A podcast about Silicon Valley, hosted by newsletter writer Eric Newcomer and Tom Dotan, with Katie Benner as a regular special guest.
We're back to opining on the state of tech media! A16z has aqui-hired Erik Torenberg and his newsletter Turpentine, while the Technology Brothers with ties to Founders Fund have created a podcasting empire. Eric and Tom reminisce about the original wave of “going direct,” why it failed, and what's different this time around. Later on, Madeline shares that crypto VCs are growing frustrated with President Trump's meme coin grifts, and how hosting a private dinner for top coin holders doesn't help legitimize the industry.
This week, Tom breaks down his scoops on how the big foundation model providers are doing.and much to the chagrin of our resident skeptic, they're earning lots of real revenue! OpenAI is on track to crack over $12 billion in revenue this year, and Anthropic projects it will double its ARR to $4 billion by the end of the year. But have we hit the AGI moment? Eric relays his o3 experiments as evidence. Madeline gets into the perpetual VC optimism in spite of market turmoil and why AI has early stage investors mostly unphased. In the second half of our show, Eric interviews Contrary's Kyle Harrison about his viral foundation model market map and why AI has led many VCs to embrace startup polyamory.
We're welcoming special guest Tom Dotan of Dead Cat fame to the show this week — just in time for the tariff market meltdown. To Silicon Valley's Trump supporters, we hate to say we told you so, but it's hard to imagine how these tariffs on our biggest trading partners will benefit tech and artificial intelligence development in the US.In the second half of the show, Eric interviews Flexport CEO Ryan Petersen on how to make sense of what President Trump's tariff policies mean for his customers around the world.
OpenAI has done it again. The AI giant closed $40 billion in fresh funding (kind of) led by Softbank, We debate the bull and bear case for OpenAI's $300 billion valuation. Eric sticks to his guns from his previous bear case, but Madeline is more optimistic about OpenAI's consumer revenue.We also go over the latest in the Deel/Rippling corporate espionage saga and dig into Eric's reporting on the Deel spy's confession. Plus, Elon Musk is reportedly stepping back from his hands on role in Washington in the coming weeks.In the second half of this week's episode, Eric interviews Clay CEO and cofounder Kareem Amin, who topped the Enterprise Tech 30 list on mid-stage startups.Time stamps00:00 — Announcing Cerebral Valley London03:26 — Is OpenAI worth $300 billion?11:00 — The Deel Spy Confession16:09 — Elon Pulls Back in DC22:40 — Clay's Kareem Amin Talks Marketing Agents
This week, Eric shared the details of his vibe coding frenzy from the past few weeks, testing out Vercel and the buzziest coding assistant of moment, Lovable. We unpack the benefits and remaining headaches of these tools from a non-coder perspective. We then turn to the Studio Ghibli memes of the week from OpenAI's new 4o image model integration and try to make sense of all the copyright risks and benefits this new tool could lead us to.Later in the show, we break down the story on 11x's potentially fabricated customers and subsequent backlash from some of Silicon Valley's most powerful VCs. And as Waymo fans, we're excited about their expansion in to Washington DC.Produced by Christopher Gates
We're opening in a celebratory mood this week with Wiz's big exit to Google, which if it holds will offer some much needed liquidity to venture firms and their LPs. It's a big win for several of Silicon Valley's heavy hitters, including Sequoia's Doug Leone, Index Ventures' Shardul Shah, and Greenoaks' Neil Mehta. IPOs are looking a little bit more uncertain, however. Plus, Deel's allleged corporate espionage at Rippling has all the makings of a great HR tech spy thriller. Next up, we touch on the new liberal "abundance" agenda, which has more than a few similarities to Marc Andreessen's "Time to Build" manifesto. In the second half of our show, Eric sits down with Browserbase CEO Paul Klein to discuss their tools for running headless browsers and their rapid growth over the past year.Produced by Christopher Gates
We're recording this episode on the ground from two different tech conferences, the flashy new HumanX summit in Las Vegas and the now-veteran status South By Southwest in Austin. We cover how the attendees diverge, with more consumer-tech making a showing at SXSW and the new guard of AI business leaders heading over to HumanX (with a few exceptions.) At both summits, though, coding assistants are far and beyond the breakout use case of generative AI applications.We also briefly touch on the threat to free speech in America under the Trump administration following the arrest of the Columbia student protestor Mahmoud Khalil. Next up, we talk about Anthropic's major revenue growth and how Claude itself is one of the strongest coding assistants on the market, notching it up in the model maker race. We close with, yes — another coding assistant — Anysphere, the makers of Cursor, and its rumored funding round at a $10 billion valuation.
In this episode of the Newcomer Podcast, Eric and Madeline dissect why VCs are mad about Trump's plans for a strategic crypto reserve. Even the biggest boosters and loudest voices for deregulation around crypto have been caught off guard by the president's push to add other altcoins to the promised Strategic Bitcoin Reserve, calling the move a blatant enrichment scheme for coin holders and friends of the President. Next, they take a closer look at the thawing of the IPO market. They unpack CoreWeave's S-1 and examine why the biggest generative AI IPO of the year so far has a lot at stake with big tech customers. They then discuss Anthropic's latest funding round, its whopping $61.5 billion valuation, and the deeper issue of when we should truly declare AGI's arrival.
Eric and Madeline break down the week that was in AI news in this episode of The Newcomer Podcast, from the unnecessary panic caused by reports of Microsoft cancelling leases for data centers to Nvidia's quarterly earnings report. Despite tech companies moving full steam ahead on AI, including OpenAI's launch of GPT 4.5 and Softbank's $200 billion commitment to data centers, tech stocks dropped, which our hosts blame on the natural slower tech adoption curve and overall market uncertainty from President Trump's chaotic policy changes.Later in the episode, Eric unpacks Jeff Bezos' increasing control over the Washington Post's opinion section and tech CEOs pre-empting so-called “hit pieces” on X. The two then shout out UK-based developer tool Lovable's $15 funding million extension and rapid growth. They close the episode with a call for readers to submit their burning questions and commentary for next week's Newcomer reader mailbag. You can submit your own question by filling out this Google form.
In this episode of the Newcomer Podcast, Eric and Madeline give a sendoff to the Humane and its AI Pin. The company was acquired by HP for its AI talent, in a darkly poetic ending for former Apple engineers who left to build a smart hardware startup. They debate the merits of voice AI technology as an interface and if it's really time to move away from screens. They break down all of OpenAI's alumni startups, starting with Mira Murati's newly announced Thinking Machine Labs. Other former founders of OpenAI like Ilya Suskever and Elon Musk are in talks to raise billions for their respective AI startups. They close with a breakdown of Saronic and Together AI's latest funding rounds.00:19 - Humane's Semi-Soft Landing to HP13:43 - Mira Murati Unveils Thinking Machines Lab and we have questions17:02 - The new SV flex - Small teams19:02 - Grok's big cluster and Elon jumps the shark24:14 - Saronic and Together AI Raise Big Series C Rounds
Eric and Madeline unpack the biggest “deal that wasn't” story of Elon Musk's unsolicited offer to purchase OpenAI for $97.4 billion. WIth Sam Altman flat-out rejecting the offer on X, this feels less like an offer and more of a statement about Musk's frustration with OpenAI's continued conversion to a for-profit company that competes with him. Pressures have been mounting on engineers to look for greener pastures, though, if Thrive Capital's Joshua Kushner's urging speech for talent to stay put is any indication. Then, they turn to Eric's reporting on Lightspeed Venture Partners' new fundraising documents, where the megafirm showed stronger returns on earlier funds ahead of its next big capital raise. They also unpack the AI Action Summit's 180-degree swing from an AI safety forum to a conference dominated by CEOs and accelerationist world leaders. They close with a breakdown with a who's who on the cap table of legal-tech Harvey's latest Series D, and Mercury's rumored new Sequoia-backed fundraise.Produced by Christopher GatesMusic by Suno
In this episode of the Newcomer podcast, Eric Newcomer and Madeline Renbarger dig into all of the chaos in Washington led by Elon Musk and his team of young staffers. They push back on the attacks from the right at the press that revealing information about public employees is anything close to "doxxing," and unpack a16z's virtue signaling by hiring new right-wing cause celebrity Daniel Penny to its investing team. Later on, Eric breaks down the General Catalyst's a pitch to investors shapeshifting into a "company." They close with even more meme discourse, this time over Marc Andreessen's reading of the "heatmap" social study.Chapters00:00 DOGE's Young Staffers03:28 Is Naming Government Staffers “Doxxing”06:20 Daniel Penny's Hiring at A16z is Virtue Signaling09:16 Debating Marc Andreessen on the Heatmap12:22 Meta's AR Bets Not In Line With Venture Capital21:03 Unpacking General Catalyst's Pitch to Investors
In this episode, Eric Newcomer and Madeline Renbarger break down DeepSeek's impact on western AI companies. Is it really the “AI Sputnik Moment” that investors have called it, or just a CCP bluff?They also delve into new AngelList data on venture returns — unsurprisingly, they're not looking good post-2021. They also discuss voice AI startup ElevenLabs' new funding round.
"In this episode of The Newcomer Podcast, Eric Newcomer and Madeline Renbarger unpack how tech elites are reacting to the early days of the Trump presidency. They discuss Sam Altman and Masayoshi Son's new venture to build AI data centers dubbed “Project Stargate” and make the case for business leaders to abide by important ethical norms. They also break down fresh performance data from UTIMCO, calling out Thrive Capital's standout returns and examining the broader struggles for many funds amid the post-2021 downturn. They close by discussing Brookfield's billion-dollar acquisition of Divvy Homes—once valued at over $2 billion—and unpack the implications for proptech employees left empty-handed."
In this jam-packed episode, Eric and Madeline break down Biden's surprise crackdown on the “Tech Industrial Complex,” explore Trump's tight ties with Silicon Valley oligarchs, and unpack the behind-the-scenes drama of a Canadian startup that ousted its visionary founder. They also spotlight a mega funding deal in AI-powered coding tools, rounding out a sweeping look at how politics, big tech, and startup intrigue collide in today's tech landscape.
