How Many Startups Will Survive OpenAI? | E2288

Summary

This Venture Capital Roundtable on This Week in Startups assembles Jason Calacanis, Lon Harris, Jenny Fielding (Everywhere Ventures), Dave McClure (Practical VC), and Sam Lessin (Slow Ventures) to dissect two simultaneous earthquakes in the venture market. First, Anthropic and OpenAI have publicly voided unauthorized SPVs and named brokers like Hiive, Forge, and Sidecar in their crackdown — a move the panel agrees was overdue given the rise of multi-layer SPVs and “Wolf of Wall Street” promoters charging 10% load-in fees. The conversation widens into a debate about accredited investor reform, the SEC’s proposed sophisticated investor test, and Naval’s USVC closed-end fund as a legal workaround for retail demand.

The second earthquake is existential: AI is collapsing SaaS moats faster than late-stage boards can pivot. Jenny shares the story of a top-tier-backed founder who raised $15M Series A and then six months later returned the capital because Claude’s MCP connector and roadmap made the company a “zombie.” The group agrees that 50% or fewer of mid-stage portfolio companies will successfully cross the “SaaS-to-agentic” chasm, and that only founder authority — the kind that lets Elon kill the Model S to fund Optimus, or that let Larry Page force Google AI-first — can execute the burn-the-boats pivots required.

The episode closes on macro tensions: wealth is increasingly “stored in stories” rather than cash flows; the upper-middle class has 10x’d since 1979 and is driving SPV demand from Palm Beach; tokens may be the fastest-declining commodity in history; and Shruti Gandhi’s viral “SF Broke at $10M” tweet captures the new psychology where mere millionaires feel poor next to centi-billionaires. Intercom’s rebrand to Fin is held up as the rare late-stage success case.

Highlights

”It’s running a zombie company… or you get a guaranteed 10, 20, 30 million dollar package from OpenAI.”

“It’s running a zombie company to put your nose to the grindstone at a startup for 10 years, 15 years, and the outcome is unknown. Or you get a guaranteed, you know, 10, 20, 30 million dollar package from OpenAI.” — Lon Harris, 0:18

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”Like a surgical scalpel is a tool and a weapon. Just depends on how you use it and where you stick it.”

“Yeah, like a surgical scalpel is a tool and a weapon. Just depends on how you — how you use it and where you stick it. Single-layer SPVs authorized by the company are probably fine.” — Jason Calacanis, 8:22

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”10% then brings out these schlocky, salesy, Wolf of Wall Street types.”

“But 10% then brings out these schlocky, salesy, Wolf of Wall Street types. And that’s… I think that’s the piece that’s the dangerous piece because the Wolf of Wall Street people getting a 10% commission, I know those folks. Like, they’re going to just turn and burn. They don’t care.” — Jason Calacanis, 10:50

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”I will 100% put it out there that if you sign a contract with me for pro-rata rights and then come back and try to renege on them, I will sue you.”

“Yeah, I will 100% put it out there that if you sign a contract with me for pro-rata rights and then come back and try to renege on them, I will sue you.” — Jason Calacanis, 21:31

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”We as a society have decided to start storing wealth just in stories, right? Not in cash flow.”

“On the other hand, I keep going back to this thing that we as a society have decided to start storing wealth just in stories, right? Not in cash flow, right?” — Lon Harris, 30:25

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”These savvy founders are basically taking a long view… and where are these models going to be in five years.”

“What I think is interesting is that these savvy founders are basically taking a long view, kind of looking back and not saying what’s happening today but like where am I going to be in five years and where are these models going to be in five years. And I think that’s what scared him and that kind of freaked me out.” — Jenny Fielding, 46:19

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”Tokens are the fastest declining commodity in the world… it just may not be the most profitable business.”

“If these things keep going down, I’m not going to give myself a clip like you’ll only ever need a 10 megabyte hard drive. Obviously, people are just going to keep using a phenomenal amount of tokens, but it just may not be the most profitable business. What if the business looks like a bandwidth provider? What if the business looks more like a hard drive provider and it’s a commodity business that races to the bottom?” — Jason Calacanis, 54:00

