How to get funded now: VCs Reid Hoffman, Aileen Lee, and Stacy Brown-Philpot, with Van Jones

Transcript from https://podmenti.com/t/a59e52455c586703

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We want you there with us too.
Join us at masters of scale dot com slash apply twenty six.
That's mastersofscom slash apply.
Twenty six.
When we're in these times of disruption, the old power structures are no longer as firm or as strong.
Doesn't mean they're non existent. Doesn't mean that there isn't still privilege of which school you went to and which community you grew up in.
But it means that that's a much less of a rigid guidepost.
Don't limit yourself.
I think we have a lot of Icarus companies right now, right? They're flying pretty close to the sun. It's like a shoot the moon strategy.
the human dynamic here. In other words, no matter what the tech is and what the market is, if the people
Aren't
able to work together and if somebody's sending a signal that they're the wrong jockey.
That can blow up the whole thing.
Those are the voices of Reed Hoffman, followed by investors Stacey Brown, Phil Pot and Aileen Lee, and capped by media figure and entrepreneur Van Jones, recorded live on stage at the 2025 Masters of Scale summit in San Francisco on October 8th.
The investing landscape for VCs and entrepreneurs has shifted dramatically this year. In this special episode, Van plays the role of moderator, engaging Reed, Stacey, and Aileen in a candid conversation about what's changed in the investing space, what it means, and how players on all sides need to adapt.
The exchange is full of lessons for right now, so
Let's get to it.
I'm Bob Safian, and this
Із рапід респанс.

We're gonna talk about the where we are in the world of investing. I'm gonna start
With my own founder story, I am a a a a founder of an AI startup.
And I did all the different things you're supposed to do.
I identified a problem that I knew about, which is how messed up the distributed uh workplace is. And so I said, Hey
Let me build a company to fix this.
So I found an amazing technical co-founder. We went out, raised some money and pre seed.
Then we built a product.
That is
Working.
It actually works.
It sounds good. I'm waiting for the shoe to drop. Oh and the shoe is coming! The shoe is coming.
I've got this product.
This is amazing. Now...
Let's go back into the market.
To raise money for
Go to market.
We're still pre-seed. And in the past two years something has changed.
Mm-hmm.
They're not doing this.
They're doing this. I'm seeing elbows. I'm like, I don't want to see elbows in the meeting. I'm seeing elbows on the zoom call. That's a bad sign.
And then they're asking questions about profitability.
I'm pretty sure!
Mm-hmm. Profitability. They're asking questions about convergence from pilot to to paid.
What's your moat? I'm like

Briefe!
Yeah.
Something has changed.
Having a good story, not enough.
Having a great team not enough.
having product market fit, not enough.
There is something happening in the marketplace right now when it comes to investment.
And we've got three of the best people in the world to ever do it.
Um and they can they're going to help you if you're an investor or if you are a founder understand what's happening.
Um
First of all, we've got
Ailingly
She actually coined the term unicorn.
And now she's doing Cowboy Ventures. Give her a round of applause. Thank you. Um
Uh
Stacey Stacey Brown Phil Pot is here. You may have heard of something called Task Rabbit.
I give her the the the round of applause for building that into a a massive
Powerhouse.
And she's now running Cherry Rock Capital.
And then we also have
Uh this young man struggling to make a difference in the world.
Uh

Uh Reed Hoffman. Give Reed a a round of applause as well.
So look.
Uh this is gonna become a therapy session for half of us.
If you could tell the founders in this room
Some hard truths.
What are
One, two, or three things.
That you want every founder here to understand.
about the investment climate right now for new companies. What are the things that you are looking for that you're gonna have to stick with?
And we may not want to hear it, but tell us the truth. What's going on out there?
Oh well first, we invest at series A. Series A we
The bar has moved, and Aileen, you can talk about where the bar is for seed, but the bar has definitely moved.
The pace of technological change.
The
Expectations have returned.
We wanna see
Can it scale?
So what's the difference between early product market fit like
Ten people like your idea.
Versus ten thousand people liking your idea versus a milyen people could like your idea.
The honest truth is you showing up with six thousand customers is is not enough.
You have to show me the potential.
Of
How do I get to sixty thousand and six hundred thousand and on what pace?
Can you do that?
Н Before was always the assumption that
The next round
Would take care of that.
That's gone now.
