#863: Elad Gil, Consigliere to Empire Builders — How to Spot Billion-Dollar Companies Before Everyone Else, The Misty AI Frontier, How Coke Beat Pepsi, When Consensus Pays, and Much More

0:00 Hello, boys and girls, ladies and germs. This is Tim Ferris. Welcome to another episode of the Tim Ferris Show, where it's my job to deconstruct world class performers to try to tease out how they do what they do. And my guest today is a lad. Gill. And I have his official bio in front of me, but let me just say that he is one of the most Impressive investors and thinkers. I have ever met. He repeatedly identifies the right founders

0:26 In the right markets before anyone else And then materially helps them to win. And there are many different examples of this, but before the AI rush. He wrote checks into perplexity, Harby, Abridge, Open AI. This was before The broader market really reoriented around LLMs. And that's just the most recent wave. He's done this over and over again. 40 plus. Unicorns.

0:52 Which is just insane when you think about it. And Once you're lucky, twice you're good, 40 plus times. I don't even know where that places you, but it's certainly a lead. So Alad Gill, you can find him on X and all social at Elad Gill, spelled E-L-A-D G I L website, Elad Gill. Is CEO of Gillin Co, a multi-stage investment firm, holding company, and operating company working on the world's most advanced technologies. Alad is a serial entrepreneur, operating executive, and investor or advisor to private companies, including Airbnb, Anderil, Coinbase, Figma, Instacart, OpenAI, SpaceX, and Stripe. He was previously VP of corporate strategy at Twitter and started mobile at Google. He was the founder and CEO of Mixer Labs and Color. Aladd is the author of the bestseller High Growth Handbook Scaling Startups from 10 to 10,000 People. I'll leave it at that.

1:43 Without further ado, please enjoy a very wide ranging, and I think very timely, very important conversation with none other than Lodgill. Optimal minimal. At this altitude, I can run flat out for a half mile before my hands start shaking. And then I also do post some questions. No se...

2:04 a cybernetic organism living tissue over metal mental skeleton. Aladd, nice to see you. Thanks for making the time. Appreciate it. And I thought we could begin with something we were chatting about or you were explaining before we started recording, which is A new phenomenon of sorts. Could you explain what we were just talking about? Oh yeah. We we were just talking about some of the acquisitions that are happening in the AI world. You know, we saw that XAI just got an option.

2:40 to effectively purchase cursor, it looks like obviously scale was You know, sort of partially taken by Meta. There've been a variety of these sort of deals that have been happening over the last year or two. And separate from that, we're just talking about what does that mean for the AI resource community and the AI community in general. And I think one of the interesting things that's happened over the last

2:59 year or so is meta really started aggressively bidding on AI talent, which was a very rational strategy, right? They're gonna spend tens of billions of dollars on compute. So it made sense to have a real budget to go after people. And normally what happens in tech is A single company will go public. And a bunch of people from that company will be enriched, and then a subset of them will continue to be heads down and working really hard and focused on their original mission.

3:22 And a subset of people start to get distracted. They may go and work on passion projects for society. They may get involved with politics. They may Go start a company, they may just kinda check out and hang out or go to the beach kinda thing. And what happened recently is because of the meta offers and then all the other major tech companies having to match offers for their best researchers. You know, somewhere between fifty and a few hundred people effectively had an IPO, but as a class of people. It wasn't like they were at one company.

3:48 They were spread across Silicon Valley. But all of their pay packages suddenly went up dramatically in the experience equivalent of an IPO. And that's really unusual. It's kind of the personal IPO. And the only time in history I I can think of where I've seen it happen before is in crypto. Where a bunch of the really early crypto holders or founders suddenly as a class all went effectively public in twenty, I guess, seventeenish.

4:08 You know. And then again more recently This is really interesting, right? It's kind of under discussed. It it may not have huge long term implications, but it does mean a subset of people will Change what they're focused on, try and do big science projects to help humanity, you know, work on AI for science maybe, maybe some people will go off and

4:25 Do personal quests or you know, things like that. Yeah, or just quiet quit and do lots of drugs and Chase vices, right? I mean there's that too. In that case. Right. You look around, say Austin, you've got the Dellionaires, right, which refers to Dell, post IPO, early employees, and so on. But as a class of people when that happens.

4:44 I suppose we don't know how. how large or how long term the implications are, but there seem to be implications. And I know only a few people. Who I would go to as Technical enough.

4:57 And also kind of broad enough in their awareness and networks to watch AI. To the extent that someone can watch it comprehensively, I would put you in that bucket. And you wrote this week just to talk about some of the other kind of elements at play here, the compute constraints that AI labs are facing. One to five years. This is in a piece people should check out random thoughts while gazing at the misty AI frontier. Good headline, by the way.

5:24 Very dramatic. Yeah, very dramatic. I love it. It's very evocative. Before we move to the compute constraints,'cause I do want you to Top to that next. But for people who don't have any real context on the talent wars. And what you were just

5:38 Mentioning earlier with meta like On the high end, what do some of these pay slash equity packages, compensation packages look like that are getting offered? I don't have exact knowledge of the full range and everything else. The rumors and the things that have kind of made it into the press, the claims are that You know, these things are between tens of millions and hundreds of millions of dollars per person. And

5:59 Again, it's a very small number of people who would get anything that's quite that outsized. But I think the basic idea is we're in one of the most important technology races of all times. And you know, the faster that we get to sort of better and better AI, the more economic value will effectively show up. And therefore people are really willing to pay in an outsize way for the handful of people the world's best at this thing.

6:22 And you know, five, ten years ago these people were like, Well compensated but it was a completely different ball game. The never just wasn't the core of everything that's happening. in technology, but also honestly societally and politically, and you know, for education and health, like it's gonna have all these really broad And I think largely positive implications for the world. But it is the moment of transformation. And so suddenly these pay packages are going way up. What are the

6:44 Compute constraints that you discussed in your recent piece. All the different people call them labs now. That's OpenAI, that's Entropic, that's Google, that's XAI, et cetera. All the labs are basically training these giant models. And effectively what you do is you buy a bunch of tips from NVIDIA. And you're actually building out a system. Yeah, you have Memory from Hinex and Samson and other places. You're building a data center.

7:08 There's all these things that go into building these big systems and data centers and everything else. And you basically have cluster of hundreds of thousands or millions, or you know, the scale keeps going up. of systems that you're buying from NVIDIA and from others. Google has their TPU, there's other, you know, other systems as well. Yeah, and You're using that to basically train an AI model.

7:28 And what that means is you're running Huge amounts of data against these big clouds. And eventually the crazy thing is your output or your model is literally like a flat file. It's like outputting a tech stock or something. And that tech stock is what you then load to run AI. Which is insane if you think about it. You use a giant cloud for months and months and months and your output is like a small file.

7:49 Ha. And that small file is a mix of representing all of humanity's knowledge that's available on the internet. Plus logic and reasoning and other things built into it. And you can kinda think about that in the context of your brain, right? You have You know, three or four billion base pairs of DNA, and that's more than enough to specify everything about your physical being, but also your brain and your mind and how it works and how you

8:12 can see things and talk and, you know, taste things and all your senses and everything's just encapsulated in these very small number of genes, actually. And so similarly you can encapsulate all of human knowledge into like the slot file. Effectively. Right. How do you think about the constraints then? What are the constraints? Every year the constraint on

8:30 Building out these big clouds to train AI. And then also what's known as inference, where you're actually using these chips to run the AI system itself. You need lots and lots of chips from NVIDIA to do this or TPUs or others, but then you also need other things. You need packaging to actually be able to package the chips. And so there's a whole supply chain around building out these systems.

8:48 And different parts of that supply chain have constraints of them at different times. And so right now the major constraint is memory. or a specific type of memory that's largely made by Korean companies, although there's some broader providers of it. And people think that that memory constraint will exist for about two years, maybe plus or minus. Because ultimately the capacity of those companies has been lower than the capacity for everything else in the system. People think other constraints in the future may literally be building out the data centers or power and energy to run these things, right? But for today it's this memory.

9:19 And so everybody in the industry is constrained in terms of how much compute they can buy to throw out these things. And so what that does is it creates a ceiling. On top of how big you can scale these models up in the short run. 'Cause every lab is buying as much as it can, a bunch of startups are buying as much of this computer as they can. And everybody's constrained.

9:37 What that means though is you have an artificial ceiling on how big a model can get in the short run and how much inference can run or how many things you can actually do with AI right now. And that also means that you're effectively enforcing a situation where No one lab can pull so far ahead of everybody else because I can't buy ten times as much compute as everybody else.

9:56 And there are these scale laws that the more compute you have, the bigger the AI model you can build, and in many cases the more performing it can be eventually. And so that may mean that over the next Two years ish, all these labs should be roughly close to each other because nobody has the capacity to pull out. And when the constraint comes off, there is some world where you could make an argument that suddenly somebody can pull far ahead of everybody else. So right now OpenAI, Anthropic, Google, you know, they're reasonably close in terms of capabilities, although some will pull ahead on one thing versus another.

10:23 That should roughly continue everybody thinks for the next at least two years because of this. So Google is also Constrained. Bye. The memory from Samsung, Micron, et cetera, they're similarly constrained as the other players.

10:37 Right now everybody is similarly constrained. And you know, a subset of these lobs either are already making their own Chips or systems like Google has TPUs and other things. Amazon has actually built its own Chip's called Triniums.

10:50 And so There's basically like different systems for different companies, but fundamentally all of them are limited in terms of how much they can either Manufacture themselves, purchase themselves.

11:01 And a year or two ago the main constraint was packaging, now it's it's memory. Two years from now, who knows, maybe it's something else, right? There we constantly are hitting bottlenecks as we're trying to do this build out. This is probably gonna be a naive question because I'm a muggle. And not able to write technicals or anything approaching that. But

11:19 It seems to me that I'm not the first person to say this. We're better at forecasting problems than solutions, potentially. And so for instance, way back in the day the uh price per gallon of gasoline or petrol goes above a certain point. Okay, people are forecasting doom and destruction. But past a certain price per barrel suddenly new means of extraction became feasible and there were investments made in things like fracking and so on. Is there

11:47 Sort of a plausible scenario in which there is some type of work around. Everyone. Along those lines, if that makes any sense. I don't know. Maybe there isn't. As far as I know there so far at least is not. Yeah.

12:00 Part of that is because of the way that some of these things are built and it's basically the capacity that you need, for example, for memory is basically a type of fab. And say You need time to build out the fab and to get the equipment and put the lines in place. So it's a traditional sort of cap axe into infrastructure cycle.

12:19 Yeah. These companies basically underinvested in that. Because they didn't quite believe the demand for counts that other people had around the stuff. Now they're trying to get that out. And so it's one of these things where everybody keeps saying, Well, yeah, it's growing so fast, how can it possibly keep growing at this rate? But it keeps growing at this rate, right? It just keeps going.

12:37 And that's because its capabilities are so impactful and so important. And so you look at the revenue of these companies. It's interesting. I can send you the chart later, but Jared on my team pulled together a graph of how long did it take for companies to get to A billion dollars in revenue and then from a billion to ten billion and then from ten to like a hundred, right? And there's only a small number of companies that have ever done that.

12:57 And you can literally look by generation of company how long it took. And so for example, I can't remember it's ADP or somebody, it took'em, you know thirty years to get to buy in revenue or whatever it is. And Anthropic and opinion, I did that in like a year. For Google it took

13:11 four years or whatever. I don't remember exactly what the numbers are, right? But it was kind of like as you go through these subsequent generations, it gets faster and faster to get to scale. Right now. Open AI and Entropic are each rumored to be roughly around thirty billion dollar run rate. That's crazy. And that's point one percent of the year.