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Key Points

• Anthropic and OpenAI void unauthorized SPVs (0:48) - Both AI giants drop bombs on the SPV market, naming brokers like Hiive, Forge, and Sidecar in a public hit list
• Anthropic picks who gets on the cap table (2:22) - Single-layer authorized SPVs probably fine; unauthorized multi-layer SPVs invite lawsuits
• Naval’s syndicate origin story (3:00) - Jason recounts being the first AngelList syndicate after Naval prematurely tweeted his sign-up
• Mark Pincus and Elon as early SPV controllers (3:42) - Pincus was first to push back; Musk has managed SpaceX secondaries every six months
• Sam Janny’s broker scam study (5:22) - 49.7% of SPV brokers were scammers, “rounded up” to half
• $100B Facebook IPO is now an A round (7:05) - Today $100B is what neo labs raise at pre-seed; the prize keeps growing
• Anthropic calls SPV brokers fraud (7:41) - “Likely engaged in fraud” framing is sweeping and marketing-heavy
• Accredited investor reform & SEC sophisticated investor test (12:00) - SEC chair on All-In said a driver’s-license-style test is coming
• Only 7-8% of country is accredited (13:46) - But only half the country owns equities, so the effective barrier is lower than narrative suggests
• Quo ad read (8:58) - Sponsor break for Quo (formerly OpenPhone) business communication platform
• Lack of transparency, not accreditation, is the real problem (15:00) - “People are not investing on balance sheets or financials, they’re investing on vibes”
• Sarbanes-Oxley made going public too expensive (16:03) - Regulation drove companies to stay private, which created the SPV demand
• Series A investors push out seed investors on pro-rata (20:53) - Jenny: in competitive rounds the big leads always pressure founders to make seed waive
• Figure was the SPV “Wild West” (24:17) - Robotics company reportedly hit $30-40B valuation entirely on SPVs with no VC pricing the round
• Middle East sovereign wealth funds still flush (26:22) - $4 trillion across Qatar, UAE, and Saudi sovereigns; NEOM and LIV were notable overextensions
• Upper middle class 3x’d, rich 10x’d since 1979 (33:35) - Lower middle class 24%→15%, upper middle class 10%→31%, rich 0.3%→3%+
• Palm Beach is the new SPV money pool (28:28) - Jenny: an entire “very buzzy” SPV was funded by Palm Beach families
• Fervo Energy and Cerebras IPOs (34:17) - Cerebras float projected to return $4.5-5B; meaningful but dwarfed by upcoming SpaceX
• Tax-free vs. taxable LPs redistribute differently (35:30) - 40-50% tax drag makes reallocation prohibitive for taxable institutions
• Tesla will be remembered as Optimus (37:20) - Jason predicts robotaxi and cars fade; humanoids billed by the hour become the story
• Feudalism 2.0 thesis (38:35) - A few hyper-winners with zero cost of capital compound endlessly; software-insurgent VC playbook is dead
• The $15M Series A returned because of Claude MCP (46:19) - Second/third-time legal-tech founder returned capital after Claude’s MCP connector landed
• First-time vs. seasoned founders react differently (1:01:54) - First-timers grind through; seasoned founders factor opportunity cost and walk
• Intercom rebrands to Fin (1:00:25) - Owen Eoghan’s late-stage AI-native pivot; rare success story
• ZoomInfo getting its ass handed to it (1:02:48) - Public SaaS data company; AI-first competitor LeadIQ already leading homepage with AI
• Only founder authority enables burn-the-boats pivots (1:10:43) - Elon kills Model S/X for Optimus; only Larry could force Google AI-first
• Tim Cook retiring at Apple’s crucible moment (1:12:59) - Engineer-led future; local models on 128-256GB Apple silicon
• Shruti Gandhi’s viral “SF Broke at $10M” tweet (56:51) - 50% taxes, $4M house, $100k nanny — net $1-2M after the OpenAI tender
• Founders meeting NYC VCs: own the state (1:14:00) - Bring 3 specific questions; be a sponge, not arrogant
• Solo founder rehabilitation (1:15:43) - Jenny reverses her 5-year position: solo founders with strong teams can succeed

Mentions

Companies

• Anthropic (0:48) - Voided unauthorized SPVs, named brokers in public crackdown
• OpenAI (0:48) - Parallel crackdown on unauthorized equity transactions; $6.6B tender for employees
• Hiive (24:50) - Secondary broker; CEO Asim Desai wrote a public letter
• Forge - Named in Anthropic’s hit list
• Sidecar (24:58) - Container/back-office for SPVs named by Anthropic
• Upmarket - Named in Anthropic’s hit list
• SpaceX (6:00) - Most-managed secondary market by Elon; 30% retail IPO allocation planned
• Everywhere Ventures (1:09) - Jenny Fielding’s fund; 500-founder LP base
• Slow Ventures (1:21) - Sam Lessin’s firm
• Practical Venture Capital (1:38) - Dave McClure’s secondary-focused fund
• Cerebras (34:17) - IPO, $4.5-5B projected float to investors
• Fervo Energy (34:17) - Geothermal company went public this week
• Tesla (1:09:25) - Burning the Model S/X to fund Optimus
• Figure (24:17) - Robotics company funded entirely on SPVs at $30-40B
• Uber (42:53) - J-curve narrative cited as analogue for current AI giants
• Intercom / Fin (1:00:25) - Rebranding the parent company to Fin; rare late-stage AI pivot
• ZoomInfo (1:02:00) - Public lead-gen SaaS facing AI displacement
• LeadIQ (1:03:17) - Jason portco; AI-first competitor to ZoomInfo, eight-figure revenue
• Grin (1:06:44) - SaaS-era influencer platform launching GIA AI product
• PipeDrive (1:02:00) - SaaS CRM Jason uses for podcast advertiser leads
• Google (1:07:23) - Google Book launch; Gemini comeback; Larry’s return for AI-first decision
• Apple (1:13:00) - Tim Cook retiring; engineer-led future for local AI hardware
• Microsoft (1:08:23) - Satya cited as rare late-stage pivot success
• OnlyFans (42:00) - $3B valuation cited as cash-flow steal vs. AI vibes valuations
• AngelList (3:00) - Origin of syndicate model with Naval
• EquityBee (1:17:42) - Employee option financing; new Slow Ventures investment
• USVC (12:00) - Naval’s closed-end fund workaround for retail access
• Mahalo (1:11:47) - Jason’s old search engine; Google copied its innovations
• TechCrunch / Disrupt (1:20:41) - Jason recounts breakup with co-founder that became Disrupt
• Launch Festival (1:20:24) - Jason’s free-for-founders event, brought back in 2026

Products & Technologies

• Claude / MCP connector (46:19) - The model whose roadmap killed the $15M legal-tech startup
• Fin (1:00:48) - Intercom’s customer-service agent, now the company’s new name
• Optimus (37:54) - Tesla’s humanoid; predicted to become Tesla’s defining product
• Robotaxi (37:54) - Predicted to be forgotten next to Optimus
• Google Book (1:07:23) - New AI-laptop competitor under $500
• Chromebook (1:07:23) - Brand being displaced by Google Book
• Gemini (1:11:38) - Google’s AI comeback product Jenny loves
• Tao subnets (54:00) - Decentralized compute pushing token prices to zero
• Plaud NotePin (16:56) - Phone-clip and chest-clip recording devices Jason wears skiing
• Carta (10:50) - SPV admin platform
• Robinhood (40:28) - Mentioned re: Sam’s teen investing exercise
• Trading Places podcast (1:17:22) - Dave’s secondary-focused show with Aman Verjee
• More or Less podcast (50:34) - Sam Lessin’s show