Waymo's milestone — surpassing Lyft's ride numbers in San Francisco — takes center stage in our first podcast of the new year. Still, it's not obvious that this translates into guaranteed scale across the country. We consider the operational headaches that come with scaling driverless fleets. One way forward for Waymo could be further collaborations with legacy rideshare giants like Uber. We also break down Whatnot's latest round of funding and debate whether a potential TikTok ban could give the live shopping startup a competitive advantage. Give it a listen. Chapters:00:00 Introduction01:35 Waymo's Progress and Challenges10:21 Whatnot's big fundraiseEpisode produced by Christopher Gates Get full access to Newcomer at www.newcomer.co/subscribe
The ServiceTitan IPO has been an unexpected bright spot as 2024 comes to a close.On this year's final episode of the Newcomer Podcast, we discuss what other startups might follow in ServiceTitan's footsteps next year. Eric defends the controversial ratchet provision in its last funding round. And we dig into Alphabet's big week. We focus on startups on this show, but this week was a good reminder that the big tech firms like Alphabet and Meta can still turn out impressive moonshot technology from their research labs. We're bullish on a couple emerging venture capital firms — Laude Ventures and Dimension — who just closed big new funds. The megafunds may be sucking up the majority of LP dollars, but firms with a clear thesis and a standout team of high performers can still shine in this market. Give it a listen.Chapters:00:00 — Reflections ahead of the new year 05:02 — ServiceTitan's IPO and Market Sentiment10:00 — Alphabet's Wins and the AI landscape15:08 — The State of Quantum Computing19:58 — Emerging Venture Capital Trends and Final ThoughtsEpisode produced by Christopher Gates Get full access to Newcomer at www.newcomer.co/subscribe
After a brief hiatus, the Newcomer podcast is back! Madeline Renbarger has rejoined me as my co-host to help break down all of the news across venture capital and startups. This week, we're kicking off with a massive $693 million chip deal and Google's huge quantum computing breakthroughs, in news that feels like flashes of Silicon Valley returning to its “silicon” roots. Still, some of this tech feels a bit too early to be exciting for a venture-backable model. We also dig into the personnel shake-ups across the major multi-stage funds, including Brian Singerman's step back from Founders Fund last week. Lightspeed also saw partners exit as part of a consumer investing reshuffle. And just this morning after recording, Lux Capital's Bilal Zuberi announced on X that he was leaving to “embark on a new chapter.” We're excited for you to listen. Episode produced by Christopher GatesBrought to you by BrexBrex knows runway is everything for venture-backed startups, so they built a banking solution that helps them take every dollar further. Unlike traditional banking solutions, Brex has no minimums and gives startups access to 20x the standard FDIC protection via program banks.Plus, startups can earn industry-leading yield from their first dollar — while being able to access their funds anytime. If you want to make sure your portfolio companies have a place to save, spend, and grow their capital, check out Brex here.Chapters 00:00 - Intro 01:06 - Tenstorrent's $693 million Series D 04:44 - Google's Quantum Computing Breakthrough06:42 - Lightspeed's Consumer Investing Re-org09:24 - Brian Singerman Steps Back and Founders Fund's Roster14:08 - Mega-funds in Transition and Tech's Trump Positioning 20:19 - Conclusion and Future Discussions Get full access to Newcomer at www.newcomer.co/subscribe
I've been spending some of the afternoon chatting with OpenAI's now fully released o1. So far, I don't know that it feels like the super intelligent ChatGPT 5 that we've all fantasized about — but it's smart and sophisticated. The new model helped me to game out potential stories and talk through problems. And of course it wrote me a poem and told me a couple dad jokes.It looks like the biggest improvement in the news model may be in math and coding, where OpenAI is highlighting meaningful improvements over o1-preview.It will take some time to digest the new version of the model and see what it says about the pace of AI advancement. Before the latest update, Max Child, James Wilsterman, and I got behind our microphones to reflect on the Cerebral Valley AI Summit and give you some of our takeaways. (Max has already hooked up the advanced voice mode of ChatGPT to his iPhone action button. Good bye Siri, hello ChatGPT.)Give it a listen. Brought to you by BrexBrex knows runway is everything for venture-backed startups, so they built a banking solution that helps them take every dollar further. Unlike traditional banking solutions, Brex has no minimums and gives startups access to 20x the standard FDIC protection via program banks.Plus, startups can earn industry-leading yield from their first dollar — while being able to access their funds anytime. If you want to make sure your portfolio companies have a place to save, spend, and grow their capital, check out Brex here.00:00 — Cerebral Valley AI Summit Overview02:50 — Key Takeaways from Alexandr Wang's Talk05:46 — The Wall in AI Foundation Models08:57 — Dario Amodei's Perspective on AI Progress12:13 — Investing in AI: Insights from Martin Casado15:06 — The Future of AI Agents and Voice Technology17:56 — The Role of AI in Gaming and User Interaction20:46 — AI in Enterprise: Trends and Predictions24:03 — Challenges in Robotics and Home Automation26:58 — Marissa Mayer on Google's Future in AI29:51 — Final Thoughts and Future Outlook Get full access to Newcomer at www.newcomer.co/subscribe
If you get some downtime over the Thanksgiving holiday, catch up on everything that happened at the Cerebral Valley AI Summit last week. We've got videos of all of the talks on stage on our YouTube channel and are sharing my conversation with Anthropic CEO Dario Amodei over our podcast feeds. Scale AI CEO Alexandr WangAndreessen Horowitz partner Martin CasadoLessons from This Year's $14B in Generative AI Enterprise Spending Databricks CEO Ali GhodsiBiology Applications of AITrain, Tune, or TurnkeyHow to Train Your RobotSpeak Easy: Voice Applications of AISunshine CEO Marissa MayerAnthropic CEO Dario AmodeiEmergent Behavior: Live Product Demos Get full access to Newcomer at www.newcomer.co/subscribe
Cerebral Valley is tomorrow! I've been listening to old interviews, brainstorming with Claude and ChatGPT, and talking to investors to prep for my conversations with Dario Amodei, Martin Casado, and Alexandr Wang. We'll be sharing those conversations here in the newsletter. Expect video highlights on our social media feeds, a detailed rundown of the biggest moments in the newsletter Thursday, and full-length conversations on our YouTube channel.To satiate your AI appetites until then, give a listen to the latest edition of the Cerebral Valley Podcast with my friends and co-hosts Max Child and James Wilsterman. You've listened to us assess whether startups are underrated or overrated and make our draft picks. Now we're looking to the future. We asked Claude and ChatGPT o1 to make some predictions about what will happen in artificial intelligence over the next year. And then we took the over or under on those predictions.Brought to you by BrexBrex knows runway is everything for venture-backed startups, so they built a banking solution that helps them take every dollar further. Unlike traditional banking solutions, Brex has no minimums and gives startups access to 20x the standard FDIC protection via program banks.Plus, startups can earn industry-leading yield from their first dollar — while being able to access their funds anytime. If you want to make sure your portfolio companies have a place to save, spend, and grow their capital, check out Brex here.Chapters* 00:00 — Introduction to AI Predictions* 02:48 — Exploring Predictions for AI in 2025* 06:06 — AI Regulation in Healthcare* 08:53 — Self-Driving Cars and Tesla's Future* 12:04 — AI in News Media* 14:55 — AI-Generated Films and Entertainment* 17:53 — Anthropic's Predictions and AI Co-Processors* 20:59 — AI in Pharmaceutical Development* 24:13 — International AI Treaties and Regulations* 26:47 — Comparing AI Models: ChatGPT vs. Claude* 30:06 — Future of AI and Human Systems* 32:46 — Conclusion and Reflections on AI Predictions Get full access to Newcomer at www.newcomer.co/subscribe
This is probably my favorite episode of the year. We just updated our picks for our artificial intelligence startup fantasy draft. That means dropping startups whose star is fading and making new pickups. Last year, Max Child, James Wilsterman, and I drafted the most promising generative AI startups that had raised $100 million or more. In this latest episode, we make some hard choices: cutting loose startups who have lost our favor, cashing in on early acquisitions, and pickup up some new startups. In the process, we weigh in on the buzziest AI startups. Brought to you by BrexBrex knows runway is everything for venture-backed startups, so they built a banking solution that helps them take every dollar further. Unlike traditional banking solutions, Brex has no minimums and gives startups access to 20x the standard FDIC protection via program banks. Plus, startups can earn industry-leading yield from their first dollar — while being able to access their funds anytime. If you want to make sure your portfolio companies have a place to save, spend, and grow their capital, check out Brex here.Catching You Up on Last Year's PicksTo catch you up: here's how last year's draft went down. It started off with me taking on a $75 billion handicap for the right to pick first and draft OpenAI. We proceeded from there in a snake draft with Max picking second and James picking third. Here were the five companies we each drafted last year.Last year's picksEric* OpenAI* Inflection* Character.AI* Glean* Mistral AIMax* Databricks* Pinecone* Cohere* Modular* ImbueJames* Hugging Face* Anthropic* AI21 Labs* Replit* AdeptAltogether on this week's episode we collectively dropped three companies, exited three, and picked up twelve new startups.I don't want to spoil our picks so you'll have to listen to the episode to find out what happened. (As a reminder, the goal here is to accumulate the most total value by November 1, 2028. We aren't worried about the return on our investment just the final end state valuation.)We'd love for you to weigh in in the comments with your own seven startup picks and give us your feedback on what you think of our draft decisions. Give it a listen. Get full access to Newcomer at www.newcomer.co/subscribe
We're back with a couple episodes of the Cerebral Valley Podcast leading up to our summit on November 20. I'm joined by my Cerebral Valley AI Summit co-hosts Max Child and James Wilsterman. On this episode, we started by talking about the thing on everyone's minds — the election of Donald Trump and what it means for artificial intelligence. Then, at the 28 minute mark we debate whether Anthropic, Suno, Perplexity, Midjourney, and a bunch of other AI companies live up to the hype in a game of “overrated, underrated, or properly rated.” Episode produced by Christopher GatesTimestamps: * 00:00 — Initial reactions to the results* 06:16 — Energy policy under Trump* 09:25 — Will tariffs replace the CHIPS Act?* 12:23 — Regulation and AI policy in a new era* 21:52 — Black swans in AI and policy* 27:54 — Overrated, underrated, or properly rated? AI's hype meterThe Cerebral Valley AI Summit on November 20 in SFWe'll be hosting an elite group of AI startup founders, investors, and other senior executives on November 20 in San Francisco.Spots are extremely limited, but we always hold back a few spots for founders who are late to get the memo that they should join us. Get full access to Newcomer at www.newcomer.co/subscribe
We're in the home stretch. Silicon Valley's political nightmare could hopefully soon be over. In the latest episode of the Newcomer podcast, we dig into all of the tech industry's burning political takes.There was Josh Wolfe's endorsement waffling. Jeff Bezos' editorial intervention. And the general sense that everyone is losing their minds leading up to what should be Trump's last run at the presidency. Later in the episode, we break down General Catalyst's massive fundraise haul and its transition into a “company.” We also discuss Stripe's billion-dollar acquisition of Bridge.Episode produced by Christopher GatesTimestamps: 00:00 — Intro04:13 — The VC political divide09:27 — The Washington Post's editorial debacle12:25 — General Catalyst raises $8B15:38 — Stripe acquires BridgeNote for our listeners: We'll be back with a couple episodes of the Cerebral Valley Podcast starting next week, so stay tuned. Get full access to Newcomer at www.newcomer.co/subscribe
Newcomer turns four this week. On the podcast, Madeline talked with me about how it all began. When I made the decision to start Newcomer, the venture capital industry was in the beginnings of a record-breaking bull run. A lot has changed since then, for both venture and the media industry, but I'm excited about our growth at Newcomer and wanted to share a bit more about what's next. Description Eric and Madeline discuss Newcomer's revenue milestones, the growth of Newcomer over the past four years, and what's next for the publication. They also focus on the downturn in the venture industry and how this will affect first-time fund managers. Produced by Christopher GatesChapters 00:00 — Introduction02:08 — Newcomer's 4 Year Anniversary08:22 — Building out a media company in 2024 and what's next15:46 — The venture downturn vs. new emerging funds22:02 — X-energy's $500 million raise22:42 — $100 million for Path Robotics Get full access to Newcomer at www.newcomer.co/subscribe
DescriptionIn this episode, Eric Newcomer is joined by guest host Jon McNeill, a seasoned executive with experience at Lyft and Tesla who is now leading DVx Ventures. They discuss the bear case for OpenAI. The OpenAI discussion then leads into a closer look at the contrast between founder and manager modes before concluding with a discussion on Tesla's advancements, or lack thereof, in self-driving technology. Produced by Christopher GatesChapters: 00:00 — Introduction03:27 — Bear case for OpenAI13:07 — Founder mode management17:20 — Tesla promises, but SpaceX delivers Get full access to Newcomer at www.newcomer.co/subscribe
Description: In this episode of the Newcomer Podcast, Eric Newcomer and Madeline Renbarger discuss two major funding rounds, the ongoing downturn in VC funding, and the growing imbalance between public relations professionals and reporters. Eric and Madeline highlight Poolside's $500M round and Impulse Space's $150M raise, while pointing out that even the AI mega rounds cant hide the downturn in VC funding.Produced by Christopher GatesAudio Chapters: 00:00:18 — Poolside's $500M round 00:02:24 — Impulse Space's $150M raise00:05:17 — Downturn in VC00:11:03 — The imbalance between PR and journalism Get full access to Newcomer at www.newcomer.co/subscribe
In this episode of the Newcomer Podcast, hosts Eric Newcomer and Madeline Renbarger delve into the world of venture capital deals, starting with Ujet's $76M Series D for its AI-powered call center software. Next up is the drama surrounding PearAI, whose growth-hacker tweet set the tech world buzzing. From there, they navigate through OpenAI's own “Game of Thrones,” exploring internal power plays and high-stakes exits, before turning to California's latest AI regulatory battles. To wrap things up, they call for some balance in Silicon Valley's escalating discourse around drugs and psychedelics.Chapters:00:22 Ujet01:40 PearAI05:49 Open AI11:45 AI Regulation16:34 Drugs + SV Get full access to Newcomer at www.newcomer.co/subscribe
Episode 1: AI + Robots, YC Preview, and Why the Cool Kids Keep Picking on TechIn this week's episode of the Newcomer Podcast, hosts Eric Newcomer and Madeline Renbarger discuss three top venture capital deals, including World Labs and delivery startup Flink. They also wade into Y Combinator's upcoming Demo Day, highlighting trends in defense tech and the implications of AI's power consumption.The conversation touches on Runway's licensing deal with Lionsgate and concludes with an examination of John Mulaney's performance at Dreamforce.Chapters* 00:00 World Labs: A New Era in AI Robotics* 05:10 The Rise and Fall of Delivery Startups* 09:19 Y Combinator's Demo Day* 11:46 Defense Tech* 20:09 Powering AI: The Nuclear Debate* 24:24 Runway's Licensing Deal* 28:02 John Mulaney's Roast Get full access to Newcomer at www.newcomer.co/subscribe