13:27 U S G D P So Yeah, I probably went from zero to half a percent of GDP, at least as as a revenue contributor. And you extrapolate out and if they hit a hundred billion in revenue in the next year or two years, whatever it is. then we're getting close to a place where each of these companies is a percent or two of GDP.

13:46 That's insane if you think of bananas. Yeah. It's bananas. That doesn't include like the cloud revenue for Azure for doing um AI stuff or Google G C P or Amazon. Like it's just those two companies. It's insane. I

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17:23 I would love to dig into your thinking'cause you're you're one of the best kind of first principles and also systems thinkers I've met. And I love having conversations with you because I always learn something new and it's not necessarily a data point, but often it might be a lens. Or a framework for thinking about different things. And that framework evolves for you as well, right? But for instance, if I was looking at s this interview you did, this is a while back. With first round capital and you're talking about sort of market first and then strength of team second, but you talked about passing on investing in lift series C. This was at the time.

17:58 And ultimately part of it seemed to hinge on winner take all versus oligopoly. versus other and I'm curious how you are thinking about that within the AI space because I mean you started skating for that puck. Before almost anyone I know.

18:17 If not everyone I know. And how are you thinking about that? And this ties into something that you mentioned in your piece that I haven't heard. Anyone else talking about but I'll give the sentence as a cue. I don't think you'll need it, but founders running successful AI companies should all take a cold hard look at exiting in the next twelve to eighteen months, which might be a value maximizing moment for outcomes. And you sort of went back to the dot com bust and the sort of survival rates and then breakout rates. Could you just explain that sentence and then also

18:49 Explain how you're thinking about whether you think this will be a winner's take all oligopoly. Like what type of dynamic you think emerges. In terms of the precedent. And that doesn't mean it's gonna happen here, but if you look at every technology cycle. Ninety, ninety five, ninety nine percent of the companies in that cycle go bust. And that dates way back even to what was high tech a hundred years ago, which was the automotive industry in Detroit. Dozens of

19:13 car companies and hundreds of suppliers and it collapsed into a small number of auto companies. And so this is not a new story during the internet. Cycle or bubble of the nineties. Four hundred and fifty companies went public in ninety nine. For hundred fifty or so companies went public in the first few months.

19:28 Of two thousand. And so that was nine hundred companies and say another you know, five hundred to a thousand went public in the couple years before that. So you had somewhere between fifteen hundred and two thousand companies go public. go public, right? So that means they kind of made it.

19:43 And of those, how many have survived? It doesn't. Maybe two dozen. Right. And so that's a out of two thousand companies, you know, one thousand nine hundred and eighty or so went under. Or maybe they got bought for a little bit.

19:57 And so there's no reason to think the AI cycle will be any different. And every cycle's like that. SaaS was like that, and mobile was like that and crypto was like that. So most companies are not gonna make it. A handful will, and we can talk about those. And so if you're running an AI company right now. You should ask yourself what is the nature of the durability of your company.

20:17 And are you one of that dozen or two that are gonna be really important ten years from now? Or is now a good moment for you to sell because what you're doing will start to get commoditized. Or ball be competed by a lab or will be something that the market will shift or the technology will shift and you'll become obsolete. And there's a handful of companies that will continue to be great. They should never sell. They should never exit. They should keep going.

20:40 But there's probably a lot of companies that now or the next twelve to eighteen is the best moment for them possible in terms of the value that they'll get for what they're doing. And for every company. There's a value maximizing moment where they Hit their peak.

20:53 And it's usually a window. Usually you know, six, twelve months where What you're doing is important enough, you're scaling enough, everything's working before some headwind hits you. And sometimes it's very predictable. that that handweight is coming and you can see it. And often you see it in the second derivative of growth, like How fast are you growing starts to plateau a little bit.

21:11 And you're either gonna keep going up or you should sell. And so that's really what that's meant to be. I'm incredibly bullish around AI, as you can tell from the rest of the conversation. And so it's it's lots about the transformation that's happening overall because of the technology. And more that only a handful of companies are gonna continue to be really important. And so are you one of them or not? You're one of them you should never, ever, ever sell.

21:31 So what are the characteristics of that handful? The handful that have durable advantage, right? Because you look back at two thousand, it's like man. What would you have used to try to pick out Google and Amazon? Yeah. And I'm not saying that's the best Comparator but with In the avalanche of AI companies.

21:52 Which are those that you think have durable advantage? I mean, of course some of the name brand labs come to mind. Maybe they become the interface for everything else. Who knows? But How would you answer that in terms of either shared characteristics or actual names? What sets apart the handful that you think.

22:11 We'll make it. The core labs will be around for a while, so it's open AI and through Google, barring some accident or disaster or you know, some blow up, but It seems like they're in a really durable spot. And to your point on like market structure, I wrote a A substack posts I don't know, three years ago or something, predicting that that would probably be an oligopoly market and there'd be a handful and be aligned with the clouds. Roughly kind of what happened. I mean

22:34 There's meta and there's X AI and there's other players that may change this. It didn't exist when I read that post. But it feels to me like in the short run that's an oligopoly. Like there's no reason for that to be a monopoly market. Unless one of them pulls ahead so much in capabilities that it just becomes the default for everyone and that could happen. But so far it hasn't. And again, this could constraint may prevent that in the short run, or at least Provide an asymptote on it.

22:54 As you move up the stock and you see, well, there's different application companies, you know, there's Harvey for legal, there's a bridge for health, there's Decagon and Sierra for customer success, you know, there's these different company's pro application, there's three or four lenses that you can look at. One is if the underlying model gets better. Does your product or service get dramatically better for your customers in a way that they still want to keep using you? Second, how deep

23:16 And broad are you going from a product perspective? Are you building out multiple products? Are they all integrated in a cohesive whole? Is it really being built directly into the processes in a company in a way that it's hard to pull out? Now, often the issue for companies in adoption of AI Isn't how good is the AI. It's how much do I have to change the workflows and the ways that that my people do things. In order to adopt it.

23:38 It's about change management usually, it's not about technology. And so if you've been able to embed yourself enough into workflows and how people do business and how they work and how everything else kinda ties together. That tends to be quite durable. Are you capturing and storing and using proprietary data? Sometimes that's useful. I think data modes in general are overstated.

23:56 But I think sometimes it can be actually quite useful and that's usually the system of record view of the world. So you know, there's a handful of criteria around like will this thing be long term? Defensible or not? Yeah. And the application level that's often. You know, one potential lens on it.

24:11 So question if people are listening to this and they are in the position of perhaps A founder who should consider identify their kind of short period of maximum valuation and perhaps hitting the parachute in some way. What are the options? Because I think of some of these companies, I'm not gonna name them, but there are multiple companies that have multi billion dollar valuations.

24:35 There's Seems to be again from a mostly lay person perspective, i.e. me, that the labs Probably can build. What?

24:47 They are currently selling without too much trouble. Do they aim to be acquired by a lab? In which case there's sort of a build versus buy decision for the lab itself. Are they aiming for one of Not the Open AIs are anthropics, but maybe somebody who's

25:04 Trying to get more skin in the game. Like Amazon or fill in the blank. What are the exit options? I think there's a lot of exit options and the thing that's crazy right now is if you go back ten or fifteen years

25:16 The biggest market cap in the world was like three hundred billion. The biggest tech market cap was I don't know, two hundred ish or something. I think the biggest one at the time was Exxon or somebody, right? Like fifteen years ago. And over the last

25:29 Ten or fifteen years, what happens is we suddenly ended up with these multi trillion dollar market caps, which everybody thought was nuts at the time, but things will probably only get bigger. There'll probably be more aggregation versus less into the biggest winners. And There's more and more companies who have these market caps between, say, a hundred billion and a few trillion. In a way that's just unprecedented.

25:48 And that means there's enormous buying power. Because one percent of three trillion is thirty billion. Right. One percent and pay thirty million dollars for something, which is insane, right? That's that's really unprecedented. And that means that these really big acquisitions can happen. For the companies that I'm imagining again, I don't want to name names that may have

26:08 Seem to have a limited lifespan. When I'm in these small group threads with friends of mine who are Oftentime not always, but I'm in a bunch of them and when they're tech investors, very successful tech investors, and I'm like, Okay, these five companies, you've got ten ships. How would you allocate your ten ships, right? There's certain companies that can consistently get zero. Even though they're Reasonably well known.

26:29 Why would one of the Labs buy one of those. Depends on what it is. And it may be a lab, it may be one of the big tech incumbents, an Apple, Amazon. Google's kinda put things. There's Oracle.

26:43 There's Samsung, there's Tesla, there's SpaceX now in the market doing things that you know, there's a bunch of different buyers of different types. There's Snowflake and Databricks, there's Stripe, Coinbase if you're doing financial survey. There's just a ton of Companies that actually are quite large. That's kind of the point. And so often you end up selling to one of four things, right? You can sell to one of the big labs or hyperscalers or giant tech companies. You can sell to somebody who cares a lot about your vertical.

27:09 So for example, a Thomson Reuters if you're doing legal or accounting or things that are kinda related to that. I think actually one thing that doesn't happen enough is merger of competitors. Particularly private companies where you can do that. Because ultimately If your primary vector is winning.

27:24 And you're neck and neck with somebody and you're competing in every deal and you're destroying pricing for each other. Like maybe it's better to just merge, right? That actually was X dot com and PayPal in the nineties, right? Elon Musk. Yeah, we're running different companies and they merge. People doing this, why fight?

27:40 Yeah, or Uber Lyft way back in the day, right? That might not have been a merger, it might have been an acquisition. Yeah, and the rumor is that that almost happened and then, you know, the Uber side walked away from it. But all the money that Uber spent on fighting Lyft for all those years maybe would have been better spent just buying them. Maybe not, right? I don't know the exact math. But Often it

27:58 actually does make sense to say, you know what, we'll just stop fighting it out and we'll just combine And just go win, you know,'cause if the primary purpose is to win the market, you're already fighting all these big incumbents that already exist anyhow. So why why make it even harder? As you know, we talk about this a lot, but we'll talk about you with your investing hat on. But before you even put that Let's call it full time investing hat on.

28:21 You had a lot in your background that may or may not have helped you and I'm curious if you look at your biology background, the math background. Do you think any of those things or other Elements. materially contributed.

28:37 to how you think about investing that has given you an advantage. In I suppose there are different stages to kind of winning deals, but Sometimes they're not crowded but let's just talk about The selection process.

28:50 The math stuff helped me, I think, in two ways. One is It's helped me with certain aspects of like technical or algorithmic Cs and understanding it. And sometimes that's useful. In the context of how certain things work in AI or things like that, or just fluency of Numbers and data and I don't know what to call it, nerd language or something.

29:08 And I did the math degree honestly just for fun and I think that's actually the thing that was helpful. You know, and we did an undergrad degree in math, so I didn't go that far with it, but I did the very sort of abstract pure math stuff. And I think that was a good forcing function of how to really think logically. Step by step about things. You know, roughly the way that At least I

29:27 Learnt how to do proofs was You do the l logical sequence, but then sometimes you do these intuitive leaps and then go back and try and prove it to yourself. Or flesh out the reasoning behind that intuitively. And I think sometimes investing is a little bit like that. When did you first have the inkling?

29:44 That's You could be Good at investing. And that could be investing. It could be Maybe within the context of our conversations.