People

• Jenny Fielding (1:09) - Everywhere Ventures, 300+ companies, returning to the show
• Dave McClure (1:38) - Practical Venture Capital, runs secondary fund buying GP and LP commits
• Sam Lessin (1:21) - Slow Ventures, ex-Facebook
• Naval Ravikant (3:00) - Taught Jason the SPV industry; running USVC closed-end fund
• Mark Pincus (3:42) - First founder to push back on secondary trading
• Elon Musk (3:42) - Strong SPV manager at SpaceX; planning 30% retail IPO allocation
• Yuri (Milner) (4:39) - Authorized buyer of Facebook secondary shares in the old era
• Chris Sacca (4:45) - Twitter secondary buyer parallel to Yuri at Facebook
• Asim Desai (24:50) - CEO/founder of Hiive, wrote prominent letter
• Shruti Gandhi (57:00) - Array VC partner whose “SF Broke at $10M” tweet went viral
• Keith Rabois (59:39) - Almost ran for Miami mayor, came back
• Owen / Eoghan McCabe (56:44) - Intercom founder back for the AI pivot
• Satya Nadella (1:08:23) - Cited as rare late-stage pivot success
• Tim Cook (1:12:59) - Retiring at Apple’s “crucible moment”
• Larry Page (1:12:47) - Returned to Google to force AI-first decision
• Roelof Botha (1:13:00) - Sequoia’s “crucible moment” framing
• Fred Wilson (1:14:00) - Cited as example NYC VC to pitch
• Chamath Palihapitiya (1:20:24) - Bought into the Liquidity Summit; doubled price, tripled attendance
• Aman Verjee (1:17:33) - Dave’s Trading Places co-host; ex-PayPal
• Sam “Janny” (5:22) - Did SPV broker scammer study (49.7%)

Surprising Quotes

“I will sue you, right? Like, I have contractual rights, and then that’s it.” — Jason Calacanis, 21:00

“It’s 7%, 8% of the country. When you’re correct, because of inflation, you know, doubling every 10 years, you know, whatever.” — Jason Calacanis, 13:46

“Everybody who’s driving on the road right now is safe and not going to cause any…” — Jason Calacanis, 12:40

“If you own equities, you’re running away with it. If you don’t own equities and you’re making income, you’re getting hosed.” — Jason Calacanis, 29:07

“We’re cheap motherfuckers right.” — Lon Harris, 41:51

“It’s running a zombie company as a great person in a moment where the world is changing so fast is like, it’s like the worst feeling you could possibly have.” — Jason Calacanis, 50:02

“Only a founder can do that. It’s founder authority that allows you to kill products.” — Jason Calacanis, 1:10:47

Transcript

Lon Harris: 0:00 People don’t want to talk about it because it’s scary to admit that this is happening. 0:03 Found a founder that closed a $50 million series A from a top tier VC, and then a half a year later they planned to return the cash to investors. You add that Claude will displace the product and erode the value, this is really happening. Most people are not talking about it. It’s kind of wild. 0:18 It’s running a zombie company to put your nose to the grindstone at a startup for 10 years, 15 years, and the outcome is unknown. Or you get a guaranteed, you know, 10, 20, 30 million dollar package from OpenAI.

Jason Calacanis: 0:34 Do you think that the companies in your portfolio that are facing this similar chasm going from the SaaS era to the AI era or the agentic era are going to make it? 0:41 Probably 50% that I think might make it. It may not be the money printing free cash flow machine that people think it’s going to be.

Lon Harris: 0:49 Hey everybody and welcome back to Twist. Today is May 13th, it’s Wednesday, which means it’s venture capital roundtable day. I’m joined by a bevy of my favorite people, including of course my usual co-host, Jason Calacanis. Jason, how are you?

Jason Calacanis: 1:00 I’m well. Excited for today.

Lon Harris: 1:02 We also have Jenny Fielding from Everywhere Ventures. Jenny, how’s life on your end?

Jason Calacanis: 1:06 It’s good. I’m excited to be back. It’s been a while.

Lon Harris: 1:09 It has been a while. If you don’t know her firm, Everywhere Ventures does essentially, raises capital from a collection of about 500 founders and sources deals from the same group. Portfolio companies include Starcloud, Headway, Devo and others. Jenny, good to have you here. Now, Sam, Slow Ventures. How are you doing?

Jason Calacanis: 1:27 I’m great, man.

Lon Harris: 1:28 Glad to have you here. Major PortCos include Nextdoor, Robinhood, Human Interest, Airtable, etcetera, etcetera, etcetera. Busy man. And then finally, we have Dave McClure from Practical Venture Capital. Dave, how you doing?

Jason Calacanis: 1:38 Fantastic.

Lon Harris: 1:39 Good to have you back. You run a secondary focused fund that also buys GP and LP commits, which is a big deal because we’re going to start today by talking about the most important thing in the world, which is news that Anthropic and OpenAI dropped successive bombs on the SPV market. And if you don’t know what that means and you’re listening to this, imagine that you can’t buy shares in Anthropic or OpenAI because you’re not a VC, you’re not an employee. So you go to somebody in a back alley behind a dumpster, they open up the coat, they have a couple of shares in there and they say, ‘Don’t worry, it’s only a 30% load’.

Jason Calacanis: 1:59 Got some Anthropic for you here. Yeah, exactly. Just cut with a little bit of, like, you know, sugar or something. You shift fentanyl.

Lon Harris: 2:04 Yeah, in this case the fentanyl is the layered fees and it turns out that the two companies in question that have these great assets don’t want you to trade them. They want to have permission and so a lot of things happened.

Jason Calacanis: 2:08 What happened to democratization of capital? What happened to the little guy? Just stop it all over them here.

Lon Harris: 2:13 But Dave, I’m confused. Like, most companies have ROFRs on stock transactions. Like, this is not non-standard in the industry. I’m actually surprised they didn’t already have those in place.

Jason Calacanis: 2:22 Well, I think Anthropic is picking and choosing who they want to be in their deals. I think single-layer authorized SPVs are still fine. Unauthorized SPVs, multi-layer SPVs might start to get into weird territory, but there’s going to be a fuckload of lawsuits regardless.

Lon Harris: 2:32 That’s what I want to talk about. Yeah, I mean, having been—

Jason Calacanis: 3:00 In the SPV game, for since its inception and Naval kind of taught me the industry, I was the first actual syndicate on AngelList famously because he sent me a link to it, I signed up and he’s like ‘hey check this out, this is what we’re going to do next’ and then I tweeted it and he’s like ‘oh we didn’t announce it yet’ and they tweeted my syndicate. And so if you are doing this and you don’t have permission from the founders, it gets very annoying for them because now you’re creating multiple ways to get on the cap table and they may not want certain people on the cap table. Maybe I’m an investor in Uber, you know, and Sam is an investor in Lyft, and Sam is doing some backdoor thing to get access to my shares.