You have to demonstrate that sooner, a lot sooner. I need to know you took you 18 months to do this, well, you need to do this in nine months. Can you do it? Can you do it?
No

I think Stace is totally right that basically
Um, we're in this incredible new platform shift to AI, and the rate of adoption is like nothing we've ever seen before. So people are seeing these hockey sticks that we've never seen before.
And then they're looking at enterprise businesses, and the growth rate looks a lot slower and it looks a lot harder. Uh and so you've got funds who are kind of chasing this hockey stick. Now, like what goes up often comes down pretty steeply. So I think there are gonna be some shoes to drop in the coming years around some of these hockey stick companies.
What's changed at seed, I'm a seed investor, is
A lot of times people needed money at seed to build the product. Now there are so many tools to help you build the product. If you come and you haven't actually tried to build something yourself, right, and you don't haven't actually given it to people and like shown your ingenuity and your hustle to get like to do more with less, you're already kind of put taking yourself
Um off the field.
It used to be if you got from uh if you're an enterprise software company, if you went from zero to a million dollars in a year, that was like amazing. And tons of people would want to invest in your company. Now that's not enough. They're saying how about two million, how about three million, how about four million, go from zero to four. And sometimes that's not even enough because they're comparing you to someone who went to ten or even a hundred in a year.
So it's really it's funky it's a funky time for founders.
Yeah, t uh two strong plus ones of this.
The way that uh all venture works is
You're saying no to
six hundred, eight hundred deals uh during the course of a year and says yes to zero to two of them.
Right, and the AI acceleration in terms of the tools you're just being described means there's a ton more out there.
Which means that even you go, look, I've got product market fit, it looks good, et cetera, et cetera. It's like no, you've got to understand what the benchmark of the competition is, because it's not just a
I I look like I'm good. It's okay. I'm gonna say yes to a very small number of things.
What are the other things in contrast that I might be saying yes to
And
You know, to be clear, a lot of no's are like, Oh, call me back on the next round, et cetera, et cetera. If you're not hearing a yes, it's a no.
Right, just to be super clear. Now the the other thing that is useful for entrepreneurs go take your idea.
and go into your favorite frontier models and say, critique this.
How would a
A skeptical VC
What would they tell me about this?
You will find that that is useful to you because you will encounter those questions in it, and so to be ready.
That's a perfect pro tip. Yes. Yes, that's really I saw the note taking kick up.
Um so look, you you're somebody though, you you do
Uh you take bets other people don't take.
You you you you you see things other people don't see.
Like w
What's in the blind spot?

that's giving you this advantage to kind of find and and spot and invest in folks that other people may have missed out on.
One of the things that
I see because I serve on big public company boards.
is perspective on what are
CTOs in enterprises buying.
So the trajectories of s enterprise sales has fundamentally changed. And so if you come to me with your AI idea.
It's cute, and you probably get the one percent play money budget.
But you're not gonna get the real.
But
And so I'm looking for companies that are
coming in with a value added
option that they can sell into a large enterprise that's gonna outdo
The build option.
And so now your competition as a startup is this team.
that wants to build the thing themselves.
So what I'm seeing is who's going to actually beat out
That internal team
That's gonna get the fifteen percent.
budget pool, not the one percent budget pool. For those of you who are selling enterprise know exactly what I'm talking about, your net retention is actually going to be a lot stronger and a lot better. That's one thing that I see. I'm also seeing
Founders come to the table with
There's a real hard problem in this industry that nobody is paying attention to, and here's how we're gonna solve it. And we don't just have an AI idea. We just have we have a company and we happen to be using AI.
For it, that's a much better sell to me than just an AI idea. There's so many ideas out there.
So we've all been in the business for a while, right? In tech, and things have changed a lot. When I started in nineteen ninety nine in Venture Capital, there were way less firms. There was no seed round. You started with an A, there was no cloud, there was no open source, right? There's no AWS. So you needed money to go buy like
Sun servers and Oracle databases and probably most of the people here don't know about Sun servers. Exactly. Um so basically I mean A's back then when I started were generally four million dollars and you were buying a third of the company.
Um and the pool to higher talent was like twenty percent.
Uh so things have changed a lot. Like founders have so much more power. If you have a great story, if you've got a big addressable market, if you've got really differentiated technology, like you can kind of set the rules now. So it used to be the venture firms would be like we have a rule. We only do deals if we get twenty percent in the A or twenty percent in the B. Like those are all like
N now founders can say I'm not gonna take more than fifteen percent dilution this in this round. Things are very different.