29:54 startups and angel investing. When did you first Kind of go. Yeah, maybe I could be good at this. Was there a moment or a deal Or anything like that. That's

30:05 Comes to mine. Uh not really. I'm really hard on myself, so You know, even now I second guess myself a lot. Somebody was telling me that the two people that always beat themselves up the most in hindsight is me and This one other person.

30:19 Is another Well nine founder slash investor. And so I think You know, I don't think there's a single moment where I'm like, wow, this makes sense for me to do. I think it just kind of organically kept going because I was getting into some very strong companies and then That allowed me to sort of continue what I'm doing. Yeah. I wish I hadn't done it like that.

30:37 God damn it. You need to revise your Genesis story like every every good founder. So Yeah, ever since I was seven, I've been thinking about investing in technology. Right. So getting into those deals. What allowed you to get into those deals, right? Because some people have an informational advantage and they put themselves in a position to have an informational advantage, right? And I think that had I not Don't want this to be a leading question, but it's like had I not moved to Silicon Valley When I did, like two thousand.

31:08 And then subsequently stayed there, moved to San Francisco specifically. Like nothing that I was able to do in Angel of Besting would have been possible. But there's more to your story because a lot of people move there. With hopes of startup riches in whatever capacity. Not saying that that's why you moved there. But What was it that allowed you to get into those deals, right? Be there are certain things That come to mind?

31:32 based on our prior conversations, but I'll just leave it at that. Like why were you able To get into or select those deals. I think it was what happened early and what happens now, and I think those two things are different. I think To your point, the single most important thing for anybody wanting to break into any industry.

31:50 is go to the headquarters or cluster of that industry. Like move to wherever that thing is. And all the advice of you can do anything from anywhere and everything's remote is all BS. And you see that for every industry, not just tech. You know, if you wanted to get into the movie business, people wouldn't say You know, hey, you can write a film script from anywhere, you can digitally square from anywhere, you can edit it from anywhere, you can film it anywhere, like

32:14 Go to Dallas. They say. Go to Hollywood. And if you wanna do something in finance and you're like, Well, you could raise money from anywhere and come up with trading strategies and a hedge fund strategy from anywhere and you could do it from anywhere. You know, people wouldn't say, Hey, go to uh you know, whatever or Seattle they'd be like, Go to New York or go to

32:29 X financial center. So the same is true for tech. Shran and my team has been performing this sort of unicorn analysis of where is all the private Market cap aggregating for technology. And traditionally about half of it's been the US and then half of that has been the Bay Area. But with AI, ninety one percent of private technology and market cap is the Bay Area.

32:49 Ninety one percent of the entire global set of AI market cap is all in one You know, my and Area. So if you want to do stuff in AI, you should probably be in the Bay Area. Probably the secondary place is New York and then after that it it drops off a cliff, right? And really it's the area.

33:07 If you want to do defense tech, you probably should be in, you know, Southern California, close to our SpaceX and Anderl are in sort of Irvine and Orange County, et cetera, or El Segundo. There's a lot of startups there. What do you want to do fin tech in crypto, maybe it's New York. But the reality is these are very strong clusters. So to your point number one is I was just in the right location. I was in the right networks and I default was You know, I was running a startup myself. I was at Google for many years and then I left to start a company and people just started coming to me for advice.

33:35 And the way I ended up investing in Airbnb is I was helping them when they were eight people or something raise their series A. And I introduced them to a bunch of people and helped with some of the strategy there in very light ways, right? They would have done it without me. And they said, Hey, at the end of it, do you want to invest a little bit? I said great. That sounds wonderful. This is very organic, or the way I invested in Stripe is I'd sold a sort of infrastructure early API company to Twitter. And when Twitter was say ninety people or so.

34:00 And I sent an email to Patrick, the CO of Stripe, just saying, Hey I've heard great things about you, and I really like what Stripe is doing, and I would use it for my own startup. And I sold this API company myself. Do you want to just talk about this stuff? And so went on a couple of walks and then a week or two later he text me and he's like, Hey, we're doing around you want to invest? So the first few things that I did were very organic where the founders were like want you on board. I didn't think oh I should be an investor and I'm gonna chase things, I'm gonna I just like really like talking to smart people and

34:27 I liked working on certain business problems and I love technology and its translation of the word. And so it's very like Yeah, I was just a nerd and I I met other nerds and we get hit it off. It just struck me that I'm sure people have heard or I'm sure you've heard this before, but you know, if you want money, ask for advice. And if you want advice, ask for money. It just struck me that it kinda goes the other way around, too. It's like if you offer a bunch of advice, oftentimes you get to give money. And if you try to give money, you might get listed for advice. Yeah, yeah, it's a good point. When did you write the High Growth Handbook?

35:02 When was that published? It's a while ago now. It's probably like seven ish years ago, something like that. Seven years ago. All right. We're gonna come back to that. In a minute. You were in the right place geographically speaking.

35:13 Right, you were in the center of the switchboard. Uh and like you said, these Some of these initial kind of stand out investments came about very organically. And What I'd be curious to hear, because you also said yourself not too long ago that there's what I did then, there's what I did now. There's also what you did in between, right, along the way. And

35:34 I'm wondering, for instance, if you would still stand by this. This is from that first round. Interview I was mentioning. As a general rule, when I make investments, it's market first and the strength of the team second. And there's more to it. But would you still agree with that? Ninety percent, yes. Every once in a while you meet somebody exceptional and you just back them, or something maybe so early. Like when I I led the first round of perplexity, like the very, very first round. And the way that came about was

36:00 Arvin the CEO just I think he like ping me on LinkedIn. Literally. And this was when nobody was doing anything in AI and he was like an open AI engineer or researcher and he's like, Hey, I'm at open AI, which nobody cares about at the time. And I'm thinking of doing something in AI and I heard that you're talking about this stuff and nobody else is talking about it, and can we meet up? And so we just started meeting every two weeks and brainstorming. And then that led to like investing in that. And that was kind of a a people first thing where he was just so good. And every time we talk, he'd show up.

36:28 A week later with the thing that we discussed built. Like who does that? Yeah, yeah. That's a good sign. So good. Or You know, the way I ended up investing in Anderil was

36:39 You know, Google shuts down Maven, which was their sort of defense project. And so I think well if if the incumbents are gonna do it, what a great Place for startups to play. 'Cause there's been a long history of the you know, Silicon Valley and the defence industry. That's HP and that's a lot of the, you know, early brands.

36:56 And so I was just looking for something, there's somebody to work on this area and it was very unpopular at the time. And I ran into I think it was Trace Stevens who's one of the co founders of Vanderbilt is also a founder's founder at some lunch or something else again, right Said E to B N. And he said, Oh, I'm working on this new defense thing and I said, Amazing, let's talk about it. Sometimes it's just looking for these things too in a market and sometimes it's people. So Andrew was looking for a market and then finding amazing people.

37:21 Perplexity was kind of in between where it was like I was looking at everything in AI. 'Cause I thought it was gonna be incredibly important, but not very many people were. And then I just ran across an exceptional individual. And that's when I funded OpenAI. That's when I funded Harvey, which is the early legal thing. I funded a lot of really early stuff because they were the only people doing anything. In this market that I thought would be really important.

37:42 Let me come back to a few things you said. So you mentioned the perplexity founder, or later the founder, who said you're talking about this stuff, right? Or he heard or read or found you talking about this stuff. Where was that? Was that post on your blog? Was it somewhere else? How did he actually Find you talking about anything. Yeah, I mean I think he pinged me in part because I was involved with a bunch of the prior wave of technology companies, Airbnb, Stripe, Coinbase. Instacart.

38:09 Square, a bunch of stuff like that. And so I think at that point I was already known as uh Founder and investor. But then on top of that, I was just trolling AI researchers and just asking them about what's going on because it was so interesting. There's a bunch of art that was being done with these things called GANs at the time, these generative adversarial networks.

38:27 And so I was playing around with that. I tried to hire engineers to build me effectively with my journey'cause I just thought it'd be really cool to make it easy to make AI art. Let me pause for a second because this is my second question and it's a good time. When you mentioned, you know, AI, I thought it would be incredibly important. Yeah.

38:44 The Indicators of that. What was the smoke in the distance where you're like, Oh That's an interesting direction. I think there's two or three things.

38:53 AI was one of those things that people always talked about. So when I was doing my math degree, I took a lot of kind of theoretical CS classes and there are the early neural network classes and things like that. And The math behind it. And and so there's always this promise of building these artificial intelligences of different forms. And one could argue Google was a first AI first company. And back then it was called machine learning. And it was, you know, different technology basis in some sense. Yeah.

39:16 I think twenty twelve was when AlexNet came out and there's this proof that you can start scaling things and have really interesting characteristics in terms of how the I systems work. And then twenty seventeen is when the team at Google invented the transformer. Architecture. Which everything is based on now, or roughly everything. And so for example, if you look at GPT for chat GPT, the T stands for Transformer. And around twenty twenty ish.

39:39 I think was when GPT three came out. And that was such a big step from GPT too. And it still wasn't good enough to really do stuff with. But you're like oh shit, the scaling wall papers are out. The step function and capabilities was huge. You suddenly have a generalizable model.

39:54 available via an API that anybody can ping. And so just extrapolate that out to the next step and this is gonna be really important. So it's basically looking at that capability step and playing around with the technology and then reading the scaling law papers. Or just in general, the scaling laws seem to work for everything. And you're like, wow, this is gonna be really, really important. So let me start

40:13 Getting involved with it. Do you think you Would have or could have done that without a mathematics background. I'm guessing there were probably some other folks, but that leads me to the question of like How are you ingesting finding and ingesting that?

40:28 Was it the talk of the town? So it was in a sense like within your social circles and the networks that you're a part of. It was open discussion, so you were engaged with it, or are you ingesting vast quantities of information from different fields? And this happened to be something that really caught your attention. I guess the three things. I mean, I've always ingested a lot of information from a lot of different fields just'cause I like learning about stuff. Yeah, and I was always this mix of like math and biology and You know, anime and art and other things. So, you know, it's always kind of a mix. And then

40:58 It was something that my friends were talking about, but it was a bit more like toy like. Oh, this is cool and look at what came out and but most people didn't then extrapolate. It's kinda like early crypto or Bitcoin. Like everybody was talking about it, but very few people bought it. And so I think that was part of it. And then third, honestly, I just thought it was really good stuff that I kept playing around with. This is back to the GAN stuff and the art where these different models would come out and you could mess around with them. And you know, one of the things that's really under discussed in terms of the importance of it relative to this wave of foundation models and AI and everything else is The way AI or machine learning used to work.

41:31 is your team at a company or wherever else would go and there'd be what's known as an ML ops team, operations team, whose whole thing was like helping you set up all the data and the pipelines and everything to train a model. And you train a model that was custom to your use case and what you're trying to accomplish. And then it was You had to build a bunch of internal services to interact with that model. So it's a huge pain.

41:51 Get to the point where you had a working ML system up and running in production. And then suddenly you have a thing where you just do an API call. So with a line of code or a few lines of code, anybody anywhere in the world can ping it, but not just that, it's generalizable. So it's not just specialized to one use case. Like spell correction or whatever.

42:11 You can use it for anything. And it has all of the internet embedded in it in some sense in terms of the knowledge base. And it can start having these advanced reasoning capabilities. And so one of the most important things is hey, you can get it with a couple lines of code. You don't have to go and build an ML ops team. You have to host it, you have to interact with it. You don't have to do all this extra stuff. It just works. That's really important. It's huge.