Lon Harris: 3:41 But give you the shitty one.

Jason Calacanis: 3:42 Well, I mean, it’s just I think that was the actual game on the field, right? You were Lyft-shipped. I wasn’t actually an investor in Lyft, just playing for fun, fine. But the truth is, it’s annoying to founders. Mark Pincus was the first to try to say ‘hey, I’m going to not allow this and I want it to go in an orderly fashion.’ Elon has been very strongly managing this every six months, so it’s kind of long overdue, and it’s too much of the Wild West out there and people creating synthetic shares in companies… This is big deal.

Lon Harris: 4:14 But they can’t have it both ways. These companies have been using SPVs to raise capital and create a competitive market for their shares, and their employees want liquidity. So, like, why are they now saying ‘oh, it’s not okay’ when in the past they’ve used them? But just to push back, I- I might be out of date because I’m now old, but like, look, when I was at Facebook—it used to be called Facebook back in the day—

Jason Calacanis: 4:38 Yes.

Lon Harris: 4:39 This was like an unbelievably tightly controlled process, right? In fact, the way Yuri made a ton of money was by being the authorized buyer of shares. I don’t so—

Jason Calacanis: 4:45 Same for Sacca and Twitter.

Lon Harris: 4:48 So and like by the way, in that era, there was a lot of concerns about the look-throughs being like you have too many people on your cap table and you have to go public. And so I don’t- what did I miss in the last decade where some companies were just letting like unhinged SPVs happen? Like there’s something I missed because to me this is the way it’s always been done and most companies do have like ROFRs on share transactions. I mean, have you seen the rise in all the brokers though? I mean, I get five of them a day.

Jason Calacanis: 5:11 Yeah, but those are all scam—like half of those guys are scammers. Like, they’re not real, right? Or like, I mean trust me, I’ve actually dealt with one of them recently, I won’t name names on something, and like—

Lon Harris: 5:18 But I don’t think it’s true that all or half of those are scams. Some—

Jason Calacanis: 5:22 Well, Sam Janny did an actual study of it and it turned out to be 49.7% were scammers, so he rounded up. But I guess, Janny, my question to you then is what did happen here? Did the companies basically leave the barn door open? And maybe they did it because they wanted there to be some liquidity? That seems to me what I saw happening which was, ‘hey, you know, it’s- it’s not hurting anybody, let’s let it rip.’ And then Jenny, I think what happened eventually was the multi-tiered ones and then the 10% loading fee since everybody wants to get into Claude, OpenAI. 6:00 SpaceX, and that’s where maybe the founders were like, ‘Hey, that’s our money. That’s our money. That 10% load-in fee should be going to us. That’s coming off our valuation.’

Lon Harris: 6:10 Jason, this is like Lady Gaga and StubHub selling tickets and like, it’s okay if one layer does it, but now if like three different people are doing it and I’m not getting that money. Wait, no, that’s not cool.

Jason Calacanis: 6:19 Yeah, go ahead Jenny. 6:20 I mean, in my experience, and not talking about some of these big guys, but in the, you know, the larger companies that I’ve been in, the founders are kind of busy running their business, right? And so they’ve maybe like, you know, kind of looked the other way for some of these. Their friends and friends of friends, and that’s how it started. I think, you know, maybe in the last decade since Sam was at Facebook, there’s been a whole cottage industry that has literally popped up and, you know, is kind of preying on this and it’s taken it to a new level. I get inbound from these guys being like, ‘Hey, you know, do you want to sell Starcloud? Do you want to buy Starcloud?’ like an hour later. And I’m like, they’re not even doing targeted marketing. And so, you know, I don’t know if they’re legit or not. I’ve actually spoke to some, but I think that it’s becoming quite predatory and I really wanted to talk to Dave today, so this all worked out on where he thinks the lawsuits are going to be and what’s going to happen in the Anthropic and OpenAI cases. 7:05 One key difference about what changed is that when Facebook went public, it was worth about $100 billion. And today we have several companies worth—

Lon Harris: 7:19 That used to be a lot of money.

Jason Calacanis: 7:21 That used to be a lot of money. Now it’s an A round.

Lon Harris: 7:23 Now it’s— no, now it’s like a pre-seed round for a Neel lab.

Jason Calacanis: 7:25 The point is I think that as these companies get bigger, the prize is larger, people want in more. And also I think right now, as people are afraid about the impact of AI on the job market and the economy as a whole in some cases, we have some polling data in the docket, people want to own a piece of it. And who wouldn’t want to own a piece of the thing that might take their job? So I can see the demand rising.

Lon Harris: 7:41 But Dave, on the point about the mechanisms here, so Anthropic says any third party claiming to sell Anthropic shares to the public, whether through direct sales, forward contracts, tokenized securities or other mechanisms, is likely engaged in fraud.

Jason Calacanis: 7:46 Fraud’s a big word. 7:48 That’s their opinion. That’s their opinion. I would want to go to a lawyer to— I mean, some of what they’re saying I would say is probably true, but some of that is probably a little bit of, you know, marketing and fear and spreading fear and doubt.

Lon Harris: 7:57 And I don’t think Anthropic is the reference point for the entire market. Like, it’s true that there’s a lot of volume going to SpaceX, Anthropic and OpenAI, or at least was going to OpenAI. But that’s not, you know, 100% of the startups and the secondary market out there. And SPVs are a very useful vehicle for folks to raise capital, assuming they’re done in an organized and authorized way.

Jason Calacanis: 8:22 Yeah, like a surgical scalpel is a tool and a weapon. Just depends on how you— how you use it and where you stick it. Single-layer SPVs authorized by the company are probably fine.

Lon Harris: 8:32 Yeah, authorized SPVs by the company is fine. Like what— like what’s the— you know—

Jason Calacanis: 8:42 Well, I’m just saying that statement that they made was pretty broad and sweeping. And I’m pretty sure there are SPVs that Anthropic authorized in the past.

