, you should do something other than what we and I do. [01:09:21] S1: There's always the index fund.
01:09:21 · Gavin Uberti, Patrick O'Shaughnessy, Rob Wachen
[01:09:21] S1: There's always the index fund. [01:09:22] S0: Yeah, there's always an index fund, exactly. So it's actually never been scary for me. I think probably most of that is because there's a lot I don't know. And if I knew more about what you guys have done and the difficulty, I probably wouldn't have done it. I don't know what that says about maturing as an investor. Maybe I don't want you know, a lot more and and have some of that healthy naivete. Don't know. [01:09:41] S3: Funny. I mean, a lot of the traditional semiconductor funds missed the entire AI chip, like, all the AI chip companies. Yeah. And like, all the coding experts missed all the coding companies. I think it's very hard to realize the constraints have changed. And when you've looked at tape outs for twenty years, and you've seen so many of them not work on the first try or the second try or the third try, like you couldn't even run a workload. You totally forget that EDA tools are way better and that FPGAs exist today in a way that they didn't exist before. And all the types of validation you can do today just wasn't possible. For us, a lot of our believers either they were kind of on two sides of it. They were just believers in the market and the team, or they were building chips today in extremely technical, like the high 50 trading firms [01:10:25] S1: Yeah.
01:10:25 · Gavin Uberti, Rob Wachen, Patrick O'Shaughnessy
[01:10:25] S1: Yeah. [01:10:25] S3: Where they would literally audit everything from the micro architecture and the RTL to like the board designs and like the schedule and the software stack. And we would sit down with like 10 of their people who build their own chips and they're asking us such detailed questions that we're wondering, are they gonna build the chip? It was really on either of those sides. And if you were anywhere in the middle, like, you just wouldn't understand it. [01:10:43] S0: In the investing world, they all often talk about variant perception, something that you see or believe that others don't. Right? And that perception creates the opportunity. I think I've invested, I don't know, five or so times in Etched. And every time when you do it, stakes are getting bigger and bigger. It does get a little scarier and scarier. And because you guys have been so quiet in the marketplace, I think it's very easy to dismiss you. As the stakes get bigger and bigger, those dismissals are harder to hear. I do think betting on something that you see when what you hear from the outside world is very different. That perception gap equals opportunity. Exactly. The last thing I would say is the accumulated evidence of your guys' and your team's ability to solve seemingly impossible problems is one of the most interesting things a company can have. It's like a binary, like companies do this or they don't.
01:10:43 · Patrick O'Shaughnessy, Gavin Uberti
[01:10:43] S0: In the investing world, they all often talk about variant perception, something that you see or believe that others don't. Right? And that perception creates the opportunity. I think I've invested, I don't know, five or so times in Etched. And every time when you do it, stakes are getting bigger and bigger. It does get a little scarier and scarier. And because you guys have been so quiet in the marketplace, I think it's very easy to dismiss you. As the stakes get bigger and bigger, those dismissals are harder to hear. I do think betting on something that you see when what you hear from the outside world is very different. That perception gap equals opportunity. Exactly. The last thing I would say is the accumulated evidence of your guys' and your team's ability to solve seemingly impossible problems is one of the most interesting things a company can have. It's like a binary, like companies do this or they don't. [01:11:35] S1: That's the thing that's a big advantage of people who have been here for a long time. You get some new joiners who are scared shitless. You see a thing like this, and there are old timers who've been here for all of two years, smoking cigars in [01:11:47] S0: the trenches. [01:11:49] S1: Another one. Another one.