42:32 Yeah. It's hard kinda hard to overstate. Just a quick thanks to our sponsors and we'll be right back to the show. As many of you know, for the last few years, I've been sleeping on a Midnight Lux mattress from today's sponsor, Helix Sleep. I also have one in the guest bedroom downstairs, and feedback from friends has always been fantastic. It's something they comment on without any prompting from me whatsoever. I also recently had a chance to test the Helix Sunset Elite.

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43:44 Back in the day, this was 2004 maybe, I had someone approach me in a coffee shop and say, Good day, mate. And introduce himself. Who was that? It turned out to be the founder of AG1. Believe it or not, way back in the day. And people often ask me, what has survived after 20 plus years of testing every supplement under the sun? Just about what actually has stayed in the rotation, in the toolbox. This episode sponsor, AG One, is at the top of that very Very short list. I started using it close to 15 years ago when it was still called Athletic Greens. I put it in the four hour body, didn't get paid to put it in there, and it's outlasted almost everything else that I've tried. One scoop covers your nutritional bases, right, fill the gaps. You want to eat good food, of course, but 75 plus ingredients, including probiotics, B vitamins, and whole food nutrients. Act as

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45:08 That's drink A G one. dot com slash Tim. So

45:16 I have a million questions for you. The problem with this is like the embarrassment of riches of direction so we could go So I am using in my team Claude Code and assorted tools for all sorts of stuff right now. And one of them It just so happens. Overlaps with an area of great skill for you and experience, which is

45:36 Angel investing. So this is the first time where I feel really enabled. To do and there is some manual effort involved, as you might imagine, but to go back and do an analysis of twenty years of angel investing. Do any number of things. And I suspect that a lot of what interests me is not particularly useful. Like doing some counterfactuals. What if I had held each of these for three years, for five years, for whatever. I mean, that's kind of like just Opus Day whipping myself in the back for the most part, but

46:06 In doing an analysis like that There are certain things that immediately come to mind for me that might be of interest and I want to hear what You would do? If you would even do this. I mean, part of it is frankly just curiosity are the stories I tell myself about this True, or not. So I'm interested, like who made certain introductions.

46:24 Are there certain people who just took me there? Basically, people in hospice care and like ship them over as like a last ditch effort. Are there people who actually sent me good stuff consistently, et cetera, et cetera. So there are a million and one ways I could try to interrogate The data and enrich it. We're doing a pretty good job of enriching it. I mean, Claude is and other tools, you know, OpenAI is very good at this. What are some of the more interesting questions or lines of

46:51 Examination, you think, looking back whatever it is. In my case it's about roughly twenty years of stuff. Yeah. You know, the weird thing I've been doing is uploading pictures of founders and asking the models to predict if they'd be good founders. Oh wow. Because if you think about it.

47:06 We do this all the time when we meet people. We quickly create an assessment of that person. And their personality and what they're like. And there's all these micro features. Like Do you have crow's feet by your eyes, which suggests that your smiles are genuine? And what does that imply about the sense of humor you have? Or furred your brow over time and what does that mean? You know, so there's all these like micro features. And when you meet people, you actually can get a pretty quick impression of them pretty fast. It doesn't mean it's correct, right?

47:32 But we actually do this really fast as people. Mm-hmm. So I have this whole like set of prompts that I've been messing around with just for fun. Around can you extrapolate like w a person's personality based off of a few images. And therefore can you be predictive about their behavior in any way. I think that's fun, right?

47:50 Yeah. Are you finding any any signal there? Yeah, it works very well. Wow. So I've been doing the weird shit, right? Practice smiling people. Yeah, yeah, yeah. No, but I think it's interesting, right? Because

48:02 We do this all the time where we read people. And that's part of the prompt. It's like you're a very good cold reader of people based on micro features. And et cetera, et cetera, you know, kinda spell it out. And then based on that, you know, not only give me your interpretation of this person But explain the specific micro features for each thing that you're stating about the person.

48:21 It's amazing. Like imagine what this technology is. It's crazy. And again, I'm not saying it's fully accurate and I'm not saying, you know, it'll be predictive and but It's done pretty well in terms of nailing people and it's even done things like, Oh, this person probably has this type of sense of humor. Or this person probably holds themselves back in most social settings. And then chimes in

48:43 with a witty wry thing that nobody expects or whatever. I mean it's very specific. Very specific. Wow. That's amazing, right? And so I've been doing stuff like that. Which may not be that your question, but I've been finding it really fun, you know. Well, it's related, right? In the sense that and I'm sure I'm missing some steps, but I love angel investing. The dose makes the poison, so there's usually a case.

49:05 To be made. When I get to a certain threshold, I'm like, okay, this isn't fun anymore. Like I love dark chocolate too, but I don't want just to be Force fed. Dark chocolate all day. But and he and I have talked about this. I really do enjoy

49:20 the learning and the sport of it, frankly, and interacting with some very, very smart people. Not all of them work out as far as Found. Ultimately I'm trying to figure out. How to separate Signal from noise and

49:35 Also It's fun to try to use anything. But in this case investing. to sharpen your own thinking, right? And to stress test your own beliefs and the assumptions that undergird some of your predictions, right?

49:47 Things like that. Yeah, I'm just wondering if you've ever done like sort of a retrospective analysis of your startup investing, or if you're like, no, more Mark and Dreeson style. Only forward. You know, early on when I was first starting to invest, I would have this long grid of things by which I would score each company. And then I'd go back and see if it was correct.

50:07 It was roughly correct. I think the hard part is there's a lot of like randomness. And outcomes. You know, there's the the company that sells for a few billion dollars that you thought was dead, or whatever it is, right? Sure. How do you score things like that?

50:20 right now we're in this really weird market moment where trillions of dollars of market cap are all chasing the same prize. And so they're gonna do all sorts of stuff that wouldn't happen normally. And it's rational stuff, in my opinion, but it's just stuff that in any other time would never happen. So it's really hard to account for that kind of thing, relative to all this. I'm much more in the Mark and Riesen camp of like I think very little about the past.

50:43 I think close to zero about my own past, you know, I just in my Let's keep going. And maybe that's bad and there should be dramatically more self reflection. I try to self reflect in the moment, but I don't try to re extrapolate and examine my entire life and decisions and

50:57 You know, if anything. most of the decisions have been ones where I'm really upset with myself for not being more aggressive on something. In other words, I invested in the company, but I should have tried even harder to invest more, even if I tried really, really hard because you know, there's a handful of companies that really matter.

51:13 That's all that kinda matters as an investor. Obviously As a person, I enjoy getting involved with different companies and different founders and helping them, whether the thing works or not, or I think the technology is interesting or whatever. But the reality is from a returns perspective. There's a very clear power law that people talk about, and it's true. And I remember a friend of mine did this analysis, I think it may have been

51:32 Dream Milner is someone where it's like look at all the companies from like I don't remember the exact dates, two thousand or two thousand four until today. And technology. And it was something like a hundred companies drove like ninety something percent of all the returns. And ten companies.

51:48 Total. drove like eighty percent of all returns over a two decade period. Technology. If you weren't if you weren't in that ten companies. You're a bad investor.

52:01 Mm-hmm. Once you start dealing with these power laws and these outsize outcomes and all that, you know. How can you rate that, right? It's basically did you hit one of ten things or not? That's really the rating. That's probably the correct rate for investment. So I Love to Try to focus on some early ish decisions.

52:17 On this podcast because Like you said. The earlier decisions, there's how you did things then, they're how you're doing things now, which isn't to say that one is better than the other, but certainly What you do in the past tends to inform what you're able to do and what you do in the present. And what I'm curious about

52:34 We won't spend a ton of time on this, but it might be interesting to folks is to discuss When you moved from purely doing angel investing yourself. To involving other investors in your deals. And

52:49 There are multiple ways to do this, but The reason I want to ask this is because you did a number of SPVs. I'll explain what that is, special purpose vehicle, but for folks you might be familiar with Venture Capital Firm, they have funds. And They raise let's just call it a hundred million dollars for a fund.

53:09 It can be more or less, of course. Then they invest in a bunch of different companies and then you sort of see Who wins, who loses, and then if there are profits. I guess conventionally, that let's just use the textbook example. The venture capital firm takes twenty percent of the upside and then the

53:25 LP is the investors get eighty percent and the venture capital firm takes a management fee to keep the lights on, although it usually does a lot more than keep the lights on. With the SPVs, it's you're investing in Let's just say, for simplicity, a single company. And There are advantages to that.

53:42 in simplicity for somebody who's putting together a the SPV, but you also have a lot of reputational risk. If you have a fund and you have a couple of losers Your investors don't automatically go to zero. Right, but if an SPV and it goes to zero, that could really hurt you reputationally. And when I look at Some of your early SPVs, which I think included certainly Number of name brands like Instacart and so on. How did you choose

54:09 Which companies to do the SPVs with, right? Because that seems like a very important set of decisions to lay the groundwork for creating optionality for what you do after that. I think To your point, I've always been terrified of losing other people's money. Like I'm fine if I lose my own money. Decision, I'm an adult, it's okay, but I've always been and you know, people give me money are adults or institutions, et cetera.

54:31 Invest on their behalf, but you know, similarly there, I was just terrified of ever losing money for people. And so I've tried over time to be judicious behind. the SPBs that I did early on and the focus was on things that I thought would really be outsized companies. And so that was DearPoint Instacart. It was early Stripe. It was Coinbase. There's a couple of things like that that were amongst my very first SPVs. And the emphasis was very much on do I think this can be a massive thing, you know? And I also do I think there's enough downside protection in some sense that If it didn't work as well as I thought it would still be a good outcome for people. So yeah, I I try to do that very diligently.

55:05 It's interesting because a lot of people ping me for help as they think about becoming investors or they're scouts for a fund, which means basically they're given a small amount of money by a venture capital fund. You know, Sequoia famously has this program, they give people money and then those people invest money. on their behalf and Some of the scouts that I've talked to basically treat it like free money or an option. They're just kinda like, Oh throw out a bunch of stuff, maybe something works.

55:27 And I pointed out to them, hey, if if you actually want to become a professional investor at some point, this is kinda your track record. Mm-hmm. A you're a fiduciary in some sense, so maybe I'll be more careful from that perspective, but B You know, this will establish like your track record and do you want to have a good one or bad one? And how do you think about that? And again, sometimes people just get lucky and they hit the one thing out of a hundred, but that

55:46 More than returns everything and they look great. But it's hard to be consistently good at this stuff or consistently hit great gump. Alright, so I wanna double click on a few things you said and maybe you could walk us through Uh pseudonymous.

56:00 example. It doesn't need to be a named company, but when you're talking about setting your track record, right? You did an excellent job of that before you then went on later to raise funds and so on. And I would love you to perhaps explain some of the things you do in diligence or how you weight things differently and also how you think about like the capped minimum downside. I'm not sure that's the exact wording that you used. in selecting those deals because you could have selected any number of deals.

56:28 On a sort of due diligence level. What's the kind of stuff that you focus on maybe more than others? And what are the things you pay less attention to than others? There's a big difference between early and late things. On the early side To that point earlier, I tend to spend a lot more time on the market than most early stage investors. Most early stage investors say I just care about the team and how good are they? But I've seen I've teams crushed by terrible markets and I've seen reasonably crappy teams do very well. And so

56:54 You know, at this point I think the market is more important, although I think obviously great teams can find their way if they decide to shift around a bit. So I index a lot on market early and that may be customer calls. I maybe just try to understand do I think something could be big? It could just be some intuition around, hey, you know. Defence is really important. Nobody's doing defense. Let me find a defense company. So I tend to induct a lot on that. And relatedly I've tended to avoid science projects.