Lon Harris: 8:54 Sure.

Jason Calacanis: 8:58 If your company is— 9:00 [Ad: Quo business phone system — quo.com/twist] 10:06 We’re going to see, I think what’s important now is what happens from here. And what’s going to happen from here, I think somebody alluded to it, there’s going to be a lot of lawsuits here. And then people are going to ask for their 10% load-in fee back. That money is already done by some promoter who promised them, ‘Just pay me 10%, give me a hundred thousand, I’ll let you buy a million dollars worth of shares in Anthropic and I won’t take any carry,’ which, I guess, it’s a free market. People can make that trade if they want, but the alignment is the issue. There is a lack of alignment between…

Lon Harris: 10:49 Completely agree.

Jason Calacanis: 10:50 You know, a person doing SPVs, say like myself, where I’m taking carry, maybe we have a 1% or 2% load-in fee and, you know, you have to pay for the Carta or SPV solutions our firm… you know, those things are… nobody’s getting rich off of. They’re just paying for basic expenses. But 10% then brings out these schlocky, salesy, Wolf of Wall Street types. And that’s… I think that’s the piece that’s the dangerous piece because the Wolf of Wall Street people getting a 10% commission, I know those folks. Like, they’re going to just turn and burn. They don’t care.

Lon Harris: 11:21 Or even 5% on a $50 million allocation is, you know, a decent chunk of money.

Jason Calacanis: 11:23 It’s great money for this weekend to pay off your bookie and go to Vegas and get more in debt. Like, that’s the… those are the characters here that are emailing all of us, and somehow they get the cap table every time. Somebody gives them a cap table, and then they start emailing you. It’s dysfunctional. What it what it does speak to at the end of the day is we have a broken system in America of accreditation where only 6% of the country can participate in this, but, you know, half the country wants to participate or 30% wants to participate. And this is where I think what Naval’s doing with USVC, these closed-end funds, could take a little of the pressure off, and most importantly… 12:00 And we had the chair of the SEC on the All-In interview program a month ago. They’re going to create a sophisticated investor test. The SEC’s been charged with this. So imagine going to sec.com/sophisticated-investor and you take a test like a driver’s license test and then you can put money into SPV. So that would be the ultimate solution here.

Lon Harris: 12:17 So, can I… Can I be provocative?

Jason Calacanis: 12:21 Please. Go here. Absolutely not.

Lon Harris: 12:24 I’ve been saying this forever, which is the… exactly this, which is there obviously should be a test. There’s lots of unsophisticated investors that have over a million dollars and blah, blah, blah. And like, you just take a test and then you can invest whatever the hell you want. I’m a big free markets guy. I get it.

Jason Calacanis: 12:40 Because everybody who’s driving on the road right now is safe and not going to cause any…

Lon Harris: 12:42 Look, I just think it’s ridiculous. I’m totally with Jason and this is like not a new problem where it just makes no sense that it’s literally how the rich get richer is like, ‘Oh, let’s take all the best investment opportunities and only let the rich people have them.’ Like it’s insane. So I’m with you on that. But let me play devil’s advocate, which is, you know, the level of what you need to be an accredited investor is actually shockingly low. Like it used to be high, right? Like, and the funny thing is, just with inflation over the last 20, 30 years, it went from being like, I think it’s like a million dollars in like liquid net worth or income over $200,000 a year, $300,000 joint. You know, that was a lot of money when the rules were written and the natural law of inflation has just made that not that much money. Like, I’m not saying it’s nothing, right? It keeps some people out. But I don’t think a lot of these SPVs, like, people who aren’t accredited investors don’t have a ton of liquid capital they’re playing with. Like, I think these SPVs are like largely accredited investors, right? In fact, they’re supposed to be in most cases. And it’s not really… it’s a problem to solve, but it’s not as big a problem as it was 10 years ago just because of inflation.

Jason Calacanis: 13:46 It’s 7%, 8% of the country. When you’re correct, because of inflation, you know, doubling every 10 years, you know, whatever.

Lon Harris: 13:52 I think we’re attacking the wrong problem. But also Jason, here’s the thing is like that’s totally true and like we’re in this crazy inequality era, right? Like it’s wild what’s happening. There’s like the rich getting… that’s just what’s happening. That’s the nature of tech, AI’s compounding, fine. But like when you start slicing who has investable assets, it’s not really 7%, right? Because like half the country owns no equities, right? So really it’s a lot higher percentage than people like to admit in terms of who actually has money to invest. Only half the country owns equities at all, right? And so when we’re like, ‘this is this huge problem,’ it’s like, you know, 30% of people are accredited investors who could possibly invest. And like the people who aren’t, should they really be buying SpaceX with their $10,000? Like, I don’t know, it’s a narrative. I mean, I’m an investor, but like it’s a narrative. It’s not exactly a cash flow driven valuation. 14:40 I just think we’re attacking the wrong problem. I mean, personally, I think everybody should have the ability to lose tons of money betting on venture capital because they already have the opportunity to lose shit tons of money buying a house with 5 to 10x leverage. So like people don’t have to take a house…

Jason Calacanis: 14:54 Oh come on, what about holiday?

Lon Harris: 14:56 That’s not where they’re losing their money.

Jason Calacanis: 14:58 Yeah, I mean, prediction markets, gambling…

Lon Harris: 15:00 People lose money… I’m betting on real estate all of the time. The- the thing that I think we’re not attacking is the lack of transparency from the company side. Cause like everybody talking about ‘Oh, I need to be an accredited investor and know what I’m doing,’ like who’s got access to company financials when they’re like doing this investing? People are not investing on balance sheets or financials, they’re investing on vibes. Like, everything’s gotten—

Jason Calacanis: 15:21 Well, I was— but to push you Dave, also like everything’s just priced on vibes anyway. Like, when was the last time—

Lon Harris: 15:26 Well, it shouldn’t be. But that’s what I’m saying is like, you know, we collectively, venture capitalists and companies, should be pushing for more transparency and information in private markets as well as public. You don’t have to disclose everything, but I think it’s a disservice to the industry when every company wants to be like completely private with their information. Like, if you’re doing well as a company, why shouldn’t you want to be fucking telling me what your revenue growth and profits are?