Today we're highlighting two fireside chats from the Newcomer Banking Summit on March 14. First up is Mercury CEO Immad Akhund. He talked about how the Silicon Valley Bank crisis sent customers rushing to his digital banking service. He pitched a world where software — not human bankers — solve most of customers' problems. Akhund told me, “My experience with relationship banking was I need to send a wire and I literally cannot figure out to do it, please help me. Which to me never felt like a relationship, it felt very transactional and painful — and with Mercury you don't have to do that.” Mercury is limited by the fact that it is not a bank — it's a software company on top of banking partners — at a time when regulators are looking closely at how banks work with fintech partners.We concluded our summit with Jackie Reses — who was a top executive at Square before leaving to buy a bank. Reses is the CEO of Lead Bank, a regional Kansas City bank that still serves local customers but has built an onramp for financial technology companies to connect with the banking system.“The thing I saw at Square — which I consider to be a very strong, innovative fintech — is that owning a bank and operating a bank is a 10X delta in understanding compliance to working in a tech company,” Reses said. At Square, Reses said, she learned to “appreciate the complexity of what it takes to do this, so that we could learn how to serve our clients better and help them scale — but make sure we never put ourselves in the position to risk the relationship that we have operating with our regulators.”You can give the episodes a listen or watch them on YouTube.Also: The Future of Banking with Rho, Jiko, and RippleIn case you missed it, we've posted another panel with three fintech/banking leaders. Rho CEO Everett Cook, Jiko CEO Stephane Lintner, and Ripple President Monica Long are all trying to solve shortcomings in the legacy banking system, with different approaches. Check it out to see their takes on the major problems with banking today. Get full access to Newcomer at www.newcomer.co/subscribe
We've got two great sessions from the Newcomer Banking Summit for you: * First up, WestCap Group founder Laurence Tosi and Lux Capital co-founder Peter Hébert. They give an unvarnished account of the collapse of Silicon Valley Bank with the benefit of hindsight. “It was like the banking equivalent of the U.S. withdrawal from Afghanistan,” Hébert said. “It was absolute sheer terror.”* We follow that up with Silicon Valley Bank President Marc Cadieux, who talks about where SVB is today and fields questions about all the new competition his reconstituted bank, now owned by First Citizens, is facing.I thought Tosi and Hébert's talk was the spiciest of the day. And Cadieux was the man of the hour. I wanted to know where his head was at one year after the crisis. You can give the episodes a listen or watch them on YouTube. Breaking the Bank: BCV's Matt HarrisIf you missed it, yesterday I published a talk from Bain Capital Ventures' Matt Harris. In the headline, I made a mortifying error and used the acronym of another VC firm. Harris is Bain Capital Ventures' fintech guru; he gave a great presentation and I had nightmares last night about my mixup. Apologies!Here's that talk: Get full access to Newcomer at www.newcomer.co/subscribe
Today, we have a double episode for you — two conversations from the Cerebral Valley AI Summit.Reid Hoffman was fresh off a meeting with President Joe Biden when Hoffman and I sat down on stage at the Cerebral Valley AI Summit Nov. 15. On stage, he told us that working to get Biden elected next year is one of his top priorities. Then, I sat down with the ever-feisty Vinod Khosla. The investor called for a TikTok ban and more welcoming immigration policies while warning against open-source artificial intelligence projects.Thousands of enterprises around the world rely on Oracle Cloud Infrastructure (OCI) to power applications that drive their businesses. OCI customers include leaders across industries, such as healthcare, scientific research, financial services, telecommunications, and more.NVIDIA DGX Cloud on OCI is an AI training-as-a-service platform for customers to train complex AI models like generative AI applications. Included with DGX Cloud, NVIDIA AI Enterprise brings the software layer of the NVIDIA AI platform to OCI.Talk with Oracle about accelerating your GPU workloads.Hoffman Plans to Go Big for BidenHoffman, fresh off a meeting with President Biden, kicked off the afternoon with a strong endorsement of the President's record. Hoffman praised Biden for his recent executive order on artificial intelligence. Reid called himself “a 95%-98% supporter” of the executive order, endorsing provisions on reporting and monitoring, “red team” testing, and voluntary commitments by companies that might eventually be enforced via the Defense Production Act. But he pushed back on the idea that the FTC should be monitoring the AI industry for anti-competitive conduct.“Startups are not being impeded right now,” he asserted, despite the apparent dominance of OpenAI and the mega-cap tech companies. Reid sits on the board of Microsoft, and offered that he was in fact “first money in” on OpenAI, through his personal foundation, but he's not concerned about, er, his own companies having too much power. “I don't think it constrains competition on any level.”Hoffman is always happy to engage on policy, and I asked him what he thought about Marc Andreessen's recent “techno-optimist” manifesto, which denigrates the very idea of government oversight. Reid said he was a techno-optimist too, and half-joked that Andreessen “quoted kind of liberally from things I've written and said” without any attribution. But Hoffman said that he's not on board with Andreessen's approach. “It's kind of dumb to think that when you have major technologies there can't be negative side effects,” he said, noting that all his AI projects have safety teams. “Tech can be amazing. Let's be intentional about building.”Khosla Wins Cheers from the Cerebral Valley AudienceVenture capitalist Vinod Khosla confirmed that his firm, boosted by an early stake in OpenAI, was about to close on $3 billion in commitments for a new fund. Valuations are high, he said, “but just because valuations are high doesn't mean it isn't a good time to invest.”He's not buying existential risk, calling it “nonsensical” talk from academics who had nothing better to do. But he's long on China risk, saying the U.S. is in a “techno-economic war” with China and needs to fight hard. “I would ban TikTok in a nano-second,” he said, unlike his predecessor on stage, Hoffman, who Khosla said he very much admired. Khosla is firmly against open-source AI models as well due to the China risk.Bio-risk and cyber risk are real concerns too, he noted.But if China or rogue viruses don't kill us, Khosla thinks the near-future is very bright: “I do think in 10 years we'll have free doctors, free tutors, free lawyers” all powered by AI. Khosla also gave a grudging endorsement of the Biden Executive Order, saying it was “okay.” But like most Silicon Valley moguls, he has no time for antitrust issues. “We have to get people like Khan out of there,” he said, referring to the chair of the FTC (though misstating her name), calling her “crazy, left-wing.” Khosla said he's long believed that AI would force us to “redefine what it is to me human.”Meantime he himself plans another 25 years of VC investing, and if all goes well, maybe more. Give it a listen Get full access to Newcomer at www.newcomer.co/subscribe
We were delighted to kick off the 2nd Cerebral Valley AI Summit with Ali Ghodsi, CEO of Databricks, and Naveen Rao, co-founder of MosaicML. Their encounter at our debut event in March led to Ghodsi buying Rao's company, which had little revenue, for $1.3 billion. At our event on Nov. 15, the two discussed how the deal came together quickly after meeting at the conference dinner. Thousands of enterprises around the world rely on Oracle Cloud Infrastructure (OCI) to power applications that drive their businesses. OCI customers include leaders across industries, such as healthcare, scientific research, financial services, telecommunications, and more.NVIDIA DGX Cloud on OCI is an AI training-as-a-service platform for customers to train complex AI models like generative AI applications. Included with DGX Cloud, NVIDIA AI Enterprise brings the software layer of the NVIDIA AI platform to OCI.Talk with Oracle about accelerating your GPU workloads.Ghodsi recounted how he started spending some time with Rao and thought, “these guys are pretty good,” and then by chance noticed an employee he respected poking around with MosaicML and offering a strong endorsement. Soon Ghodsi was on the phone with the head of his deals team, who told him “if you want to buy these guys you have to do it this weekend.” Rao said by that point “you kind of know he's going to pop the question,” and once they worked out the money, the deal was done.The two executives certainly seemed to be in harmony as they touted the potential benefits from their combination, which in simple terms will bring MosaicML's expertise in building specialized generative AI models to Databricks' corporate data platform products, essentially super-charging Databricks for the generative AI era. They were eager to defend the idea of open-source foundation models that are specific to certain tasks, rejecting the notion that general-purpose models like ChatGPT-4 will eventually swallow everything. (This conversation took place before OpenAI was thrown into chaos by its board of directors.)Ghodsi said calls to limit open-source models on the grounds that they'll be too easily exploited by bad actors a “horrible, horrendous” idea that would “put a stop to all innovation.” “It's essential that we have an open-source ecosystem,” he said, noting that even now it's unclear how a lot of AI models work, and open-source research will be critical to answering those questions.Rao added that many of the people making predictions about how AI would develop are “full of s**t.” On the safety question, he noted that cost alone would stand in the way of any existential risks for a long time, and in the meantime the focus should be on real threats like disinformation and robot safety.Give it a listen Get full access to Newcomer at www.newcomer.co/subscribe
If you could amass any five artificial intelligence startup bets right now, which companies would you pick? My Cerebral Valley co-hosts and I took a stab at answering that question with an artificial intelligence startup draft. Our startup draft starts at 27:35 after a discussion of some of the biggest themes going into this week's Cerebral Valley AI Summit. The draft gave us a chance to dissect some of the most promising startups in artificial intelligence right now. The goal was to amass five companies with the biggest valuation five years from now. We restricted ourselves to AI startups that had raised more than $100 million. I encourage you to make your own prediction in the comments. Give it a listen Get full access to Newcomer at www.newcomer.co/subscribe
For this week's episode, I spoke with Chris Miller, the author of Chip War, about the rise of Nvidia. While OpenAI gets the lion's share of the public adulation for the sudden excitement about generative intelligence, Nvidia's H100 chips are powering much of the generative AI frenzy. Nvidia's stock has climbed over 200% over the past 12 months. And the company has become a key investor in generative AI startups.Miller (who comes on the show around the 41-minute mark) talks through Nvidia's history and the geopolitical war raging over the production of chips.In the first part of the episode, Cerebral Valley AI Summit co-hosts Max Child, James Wilsterman, and I discuss how big technology companies are working to fend off this new generation of AI startups. Give it a listen Get full access to Newcomer at www.newcomer.co/subscribe
I'm back from my honeymoon in Japan. Thanks for sticking with the newsletter as I celebrated my wedding this year. Expect more of my newsletter writing soon. If you have tips or story ideas for me, you can always reach out at eric@newcomer.co.I hope you've been enjoying the Cerebral Valley podcast series while I've been gone. If you missed the first three episodes, you can check them out in the links below:* The Cerebral Valley Podcast: Artificial Intelligence Becomes Reality* AI Kills Us All (with Daniel H. Wilson)* Someday That NPC Could Be More Alive Than You Are (w/ Amy Wu & Keith Kawahata)On this week's episode of our Cerebral Valley podcast, co-hosts Max Child, James Wilsterman, and I talk about how artificial intelligence is actually affecting our lives today. Then at the 34:40 mark, I talk with DoNotPay CEO Joshua Browder. His company is helping consumers cancel their gym memberships, dispute charges, and otherwise stand up to big corporations. Browder got some heat for planning to have an artificial intelligence-powered lawyer argue in court. Ultimately, he reversed course under pressure from the legal world. Browder envisions a world where AI is fighting other AIs. Companies use artificial intelligence to power their chatbots and to handle customer support. Consumers need to be armed with similarly powerful AI-powered tools to resist those companies. Give it a listen Get full access to Newcomer at www.newcomer.co/subscribe
Video games often represent the frontier of any new technology. Many of the most popular applications in the initial iPhone app store were games. Today's virtual reality devices are dominated by video games. Artificial intelligence seems poised to upend the video game business and entertainment more broadly.On the third episode of our six-part Cerebral Valley podcast series, Max Child, James Wilsterman, and I game out how artificial intelligence could reshape the media we consume. It helps that Max and James are the co-founders of Volley, which builds AI-enabled games. They develop many of the most popular voice games on the Amazon Alexa and smart TV platforms like Roku. Max and James have been deep in the trenches of conversational-style gaming and have spent a lot of time thinking about how humans interact with ever smarter computers.In the second half of the episode, I talk with Menlo Ventures partner Amy Wu, who focuses on gaming and consumer investments, and Keith Kawahata, a former executive at Wargaming, AppLovin, and Kabam, who now has a stealth artificial intelligence gaming startup. Wu helps to articulate a three-part thesis on how artificial intelligence might change the gaming business. (1) artificial intelligence will help with the creation of the game art and graphics, (2) AI can create more sophisticated non-player characters, and (3) AI can help write the code of the game itself.One of the things that I was struck by from the conversation is that games may have a big leg up in implementing artificial intelligence over movies — because people interact so much more with a gaming, giving it tons of data to react to. While TikToks can learn what small populations of people like and what an individual likes over a long time, a game could learn a lot about a user in a single play session.Of course, there are real hurdles left standing. Most notably, text-to-image generation so far is mostly two-dimensional. Despite everything that's happened, image generation models aren't just whipping out 3-D levels that are ready to play. And it could be a while until non-player characters are as smart as humans. But imagine playing a game of Grand Theft Auto or Red Dead Redemption and the characters roaming around the game are self-aware agents with their own thoughts and drives. Give it a listenP.S. I'm on my honeymoon right now in Japan. I was working frantically to record these episodes before I left. My chief of staff Riley Konsella is sending the episodes out for me while I'm gone. If you need anything while I'm away, you should email Riley.Thanks in advance for being understanding that this newsletter is slowing down for my honeymoon. I'm going to dedicate myself to relaxing over the next two weeks so that I come back hungrier than ever. Get full access to Newcomer at www.newcomer.co/subscribe