57:17 And there's some people who get really distracted by wow, this is really cool. It's quantum and it's this and it's that. And I've largely avoided those things. And you know, sometimes I miss things that were really good, but often That was a right call. I actually think SPAC saved the sort of hard tech and science based investing industry because If you look at what happened basically at the market peak. A bunch of spacks took a bunch of companies public that would not have been able to raise money in private markets later.

57:43 And they gave enough money to keep going, but more importantly, they returned a bunch of money to these hard tech funds. And that saved them from going under. It gave them all the retrect. was basically the spack era. So Chamath basically saved hard tech. I mean that seriously, and cheek. And I largely avoided that kind of class of companies. And I'm a thing I'm smart. I would have made

58:00 Money off of it. I just thought there was all sorts of capitalization issues and science risk and market risk and other things to them. For later stage stuff. The hard part often is Everything on paper gets modeled out for a late stage company as a two to three X from that investment.

58:15 Point. Right. Because all the funds that are driving the rounds underwrite against some IRR clock, twenty five percent IRR, whatever it is. And so they all come up with these models and then the models all say all these companies are basically gonna two to three X and the art there. Or the science there, or whatever you want to call it, is is that a point five X company? Is it gonna drop in value or is that a ten X? And how do you know it's a ten X versus a two to three X versus a point five? And that's the harder part of growth investing. And there's a subset of things that you're like, this thing will just keep going.

58:45 And here's why, but often it's not mathematical. Often that's just like Some market dynamic or some core insight or some market share question. And people tend to make that stuff really complicated and they have these really complicated multi page models and fifty page memos and all the rest. And often these things boil down to one single question. What is the one thing I need to believe about this company that makes me think it's gonna continue to be really big? If it's three things, it's too complicated, it's probably not gonna work.

59:12 If it's no things, then it doesn't make much sense. So usually there's one or two things that are really the core insights you need to understand, like The outcome for something. Could you give an example of one of those beliefs for Any company that comes to mind? I mean, Coinbase.

59:28 Part of it was just hey, this is an index on crypto and crypto will keep growing. Because if Coinbase trades every Main cryptocurrency. And they take a cut of every transaction and have enough volume to effectively bought a basket of every cryptocurrency by investing in Coinbase. That was the premise there.

59:43 Stripe it was. They're an index on e commerce and e commerce will keep growing. Back then. Now it's much more complex and there's all sorts of great drivers of its performance. Andrew was hey, machine vision and drones are gonna be important. AI and drones are gonna be important for defense. Well, that was it for the belief, for the core belief. There was like cost plus model versus, you know, hardware margin. You know, Andrew actually had four or five things that were important there.

1:00:07 that were kind of like a checklist for a defense tech company, but for a lot of the other ones it was like E commerce is good. This is probably too inside baseball, but what were the stages of the companies that you mentioned when you created the SPVs? Roughly. Well, I first invested in Stripe when it was like eight people and then I kept following on and I ran out of my own money, frankly. And that's when I started

1:00:29 Doing SPVs. I think I did my first S P and Striper on the series C ish. We're in there. Something like that.

1:00:37 Got it. And were the others more or less similar. Ish, Instacart, et cetera. It's probably roughly in that ballpark C D kind of that range. No. I didn't have funds and everything else and you know, I was putting as much as I could personally into these things. Both earlier, but honestly I just kept going when I could.

1:00:54 When you're looking at trying to determine if something is a point five X or a ten X In addition to the core belief. What are other layers of due diligence that you bring to bear on trying to ascertain that? Where something falls on that spectrum. Oh, I mean, I do enormous due diligence. So, you know, meet with the CFO multiple times, walk through all the financials, walk through the financial model, walk through customers, call customers.

1:01:15 Look at it. Executive team, you know, it's it's a bunch of stuff. My fund is the only one I know that actually does like cash reconciliations where we'll go through and do a cash audit. To look at cash flows for later stage things. So I do enormous diligence. Inappropriate. But the flip of it is

1:01:31 Most of it just collapses into like what's the one thing. So when I work with a company, I actually try to be very fast and straightforward on the diligence in terms of saying let's just talk about A, we need to just make sure financials are correct and you know, like there's the basics, but like Let's collapse it down into one or two core questions, right? That help us understand if this thing will keep going, not here's thirty pages of questions that don't matter. Right.

1:01:56 They're like, Hey, we need to know the secondary cohort on this fucking thing that's like a tiny product that who cares? They just waste you. Right. They waste a forest time. The team's time. And I try very, very hard not to do that as a former entrepreneur myself, I know how precious the time is and I know how annoying those questions are. I was actually gonna at one point ask you about this, but we don't need to spend too much time on it. You have a post, this is from a while back, twenty eleven, listing questions a V C will ask a startup. You omitted some of the

1:02:24 questions like the one that you just mentioned. But I am curious If Any of the These questions or additional questions come to mind when you are talking to founders. Could be early stage or later stage. that you actually apply yourself. And I know it's from twenty eleven, so I'm not expecting you to remember the the post itself. Yeah.

1:02:44 I haven't looked at that post in a really long time. I'm actually writing another book now. That is sort of the zero to one startup phase and I guess into some questions like that. You know, I think the reality is venture capital has changed dramatically since I read that post, right? Because in two thousand eleven The venture capital funds were largely doing like seeds through series D E maybe, and then companies that go public. Yeah, this whole like

1:03:06 twenty year private company thing didn't exist. Do you know why there's a four year vest on the stock? No, why is that? I can kinda guess now that we're talking about IPOs, but go ahead. Why? Yeah. In the nineteen seventies they came up with a four year vest on stock options for employees because companies would go public within four years. And so then you're done. Literally, right? And so it's like a four year clock usually. And then when Google took six years to go public, everybody's like, Oh my gosh, it took them so long to go public. Six years. Like they just flat on their hands. Do you know what I mean?

1:03:37 Yeah. Literally people would say that, right? And so um Ha ha And so what happened is venture capital used to be very early stage and then what we now call growth investing. Was public market investing. Right. That was a stop that.

1:03:51 People. than the public markets would do after four or five years of a company's life. And so the public markets used to be involved very early. And then as Sarbanes Oxa came out and companies decide they didn't want to go public and there's more private capital available. The timeline until going public stretched out. And so suddenly venture capital firms are doing all the growth investing that used to be public market investing.

1:04:11 And in twenty eleven that really wasn't happening much. It was kinda Yuri Milner from D S T and a few other folks, but it wasn't that much of an industry. And so the nature of venture capital has shifted radically over the last fifteen years. And that means that those questions That I listed there didn't include what I'd consider more growth centric questions because there wasn't a lot of growth investing in venture. What would be uh examples of growth centric questions?

1:04:35 Honestly it would overlap with some of the earlier stages, but it would be much more you know, by the time you hit a very late stage it's very financially driven. And so often what at least I and my team look at is what is just the core business and how do we extrapolate that going. And then what are these ancillary things that the company's doing that are almost like options in the future that may or may not come through? And so usually we we base our investment on that core. Can they just keep doing the thing they're doing forever?'Cause most companies mainly get big off of one thing.

1:05:02 At least for the first decade. There's very few companies that end up with multiple things that all work. Usually it's one thing and then ten years later you maybe come up with a second thing that really works. It's like Google Cloud for Google, although obviously there's YouTube and there's all bunch of other stuff. And Wemo and all these interesting things now. But it took a while. For a long time it's just search, search and ads. But then sometimes are these extra things that are potential really interesting drivers on a business.

1:05:24 Like SpaceX was launched and then it became satellite. Right, it became Starlink. Yeah, man. Starlink. What a thing.

1:05:32 It's too bad I have so much tree cover here. Can't use it anywhere I spend time, but Let's turn to the high growth handbook for a second. That was Let's just call it seven ish.

1:05:42 Years ago. It is an outstanding book. People should really check it out. I mean, if you're especially if you're playing in the venture back game. What's the subtitle? The subtitle is Scaling Startups from Ten to Ten Thousand People. There's a lot of good advice in this book. I wanted to ask you. If there's anything in this book that you wish Startup founders the book was intended for would pay more attention to, or if there's anything that you would add or expand.

1:06:09 To the book. So when I read the book I had an outline for it that was two, three times the length of the actual book in terms of chapter So there's a lot of stuff I didn't write about sales and marketing and Growth and a bunch of other stuff. But you know, the book was basically written as sort of like a tactical guide. It wasn't meant to be read it from start to finish. There's a bunch of interviews with different people who were thinking amongst the best practitioners in the world at those areas.

1:06:32 But you know, fundamentally it was meant to be more like you're suddenly involved with the MA, jump to the chapter and read that and then put it aside until you something else comes up around hiring that you need to look at or whatever. And so it really is meant to be like a handbook or guide or companion to a founder versus Hey, I'm just gonna read it start to finish, but There'll be some pithy quotes in it or whatever. Or one concept over five hundred pages, you know, try to avoid stuff like that.

1:06:55 No, it's very practical, it's very tangible, it's very specific. And this new book that I'm working on is basically the zero to one version of that. It's like how do you hire your first five employees as a startup? How do you somebody tries to buy you, what do you do? How do you raise your first round of funding? That kind of stuff.

1:07:12 It's kinda like the zero to one tactical guide. Let me ask you about one specific section. I think this is chapter two. This is on boards. And if this is getting too in the weeds too, maybe we can hop to something else. But I am curious if you could Talk about There are two things.

1:07:28 Take a better board member over a slightly higher valuation. And if you want to revise these, that's fine too. But there are two things I'd love to hear you talk about just because this It's something that You know, founders I've been involved with bump up against constantly. Take a better board member over a slightly higher valuation and then write a board member job spec and then it Specifically for independence, maybe? I'd love to hear you.

1:07:48 Maybe just elaborate. But could you speak to either or both of those a bit? And if you want to take it a different direction, I mean it's really just boards writ large. When founders Pull together boards. Often the early boards are investors because the investors ask for a board seat as part of it. As part of the investment. And sometimes the founders want somebody on board who's really committed to the company and will help out extra. And to some extent when somebody takes a board seat, it really means or it should mean that they're all in to help you versus

1:08:14 You know, you can have lots and lots of investors, but you have very few board members. Reed Hoffman has this thing which is like a board member at its best as like a co founder that you wouldn't be able to hire And so you bring'em onto your board and they kinda it's somebody that you want to spend more time with on specific And she's related to the company.

1:08:29 But fundamentally your board should be able to help with different areas of the company. It could be strategic direction, it could be closing candidates, it could be product areas, it could be customer intros, it could be a variety of things. And Usually you wanna kinda think of your board members as a portfolio of people. It's gonna change between an early stage company and a

1:08:46 late stage in a public one, you're only different types of people over time usually. But most companies are very Reactive on their board versus proactive. And so they tend to end up with a couple investors and then they kinda add somebody from an industry. Seat and they don't really think through like who they want and why.

1:09:03 And If you're Co founder is kinda like your spouse, your work spouse, your work husband or your work wife. Your board members are like your in laws. You know, you have to see them and you have to like chat with them all the time. You know.

1:09:18 And so hopefully you have somebody you want to see all the time and who's hopeful and wonderful and The bad version is like Uh, it's the like father in law or mother in law who's always like berating you or whatever. And so You kinda need to find the right person and it's for many, many years, right? You end up sometimes with people on your board for a decade. And if they're an investor, you can't get rid of them. Right. You literally can't fire this person. 'Cause they have a contractual ability to be on your board because of the investment.