Jason Calacanis: 15:52 Preach. I absolutely agree with that. And there should be a lower cost of capital available to people who want to provide that transparency. Right now it’s the opposite. We’re giving people cheaper cost of capital for being private. That’s fucked up.

Lon Harris: 16:03 Sarbanes-Oxley made being public super annoying and expensive, right? Like back in history. And it just was— it went too far. It went too far. It just like was a terrible set of regulations, right? And so all of a sudden no one wants to be public. What you’re basically pushing for is effectively half of the public market, which is like ‘Yeah, let anyone buy it and let the information be public’ and make it all public— like that’s half of it. Take out the governance piece, that’s what it is. The question is like what standards, whatever.

Jason Calacanis: 16:31 After we get back from this quick commercial break, plus for the cause, Jenny, I want you to give us your opinion of what should happen in terms of accreditation and private market transactions like this. But let’s take a moment to just turn on our Plaud AI readers. And thanks to Plaud for supporting the podcast. I use this all the time to take notes when I’m on hikes on the ranch, which I did this morning.

Lon Harris: 16:56 [Ad: Plaud NotePin — plaud.ai/twist, code TWIST for 10% off]

Jason Calacanis: 17:37 Alright, okay, Jenny.

Lon Harris: 17:39 I run a small fund where we are— our business model is SPVs. So when I see these huge statements, um, you know, we write small checks at the pre-seed and then we offer, you know, SPVs to our accredited and— and wonderful LPs who happen to be a community of founders. So when I see these broad statements by, you know, the model company—

Jenny Fielding: 18:00 It gets me a little bit nervous that there’s going to be broad crackdown. So, while I agree with you that there should be, you know, democratization and that there should be standards, you know, I also don’t want that encroaching in our business model and I don’t think that’s necessarily fair. So, I don’t have, you know, any huge insights on it, but I think it was kind of overblown and as most people said here, a lot of this is already baked into the docs and people are just getting, you know, kind of shafted.

Jason Calacanis: 18:25 Jenny, when you have this small seed position and then the company gets big, you have the right to that pro-rata to your syndicate, right? That’s in your docs?

Jenny Fielding: 18:38 Correct. I have the right and then also, you know, we have great relationships with our founders and so we’re in communication with them, they’re introducing us to their lawyers and it’s all, you know, a very transparent process.

Jason Calacanis: 18:44 Do you ever have a founder say, ‘Hey, thanks so much for supporting us early, but we don’t want you doing SPVs now. We want you to waive your pro-rata,’ and then how do you handle that?

Jenny Fielding: 18:54 I have had that. It makes me quite grumpy. ‘Cause quite frankly, you know, I was their first supporter before everyone was excited and, um, you know, we have it in writing and, you know, I do believe that you have to earn your pro-rata and hopefully, you know, we do that, but it happens very infrequently I would say, but once in a while it really gets under my skin.

Jason Calacanis: 19:13 Do you hold your ground?

Jenny Fielding: 19:14 Um, I have. Um, I’d say sometimes it’s more, you know, you kind of just write off the founder and you’re like, ‘Alright, well, this wasn’t the relationship—’

Lon Harris: 19:21 Oh, Jenny, don’t say that. Even if you sometimes cave, you have to hold the line, which is we never cave. Don’t put it out there that you cave. That is not who you want for us or for you.

Jenny Fielding: 19:30 I mean, yeah, I’d say it’s happened. I’ve invested in 300 companies.

Jason Calacanis: 19:35 Contractual rights are contractual rights.

Lon Harris: 19:38 [Ad: Grasshopper Bank — grasshopper.bank/twist, code TWIST for $500 bonus]

Jenny Fielding: 20:37 Correct. I’ve invested in 300 companies. There’ve been three or four cases where the founder has, you know, come back and basically, um, you know, tried to get us to waive our pro-rata. And I will tell you honestly, it sometimes it’s not the founders, it’s the big guys, the big, um, investors.

Lon Harris: 20:53 It’s always the big guys. No, the big investors in the Series A, they will always say—

Jenny Fielding: 20:57 Yeah, and they’re putting pressure on the founders and then that puts me in a— 21:00 position where, you know, I have to call up the, you know, Series A or B investor and say, listen, um, you know, this probably isn’t what you want to be doing.

Jason Calacanis: 21:08 Well, that, I mean, for what it’s worth, that… I mean, this is like for sure, in hot rounds, the Series A investors will always tell, especially young founders, ‘Oh, you have pro-rata rights, but seed investors will always waive them, don’t worry about it.’ And I’ve had that conversation several times, and like, for me, it’s like a complete non-starter. It’s like, I will sue you, right? Like, I have contractual rights, and then that’s it.

Lon Harris: 21:28 Yeah, but do you think you want to be put out there that’s suing founders?

Jason Calacanis: 21:31 Yeah, I will 100% put it out there that if you sign a contract with me for pro-rata rights and then come back and try to renege on them, I will sue you.

Jenny Fielding: 21:39 I like it. I take a slightly different approach, which is like you try to educate and support the founder and basically, you know, try to get them to push back. And if that doesn’t work, then you call the Series A investor and you say, ‘I’m never sending you any deals,’ you know, again.

Lon Harris: 21:51 Yeah. Jenny, do you explain why these major funds are pushing down so hard on seed-stage investors to give up their pro-rata rights? Everyone in this conversation knows, but not everyone listening understands that dynamic.

Jenny Fielding: 22:01 Yeah, in a competitive round, there’s just not enough to go around, right? So we recently had a case where it was a Series B and there were, you know, three kind of leads, right? And it’s like you can’t get three people all getting their 10% into a round. And so what the founder did was the founder came to their pre-seed investors and said, ‘Hey, I’m going to need you guys to sell.’ And we were like, ‘Well, it’s not actually how this works, so why don’t we explain this to you?’ We went back and forth a bit and ultimately we did not, but we did have some conversations with those Series B investors who we supply deal flow to as, you know, the smallest person on the cap table and, you know, it all kind of worked out. So there’ve been a few cases where it hasn’t, but very few.