What's so crazy about this moment in artificial intelligence is that many of the most credible voices in AI think there's a real chance that this all turns out really, really badly. Anthropic CEO Dario Amodei recently pegged his “chance that something goes really quite catastrophically wrong on the scale of human civilization” between 10% and 25%. That's comforting.Applications to attend the Cerebral Valley AI Summit close TODAY October 17. Apply right now to be considered for an invitation!On the series' first episode we reflect on how generative artificial intelligence and large language models took Silicon Valley by storm.So in our second episode of the six-part Cerebral Valley podcast, Max Child, James Wilsterman, and I played out the doomsday scenarios. We talked a lot about science fiction and how writers have imagined artificial intelligence turning dystopian.In the second half of the episode, I talked with science fiction author Daniel H. Wilson. He wrote the books How to Survive a Robot Uprising, Where's My Jetpack?, and How to Build a Robot Army. Wilson has also consulted with the military to help them game out how dystopian technologies might unfold. Of course, even in the Anthropic CEO's estimation, the most likely scenario is probably a more boring one: artificial intelligence doesn't try to secretly destroy us as we sleep in our beds. But the fact that there's a chance is certainly worth considering.I open our conversation with the parable “The unfinished fable of the sparrows” from Nick Bostrom's Superintelligence.It was the nest-building season, but after days of long hard work, the sparrows sat in the evening glow, relaxing and chirping away.“We are all so small and weak. Imagine how easy life would be if we had an owl who could help us build our nests!”“Yes!” said another. “And we could use it to look after our elderly and our young.”“It could give us advice and keep an eye out for the neighborhood cat,” added a third.Then Pastus, the elder-bird, spoke: “Let us send out scouts in all directions and try to find an abandoned owlet somewhere, or maybe an egg. A crow chick might also do, or a baby weasel. This could be the best thing that ever happened to us, at least since the opening of the Pavilion of Unlimited Grain in yonder backyard.”The flock was exhilarated, and sparrows everywhere started chirping at the top of their lungs.Only Scronkfinkle, a one-eyed sparrow with a fretful temperament, was unconvinced of the wisdom of the endeavor. Quoth he: “This will surely be our undoing. Should we not give some thought to the art of owl-domestication and owl-taming first, before we bring such a creature into our midst?”Replied Pastus: “Taming an owl sounds like an exceedingly difficult thing to do. It will be difficult enough to find an owl egg. So let us start there. After we have succeeded in raising an owl, then we can think about taking on this other challenge.”“There is a flaw in that plan!” squeaked Scronkfinkle; but his protests were in vain as the flock had already lifted off to start implementing the directives set out by Pastus.Just two or three sparrows remained behind. Together they began to try to work out how owls might be tamed or domesticated. They soon realized that Pastus had been right: this was an exceedingly difficult challenge, especially in the absence of an actual owl to practice on. Nevertheless they pressed on as best they could, constantly fearing that the flock might return with an owl egg before a solution to the control problem had been found.Give it a listen. P.S. I'm on my honeymoon right now in Japan. I was working frantically to record these episodes before I left. My chief of staff Riley Konsella is sending the episodes out for me while I'm gone. If you need anything while I'm away, you should email Riley. Thanks in advance for being understanding that this newsletter is slowing down for my honeymoon. I'm going to dedicate myself to relaxing over the next two weeks so that I come back hungrier than ever. Get full access to Newcomer at www.newcomer.co/subscribe
In the past 12 months, it has felt like “AI” transformed from a pair of letters that companies affixed to their latest product announcements to get some extra marketing luster to the shorthand for a genuine technology revolution. ChatGPT, Dall-E, Midjourney, and more showed the world what artificial intelligence is now capable of doing. Then, the funding started pouring in for every startup that had anything to do with those two letters. Every venture firm needed to bet on their own foundational model and every startup needed to get its hands on Nvidia's H100s to train their own foundation models. Ahead of the 2nd Cerebral Valley AI Summit on Nov. 15, I wanted to really take stock of how we got here. So I teamed up with my conference co-hosts Max Child and James Wilsterman to bring you a six-part podcast series on the rise of generative artificial intelligence.You can apply to attend the Cerebral Valley AI Summit here. Applications close Oct. 16. On the series' first episode we reflect on how generative artificial intelligence and large language models took Silicon Valley by storm. With the help of ChatGPT, we consider the top research papers that brought us here, the most important historic milestones along the journey, the key artificial intelligence products on the market today, and how artificial intelligence is already impacting our lives. The show is fun and and lighthearted. I hope it's a little more accessible than the usual fodder on the Newcomer podcast. For instance, on a future Cerebral Valley episode, we're going to do a draft pick of what we think will be the most valuable AI startups. On upcoming episodes, I interview guests like Daniel H. Wilson — author of How to Survive a Robot Uprising, Where's My Jetpack? and How to Build a Robot Army — and DoNotPay CEO Joshua Browder.If you've never listened to the Newcomer podcast before, this is a good time to give it a shot. Die-hard podcast listeners will remember Max and James, who are the founders of the AI voice games company Volley, from my January episode on augmented reality.Whether you can make it to Cerebral Valley in person or not, my hope is that this series is a solid primer as to what exactly has been going on in the business of artificial intelligence. I follow this stuff super closely and until we got organized for this podcast series there was so much that I hadn't learned. I know most of you won't be able to come to the conference in person, but there will be a virtual conference in this newsletter. We will publish recordings from the summit on our YouTube channel and send out some of our favorites over the podcast feed. So this is your lively refresher on all the crazy stuff that happened in Silicon Valley artificial intelligence startups this year. Give it a listen.Apply to attend the Cerebral Valley AI Summit here. Applications close Oct. 16. P.S. I'm on my honeymoon right now in Japan. I was working frantically to record these episodes before I left. My chief of staff Riley Konsella is sending the episodes out for me while I'm gone. If you need anything while I'm away, you should email Riley. Thanks in advance for being understanding that this newsletter is slowing down for my honeymoon. I'm going to dedicate myself to relaxing over the next two weeks so that I come back hungrier than ever. Get full access to Newcomer at www.newcomer.co/subscribe
I brought two top Silicon Valley entrepreneurs working on extending lifespans on the Newcomer podcast this week. One of them is trying to help people live longer. The other, their dogs.James Peyer, the CEO of Cambrian Bio, is acquiring majority stakes in drugs that could combat a particular illness while showing promise for broader use among healthy humans. Meanwhile, Celine Halioua, the CEO of Loyal, is developing drugs to make dogs live longer. Fundamentally life extension, or longevity, is about finding drugs and treatments that can be given to healthy humans to help them live longer, healthier lives. Instead of just treating illnesses, entrepreneurs in the space want to find ways to stave off aging in already healthy people. The space has long been a fascination of mine. In February 2022, I profiled Elad Gil's investments in an array of companies looking to make healthy humans live longer, healthier lives.The HBO show Silicon Valley helped popularize the idea that Silicon Valley elites were pumping their veins with younger people's blood. (I've yet to get anyone to confess to me that they're buying plasma.)To the chagrin of this week's guests, one tech mogul desperate to avoid death has received a lot of the attention recently. That's Braintree founder Bryan Johnson. Time magazine just profiled Johnson under the headline “The Man Who Thinks He Can Live Forever.” Johnson, 46, is a centimillionaire tech entrepreneur who has spent most of the last three years in pursuit of a singular goal: don't die. During that time, he's spent more than $4 million developing a life-extension system called Blueprint, in which he outsources every decision involving his body to a team of doctors, who use data to develop a strict health regimen to reduce what Johnson calls his “biological age.” That system includes downing 111 pills every day, wearing a baseball cap that shoots red light into his scalp, collecting his own stool samples, and sleeping with a tiny jet pack attached to his penis to monitor his nighttime erections. Johnson thinks of any act that accelerates aging—like eating a cookie, or getting less than eight hours of sleep—as an “act of violence.” Even as Johnson is getting a lot of attention for his self-experimentation, there's a growing view that there could be something credible behind Silicon Valley's interest in life extension. The Economist just wrote that “slowing human ageing is now the subject of serious research.”Many in mainstream science and medicine look at all this slightly askance. That is understandable. It is an area which attracts chancers and charlatans as well as those with more decent motives, and its history is littered with “breakthroughs” that have led more or less nowhere. America's Food and Drug Administration does not recognise “old age” as a disease state, and thus as a suitable target for therapy. Nevertheless, evidence has been accumulating that such research might have something to offer.Some established drugs really do seem to extend life, at least in mice. That offers both the possibility that they might do so in people and some insight into the processes involved. The ever-greater ease with which genes can be edited helps such investigations, as does access to large amounts of gene-sequence data. The ability to produce personalised stem cells, which stay forever young, has opened up new therapeutic options. And new diagnostic tools are now offering scientists means to calculate the “biological ages” of bodies and organs and compare them with actual calendar ages. In principle this allows longevity studies to achieve convincing results in less than a lifetime.I dug in with Halioua and Peyer about where they saw the most opportunities, how their own companies were progressing, and why they thought Johnson's publicity campaign was doing a disservice to companies working on longevity. The duo helped break down the space, discussing which types of companies they think are innovators, which efforts are more speculative moonshots, and which ones are simply snake oil. Give it a listen. Get full access to Newcomer at www.newcomer.co/subscribe
Chris Lehane was once the consummate Democratic spin man and campaign wonk. He introduced the world to the vast right-wing conspiracy against the Clintons. In 2015, Lehane dove into the high-growth startup world. He joined Airbnb to run policy and communications. He taught the home sharing company how to fight nicely with cities, dishing out data and tax cooperation in exchange for favorable local regulations. Unlike Uber's confrontational approach that had it going to war with Bill de Blasio in New York City, Airbnb tried to foster a cozy relationship with urban policymakers.Airbnb CEO Brian Chesky and President Barack Obama built a tight relationship. A year ago, just as the crypto winter was starting, Lehane joined Katie Haun's self-named venture fund, which had raised $1.5 billion. Haun Ventures positioned itself as a leader in regulation, policy, and communications. Haun is a former assistant U.S. attorney. Rachael Horwitz, the firm's chief marketing officer, once ran communications for Coinbase. And Lehane brought the political experience, especially with Democrats. But there's only so much one firm can do to change crypto's reputation in Washington, especially with Democrats. Sam Bankman-Fried, the former CEO of FTX, had become the crypto world's standard bearer with Democrats, donating to their campaigns and speaking to their values. Then when Bankman-Fried's empire unraveled and he headed to jail, many Democrats grew disillusioned with crypto. This year, two Republican-led House committees moved forward crypto-friendly legislation that would clarify the regulation of crypto currencies and give the Commodities Futures Trading Commission more power to regulate crypto (denying the SEC some of that power). Meanwhile, the Biden appointed SEC chair Gary Gensler has sued crypto exchange Coinbase and Binance for failing to register their exchanges with the SEC. I invited Lehane on the Newcomer podcast to take stock of crypto's status in Washington. We talked about the bills working their way through Congress, the SEC lawsuits, and the crypto winter. Lehane and I also talked about how he believed that America needed to embrace a “common sector” that served as a hybrid between government regulation and corporate self-regulation. Think Airbnb data sharing with cities or Facebook's oversight board. We also commiserated over co-existing with Silicon Valley Republicans in the MAGA era. Get full access to Newcomer at www.newcomer.co/subscribe
I spend most of my time here talking about how people earn their money.Rey Flemings, the chief executive of the YC-backed startup Myria, is an expert at helping people spend it. For several years, Flemings ran a luxury services consultancy for family offices. In other words, he threw parties in Las Vegas, introduced billionaires to celebrities, rented out private mansions, and helped people acquire things money can't usually buy. These days, Flemings is building a startup around the same concept. Letting rich people buy what isn't on the market. He's building a marketplace for off-market travel and accommodations. On top of that, he's spinning up a social network for the ultra wealthy. Flemings says his average member's net worth is about $600 million. I sat down with Flemings to talk about his startup and to understand how Silicon Valley's most successful people are spending the fantastical sums that they've earned in the past few years. He warned about the unhappiness that sudden fortune can bring, calling it “the success condition.”We're all humans. We're all chasing the American Dream. We're all chasing success. And when you achieve it, one of the first discoveries that people are shocked by is that you have to pump the brakes. Money doesn't buy happiness. I was talking with a new client the other day and he said, “Ray, I can't talk about this publicly, the world would play the world's smallest violin, but the day I exited triggered the deepest and greatest period of depression in my life.”Give it a listen.Highlighted ExcerptsThe transcript has been edited for clarity.There is a phenomenon in Silicon Valley where someone suddenly becomes rich, especially when their entire net worth is tied up in a startup. Finally, they sell the company and now have all this money, but don't really know how to be wealthy or what to buy. What typically happens when somebody sells their company for a billion dollars and gets 300 million of it?Rey Flemings: First of all, there's no one-size-fits-all answer, right? We're different. Significant, sudden, great wealth does come with a particular set of challenges. Zooming out across 15-17 years in this space and looking at all of the folks that work here, zoom all the way out. Let's just focus on first-generation people who are operating a business and/or they're doing something presently to amass that wealth. I've worked with probably 100-125 folks in that category. I hear the same things over and over, so often that we have even coined a name for it — we call it the Success Condition.It goes something like this: We're all humans. We're all chasing the American Dream. We're all chasing success. And when you achieve it, one of the first discoveries that people are shocked by is that you have to pump the brakes. Money doesn't buy happiness. I was talking with a new client the other day and he said, “Ray, I can't talk about this publicly, the world would play the world's smallest violin, but the day I exited triggered the deepest and greatest period of depression in my life.”What ends up happening is we chase the American Dream only to realize it and then we're like “Wait, why am I not happy? What's missing here?” Rich people get sad, depressed and commit suicide just like anyone else. Studies show that beyond about $100,000 a year, any more money doesn't actually contribute to human happiness. The wealthier and more successful you become, the harder it is to form close interpersonal relationships with people that aren't in your network.Break down what was the motivation to do Y Combinator and build more of a tech platform for Myria?Rey: Fantastic question, Eric. I'd love to sound like I had this all planned out and was so smart with so much foresight. I knew I wanted to build a scalable business with my background. But when I started The Blue, I ran it for 5-6 years before we could start Myria. It was complicated. How do you scale services? Many say you can't scale services. If so, what do you scale and how? How do you keep customers happy who want white glove service and personalization? How do you provide that special touch at scale? These are really hard problems to solve.I grew that business bootstrapped to about $60 million GMV annually. If you do that, you stay busy. I didn't know my kids, family, or myself. I was