1:09:42 That's why it's really important to figure out the right person and that's back to valuation. Sometimes founders will take a better price from a worse person because a better price. And our mutual friend Naval has this great quote that valuation is temporary but control is forever. Yeah. Yeah. Very.

1:10:00 Very little. And I think that's very true. And so if you're choosing a board member and Part of that is a control thing. The people who control the board can in some cases fire the CEO. You really want to choose the right people and maybe take a worse price for somebody who's really gonna be helpful and

1:10:15 They're minimally non destructive and Who get to have around for ten years. Any other books or resources for people who are outside of the high growth handbook who specifically want to learn about boards recruiting incentivizing the co founders that you couldn't hire to join the board, et cetera, et cetera. Any particular approach you would take there if they wanted to

1:10:37 Get more conversant. I don't have anything super useful there, I think. The best thing is to call other founders, other people have added people to their board and See how they approached it. I do think writing up a job spec, you write a job spec for everything else in your company. Why wouldn't you write one for a board member? So it's good to write that up and say what am I actually looking for and why and what am I optimizing for. So there's a common view of that.

1:10:58 You know, you can use search firms, you can ask people, you can target people that you know. You know, if you have angel ambusters. Getting to know them is a great way to see if you want to add one of them eventually to your board. That's what we did. Howler we eventually added Sue Wagner, who is a co founder of BlackRock.

1:11:12 Underboard or other board seat were um Apple Black Rock and Swiss are you when she doing her board. I just got to know her through just like she invested and we just started working together and really Enjoyed her feedback and insights and so we added her to the board there. So it's kinda like that. You know, you you kinda wanna maybe get to know some people.

1:11:30 Next I wanna come to our we were joking earlier about the In some case sort of revisionist history genesis stories. So I'm I'm looking at this is from two thousand eighteen. This is a while back. This is on uh why combinators blog. And you're being interviewed about the high growth handbook, but The sort of end of this piece that I'm looking at says these stories are never told. People always say, Oh, these things just grew organically and isn't it amazing. But almost every company that ended up

1:11:59 Tens of billions or hundreds of billions in market cap did this, which is Taking an aggressive approach to distribution, whether that's sort of Google and the Firefox story or Facebook running ads against people's names in Europe. I just wanted to hear you tell some of these stories because it is the stuff that kind of conveniently that Gets left out of Ted talks later. Do you know what I mean?

1:12:20 Oh yeah, yeah. I mean actually the origin stories for founders is always like Ever since Sarah was three years old. She dreamed of starting an accounting software firm. Yeah, like come on. Do you know what I'm getting? Yeah. Yeah. And so a lot of the stories that are told about founders are very revisionist and

1:12:39 They make it the life's passion of the s you know, it's sometimes it really is. But you're like, no, when there were five they did not And then that turned into Pinterest thirty years later or whatever. Like I said not, or that turned into We always dreamed of

1:12:55 building A G I when there were four and that's why you know some almost started open AI or whatever. So I think a lot of these things are very kind of ridiculous in terms of how they're written later. And I think the product really, really matters and I think sometimes great product just wins. And the reason great product just wins is it opens up a form of distribution that didn't exist before or people will buy it despite the lack of distribution or relationships for a company.

1:13:18 The flip side of it is though the companies that are really good have an enormous And then they have an amazing distribution engine. And sometimes a distribution engine is built into the product. That's like Cursor or Windsurf just distributing through product like growth where developers just find it and start using it and it helps them. And so they tell other developers. And it's best word of mouth.

1:13:38 But often there's Very aggressive sales, marketing, other components to it. And so for example, when I was at Google they were spending hundreds of millions of dollars a year, which at the time was real money. On

1:13:50 And they had this little thing called the toolbar that would like fit into a browser'cause right now browser is like with Chrome, you type in words or whatever, and then it instantly searches it. Back then the main browsers were like Netscape and Internet Explorer, et cetera. And the browser bar thing didn't exist, and they had this little client app they could install, and they paid basically every company on the internet to cross download it. In other words, Installing Adobe or installing some malware detector thing, it'd be stall and it would always download the toolbar'cause it they got paid. It's a very aggressive

1:14:21 Yeah, do you remember that one? Facebook and Facebook buying ads against people's names. Can you explain that? What are they doing? What was their end game? Yeah, they were basically trying to create network liquidity in markets where they were Earlier behind and so they would basically buy ads.

1:14:37 Of literally a person's name and one of the most common queries is people searching themselves. And so you'd be like, Oh, let me look up Tim Ferris on Google or whatever and there'd be a Facebook ad saying, Hey, Tim Ferris on Facebook and you'd click and you'd land on the sign up flow for Facebook. This was years ago. This was TikTok and Bite Dance. It was basically spent billions of dollars. Distributing TikTok so they could build enough of a network to train AI algorithms to start telling people what to do and also to get content on. Where did they spend that money?

1:15:04 On distribution. In this case of say TikTok. My sense is it's uh ads again. You kinda say this over and over again. I mean, for enterprise Snowflake spent billions of dollars on salespeople and compensation and channel partnerships. So again, like distribution is really important. Every once in a while you see a company that actually wins not because of product, but because they're just better at sales and marketing and distribution. And often that's a bummer for technologists such as myself,'cause you're like, you know, the best product should always win.

1:15:29 Sometimes it does, but sometimes it's just Who was early and developed a brand or who Got ahead on distribution, you know. I'm looking at The piece in front of me. This is from a while ago, but it's you discussing

1:15:43 Long held dogma that ends up So for instance the common hell belief. after PayPal's sale to eBay that fraud will kill you in the payment space. I'm wondering how you orient yourself as an investor to Stress test.

1:15:58 Those types of dogma. It's really hard because You start off with some set of beliefs, you think something's interesting. Maybe you invest in it, maybe you start a company in it. And then it turns out the thing you think is really interesting turns out to be really hard and you get killed.

1:16:12 And then five years later a company comes up that actually does it and wins. The question is why? Why did the thing suddenly work when it didn't before or you know, there's ten attempts to do X and then Suddenly, is it the technology got good enough? It could be a regulatory change, it could be a market shift, it could be whatever. An example that may be Harvey and Legal where selling the law firms traditionally has been awful.

1:16:34 And Harvey's not much broader than that, right? They also have very strong enterprise adoption and You know, lots of different people using them in different ways, but the dogma was always like building stuff for law firms is crappy as a business and you should never do it. But what AI did is it shifted things from selling tools to selling work product or selling units of labor. That's really the Shift in generative AI. We're going from seats and we're going from software.

1:16:58 And SAS and we're moving into a world where we're selling human labor equivalents. We're selling Work hours or labor hours or whatever you want to call it. Yeah. And so

1:17:08 Harvey is effectively helping really augment lawyers in different ways. And part of that's a knowledge corpus, but a lot of it is this tooling that really helps lawyers achieve the goals that they have in different ways. In a collaborative manner in some cases. And so It's just a fundamentally different type of product from what people were selling before. And so it opened up the market in a way that the market wasn't open before. There's actually a broader conversation around

1:17:30 Is the world market limited. or founder limited in terms of entrepreneurial success. Though a combinator school of thought is that We just don't have enough founders and if we had ten times as many founders, we'd have ten times as many big companies. And there's an alternate school of thought, which is how many markets are actually open in any given moment in time.

1:17:48 And those are the ones where you can build big companies. Cause if the market isn't open to innovation or change or whatever is uh undergoing a shift. You can't really build anything there anyhow, so why do it? And the striking thing about AI is it's opened up tons and tons of markets that were closed. For a long time. And it's opened it up because of capabilities.

1:18:06 But it's also opened it up because every CEO's asking themselves, What's my AI story? And way more openness to try things than I've ever seen in my life. And so We have this odd moment in time where things are massively available for founders to do new things. And if you're an AI company and you're not seeing explosive growth quickly.

1:18:23 Something's fundamentally broken. Because the markets are so open. that you can suddenly grow at a rate that you've never grown before. There's always been cases of companies that just go like this. But again, you look at the ramps of open air and anthropic and it's the fastest ramps to tens of billions ever. Like percentages of GDP. It's like crazy.

1:18:40 If we come back to your Comment of Not necessarily market first and strength of team second all the time, but like you said, you ninety percent agree with that. And if you have an excellent team in a terrible market, like that's gonna be a difficult one to execute. How do you determine?

1:18:56 What is a Good versus great market, or just what is a great market? What do you look for? And the example you gave, I might be overreading this, but when you said that when Google shut down, I think it was Maven. That's an interesting kind of event based. Approach.

1:19:13 as an input to investing, right?'Cause you're like, Okay If they're not gonna build it. That suddenly creates a playing field for Startups.

1:19:23 To play in that space. So could you speak to more of how you determine or look for great markets. I mean there's a few different ways to think about it. One is like

1:19:32 Some people take the framework of why now. What's shifted now that makes this suddenly an interesting market because people have been trying to do things for a long time in every market. And so That may be a regulatory shift. Some Sara, the fleet management company, benefited from the fact that suddenly there's regulation around needing in cap monitoring of drivers. So you had Sunly camera's watching people so they don't fall asleep while they're driving trucks on the road.

1:19:52 And so that was their entry point to then start building out a suite of software. But it was a regulatory shift. Sometimes there's technology shifts like what's happening in AI. And the crazy thing about the AI shift is The foundation models instantly plugged into a massive set of markets, which is basically all enterprise

1:20:09 data and information and email and just All way color work was suddenly available to AI. Because it's the perfect technique for that. It also plucked into code, which is a type of what color work. So it's just suddenly it just inserts into language and language is used everywhere in enterprises as well as in consumer. And so there's just a massive market to tap into and transform or set of markets. Robotics is a little bit different from that because even if you had the world's best robotic model, the sub markets that already have robotic hardware are quite small.

1:20:35 On a relative basis. And so you don't have that Instant runway that you would with language unless you come up with something new there. That's kind of an aside. But I think robotics is really interesting and be important. It's more just that nuance of like what's that's the thing you plug into commercially.

1:20:50 There's regulatory shifts, there's technology shifts, there's incumbency or company shifts, competitive shifts. A company may blow itself up, it may get bought by a competitor. One company I'm excited about on the security side is called M Physical, and they're basically competing in part with Hashi. Hashtag got bought by ABM. Anytime you get bought by ABM, you slow down a lot, usually. It creates more opportunity for a startup.

1:21:10 So I just feel like there are these different things that can change In a given moment in time. We could do the markets run really fast. It's Coinbase and Crypto, right? You just have suddenly this adoption and proliferation of token types. So there's lots and lots and lots of different markets are interesting. The commonality is usually like is it also big?

1:21:28 Is there a big enough TAM and there's two types of TAM. There's fake TAM. So yeah, just for people listening who might not have it. Yeah, total addressable market. Yeah. Yeah, total addressable market. So what's the market you're in? And sometimes people come up with these fake markets. They're like, Oh well We are facilitating global e-commerce and global e-commerce. I'm making up the number, is thirty trillion dollars a year. And so we're in a thirty trillion dollar year market. And if we get just a tenth of a percent of that is three hundred billion of revenue and you're like, That's not your market. Your market is like you built this little optimization engine for

1:21:58 S M B websites or whatever. That's not a thirty trillion dollar Market. So really it's kinda defining the market. There's a really famous example of this where defining your market changes how you think about it. And so that's Coca Cola. Coke and Pepsi were roughly neck and neck in terms of market share. For decades.

1:22:15 And then one of the Co said hey Maybe we should be thinking about our share as share of Liquid sold. Like drinks. Share of soda.