Lon Harris: 22:43 I just want to understand broadly, though. It sounds like the secondary market itself is not in trouble. The worst actors in the SPV market are over their skis and just got their earlobes flicked, Dave. But the model of buying shares, you know, on the secondary market in general will stay as it was, will hold this, will not kill it?

Jason Calacanis: 22:58 Um, I don’t think this is going to end the secondary market or the SPV market. It probably will clean up some behavior that should have been cleaned up anyway, and that’s probably a good thing. I think future lawsuits might result in more regulatory oversight and that would be interesting to see. Might be good, might not be good.

Lon Harris: 23:17 I’ll take the other. I think this is… this is going to blow out the bad actors in the space because the people who are buying into it, you know, who are saying like, ‘I want to put 250k into Anthropic or SpaceX’ and they’re like, ‘Yeah, give me 10% and I got this synthetic thing and yada yada,’ they’re just going to be like, ‘This isn’t worth the risk. I’ll just wait to go public.’ And I think that’s… it’s going to put cold water on that group of people. I know with… there was one robotics company that was funded like… just like crazy valuation, all on SPVs, no VC pricing the round. I think it got to like 30 or 40 billion. I won’t say the name of it, but I may have just inadvertently said the name of it. And yeah, there was all kinds of shenanigans going on. And then the…

Jason Calacanis: 24:00 founder has to worry, am I losing control of my cap table? Am I losing control of the story and my valuation? Because if they’re going out there promising stuff, they don’t have information rights, they’re telling a story to investors. Is that the story you want? And that’s the problem.

Lon Harris: 24:17 Yeah, there were people who were telling me the Figure thing was just a Wild West of all SPVs they’d ever seen. I don’t know if that’s true or not. No dig to the founder.

Jenny Fielding: 24:27 But I just wanted to add, you know, one one thing, which is, I think it was at Anthropics, they actually named some of these broker guys who are in my inbox every day, and they actually named some groups I won’t say here that actually aren’t brokers, they’re just, you know, the back office or the container for the SPV. And those people had to then come out and say like, ‘Listen, like, we, you know, we check all documents and like we haven’t done anything, you know, here.’ So I do think there is some—

Jason Calacanis: 24:49 I think it’s okay to name them.

Lon Harris: 24:50 Asim Desai, the CEO and founder of Hive, wrote a very prominent net letter this morning about that structure.

Jenny Fielding: 24:58 Right, but I’m not talking about Hive, because they are, as far as I understand, a broker. But I think they named Sidecar or some other folks. And, you know, it’s just I don’t think we should scare people away from the industry is my point.

Lon Harris: 25:10 Well, but I am curious where you guys as VCs, it’s like, who the— where the hell is all this money coming from? Because, like, it’s an interesting thing, like, you know, the Middle East is kind of like out of money, right? Like, they’re—

Jason Calacanis: 25:25 That is so not true, Sam. You are absolutely—

Lon Harris: 25:28 Directionally.

Jason Calacanis: 25:29 I don’t know.

Lon Harris: 25:30 I heard things.

Jason Calacanis: 25:31 Oil prices are up. You think they’re out of money in this environment? Come on, dude. Do the math.

Lon Harris: 25:38 Listen, let’s see how it plays out in the next few years. My sense is is that that honey pot, which has been the last few years of ridiculous amounts of money, is like slowing and going to stop. You know, VCs keep raising—

Jason Calacanis: 25:46 I think you’re absolutely wrong.

Jenny Fielding: 25:48 Alex is nodding.

Jason Calacanis: 25:49 Those guys went into Anthropic and SpaceX just as much as anybody else.

Lon Harris: 25:54 They still have a lot more money than I do, but I think Sam makes a good point that when you look at the minimum oil price for many governments and oil producing countries in the Middle East, it’s like 100, 110, 120. And so even though oil prices have rebounded, Dave, they does not mean they have massive surpluses that are new that are coming into their coffers. So what I’ve always thought that the big push into AI was, get in early while we still have the capital, build something that will endure, and then as the oil industry slowly kind of peters away.

Jason Calacanis: 26:22 Alex, the sovereign wealth funds of Qatar, UAE, and Saudi have over four trillion dollars. The royals across those companies have hundreds of billions. They are not shutting off the spigot.

Lon Harris: 26:35 But they’ve pulled out of— they pulled out of LIV, right? They’re pulling back on sports. They’re rationalizing their portfolio in healthcare. So okay, I can—

Jason Calacanis: 26:44 I can adjudicate this officially. So Dave is in the Middle East, he’s very close to it. And Sam, you’re absolutely correct, they did get over their skis in a lot of projects. NEOM specifically and LIV would be great examples of that where maybe they started spending a little bit too—

Lon Harris: 26:58 NEOM for sure.

Jason Calacanis: 26:59 NEOM for sure. And then— 27:00 In some cases, they were maybe doing too many venture funds and didn’t have the infrastructure in place maybe to manage these things properly, and I think they’re catching up to their spending. That’s what I see when I go over there is, hey, we need more partners, we need to have more eyes on these projects, and they’re just refining their strategy.

Lon Harris: 27:23 So I call it like splashy-cashy. Somebody who’s made a bunch of money goes to the casino, they just start playing a bunch of games. Then the next time they go, they’re like, okay, which games am I going to play? Where do I want to put chips down? So I think this is just the natural second-decade evolution of their participation in private stock, stocks generally.

Jason Calacanis: 27:43 The specific thing to your question, Sam, of where the money is coming from, we have seen an upper, the upper middle class or the lower part of rich people in the United States has grown massively. So everybody’s moved up, but there’s a very specific group of people, which is these equity and owner-based middle class. And when you see the charts of how that’s grown, it’s kind of nuts. And it’s grown at the expense of the lower and middle middle class is the upper middle class moving into…

Lon Harris: 28:14 So it is, but to just to push them to connect the dots and go, is it is accredited investors.

Jason Calacanis: 28:18 Yes. 28:20 100% it’s accredited unless they lied on their self-accreditation forms, which I would say maybe, you know, low single-digit percentage people do.