always on a plane, just work, work, work. That's not sustainable.At least you get to go to parties sometimes?Rey: Yeah, almost always in that business. I just celebrated my 50th birthday. I don't have to tell you I didn't want to spend the rest of my life on a plane in a suit. That's no way to live.It turns out that when we started Myria, we asked clients what they wanted. Ninety-two percent of requests fell into just three categories. People wanted our global travel product — not just booking a flight or kayak to Toledo. Really crazy, experiential travel beyond a private jet. When you get off the private jet, what happens? The best things in the world you can't find on Google. If you can't search for them, how do you know what's on the menu? There's a whole universe of off-market awesomeness in every category, but no one tells you about them because they aren't online.Travel experiences, people, and assets. When you're running a big company, you have an amazing team. When you hit $300 million net worth, you probably move to a single family office with teams managing your wealth. But for your personal life, even with household employees, you want to relax at home. A person worth $3 billion wouldn't run their company with one person, but their personal life becomes a multi-billion dollar enterprise with homes, kids, divorce, assets everywhere. Assistants work hard but can't be experts in everything billionaires need help in.We asked clients what they wanted and 92% of requests were in three categories. Also, there are about 20 markets ultra wealthy care about. If we have great coverage in those categories in those markets, we've covered nearly all use cases.I've always wondered — if I'm at Bezos' level of wealth, do I try to get everybody who interacts with me to sign an NDA? Especially if I'm out partying on a yacht, is everybody at that party signing something to keep things confidential?Rey: On the Myria platform, everyone who sells to our members is automatically under binding arbitration. The wealthy are targets for frivolous litigation. We try to prevent that.In real life, if you're hosting a party, many will request or demand NDAs and lock up phones, like Dave Chappelle style with magnetically locked bags. I think that's good considering phone addiction. You've thrown a million dollar party for people's enjoyment but they just look at their phones. But there are gaps. I can share a horror story.We did an expensive, innocent party at an incredible estate with famous people relaxing and having fun — nothing unprintable. But no one wanted cameras in their face while relaxing Someone who signed the NDA went to the press implying we discriminated by only having women sign NDAs, not the men. The men were dear friends of the client, so they didn't have to sign. Sometimes NDAs can backfire.Do you require NDAs for everything?Rey: We try to on the platform but nothing substitutes for having a good group of trustworthy people, which is harder as you become more successful. It's become a sport to vilify the rich, making it harder to form close relationships outside your network. Get full access to Newcomer at www.newcomer.co/subscribe
Jane Poynter spent two years and 20 minutes in a biosphere back in the early 1990s. (There's a documentary about it.) Later, Poynter set her sights on a mission to Mars. Wired wrote in 2014, “Meet the Couple Who Could Be the First Humans to Travel to Mars.” The story was about Poynter and her husband, Taber MacCallum. These days, the duo is working together on building a hydrogen balloon that will take tourists to space for $125,000. Poytner came on the podcast to talk about her startup, Space Perspective. We also discussed SpaceX, Elon Musk, Virgin Galactic, and the state of the adventure tourism industry in light of the deep sea deaths on a OceanGate submersible headed to the Titanic. On the show, Poynter said that Space Perspective, which has about 130 employees, has raised almost $70 million. Prime Movers Lab and LightShed Ventures are major investors, Poynter said. She told us that she hopes to commercial operations “around the end of 2024.” Venture capitalist, chief of staff newsletter author, and AI event host Ali Rohde joined me as a guest co-host for the episode. (She's a friend of the show and I'm exploring different podcast episode formats. I always welcome your feedback and advice. In that spirit, I'll mention that I'm still looking for a podcast producer.)Think of the episode as part two in my exploration of space startups. Last week, I talked with Delian Asparouhov, the co-founder of Varda Space Industries. This week, we interrogate space tourism. Give it a listen.Highlighted ExcerptsThe transcript has been edited for clarity.What if anything did you take away from the OceanGate situation?Jane: What's fascinating is we got almost no customer questions or refund requests due to the OceanGate accident. It's incredibly different from what we do. Also, in the 60+ years of deep ocean submersible operations there had never been a fatal accident until that incident. You have to ask why. I don't want to focus on OceanGate specifically, but the big takeaway for us was that we embrace regulatory oversight. We want the FAA and Coast Guard to work with us since we also operate at sea. We go so far beyond any standards they would set that it's good for us and the industry to have that accountability and transparency. That was the main takeaway: We welcome reasonable regulations and oversight.Space tourism more akin to safaris than Virgin GalacticJane: It's interesting that you talk about Blue Origin and Virgin not being competition because the experience is so differentiated from what we offer. Our experience is more akin to incredible safaris, trips to Antarctica, and other wonder travel that deeply transforms people. That's why we priced our tickets at $125,000. It's in line with those kinds of life-changing experiences. When Antarctica tourism opened up, there was a huge demand from people willing to pay high prices for a once-in-a-lifetime trip. We're seeing incredible excitement and demand from customers wanting to go to space with us. We have an event coming up soon with over 100 of our explorers gathering here, and they all want to connect with each other too. We're building a real community around spaceflight and this experience. It's going to be such an extraordinary, bonding experience for people. I truly believe it will bring people together in a deep way.You mentioned Blue Origin, Virgin, and SpaceX — obviously some of the first names people think of when space is mentioned like Elon Musk and Jeff Bezos. They are controversial figures, likely quite different from our target customer base. But I'm curious. What do you think about them? Are you grateful for how they've helped popularize and mainstream space travel?Jane: Taber and I worked with Elon before he started SpaceX, so we have an interesting perspective. In the early days of SpaceX, space tourism was considered a joke and the idea that commercial companies could enable space travel or moon/Mars missions was insane. It was assumed that only governments could do that. Elon deserves a lot of credit; Gwynne Shotwell too. She's done an incredible job revolutionizing the space industry by lowering costs, improving efficiency and effectiveness, and showing us what's possible. SpaceX paved the way for the over 100 small rocket companies operating now, which never would have happened without that trailblazing. So while there are likely narrative or cultural elements we wouldn't fully align with, overall we are absolutely grateful for the pivotal role SpaceX played in advancing commercial space and making it seem achievable.What excites you about exploring space?Jane: When I think about space exploration, I don't view it as leaving Earth never to return. I actually quite like this planet! To me, space exploration is more of an extension of the perspective-broadening we do now. When people look down on Planet Earth from space, it's a mind-blowing experience. Now imagine yourself standing on the moon or Mars and seeing Earth. It's that exponentially more impactful. It will give people a wildly different perspective on what it means for all of us to live together. We should think of ourselves as one human family living on Spaceship Earth. As we venture farther out, it will become increasingly clear that we're holding up a mirror to humanity, seeing ourselves somewhere other than Earth for the first time. It's a wild concept. So that's how I view space, not as leaving the planet but expanding our perspective to appreciate that we're all in this together.How do you prevent accidents in the air?Jane: A common question we get is what happens if something goes wrong with the balloon? The balloon technology is incredibly well understood with a long legacy. Hundreds have been flown in the last 20 years without a single in-flight incident. However, we obviously need backup systems. We have a series of parachutes, similar to those used on SpaceX's Dragon capsules or other space vehicles. They are robust, proven parachutes. We have four total, with only two needed for a safe landing. The parachutes are only used in an emergency scenario because normally the ship ascends under the balloon and descends back onto the balloon, keeping the flight system consistent. This is a very safe approach, never transitioning between flight systems. We've focused on simplicity everywhere possible because simpler systems tend to be safer overall. Get full access to Newcomer at www.newcomer.co/subscribe
Last time I remember writing about Varda co-founder and Founders Fund partner Delian Asparouhov, I was giving him a hard time about his subdued impromptu Clubhouse run-in with then San Francisco District Attorney Chesa Boudin who he'd been flaming on Twitter.But since then, Asparouhov has mellowed out online. When I texted him after our podcast recording session and mentioned that his Founders Fund colleague Mike Solana was sassing me on Elon Musk's social networking platform, Asparouhov wrote back, “Bro I'm tryna do 3 jobs over here. I don't have time to pay attention to what Solana is up to.”Besides Varda and Founders Fund, I wondered what the third job was.He texted me back, “Fatherhood.”On the latest episode of the Newcomer podcast Asparouhov and I covered a lot of ground. We talked about Varda's satellite mission and its ambitions to manufacture in space. We discussed SpaceX's reusable rocket and the media conversation around Starship's explosion. Asparouhov mused about UFOs and missions to Mars. It was a wide-ranging conversation about space and technology.The conversation started off digging into Varda's excited research into LK-99.Varda ran an experiment which they initially thought might show verification of room temperature semiconductors.By the time we recorded our conversation, you could tell Asparouhov was more muted about Varda's findings.Later he tweeted, “alas, the rocks we made floated due to iron impurities.”Highlighted ExcerptsThe transcript has been edited for clarity.Eric: What is Varda's focus at the moment?Delian: Our goal is to take some of the research that's been shown on the International Space Station to have a ton of promise in terms of, as we've been talking about, solid state formulation. It turns out solid state formulation is significantly affected by gravity - that may also be true in superconductors. So one day down the line, if somebody does discover these formulations and they're showing issues that we think gravity could actually solve, there's a world where Varda flies a superconductor. You know, four or five years, definitely not anytime soon, given that the biopharma side is so much more preserved currently.Eric: I'm gonna be dumb again. To me, solid state is like hard drives. Is that what you mean by solid state formulation?Delian: If you look at what's happening both in superconductors and what we do in the pharma world, you're taking things that start as very fine grain powders or liquids and making solid state crystalline versions of them. In the pharma world that ends up looking like a little bit of table salt that you take, and it turns out that thing actually has drug cancer molecules and mRNA molecules. In the world of superconductors, it turns into these things that look like, I mean you've seen them on Twitter, they look like these kind of weird half ceramic, half metal objects. So solid state is just the form of the matter. Solid state in particular typically means a larger crystalline lattice structure, not just individual small molecules.Eric: The whole story of milestones you're talking about, what would be viable, reminds me of the SpaceX experience. Where a few months ago one of their rockets blew up. It's so hard as a layperson, even when cheering these things on, to know as an external observer what signs show the company's on track. What was your reaction to media like The New York Times framing the SpaceX explosion super negatively?Delian: I think the layman's view, particularly The New York Times, was clueless and off base. In aerospace, it's easier to publicly verify traction, unlike software where companies just claim things. You can see did the rocket launch? Did the spacecraft enter orbit? Those are physical facts. SpaceX is developing an extremely ambitious new rocket alongside their workhorse Falcon 9 that has flown over 200 times without exploding. This new rocket is riskier but more capable. It's interesting because even though Falcon 9 lands part of itself, it still loses the top section on every flight. So travel is expensive if you had to rebuild the cockpit after every plane flight. This new rocket Elon's making aims to be fully reusable to lower costs.Because it's so ambitious, SpaceX's approach is to test and fly rapidly rather than get stuck analyzing indefinitely. Their early Falcon rockets blew up but they learned. Nobody expected this new rocket to even get off the pad, but it went way further than expected before failing around stage separation. Calling it a failure seems crazy to me given this is the most ambitious project ever. It did way better than anyone thought, proving out concepts. Failures are part of pushing forward ambitiously. The NYT calling it a Space Shuttle-type failure shows cluelessness - this explicitly developmental rocket had no people aboard. To get to safe, you have to start unsafe and prove it out over time.Eric: How much does Varda depend on SpaceX's continued success in bringing down the cost curve? Could Varda work with today's cost of satellite deployment? Or are you counting on further reductions in deployment costs?Delian: At today's launch costs, where we're spending $1.5 to $2 million per flight, that is low enough for us to build a strong business around what we're doing now. So I'd say none of our models or thinking depends on future cost drops. Obviously I'd be thrilled if something like Starship came online, though I think that'll take time. I'd be excited for more players to start landing rockets - no one has really done that yet, even though it's been eight and a half years since SpaceX's first landing. So I'm not counting on it happening soon. We've architected our business so it doesn't depend on further cost reductions.. Get full access to Newcomer at www.newcomer.co/subscribe