1:22:27 And so we just went from fifty percent market share to point five percent. And that's why they bought Dasani and that's why they entered all these other markets. Because they said our definition of our market is wrong. We're not in the soda pop business, we're in the drinks business. And so I think also sometimes reconceptualizing what you're doing can really help change Your scope of ambition or how you think about what you're doing.

1:22:46 If you were trying to spot Along the lines of the fraud will kill you in the payments space. Right. Any Dogba. in the AI world, the sphere of AI. Anything hop to mind where you think, uh, maybe that's not true now.

1:23:03 Or maybe in like two years. It'll be completely untrue, but people will have latched on to this belief. As One of the thou shalt not or thou shalt commandments. Yeah, I don't know. I mean there's some things that have circulated in the past around what's the ROI on the CapEx spend of then will it ever be paid back? I think that stuff is probably off.

1:23:21 I think fundamentally. There are moments in time where it's very smart to be contrarian. And Moment in time we're being consensus. the smartest possible thing you can do.

1:23:31 And I think right now we're in a moment in time where being consensus is very right. And you can really overthink it and what's the contrarian thing, we should go do a bunch of hardware stuff,'cause blah, blah, blah. Yeah, maybe just buy more AI. I think people make these things way too complicated. Uh yeah, true. In every aspect of life, probably. Let's just say you were

1:23:53 Mentoring. This is somebody you really care about. We can make up an avatar, whatever. Nephew of one of your best friends, or son of one of your best friends, or daughter who's Really smart, got an engineering degree, came out of MIT, has a couple of hits in angel investing, and they're like, All right. Think I'm gonna raise a fund. But they don't have the access necessarily that you do to AI. Let's just say.

1:24:17 Are there any things categorically you would say would be on the Do not invest list because they're likely to be annihilated. Or consumed or replicated by AI. I think the reality is that when people start off as investors

1:24:33 A lot of the times the reason they have early stage funds is because you can always get access to the earliest stages of companies. If you just start helping people. I mean, that's kinda what I did accidentally, but the reality is I've seen it over and over. You fall in with the right group of people'cause the smartest people all self aggregate together. And you just start helping people out and they just ask if you want to invest and you start investing and suddenly you have a great track record and you raise bigger funds and then you go later stage.

1:24:57 That same cohort has grown up and they've started doing later stuff and When somebody can get access to everything else, right? That's kinda the traditional venture story and it has been, I think, for decades in some sense. So I think that's still very tenable and you can still do it for AI and you can do it for anything. I don't think you have to go off and do like energy investing or something. You have mentioned in the past. A key learning.

1:25:19 Maybe that's an overstatement, but you can correct me from Venod Kosla. And I think the wording is along the lines of your market entry strategy is often different from your market disruption strategy. Yeah. Can you speak to that? There's sort of Two or three versions of this. Version one is you do something that's really weird and it starts off looking like a toy and then it turns out to be really important. And that would be Instagram or Twitter or some of these more social products, right? Where

1:25:43 The initial use case is very different from how it's used today and it kind of evolved as a product and how people perceive it and use it and That's one version of it. And that's usually more consumer centric. Another version of that would be SpaceX and Starlink, where they started off with launch. And getting things up into space and they realized hey, they have a cost advantage for satellites. And then they built out the Starlink network, which is now like a major driver of their business. And so What they did expanded a lot and kinda shifted in terms of their market entry with space launch, their disruption is Starlink in some sense.

1:26:12 So I do think there's lots of examples like that over time. Coming back to information and consumption. How do you consume most of your information. What would the pie chart break down to? In terms of If you listen to podcasts versus books versus

1:26:29 X versus white papers versus something else. I think a lot of what I've done has collapsed into three things. It's X. It's reading some technical papers slash journals in some cases if it's more of the biology side. Although I don't do biology investing, I just like a But you know, papers as although the papers in the AI industry have really dropped off given the competitive nature of everything now. And then talking to people.

1:26:54 And so I found that like twenty minutes with somebody really smart on a topic. gives me more information and insights and leads on what to go read about than doing some exhaustive search. Actually the fourth thing is now using models to do research for me. That could be open air, that could be cloud, that could be Prolexity, that could be Gemini, but and for each of them I actually use different things or I do different things with each of them. What do you do with the different models?

1:27:17 I'll just give you one example versus go through every single one of them, but Gemini actually feel like If I'm looking up more like activities, like hey, I'm planning a trip somewhere. I actually feel like the Google corpus and all the stuff they built over time is quite useful for like travel tips support types. So that'd be a Gemini specific thing.

1:27:35 That doesn't mean the other models can't do it well. It's more just like I've I've tended to get more accurate. Rankings of things that way. And allows like breakdowns and rankings across multiple dimensions and all the stuff for scoring of things. I did like a deep dive on a few different areas of like ADHD and ASD. What's A S D?

1:27:52 Oh, I'm sorry, it's autism spectrum. I see. I got it. So basically like if you look at autism It went from I'm gonna misquote the numbers, so you know, I should look this up later, but I think it's something like one in A few thousand of the population was diagnosed with autism like thirty years ago, forty years ago. And now it's like three percent.

1:28:10 So you're like, Well, what is that? Is that a change in Older parents. having more kids, which it turns out that that's not the driver. Is it some shift in the environment? Is it it turns out it's just diagnostic criteria shifted. And then there's a lot of incentives to actually diagnose people in the schools. That's roughly the summary of why we have so many kids that are classified as either having attention deficit where there's also like a financial incentive for doctors to do it'cause they can prescribe drugs.

1:28:34 versus autism, but both have gone up dramatically in terms of diagnoses. And It's unclear to me that more people actually have it. It's just diagnosed dramatically more broadly. Which model were you investigating that with? Usually when I do things like that, I use two or three models at once and then I ask for primary literature and then ask for summary charts. And I actually have this whole breakdown of like stuff that I ask for it to output.

1:28:55 So that I can go back. And double check the data. And then reread through the literature and everything else. And there's really interesting things that came out of the autism one in particular because it turned out maternal age actually has a bigger impact than paternal age. And some of the studies.

1:29:08 And people always talk about paternal age. And then you're like, Well, why are people only talking about paternal age? Is there a societal incentive for that? Is it a Political belief system like why is that the point of emphasis? So there's other things that kind of come out of that. In terms of questions, in terms of the why of things.

1:29:25 Why were you looking into that? Specifically. I thought it was interesting. Yeah. Okay.

1:29:31 Got it. Seems like it's gone up a lot. Let me try to understand why. And so I started looking into it. I was also talking to a friend of mine.

1:29:40 In her sort of mid to late thirties. And she was dating a guy who was in his late forties, early fifties, and she brought up oh, she was worried about Autism and you know, what would happen with them if they had kids and all the stuff. And so then I did this deep dive as part of that too. The takeaway was I can't remember exactly what it was. It was like I'm making it up, so please don't quote me on this. I can look it up later. But it was like

1:30:05 There's a ten percent increase for every five to ten years incremental. Paternal and maternal age. And again, maternal was actually a little bit stronger in some of the data sets. And The thing is though, if you believe that it's one in five thousand or one and whatever in the population.

1:30:19 That ten percent, twenty percent difference doesn't matter. from a population frequency perspective, is his diagnostic criteria went way up. Yeah, that's true for a lot. Of diagnosis. A lot of stuff, but like societally we're told oh it's

1:30:33 The age of the parents that's driving all these autism rates up and you're like, no, it's like all these incentives. And then you look at some of the school systems, it's like sixty percent of all the autism diagnoses in I think it was the state of New Jersey or something. were not actually based on any clinical criteria. It's just a teacher randomly saying this person has autism. God.

1:30:51 Terrible. You start digging into these things and you're like, wow, this is super interesting. And these models are really valuable and helpful for that. So I've been doing a lot of Back to your question of where do I get information? Part of it has been these deep dives with models and like questions that I just find interesting where I asked them to aggregate clinical trial data or aggregate different types of information and they give me the primary sources and then give me summaries and double check things and so I have like a whole series of prompts around that to kind of also clean data and check it and

1:31:17 That's really fun. And then I always set it up in multiple models and just see like what they each come up with. When you talk to people This may be

1:31:26 Amorphous topic for us to dive into in a meaningful way, but let's just say you Find somebody you want to talk to for twenty minutes. How do you typically find those people? I suspect there are a lot of ways, but are you finding them on X versus finding them in a technical paper versus finding them somewhere else just to get an idea and then When you get on the phone with such a person Are there repeating trains of questioning or certain ways that you like to approach it?

1:31:52 I think there's three different types of things. One is Hey, I'm doing a deep dive in an area just'cause I think it's interesting or maybe it's relevant to like an area I want to invest in. Often honestly just is it interesting. And then I'll try to quickly triangulate for the smartest people on the thing and that may be technical papers, that may just be asking.

1:32:08 each person I talk to who's really smart. Well there's one form of that which is hey, it's very informational and I'm trying to do a deep dive on something. I mean, I work with some of the early uh AI researchers at Google. That's how I knew like number zero, we start character and then went back to Google and that's I met a bunch of other folks, but Some of the people I just met You know, just uh

1:32:25 Interesting paper. Let me look them up. Or hey, everybody says this person's really smart. Let me talk to them. That's one form A second form is I do think like really smart people tend to aggregate and so if you're just hanging out with smart people, you keep meeting other smart people. And people who are polymathic tend to hang out with people are polymathic. It's kinda like attracts like for all sorts of things. So sort of a second side. Those are probably the two main

1:32:45 things. I mean sometimes people also just refer people over to me. They'll say, Hey you're I think you two would like chatting. There's a separate thing which is there's people that I go back to recurrently. Where it's just more like I think this is one of the smartest people about where AI is heading and let me talk to them all the time. Or Those are one of the smartest people about longevity. Like Kristen, the CEO of BioAge, I call sometimes about random longevity.

1:33:07 related things because she knows so much about every topic in it. She's very Thoughtful. She's very willing to question her own assumptions. It's very just like Truth seeking. In a way that Aren't and people always use that term and say but she really is just like what's correct.

1:33:24 Let me just figure it out. She's like a PhD And postdoc and like bioinformatics and aging and all you know, she's super legit. And so That's an example of somebody that'll call for like longevity. Stuff.

1:33:36 So I just have certain well I'll talk I'll call for certain topics. Mm-hmm. So you have literacy in biologies. It's kinda quaint how And I went to the first quantified self meetup and Whatever it was, two thousand eight or something, with twelve people sitting around in Kevin Kelly's house talking about Measuring things with

1:33:54 Excel spreadsheets. The world has changed. So there are armies of tens of thousands of Self described biohackers and so on. Talking about longevity. There's a lot of nonsense. For yourself personally. Where have you landed in terms of Interventions or thinking about interventions.

1:34:13 For yourself. I haven't done a ton. It feels like a lot. collapses into like sleep well, exercise a lot. Excetera. Like there's a handful of things that kinda matter. Ewell And so I've kinda collapsed onto that stuff.