It's much more of a conversation rather than the VCs controlling and determining what the terms are now.
There's a very small number of deals that are so hot.
That you can kinda just go, Well I'm gonna tell you exactly what I want and so forth.
And sometimes some of those requests, even if you're a hot deal
Are
Um
negative signals.
Like I've I've I've
Like past on
investments that are like look you're not being realistic to where you are, which means you won't be realistic. Future and even though I like
You and the product.
Your lack of realism here
Implies that I think you're gonna not be successful. And by the way
Valuable companies have boards.
Yeah. Valuable companies
Actually don't
Emphasise.
Like
10 percent versus 12 percent delusia, and they emphasize chances of being successful. And I actually think on both sides that negotiation
is because this this is fundamentally one of the things I love about this investing business is
you're trying to ultimately be non-zero sum. You're trying to build so much value for everybody that it really works.
But the the negotiation itself is zero sum because it's like well for a dollar, I get X percent.
You know, it's kind of as the as the as the equation.
But that's a
great learning experience between the investor and the founder saying, Well, how do we navigate this particular thing? And that's what both sides should be learning. And when I learn negative less lessons in that dialogue, I go, Ah, I'm good.
Yeah. I have to agree with plus one to everything you both just said. We lead rounds for series A.
And we request abort seat at the time of leading the round. And it is a conversation. We expect you to negotiate and we expect it to be a conversation, but how you show up in that negotiation is a pretty good indicator of how you're gonna show up. And how we show up, we believe it's a good indicator of how we're gonna show up for you.
treat that negotiation is not as this I'm trying to win. Like we don't if you win, I lose, and if I win, you lose. We we gotta go together. And there's a commitment that happens at the time of investment that goes beyond the money.
And I had to write the check and now we're done. It's like no, we made an exchange. I agree to give you some money, you agree to deliver on these goals. None of us are gonna be right, and we both know that, but like let's go in knowing that there's a commitment to working together. And I think that's what's different. There's a few companies out there that'll write their ticket, but that's by and large.
It is a it's a conversation, it's a negotiation to a company.
Uh how much you raise and a what valuation, right? There is a tendency for some founders to especially because you read if you read TechCron, you read the news, you see these like, you know, giant series A's, giant series B, and you think like, Oh, they're beating me or I need to match them. And that's not always the right answer. Um and that is why not that is a conversation that you are
I I think we have a lot of Icarus companies right now, right? They're flying pretty close to the sun. It's like a shoot the moon strategy, right? Which if you're a big fund and you've got a lot of companies like you know, this is just one of your bets, but if this is your life, this is your family's, you know, ability to put food on the table, like you have to know that when you raise a lot of money.
You are making potentially making your business less capital efficient, right? Which might make it harder for you to make to raise the next you're kind of putting a bogey on your back that you have to achieve incredible results to be able to do an up round for your next round. And if you raise so much at different valuations, you may make
exits less likely because you're more expensive for acquirers. Um so there's I think that's part of the conversation as well is like what's the right valuation, what's the right trajectory? Are we on the same page with how we're setting the company up for lots of different kinds of options in the future.
You know, it's it's interesting to hear that that the human dynamic here. In other words, no no matter what the tech is and what the the the the market is, if if the people
Aren't
able to work together and if somebody's sending a signal that they're the wrong jockey.
That can blow up the whole thing.
Hey Bob Safian here. I love how Van wraps this up, spotlighting the human elements that are in play in the investing and business decisions we make. But of course, technology can complicate things. So how is AI impacting the landscape?
We'll hear Van, Stacey, Aileen, and Reed talk about that and more after the break. Stay with us.
Humans will never be more intelligent than AI.
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Before the break, we heard Van Jones lead Reed Hoffman, Stacey Brown, Phil Pot, and Aileen Lee in a conversation recorded live at the Masters of Scale summit about the changing expectations of VCs and founders.
Now Van talks to Reed and the crew about the impact of AI on jobs, how to bring skeptics along on the journey, and whether the disruption of AI might actually help disadvantaged communities. Let's dive back in.
You have been
A cheerleader and a champion for the positive part of AI.
Um I love you have this this kind of framework of the uh of the
Zoomers.
The bloomers, the gloomers, and the doomers.
look at all the different relationships and the the zoomers just want to have you know AI Close your eyes your eyes and let and let it go and the doomers are like we're all gonna die. And the gloomers are like, well we might not die, but I'm not gonna have a job. Um and but you're a bloomer.