Claire Hughes Johnson writes in her book, Scaling People, about a moment early on in her time at Stripe when an Irish journalist shouted to her, “You're the lady! You're the lady with the lads!”Hughes Johnson, who joined Stripe in 2014 as the payments startup's chief operating officer, works closely with two of the most iconic Silicon Valley entrepreneurs, Patrick and John Collison. During her tenure as COO, she helped bring her management know-how from Google and experience working for Sheryl Sandberg to help organize the growing company. I invited Hughes Johnson on the Newcomer podcast to talk about her time at Stripe and the management lessons that she has put down on paper in Scaling People, which she published this year. Toward the end of our conversation, Hughes Johnson turned the tables on me and gave me some coaching.Our conversation circles around two sections of her book, in particular. We talked about giving feedback and honesty in a corporate setting. She talked about her principle that managers should encourage people to “say the thing you cannot say.”She writes,How often have you sat in a meeting and mused, “It really feels like there's something that isn't being talked about right now”? Or had a conversation with a report and thought, “I think they're getting upset about what I'm saying”? Or caught yourself filtering everything you say? These questions prompt a bigger one: Why don't managers say what's actually on their minds?People often think that good management is about having a lot of filters, and for good reason. There's a lot that might feel risky to say, or that feels like a personal judgment. But be wary of over-filtering. Fine-tuning your filters and pushing yourself to name your observation in a constructive way means you'll be able to have a more honest conversation about what's going on. Then you can all start working on a solution in earnest.Hughes Johnson concludes scaling people with a chapter titled, “You.” It looks at how managers manage themselves.She writes,The more senior you become, the more creative reality gets at finding ways to beat you up every day. You will have days—sometimes many in a row—when your highest performer is threatening to quit, a top customer has just informed you that they're moving to a competitor, you're leading a company-wide meeting the next day and haven't had time to prepare, and the cross-functional project you kicked off last week is already going off the rails. Many people don't have the psychological strength and resilience to keep going. In The Hard Thing About Hard Things, Ben Horowitz calls this “the struggle,” when “nothing is easy and nothing feels right.”To make it all work, you have to learn how to manage your time and energy. First, diagnose what gives and takes your energy. The easiest way to do this is to map out your good and bad days and track what activities add to and detract from your energy. An easy tactic is to keep check marks on your calendar of good days and bad days. After a month, look at all the good days and all the bad days, and then the good weeks and bad weeks, and see what trends jump out. When I did this exercise, I found that the weeks when I had more than one work event that kept me from having dinner with my kids and getting them to bed were bad weeks. I then resolved to restrict my work-related late nights to once a week—a personal guideline that I occasionally break, but not often. Your goal is to study what combination of time spent on which activities creates your best performance, then determine where you need to set boundaries to preserve your strongest self.Coming up as a reporter, I was always resistant to “management” and “leadership” advice. Those words made me think of Dale Carnegie books and cash-grab leadership seminars. But as I've started to build Newcomer into more of a company (we've got a full-time chief of staff, three summer interns, and am looking to hire a full-time reporter), I've come around to the idea that being intentional about how you spend your time and how you work with people are essential skills, worthy of serious reflection. These days, Hughes Johnson is a corporate officer and advisor at Stripe. She's spending a lot of her time working with individual managers and offering coaching inside the company. So we got a taste of how Stripe's management guru thinks.I really enjoyed our conversation. Give it a listen. Highlighted ExcerptsThe transcript has been edited for clarity.On Good Management.Claire Hughes Johnson: One of the topics that came to mind during my interview with John and Patrick was the importance of good management and smart operating structures. I emphasized that we shouldn't be reinventing the wheel. I believe in fundamentally sound management practices, rather than creating an entirely new way of thinking about performance feedback.I paused and told them, “You guys have to be with me on this. We might start with a very basic version of performance feedback, but it's better to do that than to let the perfect be the enemy of the good.” What's wrong with doing everything from first principles? At some point, it becomes exhausting, and you might not be the best at constructing the system.I also discussed the permanence of management structures and hierarchies that have been in place for hundreds of years. There have been attempts to innovate, such as holacracy, and workers' expectations have changed. I'm not suggesting we do things the same way we did 100 years ago, but we must pay attention to history.Patrick became particularly interested in this topic and started reading studies on management practices. He found academic research and data that showed countries with good management education and practices tend to have better economic outcomes. He agreed, saying, “Yeah, I think you're right. Let's put some fundamentals in place.”Unfortunately, some young companies want to reinvent more than they should. They may have invented a great product and feel compelled to create new ways to manage people. But I believe this can be a mistake, and it's better to rely on proven methods and structures.Young companies, especially, should practice giving feedback.Claire Hughes Johnson: The book has a lot of stuff on operating structures. It's really important to have goals and metrics that everyone recognizes as the company's most important goals, and to review them publicly with everyone. The mission should be clearly articulated, along with the direction for the next three to five years. Clear feedback structures are vital. Ideally, feedback should be continuous, but in young companies, many managers are new to this process, so they're not giving as much feedback. Therefore, you actually have to build more structures for it, which may seem counterintuitive. Some companies might say, “Oh, we're just running after this prize, and we can't be distracted by that.” But I respond, “Well, actually, it's the most important thing, because you aren't used to doing it.”How do you think about feedback? How direct or brutal should the feedback be?Claire Hughes Johnson: When I first started working at Google, I was shocked at how direct the engineers were, saying things like, “That's a terrible idea.” It was not the world I had been in working in consulting or government. At first, I got defensive, but I've come to love it. However, when I talk about feedback, there's a level of directness that I don't think is productive. If it's so direct that it feels like an attack, people stop listening and think about survival. It becomes a matter of adapting or dying.I have an operating principle that I talk about in the book: “Say the thing you think you cannot say.” I try to push myself and others to be open and willing to put things on the table without creating an attack response. For example, I might say to a leadership team member at Stripe, “From my seat, 10,000-20,000 feet away, I have a couple of things I'm worried about.” Then we can have an interesting conversation, looking at the problem together.As a leader, it's also about reading the room, even virtually. What's the body language? Are people making eye contact? Are there weird comments in the doc? My job is to get everyone else's opinion on the table first. Sometimes I'll say, “It feels like there's something we're not saying. It feels tense in here.” Then I might call on someone to break through to the real thing.There are different dynamics at play, such as power dynamics and layering issues. Sometimes you can tell the team isn't behind their leader. Other times, there's friction within the team or with another team. And sometimes, it's a matter of seeing the forest for the trees, stepping back to look at the bigger picture. Is this actually a good product? Why are we not seeing more user adoption? Why have we only grown 10% when the rest of the products are growing 40%? As a leader, your job is to have that bigger picture in mind and to ask, “Is this the right strategy?” Sometimes, you have to zoom out and say, “We're having the wrong conversation, folks.” Get full access to Newcomer at www.newcomer.co/subscribe
Lightspeed Venture Partners can sometimes live in the shadow of its noisier rivals. Andreessen Horowitz has a massive war chest, sprawling payroll, and insatiable appetite for attention. Meanwhile, Sequoia Capital is, well, Sequoia. But Lightspeed has established itself as one of the top multi-stage technology investors of this era. In July 2022, Lightspeed announced that it had raised more than $7 billion to invest in startups. Now, as Sequoia spins off its Chinese and Indian venture capital arms and as Lightspeed builds out its presence in Europe, Lightspeed is looking like one of the most globally-oriented venture capital firms. I invited Bejul Somaia on the Newcomer podcast to talk about Lightspeed's investments in India and its global strategy. Somaia is one of the leaders of the firm and relocated to the United States after many years investing for Lightspeed in India. “We want to see, access, and compete for the best opportunities wherever they are,” Somaia told me. Venture capital investments in India fell to $25.7 billion in 2022 from $38.5 billion in 2021.“Forcing capital into these companies is not necessarily the answer and I think we've learned that time and again,” Somaia said. “2021 — we know was out of control everywhere. But in shallow markets, out of control is even more damaging because the asset price inflation is even more significant in shallow markets. The movements are more jarring,” he said. A correction was healthy, necessary, and painful. Get full access to Newcomer at www.newcomer.co/subscribe
Union Square Ventures has some of the best performing funds in the venture capital industry. As I've reported, USV-backer UTIMCO disclosed in a recent filing that USV had delivered the public investment fund an internal rate of return of 59%. And that number will likely go up over time. (For instance, USV portfolio company Casetext sold to Thomson Reuters for $650 million after the UTIMCO performance update.) I invited USV managing partner Rebecca Kaden onto the Newcomer podcast to talk about how USV consistently invests in unconventional companies. We started off our conversation talking about Journey Clinical, the psychedelics company, in which Kaden announced a Series A investment in January. We also discussed USV's $200 million climate fund strategy, her interest in the AI application layer, and how rising interest rates are effecting the venture capital asset class. Give it a listenHighlighted ExcerptsThe transcript has been edited for clarity.Eric: How do you repeatedly invest in weird things like psychedelics?Rebecca: This thesis around access to care, which has attracted so much capital — some of it ours and is proving to be a good category — has been where the market has gone, but it's actually only one piece of the puzzle. The way we get into things that are unusual is by having strong theses about where things are going versus being extremely opportunistic. Obviously, there's a balance. But that thesis thinking is important. A lot of thesis work on this category really led to the belief that access to care is only half the puzzle. The other is how is care itself going to evolve, and you start unraveling that thread: how is care itself evolving? The real biggest last evolution of care is SSRIs. Those are prescription drugs and have been very important to the treatment for mental health crises, but there's a lot of things they don't treat. They're not a one size fits all model. And they're basically all we got, right? The innovation has not had a lot of other layers, except for psychedelics. And so we became very interested in psychedelics as the next card to get turned over and the next option in needing a bucket of options to treat a crisis.Eric: There are pharmaceutical companies. If there's money to be made, shouldn't they be trying? What's happening that it feels like you need a real outsider thinking to bring ketamine, a drug that's legal, to people's lives that the medical system is unable or unwilling to do what's happening?Rebecca: Well, this isn't really unique to psychedelics or to mental health. Pharmaceutical companies make drugs, so the development of drugs goes with them, but the distribution and networks of access is outside of it. That's not particularly new or unique here. That's where business opportunity has been. So the idea is, when you talk about distribution and networks of access, that's often where these business opportunities lie. The development of drugs is kind of a different beast, which lies in the pharmaceuticals. Why is there a business opportunity with creating access? Because the same reason technology drives business opportunity into anything. Offline access is slower, it's more gated; it's more piecemeal. You have to be at the right doctor at the right time, you have to find it. By creating a network, you just allow anyone anywhere to find access and education at a faster speed and with much broader supply, which brings efficiency to the market.Eric: Do you think mushrooms are going to be on the table soon? Or how much was this a bet that the regulatory regime would change?Rebecca: I don't think mushrooms as we think about them in a recreational sense are just gonna get legalized, maybe they will, but that's a separate kind of thing. I think other forms of psychedelics in formats that are right for care are very much going to get legalized. And actually, as we did our research, to us that's a when not an if. When you dig into what's going on clinical trials and in the clinical world, in some ways that seems pretty easy to bet on that these will continue to happen. And if not exactly the form that we've outlined, rapid new forms of options for care for mental health diseases are going to get approved and released. They're going to need a network of education and distribution to go into the therapist network.I do think there's a regulatory risk here. There's some amount of regulatory risk on psychedelics. We have to be honest about it. But I actually think more about regulatory risk across broader online healthcare in general. We're at somewhat of a time of that whole market still getting worked out on not unique to mental health and not unique to psychedelics, but what you can prescribe online and to whom and to how and how to allow that really important access that we've come to rely on, but also do it in an appropriately controlled way.Eric: You come from a consumer focused firm. When you were interviewing with USV, was it clear that you were shifting away from consumer, and how have you thought about consumer professionally?Rebecca: We don't think a lot about the divide in our portfolio if we think about our fund construction, or how we're looking at the world between consumer and B2B. What we think about is this thesis and the mechanics involved, for instance the role of building network driven businesses and the opportunity to leverage bottom up networks to create moats and scale and to broaden access by driving value and down costs systematically across categories we care about. Sometimes the right application when you pull the threads of that thesis is a consumer product or service, and sometimes it's the enabling infrastructure of them. But most of USV's investments had been one of those two things. They've either been the end application or the enabling infrastructure involved, but a common theme throughout our investments is how do you build important networks that can change industries, but rise outside of them. If you think about Journey Clinical, it's a network of therapists. They're stronger, and the more you add on to them, it's a bottom up growing network of acquiring the therapist, even though it interacts with the healthcare system and can change it. But it's growing this network outside of the infrastructure to then impact the existing structure. We really like that if you think across of our investments, and sometimes that turns out to be consumer, if you think about an Outschool in education, or a Duolingo, or a Twitter, and sometimes it turns out to be the enabling infrastructure or the B2B Marketplace application like Journey Clinical.Eric: What are your thoughts on AI in consumer?Rebecca: The piece of the AI craziness that I'm most excited about is the application layer. There's still a lot of kind of complexity and uncertainty on the foundational model and on the enabling infrastructure on where equity value aggregates — how much of the stack the models own, how defensible those models are, how that shakes out — but what I feel like we can have more conviction about is that it unleashes a wave of consumer innovation that's going to be really fun. The way this is gonna get utilized is by products that we want to use. I'm excited about unleashing this rejuvenated value around fun things to do, where the coolest thing about AI driven applications is they get better if people actually use them. So the strongest incentive of the team is to increase engagement and utility. The only way to do that is to combine utility with fun. There's gonna be so many things in the market that if things aren't fun to use, you'll go to another option. But the team has a huge incentive to get you to stick because that's how their product gets better. So if you think about something like Duolingo, which has been on this for a long time of leveraging machine learning and AI to create better consumer experiences — streaks, gamification, fun — infused with the utility of language learning is critical, because their product gets better if I use it. I'm really excited to see that apply to lots of different consumer applications. We've been talking a lot and everyone's been talking a lot about whether they're going to be moats. Is stickiness going to be possible? The barriers are so low. The moat is going to be fun and teams that can create rapid new fun things that keep you on the platform. We haven't seen that in a while. I'm excited about it. Get full access to Newcomer at www.newcomer.co/subscribe