1:34:25 I think there's one or two things that maybe you can take that are helpful and then There's some things I always thought it'd be fun to experiment with that I haven't done yet. Like what? I thought it'd be cool to try like a Rapamice Impulse or something. So stuff like that, but the reality is that

1:34:39 I'm kinda waiting for the real drugs to come out and then maybe I'd use those. Some of the ones that I actually think will really impinge on longevity or certain systems like we were talking earlier about As you age, muscle that holds the lens of your eye weekends, and that's part of the reason that you're Your ability to focus kind of gets screwed up. And so there should be eye drops for that. Like there's a bunch of stuff around neurosensory aging that I'd love to fund a startup. There's a bunch of stuff around the cosmetics of aging that I've long been talking about trying to find actually find a

1:35:06 clinical trial at Stanford to d to work on that, for example. 'Cause I think it's very understanding and peptides to me is basically that. I think a lot of people are taking peptides as like certain forms of health, but also certain forms of cosmetic applications like five H K C U and Melitanin and all these things are basically cosmetic in nature. You mentioned a handful of things that seem helpful to take. Are those just vitamin D or are we talking about other things? What are on that short list?

1:35:31 Vitamin D and creatine. Yeah. Got it. I don't know. What's on your list? I mean, you've thought about this so much more than I have. What are you taking or what are you thinking about?

1:35:40 I'm much more conservative than I think people would expect. Played around with a lot of things. In my earlier days. And A lot of it is

1:35:51 Very I would say capped risk. If you're experimenting as I was with first generation Dexcom. Continuous glucose monitors in two thousand nine. Very unpleasant to wear and I might have been I wasn't aware of any non type one diabetics using them at the time, but

1:36:06 I wasn't using much in terms of Let's just say questionable gene therapy flying to other countries to Use something like a phalastatin, not to throw it under the bus, but I feel like The general heuristic of no biological free lunch, I recognize it's very simplistic, but it's pretty helpful. At least it will

1:36:27 Aid you in avoiding a lot of pitfalls. So I mean there are things I'm experimenting with. Different forms of ketone esters and salts, for instance. I think some could be very, very interesting for Cerebral vasculature. And since I have Alzheimer's disease, Parkinson's, et cetera, in my family, including for people who are ApoE three three. So there are certainly many other risk factors, I'm paying a lot of attention To that side of things, you know, uh Oba Cetrapib, I think, is one to keep an eye on that's not yet ready for prime time, but

1:37:01 Rapomice's interest. I do think Rapamycin is interesting with a lot of asterisks because you can screw yourself up if you don't know what you're doing. I mean if you're playing with any immunosuppressant, I mean you just have to be very careful. But looking at Combining that, for instance, one of the experiments that I might do is And I would have a cleaner.

1:37:22 Read of signal if I only did one intervention, but Real life is different from Yeah. Waiting for Science sometimes.

1:37:31 So possibly combining like uh Norwegian four by four interval training with rapamycin pulsing to look at volumetric changes, if any, in the hippocampus. And other areas. Like I think that's a Pretty interesting. hypothesis we're testing. But otherwise it's basic, basic, right? It's creatine. It's

1:37:52 The vitamin D's look if you have methylation issues or you're taking medication as I am like Omeprazole, which can inhibit magnesium absorption and other things. Like you want to keep an eye on that. But Not too fancy. You know, I think U lithane A is pretty interesting. The the data keeps mounting on that.

1:38:11 Yeah, I do have a keen interest in mitochondrial Health. So if there are things. Which could also include regular intermittent fasting and occasional three to seven day fasting. Which could be a fast mimicking diet most recently for me, based on the input from

1:38:29 Doctor Dominic Dagostino. trying to foster Autophagy and mitophagy with some regularity. Not all the time. I'm not trying to optimize for that all the time. One thing I've been wondering, so if you look at like a computer

1:38:44 And often the key to fixing your laptop or the key to fixing any system is you just fucking reboot it, right? Yeah. You reload the system and it just works magically. And there's a bunch of craft that kind of can't be. Is there like a Equivalent of that? Is it like going under for anesthesia? Is it

1:39:02 Yeah. Some nerve like Oof. Yeah, I don't know.

1:39:09 Sounds scary. Oh, maybe stellate ganglion block. Yeah, that's it. The stellar ganglion block. Yeah. Yeah, I mean the rebooting I'm you're letting out an exhale because There are some interesting options for very specific use cases. It makes sense conceptually, you're more qualified to speak to this, but

1:39:28 I would say Just spending a lot of time around. Neuroscientists and I I spend a lot of my time in terms of information intake, reading Or doing my best. Fortunately with AI tools, it's become a lot easier.

1:39:41 Not just getting a synopsis, but actually using it to help you Learn. Concepts that you can kind of layer and some. Rational sequence. But

1:39:51 I read a lot of neuroscience stuff and a lot of optical stuff. There's actually a surprising amount of I mean, there's maybe not so surprising, like Very strong intersection there. So if you're looking at like PDM and photobiomodulation through the eyes. I mean you can do it transcranially as well. I would give a note of caution for that for folks, but the Reboot side, I would say, for instance. And people have experienced this to a lesser extent with GLP one agonists. If they take it for weight loss, maybe they stop smoking or they cut back on drinking or

1:40:24 They have these Kind of system wide decreases or increases in impulse control. For someone who's saying opiate addict, I think that I begin. Which

1:40:36 in the future may take the form of an active metabolite or something like that. In flood dosing. Um at least That's it seems pretty necessary at this point, relatively high doses. Under medical supervision, because you can have fatal cardiac events. Co administration of magnesium seems to help, but it's dangerous stuff. People should be careful.

1:40:56 You can, and there are lots of people historically who deserve a lot of credit for this, like Howard Lotsov. And his wife, but Opiatics can go through flood dosing of I began and come out and they're basically given a window with which they won't experience withdrawal symptoms, physical withdrawal symptoms.

1:41:16 And I think there are probably applications to other things with ibogaine or pharmacological interventions like Ibogaine. Some of the craziest stuff, honestly, related to that molecule is And I'm skeptical of this simple description, but sort of reversal and brain age. So changes in The brain based on MRIs, Nolan Williams, Rest in Peace, and his lab looked at this pretty closely. pre and post dosing of IBogaine for veterans with traumatic brain injury.

1:41:47 And some of that might be due to something called glial derived neurotrophic factor, right? People might be familiar with like BDNF. So I begin is one interesting option. Anaesthesia, I've become a lot more cautious. With

1:42:04 General anesthesia. I just had surgery yesterday and I opted for local anesthesia. Which in this case was not a big deal'cause it was just you can see it. Had something cut out of my head. But Coming back to the

1:42:17 And I'm gonna rift for a second here. But Yeah. Autism spectrum disorder and ADHD. example you were unpacking where you talked about the incentives, they might be perverse incentives to diagnose.

1:42:31 Well I mean Not to quote Munger, right? But it's like follow the money, right? And A lot of people are put under general who really don't need to be put under general, but it adds a very, very, very huge line item to the tab. And there are people

1:42:50 Who go under anesthesia and wake up and do not retain the same ability to recall memories and so on, like their personalities become in some way destabilized and The fact of the matter is

1:43:06 that a lot of anesthesia is very poorly understood. We know it works. But it's very poorly understood. And I I don't think A lot of people Realized because why would they unless they've

1:43:18 Just spending a lot of time looking into this. There are lots of medications that are incredibly Well known, commonly prescribed. for which the mechanisms of action are really poorly understood, if they're understood at all. We know based on studies they appear to be well tolerated, like Side effects profiles include A through Z.

1:43:38 And It certainly seems to exert this effect or have an impact on biomarker X, but we don't actually fucking know how it works. And there's just a lot of stuff that falls into that bucket. And so I am cautious with a lot of it. But to come back to your question, I went off on a bit of a Ted talk. The most interesting reboot that I've seen.

1:43:59 I don't wanna really water it down to like the dopaminergic system'cause there's a lot more to it. But I began I think More so than I begin itself shows what is possible. And I don't know if that's limited to Drugs. I am very bullish. There are gonna be fuck ups. There are gonna be some sidebars that don't look so good, but

1:44:19 Brain stimulation and bioelectric medicine. Broadly speaking. is one of the great next frontiers. Certainly in treating what we might consider psychiatric disorders, but also for performance enhancement. And

1:44:33 We're at a point kind of looking for those external why now. Answers, right? There are actually some really good answers to why now for this as a field. And I think people will be experimenting a lot with this, but without the use of pills and potions and IVs and actually non invasive brain stimulation, maybe some invasive in the case of implants. So that's a long answer.

1:44:56 But yeah, that's what I'm thinking about and tracking. I mean some of this stuff we'll see, but I think a lot of this stuff could be outpatient procedure. You walk in, you're in there for an hour or two. And then you're out. So we'll see.

1:45:08 Let me ask just a couple of last questions and then if there's anything else we want to bat around, we can bat it around, but I appreciate the time. A lot of five years from now is looking back at a lot of today. Are there any beliefs, positions, could be related to AI or otherwise that you think are more likely than others to be wrong.

1:45:27 I think there's all sorts of things I gonna get wrong. And I think we're living through a period of big change, which means big uncertainty and so I wouldn't be surprised if Half the things I think are gonna happen don't or happen even more so or whatever it may be. And that's part of the fun of it, you know, in terms of if we had a perfectly predictive future, it'd be very boring, right?'Cause we we'd know exactly what's coming and that'd be awful.

1:45:46 It just ties into notions of free will and all sorts of other things, right? So I think You know I'm sure there's a lot. There's a separate question of just One exercise I've been going through recently is and I've never done this before. You know, a lot of what you do in life it's back to the John Lenno quote.

1:46:00 Like'cause what happens you're making other plans. For the first time I'm actually thinking like what's my ten year plan? Across a few different dimensions of life. And the basic question is, you know, I won't get it right. I can try and have a plan for ten years. Of course it's not gonna be what I think. But it's more does it change the scope of ambition?

1:46:17 that you have? Does it change how you think about life? I've been trying to think in those terms, like what do I want to do over the next decade? And that what does that mean in terms of the near term what I do? Order to get there in ten years. And so I think that's been very eye opening for me in terms of shifting some of my mindset around what I should be trying or not trying to do. Now

1:46:37 The AGI P tell people will say, Well, in two years we have AGI, so it doesn't matter what your plans are. But I find that to be a very kind of defeatist view of the world, you know, it's like I'm gonna give up Versus saying, Great, I'm gonna have this plan and I can adjust it as needed, but Do with time of change, there'll be some really interesting things we'll be to do in the world. Do you have anything else you'd like to say, comments, requests for the audience, things to point people to, anything at all before we

1:47:00 Wind to a close. People can find you on X at I Gill. Alladgil.com, certainly the substack blog, blog.eladgill.com, and elsewhere. We'll link to everything in the show notes, but anything else that you'd like to Yeah, it's wonderful to chat with you as always. I really enjoy it. So thanks for uh having me on. Yeah. Thanks, man. Always a pleasure. And to everybody listening or watching. We will link to everything in the show notes Tim.blog slash podcast. And until next time, as always, be a bit kinder than is necessary.

1:47:29 to others, but also to yourself. Thanks for tuning in. Hey guys, this is Tim again, just one more thing before you take off, and that is Five Bullet Friday. Would you enjoy getting a short email from me every Friday that provides a little fun before the weekend? Between one and a half and two million people subscribe to my free newsletter, my super short newsletter called Five Bullet Friday. Easy to sign up, easy to cancel. It is basically a half page that I send out every Friday to share the coolest things I've found or discovered or have started exploring over that week. It's kind of like my diary of cool things. It often includes articles I'm reading, books I'm reading. albums perhaps, gadgets, gizmas, all sorts of tech tricks and so on that get sent to me by my friends, including a lot of podcast guests. And these strange esoteric things end up in my field and then I test them and then I share them with you. So if that sounds fun, again, it's very short, a little tiny bite of goodness before you head off for the weekend, something to think about. If you'd like to try it out, just go to Tim.blog slash Friday. Type that into your browser, Tim.blog slash.

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