Yes.
You think that this is gonna be net positive.
As you know, people are sitting here figuring out how they they're going to build their companies, they're they're you're using AI to make the you know their their company better.
But you got a bigger view than just a company. Talk a little bit about AI and why you're such a a bloomer in terms of the net positive of all this.
When we have these major technological waves
The initials
impulse in human being is always like oh my god it's gonna up and society it's terrible.
And by the way, the transitions are very difficult. I don't mean to be hiding the difficulty of the transition.
But we don't have anything of our modern society.
Without the printing press.
And which creates science and all the rest without the industrial revolution. This is the cognitive industrial revolution.
It will transform every job that involves language, and most jobs do, will get transformed. And so the skill set will be different.
Typically we go, Well, I'm really I'm a I'm an expert because I've memorized a whole bunch of information. I've memorized a bunch of information about medicine, I've memorized a bunch of information about law, I've memorized
Well, now we've got our memory agent with us and that's the worst AI you're ever gonna use.
is the AI using today. It's gonna be increasing. So that'll be
All kinds of transformations.
And it's
Hard to envision exactly the way the world changes. You couldn't envision what would happen with the steam engine. You couldn't envision what would happen with the printing press.
But you can shape it.
And that's my it's not
I'm just blindly optimistic. It's I have a bunch of historical information. I understand how we can build these things.
And we can make it so that
It's a much better elevated.
Human.
Agency, human condition.
Now the transition will be difficult, and so we need to navigate it.
I'm curious though, you think like the jobs that get eliminated, will there be a one for one recreation of new jobs using AI?
Um
Look, uh it I think no one anyone who claimed they knew it either way is making a mistake. Right? Definitely yes, definitely no mistake.
Now
Like the the one that I kinda use is a canary is customer service.'Cause roughly speaking, as a as a proxy, any place where you're trying to get human beings to do a script, a job that robots do, robots can do it better.
Right. And by the way, right now you get this funny thing where uh people are calling human beings
uh on the outside of customer service and say, no no put the human on because the human being is such a bat doing a bad job that because it's a script and everything else that they're thinking, oh it must be a robot.
Actually, in fact, I think we're gonna have it where put the robot on. Right. Because and and we will have some of those and so will suddenly there be a new form of customer service job? I don't necessarily think so. I mean customer service experience, transform it, like how can be brand positive, thinking about that, those kinds of things, yes.
So not one for one in everything. But on the other hand, the same thing of like, hey, everyone moved from agriculture into the cities, it wasn't one for one of well, I was
I was I was driving a plow. It it doesn't happen that way, but I think like we figure out ways to I think we will in various ways.
Can't find the labour.
Like in healthcare, right? Or administrative stuff, where like the turnovers really high, they're having a really hard time finding the people to do the jobs. AI is being pulled into actually a lot of industries that are like not considered sexy industries'cause they just they can't find the talent. And so I think that's part of what's really going on that's transforming our economy.
I think that's right. I mean we invest in a company called Certiverse that's actually helping
with the transformation of knowledge. So how do you learn a new thing and how hard that is. Friend of mine said, we they invest in accounting, that's doing the same thing for custom service and accounting. I'm a CPA by training. And I said, what do you think, Stacey? And I said, Well, there was definitely some jobs when I was in public accounting that I did not want to do. That I wish
That there was a machine or some other human. Yeah, people are nodding. Like that just we I wish there was somebody else who could do that job. So yes, like we have to go to this future where you're not doing this work that you don't want to do. But then the question is how do you requalify?
Yeah. And there's a there's some people who are gonna figure out
how to do that. There's companies like one we invest in that's gonna help people do it. And then there's people who are gonna say, oh my God, they're like in the dooming bucket, they're just sitting on their hands. But we've got to figure out how to bring those people along to the important point to add on this. Look
There's no way to AI proof yourself or AI proof your job.
But the jobs of the future will be how well do you use AI in order to do them.
So categorically what I tell everyone is start using it.
Like literally it's almost like a ritual thing of like how many times a day are you using deep research?
Right,'cause if you're not in like information jobs
You're well behind the curve. So it's like
Start using it personally. Don't say oh I'm smart, I know how to use Like no, start using it. You learn things.
I just want to get your
Guidance.