Elon Musk is the liberal elite's enemy of the moment. How quickly the bad blood for Mark Zuckerberg is forgotten. When Zuckerberg's Meta released Twitter rival Threads, reporters and left-leaning types (myself included) flocked to the new app as a potential refuge from Musk's Twitter. The enemy of my enemy is my friend seemed to be the logic of the moment.I invited Facebook whistleblower Frances Haugen onto the podcast to discuss the sudden embrace of Threads, her ongoing criticisms of how Facebook operates, and her new book, The Power of One.Haugen, for one, has not forgotten the problems with Facebook. She hadn't downloaded Threads.I said on the podcast, “As a reporter, it's funny to see the reporter class embracing Threads at the moment when two years ago, or even more than that, they would have been so negative and apprehensive about trusting Facebook. I'm just curious watching the pretty upbeat response to Threads, what do you take from that and are you surprised there seems to be some media trust for Facebook right now.”Haugen was empathetic toward people fleeing Twitter for Threads. “I think it's one of these things where the trauma the Twitter community has faced in the last year is pretty intense,” Haugen told me. “People really liked having a space to discuss ideas, to discuss issues, and the idea that they could have a space again feels really good.”We spent much of the episode getting into the particulars of The Facebook Files and her criticisms of Facebook. She outlines a core critique in The Power of One's introduction:One of the questions I was often asked after I went public was, “Why are there so few whistleblowers at other technology companies, like, say, Apple?” My answer: Apple lacks the incentive or the ability to lie to the public about the most meaningful dimensions of their business. For physical products like an Apple phone or laptop, anyone can examine the physical inputs (like metals or other natural resources) and ask where they came from and the conditions of their mining, or monitor the physical products and pollution generated to understand societal harms the company is externalizing. Scientists can place sensors outside an Apple factory and monitor the pollutants that may vent into the sky or flow into rivers and oceans. People can and do take apart Apple products within hours of their release and publish YouTube videos confirming the benchmarks Apple has promoted, or verify that the parts Apple claims are in there, are in fact there. Apple knows that if they lie to the public, they will be caught, and quickly. Facebook, on the other hand, provided a social network that presented a different product to every user in the world. We— and by we, I mean parents, children, voters, legislators, businesses, consumers, terrorists, sex- traffickers, everyone— were limited by our own individual experiences in trying to assess What is Facebook, exactly? We had no way to tell how representative, how widespread or not, the user experience and harms each of us encountered was. As a result, it didn't matter if activists came forward and reported Facebook was enabling child exploitation, terrorist recruiting, a neo-Nazi movement, and ethnic violence designed and executed to be broadcast on social media, or unleashing algorithms that created eating disorders or motivated suicides. Facebook would just deflect with versions of the same talking point: “What you are seeing is anecdotal, an anomaly. The problem you found is not representative of what Facebook is.”To jog your memory for the episode, in September 2021, the Wall Street Journal published the first in a series of articles, called the Facebook Files, about the company's cross check program, which gave special treatment to high-profile users when it came to the company's moderation decisions. The Journal followed that report with a story about how Facebook's internal research showed that 32% of teen girls said “that when they felt bad about their bodies, Instagram made them feel worse.” The third story in the series showed that Facebook's decision to preference “meaningful social interactions” seemed to have the opposite effect, giving more reach to posts that instigated conflict and anger. Perhaps most damning in my mind, was the Journal's fourth story in the series which showed that Facebook had failed to implement internationally many of the table stakes moderation practices it applies in the U.S.The Journal won a Polk Award for its reporting. I have at times been skeptical of how damning these stories were. It's not that crazy to me that Facebook would want to provide extra attention toward moderation decisions for public figures. Is Instagram harming teen girls more than Vogue or Cosmo? So it was fun to finally hash out some of these issues with Haugen on the podcast. Ultimately, I think we were mostly aligned that we both support much better disclosure requirements for Facebook. Regulators are fighting with both arms tied behind their backs.I was disappointed, however, that Haugen seemed to bend over backward to come off as apolitical in her critique of Facebook. She didn't really engage in the obvious political asymmetry: Republicans are clearly much more likely to post the type of content that Democrats would call misinformation. I think that's a fair statement whatever you think of “misinformation.”Anyway, that should give you enough context to dig into our conversation. Enjoy!Give it a listenHighlighted ExcerptsThe transcript has been edited for clarity.Eric: How would you see a disclosure regime working that still allows companies like Facebook to be flexible and to change?Frances: I think a lot of people don't sit and think about what's the menu of options when it comes to intervening in a problem as complicated as this. I'm really glad that you brought up the idea that these companies' grow and change, where the next one to come along might not fit the exact same mold of this one. One of the ways the European Union handles that flexibility — and to be really clear, this kind of way of doing regulation of saying disclosure and transparency is instead of something like what's happening what's happening in Utah, where Utah is coming in and saying, “This is how you will run your company.” If people are under 18, they have to have parent supervision, no privacy for kids, their parents can see everything — or like Montana coming out and just flat out banning TikTok. Those are kind of “building fences” type roles, where we're like, “Oh, this is the fence you can't cross.” And the thing about technology is it moves and changes, and they're very good at running around fences.So the alternative is something like what the European Union passed last year, which is called the Digital Services Act. And the Digital Services Act says, “Hey, if the core problem is a power imbalance, right, the fact that you can know what's going on and I can't, let's address that core problem because a lot of other things will flow downstream from it.” So they say, “Hey, if you know there's a risk with your product, you need to tell us about it. If you discover one, if you can imagine one and you tell us about it. You need to tell us your plan for mitigating it because it's going to be different for every platform. We want it to unleash innovation. And you need to give us enough data that we can see that there was progress being made to meet that goal. And if we ask you a question, we deserve to get an answer,” which sounds really basic, but it's not true today.Eric: Some of these problems that you've identified are just human problems. If you talk about sort of the Instagram critique with it, potentially making sort of young teenage women — some segment of them unhappy. I mean, you could say, like, was that so different from Vogue? Is this really an algorithmic problem?Haugen: There have always been teen girls that were unhappy about their bodies or how nice their clothes were. But there are a limited number of pages of Vogue every month. The second time you read Vogue, you're going to have a different impact on you than the third time you read Vogue. Or you're going to get bored of it? And in the case of something like Instagram, Instagram progressively pushes you towards more and more extreme content.…With a 13-year-old girl, she might start out by looking for something like healthy recipes. And just by clicking on the content get pushed over time towards more and more extreme materials.Eric: Why did you decide to come out and reveal your identity?Frances: I had been contemplating for quite a while would I have to come forward at some point. I had a chance to talk to my parents about it a large number of times just because what I was seeing on a day-to-day basis while I lived with them during COVID was so different from Facebook's public narrative was on these issues. But the moment where I was like “okay, I have no other options” was right after the 2020 election — so this was in December, less than 30 days after the election — they pulled us all together on Zoom and said, You know how for the last four years, the only part of Facebook that was growing was the Civic Integrity team. So it was the team, for Facebook.com aimed to ensure Facebook was a positive social force in the world, that it wasn't going to disrupt elections, it wasn't going to cause any more genocides because by that point there had been two. They said, Hey, you are so important; we're going to dissolve your team and integrate it into the rest of Facebook. And when they did that, that was kind of the moment where I realized Facebook had given up. That the only way that Facebook was going to save itself was if the public got involved. That the public had to come and save Facebook. Get full access to Newcomer at www.newcomer.co/subscribe
Former BuzzFeed reporter Katie Notopoulos spent the first few days posting on Meta's Twitter copycat, Threads, as if she were the editor-in-chief of the new app. “As EIC, it's a lot of work! I'm personally curating the feed for users based on all of Meta's information on them to bring each person a hand-curated feed that I've approved,” Notopoulos posted on Threads. While Meta tolerated the ruse, the company censored one of her more roguish posts. “At Threads, our expectation is for all users to treat others with kindness and respect. This encompasses acknowledging the choice to adopt a Nazi lifestyle. We embrace a diverse community,” she trolled.Ultimately, Notopoulos announced that she had been fired from her role as editor-in-chief. I invited her on the show, along with Dead Cat podcast defector Tom Dotan, who abandoned our old podcast in favor of a gig at the Wall Street Journal. Together, we made sense of the Threads-Twitter rivalry. We talked on Friday so a few of our stats on Threads' growth might be outdated. Threads has since exceeded 100 million users and Elon Musk has proposed a “literal dick measuring contest” and called Zuckerberg a “cuck.” Otherwise, I think you'll find our conversation perfectly current. It's a lively episode. I posit that Threads will quickly become the Uber to Twitter's Lyft. I didn't just invite Notopoulos on the show because she has been a Threads troll and a the thorn in the side of Meta. She is famous for her extremely online, yet carefully reported pieces from her time at BuzzFeed. She wrote a piece titled, “Chuck E. Cheese Still Uses Floppy Disks To Make Its Rodent Mascot Dance — For Now.” And she revealed the real names of the Bored Apes founders. BuzzFeed is paying her for the next few months after the company shut down its news division. So she's had plenty of time to spend on Threads. Dotan once covered Snapchat obsessively and we spent many Dead Cat episodes talking about Facebook, so I thought this would be a fun episode to have him back on the show — even if the Journal has muzzled how wild he can be in his pronouncements. We concluded the show talking about a much more Newcomer-y topic. Dotan wrote last week about how AI had stemmed tech's downturn. He reported:The Nasdaq has risen 32% this year—the Dow Jones Industrial Average is up 3.4%—while Microsoft shares have climbed 41% and Nvidia shares have almost tripled on the back of optimism that AI will bolster their businesses.Companies that had been touting their cost-cutting and apologizing for hiring too many people in recent years have been adding to the excitement by broadcasting their AI ambitions. Of the S&P 500 companies with earnings conference calls from the middle of March to late May, 110 mentioned AI, according to FactSet. That is a record high and around three times the 10-year average. Give it a listenHighlighted ExcerptsThe transcript has been edited for clarity.Eric: Will threads be bigger than Twitter? Will it be the Uber to Twitter's Lyft?Katie: I predict yes.Tom: Twitter in its current state? Not at its peak? Yeah, such a low bar.Katie: Twitter still has advantages over Threads, like anonymity and retaining large followings. [Instagram Head] Adam Mosseri recently mentioned that Threads won't be a place for news.Eric: Threads aims to be a “nice” platform, countering the mean-spiritedness associated with Elon Musk and promoting a friendlier environment. Do you think the personality and positioning of Facebook will play a significant role, or is it all about the product and Instagram's connection?Katie: It's a combination. Threads' success will come from being a product under Instagram, which many people don't realize is owned by Facebook. On the other hand, people are leaving Twitter because of Elon Musk's presence.Tom: Facebook has a history of copying features in response to perceived threats, such as stories. However, Twitter isn't a threat. This opportunistic move by Facebook. To launch Threads won't magically fix the limitations of text-based platforms. We're in an era of niche social media experiences, and reaching a billion users with this format is unlikely. It's unfair to hold that expectation. Nonetheless, with 70 million users already, it can be considered a success.Katie: The Instagram account provided a dictionary where a conversation is referred to as a thread. For example, I was reading some intriguing threads that Eric was discussing. However, an individual post is still called a post, and instead of a retweet, it's called a repost.Eric: What are your thoughts on what was happening there? I found it very strange that they were dictating the language they want people to use. I couldn't determine if they're worried people will start using terms like “tweet” and if they wanted to discourage that.Katie: I interpreted it similarly. People were genuinely asking, you know, what should we call them? Since they're not tweets, do we call them retweets? What should we call them? I think the worst-case scenario would be if people started jokingly referring to them as “threats,” which is probably not what they intended.Eric: People are really enjoying wordplay, and personally, I'm not a fan of that. There are posts about your followers or your thread count. It's like a new summer camp where everyone is trying to come up with the language that will dominate the platform.Katie: Absolutely. And it's important to remember that there are a lot more people signing up than they expected, maybe around 70 million or something. But most of these users aren't on Twitter and don't know anything about it. They're not comparing it to Twitter. It's mostly regular users, like 16-year-olds in Brazil, who are thinking, “Oh, a new platform? Where does this fit in with Instagram? Just tell me what to do.” The user base is incredibly diverse, which is why it's very straightforward in terms of understanding.Tom: Explain to me, though, why people who have never liked Twitter would suddenly join a Twitter copycat and find it useful. Twitter has been around for a while, and its mechanics and design haven't broadly appealed to more than 200-300 million users. So why now are they expecting people in Brazil, who have ignored Twitter for the first decade of its existence, to suddenly find “thread” compelling just because they can use their Instagram handle and easily sign up?Katie: Personally, as someone eager to test out new apps, I preordered it on iTunes so that it would be ready for download at exactly 7 pm. I was excited about it because I follow technology news and knew there was a new app coming out. But for most people, I don't think they heard about the app and actively went to the App Store to look for it. I assume that when most people opened Instagram, they received a prompt to click and experience the new threads. They were signed up right from inside the Instagram app. So, anyone who opened Instagram yesterday was directed to join the app. They might have thought, “I'm not sure what this is, but I like Instagram, so I'll give it a try.”Eric: It seems like there are a couple of factors at play. There's definitely a disdain for Elon Musk, particularly among reporters and the left, including myself. I feel like that revolt and the desire of that crowd to find a new home helped motivate this, which is amusing because those same individuals have been critical of Zuck over the past five years.Katie: I think it's a case of “the enemy of my enemy is my friend,” to a large extent. That seems to be the prevailing sentiment.Eric: Indeed. It's obviously Instagram's power to bring Instagram users to the new app. Additionally, there are people who believe in getting on a platform early and building followers. So it's like these three groups trying to coexist—the social media managers who want to grow their accounts in case it becomes the next big thing, the Twitter rebels, and the Instagram influencers who are being told that this is part of the app.Katie: I have another theory as well. When you sign up for the app, the feed is currently purely algorithmic, and it includes a lot of content from people you don't follow. There's probably a lot of enthusiasm from these big celebrities who haven't found success on TikTok and are holding onto Instagram as an essential platform for their careers. Fans and regular users are excited because they suddenly see celebrities who hadn't posted on Twitter for years.Eric: What are people's opinions on the algorithmic feed? I think the average person wants an algorithmic feed.Katie: I believe so too. Instagram has continued to have an algorithmic feed for years because multiple tests have shown that it's what people actually want.Katie: Another important factor to consider is the timing of the app's launch. Summer is the ideal season for such apps because teenagers are out of school and have more time to use their phones. The current success can be attributed to the high number of young users who are typically in school during other times of the year. While the app's popularity may decline in the fall, I don't think it will fade away like Clubhouse did.Tom: Additionally, Facebook can easily maintain the app without much effort. Even if it reaches its peak user base, let's say around 100 million, and then gradually declines to 50 or 60 million, it will still be manageable for Facebook to sustain it. The operating costs are likely low, mainly cloud computing expenses, and it might even serve as an ad platform. For Facebook, it could be a side project that requires minimal effort. If it also happens to cause some inconvenience for Elon Musk and the ongoing competition in Silicon Valley, then that's an added bonus. Get full access to Newcomer at www.newcomer.co/subscribe
Maëlle Gavet and I first crossed paths about a decade ago when she was the CEO of the Russian e-commerce company Ozon. Then, we met up again when she was working as the chief operating officer for the SoftBank-backed real estate tech company Compass. A couple of months ago, I ran into Gavet at a networking dinner in New York City. I interrogated her about her two-and-half years so far as the chief executive officer of Techstars, the global pre-seed investment firm.I invited Gavet on the Newcomer podcast to talk about her time at Techstars and the state of the early stage market. You can listen on Apple, Spotify, YouTube, Substack's app or wherever you get your podcasts. I've also included some excerpts from the discussion below. What she said about the state of venture capital firms will strike a chord of fear with many of my readers. Gavet warned that many VC funds are entering “zombie mode.”She said: In the VC environment, there is a consolidation ongoing, it's not visible yet and in my view, the worst is to come. Emerging general partners not being able to raise their next fund. In the venture world, they don't shut down. It's not like in the operating company world where a company goes bankrupt and literally fires people, closes the door, and that's it. In the VC world, it's more like they move into zombie mode. It's like we are still managing our last fund, but we're not raising anymore.Our conversation covered a range of topics, including Gavet's book, Trampled by Unicorns: Big Tech's Empathy Problem and How to Fix It. We concluded our conversation, interrogating how tech has changed since she published the book and discussing what it would mean for brewing artificial intelligence regulation. Give it a listenLightly edited podcast excerpts from my conversation with Maëlle Gavet:What was the main thing that you wanted to change about Techstars?I wanted Techstars to become the best and largest pre-seed investor in the world. I thought that there were a lot of really good building blocks. The fundamentals were there, and there was also an opportunity to scale it further, streamline it, strengthen it, and provide more value to entrepreneurs, helping them get better terms, better exits, and better valuations. That's a long process. The VC industry works in a very, very long cycle. So it's not like you arrive and then three months later things change. But that was the idea of taking this great company to a whole different level. To start, when I would talk about Techstars, people would actually know who we are and what we do. And I remember announcing that I was joining Techstars to my network, and a few people, including venture capitalists from Silicon Valley who will remain unnamed, saying: Why are you joining a nonprofit? My answer was, this is not a nonprofit, this is an investment business and a pretty good one at that. It's just that they never really position themselves as an investment business. And so part of the work was to change internally and externally, the image of Techstars to say, we are very large pre-seed investors. And by the way, as for Crunchbase, a few months ago, we officially became the largest pre-seed investor in the world.What has been the company with the best return for Techstars?We have some really, really cool companies that I like very much. Companies like Chainalysis made headlines not long ago because they provide blockchain data and analysis to governments, banks and businesses around the globe. And when things like FTX happen, and it's only the most famous but there have been multiple situations where figuring out what is happening in the blockchain, crypto world has been pretty critical for a lot of institutions. Chainalysis is usually the company that calls.One that I liked very much is called Remitly. They're a mobile payments service that enables users to make a person-to-person international money transfer. So that's the tagline. What they do is that they allow to a large extent immigrants from all around the world to send money in a safe and cheap way to their families and to the people who need it. That's a $6 billion company. They went through an IPO in 2021. This is a company with a mission, which is amazing.We're talking about billion dollar plus companies, and we can also talk about smaller companies because we have 3,600 companies in our portfolio. We've got a bunch. But the one that I like a lot among our billion-dollar-plus companies is a company called Zipline. They design and manufacture these drones, and then they operate them to deliver vital medical products in Africa. It's a $3 billion company. They did successful fundraising in April of this year. Again, what they're doing really makes a lot of sense for the world, and the risk of using a Silicon Valley sentence: to make the world a better place. But the reason why it matters so much is because I deeply believe and so does my team that big money comes from solving big problems. Big problems usually are found in things that make the world a better place. Not always, but it does help. So that's my $3 billion-plus favorite company, but we got quite a few others.Are there standard terms for Techstars? If I'm an entrepreneur, what should I expect in terms of money and ownership?We have standard terms and they're public. So it's $20,000 plus $100,000 convertible notes. And depending on the conversion of the note, we ended up on average about 8% of the capital in the company. Basically what we provide to founders is the capital, obviously. But there is what we call the Techstars formula. So it's the $120k that I've just mentioned. It's the program. Our programs are very intense. It's a small class, very small classes — 10 to 15 companies. It's very hands-on. You have the Techstars team, and these are Techstars employees dedicated to that particular program. These tend to be people who are former entrepreneurs themselves. What is your read on the funding environment right now?In the VC environment, there is a consolidation ongoing, it's not visible yet and in my view, the worst is to come. Emerging general partners not being able to raise their next fund. In the venture world, they don't shut down. It's not like in the operating company world where a company goes bankrupt and literally fires people, closes the door, and that's it. In the VC world, it's more like they move into zombie mode. It's like we are still managing our last fund, but we're not raising anymore.A lot of venture firms have not yet taken the full write-down on their valuation, which compounds the problem because a lot of institutional LPs have public and private portfolios and the public portfolios have taken the write-down. Valuations has dropped quite dramatically.We came from a period where it was not abnormal for a venture firm to raise every two years, sometimes every year. And so a lot of the firms are now out in the market fundraising. And if you take a significant write down, then suddenly your performance on paper doesn't look great. And so it can create a problem for you. So it's not like they are in denial. I just think that they're trying to keep the appearances. The institutional LP knows that so there's like a double effect. The first one is most institutional LPs are over overexposed to VC because the VC hasn't taken the write-down that the public market has so there's like a denominator effect. And then the second reason is the LPs know when they look at the GP they invested in that some of them have not taken the full write down, and they're like, okay, maybe we're going to wait to see where all of that lands. And so VC environment is very tricky at the moment, and I think what we're observing is a complete change of the guard, a complete reorganization of the venture space. It's not over. My guess is that it's probably another few another couple of years. At the outcome of that change, we're most likely going to see very different players really influencing the markets.I would assume that over time, there's less money available.There's less easy money available. We have a little over 15,000 investors who have made an investment in Techstars, portfolio companies we've been connected with. So we talk to a lot of these people like we are deal flow to the VC industry, we're not really a VC ourselves. And what we tell our portfolio companies is, it's not that there is no money. There absolutely is some money, but it's harder to get because the VC is going back to some fundamentals — you should probably do due diligence before you give a check of a few million dollars to a company. You are going to have to show a clear path to profitability — doesn't mean that you have to be profitable, but it has to be clear and credible, not like you know, the hockey stick that makes you profitable in year 10 if all the planets align and you have no competition. And so that, by definition makes it a lot harder to create compelling cases. And then in a lot of cases, the VC will now ask, even at an early stage, to see some traction. We have companies that have raised recently very good rounds at seed and Series A levels, but they had a good track record a clear path to profitability, and a great product market fit. I think, if I had to summarize: Gone are the times where you could go and raise $5, $10, $15 million based on a napkin and a barely put together MVP [minimum viable product]. That's not happening anymore unless you're in AI. And that's a different thing.Some of the founders think the gloom and doom has been oversold. VCs want to get better terms, and it's in VC's interest to emphasize how bad things are. What do you say to that?The valuation that we saw in 2021 and 2022 didn't make a lot of sense. We're seeing a recalibration of the markets. We also say that to our portfolio companies: If you are being offered a down round, you probably should accept it because most likely, and obviously it's always on a case-by-case basis, but most likely, your last valuation was probably a little inflated, and the new valuation that you're getting is probably closer to reality. And so yes, it looks like you're down round. But maybe the way you should look at it is your previous round was an out of the ordinary round and this is the normal round. So it's not a down-round technically; it's just a normal round. Get full access to Newcomer at www.newcomer.co/subscribe
The metaverse had been left for dead. The massive hype for virtual worlds that we saw during the pandemic dissipated once we could all see our fellow humans in person again. But last week Apple finally revealed its augmented reality device, the Apple Vision Pro. The tech giant that rarely misses the mark with its carefully thought through product releases revealed that it wanted people to strap on ski goggle-like devices, direct a computer with their eyeballs, click with their fingers, and video chat in a digital realm.I invited Wired senior writer Lauren Goode and Anand Agarawala, CEO of the startup Spatial, on the show to talk about the new device. Goode got 30 minutes first-hand with the Apple Vision Pro. So we spent the first part of the show interrogating Goode about her experience with the $3,500 device that's expected to be released next year. Goode told us that she didn't think the device is truly augmented reality in the purist sense of the term. “It's not using any waveguide technology that refracts light and then puts it into your eyeballs. It's not holographic or volumetric, but it is AR if you think about the literal definition of AR as augmenting your reality,” Goode said. “Once you are running computer applications into this space in front of you where you would typically be looking at your real world living room but actually you're seeing apps and playing games and doing stuff, you are augmenting your reality. It's conceptually AR.”Agarawala has been hard at work on building tools for augmented reality devices for the past seven years at Spatial. The company builds 3D creation tools and hosts experiences across a range of devices, including virtual reality and augmented reality devices. Agarawala is cheering for real competition among the big tech giants when it comes to developing these wearable computers. “The market at some point of maturity would need all the Big Tech companies to get involved. If you're just the one company doing it, that means it's probably not a big enough market,” he said. Apple's entry into augmented reality “absolutely validates it,” Agarawala said. On the episode, we talked about Meta CEO Mark Zuckerberg's comments on the release of the Apple Vision Pro:Apple finally announced their headset, so I want to talk about that for a second. I was really curious to see what they were gonna ship. And obviously I haven't seen it yet, so I'll learn more as we get to play with it and see what happens and how people use it.From what I've seen initially, I'd say the good news is that there's no kind of magical solutions that they have to any of the constraints on laws of physics that our teams haven't already explored and thought of. They went with a higher resolution display, and between that and all the technology they put in there to power it, it costs seven times more and now requires so much energy that now you need a battery and a wire attached to it to use it. They made that design trade-off and it might make sense for the cases that they're going for.But look, I think that their announcement really showcases the difference in the values and the vision that our companies bring to this in a way that I think is really important. We innovate to make sure that our products are as accessible and affordable to everyone as possible, and that is a core part of what we do. And we have sold tens of millions of Quests.More importantly, our vision for the metaverse and presence is fundamentally social. It's about people interacting in new ways and feeling closer in new ways. Our device is also about being active and doing things. By contrast, every demo that they showed was a person sitting on a couch by themself. I mean, that could be the vision of the future of computing, but like, it's not the one that I want. There's a real philosophical difference in terms of how we're approaching this. And seeing what they put out there and how they're going to compete just made me even more excited and in a lot of ways optimistic that what we're doing matters and is going to succeed. But it's going to be a fun journey.Find the Podcast Get full access to Newcomer at www.newcomer.co/subscribe
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