Um some of us were trying to figure out
How to get kind of
overlooked underestimated talent in communities.
uh to play this game. I think it could be awesome.
Um I'm not listening everybody's like
They're gonna disrupt everything. Everything's gonna be disrupted. I'm like
You say that like it's a bad thing.
I'm not so excited about the status quo right now. I don't want to dis I mean like are you that happy with the education system we've got, with the healthcare system we've got? Please disrupt this stuff. So I'm not, you know, uh I'm I'm more on the the P bloom.
Than the P Doom.
Uh I I would like to get your guidance for people here. What kinds of mentorship programs or or other things would you be excited about seeing in the world that would get more talent playing the game that you're playing?
I
I think
Trying it every day as an individual is is one great way to do it. Who's on your board that actually knows something about this topic? Bring them in.
Find the digital natives in your company.
In your organization, they are already doing this. Often younger. Elevate those people.
to those roles. I joined the H P board when I was thirty nine years old.
And I was young.
But I knew so much about technology than everyone else. Everybody else in the room that it really just fundamentally changed the conversation. So you have that talent just sitting right there. Don't overlook it.
You coined the term unicorn. Uh huh.
And unicorn used very and by the way I've heard I'm now hear I'm now hearing Icarus. I wrote that down. Those are very different mythological uh frameworks.
Um
But I it does make me I mean, it used to be that unicorn was an aspiration and now it's almost an expectation, but
Uh and you're seeing all these companies, these billion dollar evaluations.
How do you
Evaluate value now.
You see these valuations.
But w how do you value it? It's so funky, because if you look at the public companies, right, they're trading at six, eight times, maybe ten or twelve times revenues, right? And then you've got private company valuations where it's got a term sheet and it's fifty times revenues. If you can you know, it's like it's really hard, because I don't think that a lot of these companies are being
set up on the right trajectory.
The tech industry has been comprised of pretty much the same kinds of people for a very long time, and the wealth creation and the societal impact of our industry is massive and it's global. We know there are so many studies that show that diverse teams and people from different backgrounds come up with better decisions and they come up with better results. So I think in this age of AI,
Like what Reed was and Stace were saying is like you ha you know.
We're so excited to see more founders from different backgrounds come to the table with their ideas, serving communities that are overlooked or business processes that are overlooked. And I think th this is go time for for all kinds of people to make sure that they don't miss out on being founders or or early employees of AI companies.
Which you just said for me gives some hope.
Mm. Uh saying that
It could be that
communities and people and talent.
That didn't do as well.
In the last round.
might actually wind up doing better.
They might see things that others miss and that the AI models haven't been, you know, focused on
And
Is it possible there's a world?
where communities are used to disruption.
Like disruption's not new in in low income communities, it's disruption every day.
They might be preadapted.
for some of these, you know, moments where things are changing.
It could be
That some of the communities that that
were disadvantaged before, they might be advantaged in this new era. Is that just dreaming or do you see something similar in terms of people who've been on the outside they might be able to do really well in this new era? When we're in these times of disruption, which obviously are now
That means that the old power structures are no longer as
firm or strong. Doesn't mean they're non existent. Doesn't mean that there isn't still privilege of which school you went to and which community you grew up in.
But it means that
That's a much less of a rigid guidepost.
And so
Y your b your ability to follow your imagination, to take risks, to be bold, don't limit yourself.
Like
Like times of disruption. That's a it's the reason why like when you go to, you know, like the old American mythos of going west in the pioneering. Pioneering is the closest thing to entrepreneurship. It's you can
The the rules are shifting.
So that's when the opportunities are there, and that's
To lean in. That's why it's so important. The message that you guys are doing so important.
Hey, listen, um, I am honored to be here.
Let's give a round of applause to these folks who all love very much.
Hey, it's Bob here. I love Van's hopefulness that AI will open opportunities for new communities, as well as Alien's description of Icarus companies, how valuations may be higher than is appropriate for what she calls hockey stick companies.
I also love hearing Stacey encourage us all to work harder to bring those left behind by AI into the fold.
As for Reed, well I always learn something new listening to him. His obvious optimism about AI is paired with realism about how difficult the road to a better future will be.
What strikes me overall is how high wire things are right now for investors and founders, for all of us.
The des read notes.
In times of disruption, all bets are off.
That's scary and fun and rife with possibilities.
Here's hoping we rise to the occasion together.
I'm Bob Safian.
Thanks for listening.
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Yeah.