Jenny Fielding: 28:28 So mine is anecdotal, but we just did a very large SPV in a buzzy company and all the money came from Palm Beach. So all families there, not Middle East, that is concentration of wealth in certain areas in this country, including South Florida, and they all want in to certain categories.

Jason Calacanis: 28:46 So their 401ks are doing really well. The businesses they own, whether they own a restaurant or an HVAC or a finance company, like the rich are getting so much richer because of the stock market and the poor are staying the same, which goes to your point…

Lon Harris: 29:05 …over the last five years.

Jason Calacanis: 29:07 Yeah, of what’s happening in the United States in terms of the haves and have-nots. If you own equities, you’re running away with it. If you don’t own equities and you’re making income, you’re getting hosed. 29:14 [Ad: Pilot accounting — pilot.com/twist, $1,200 off first year]

Lon Harris: 30:15 Yeah, and the interesting thing about this is it’s not just technology. There’s also this like feedback loop cycle to the market, right? Where it would basically what’s happening is like the market is going up because the market went up, right?

Jason Calacanis: 30:24 Yeah.

Lon Harris: 30:25 And that is a real I mean that is like a classic it’s interesting because on one hand that’s classic bubble dynamics, right? It’s up because it’s up. But, on the other hand, I keep going back to this thing that we as a society have decided to start storing wealth just in stories, right? Not in cash flow, right? If you think about it, it’s like—

Jason Calacanis: 30:44 Give me an example.

Lon Harris: 30:46 Well, I just say like the global clearing price if if I said I have a billion dollars of free cash flow, there is a global clearing price for that, right? Based on the growth rate or whatever that we could all model and everyone globally would basically model the same way, right? And you come up with a value of that cash flow, right? None of the assets that Anthropic, OpenAI, SpaceX, all these enormous numbers, the tie to business logic is basically nonexistent, right? Like in terms of valuation, right? It’s a tie to—

Jason Calacanis: 31:15 For those for those companies, yeah, I agree.

Lon Harris: 31:18 For two bil— but that’s basically everything in tech, right? Like I can’t name the last—

Jason Calacanis: 31:21 No, that’s not true. That’s not true. There’s companies that are still valued on fundamentals. Now, there’s more companies being valued on vibes recently.

Lon Harris: 31:29 Well, but I’d say the ones that are valued on fundamentals, like the movement in the stock has much more to do with the vibe shift around it because it’s just a multiple expansion question than like revenue growth, right? Or profit growth.

Jason Calacanis: 31:40 But this is my point is that I think, you know, we’re we’re leaving fundamentals behind when we should absolutely be paying attention to fundamentals in in our podcast every week we we focus on valuation corner and we analyze companies and there are some that are way crazy out there and there are others that are much more— 31:58 Example: Palantir comes to mind?

Lon Harris: 32:00 Well, I would say Palantir’s way ahead of itself, kind of crazy. Well, I would put this as a just my basic point of feedback cycles is like if you were a fun— like being a fundamentals— if you were a value investor over the last decade, you’re screwed, right? You’ve made like no money, right? Whereas if you’re a vibes investor, you’re like crushing it, right? Like—

Jason Calacanis: 32:18 Until you’re not. Until you’re not.

Lon Harris: 32:22 I agree with you. I struggle with this. I’m not saying that the vibes investing is right. I’ve actually argued for— I’m not a vibes investor and I’m not in Anthropic or OpenAI.

Jason Calacanis: 32:28 But if you look at the public Mag 7— Seven, you know, five of those seven maybe six of those seven aren’t crazy on fundamentals. Tesla is a little bit crazy on the fundamentals. But the other ones are not. They’re, you know, you know 20 to 25 PE, maybe 30. Jenny, are we are we massively ahead of our skis as, you know, in terms of the public markets and the valuation of these companies and how they’re being valued? And will we return to maybe a scale at some point where we actually weigh them and say, what is the free cash flow from—

Jenny Fielding: 33:00 This company? I think it depends if there’s other asset classes to go in, right? A couple of years ago everyone was very excited about credit, um, you know, that turned out not to be a great place and so they’re just looking for, you know, interesting opportunities. So right now the stock market’s crushing. I think what we’re here all interested in is what’s going to happen, you know, as these companies go public and more liquidity kind of starts coming back. So that’s the question I’m more interested in is like, it’s really hard to raise capital right now as a pre-seed investor but I think, you know, the floodgates are going to open with SpaceX and all these other ones.

Lon Harris: 33:33 Great segue.

Jason Calacanis: 33:35 Great segue. Here is, um, the share of families in each class: 1979, 2001, 2024. And what you’re looking at here really is the lower middle class going from 24% to 15%, the core middle class going from 35 to 30%. And then the upper middle class went from 10% to 31%. And then rich people went from 0.3% of our society—it went up 10X since 1979. So you have tripling of the upper middle class and 10Xing of the rich.

Lon Harris: 33:59 What’s kind of interesting though is this chart says that the poor and lower middle class are declining.

Jason Calacanis: 34:06 Yes.

Lon Harris: 34:07 So like I guess the question is what’s the basis of how you define these buckets? 34:12 Yeah, what are the bands here for income or wealth, Jason?

Jason Calacanis: 34:15 Yeah, let me look it up while we continue the conversation.

Lon Harris: 34:17 But on the point about excess liquidity, Jenny, you make a really good point. This week we saw Fervo Energy go public, venture-backed. We’re seeing Cerebras go public, venture-backed. Little bit of liquidity there. Jenny, do those two IPOs drive any meaningful amount of liquidity through venture, or are they relatively sideshows as we wait for the big three, SpaceX, Anthropic, and OpenAI?

Jenny Fielding: 34:42 My understanding of LPs is that, you know, they kind of work on, you know, sentiment and vibes and not necessarily reality. So I think seeing a few things gives them hope and we start—I mean, we can literally track this, like the amount of inbound we get from LPs and how fast they kind of get back to us based on some of these IPOs. So I don’t think that moved the needle necessarily, but I think there’s a lot of anticipation of some bigger ones and I think those will move the needle. But we’re actually seeing a lot more inbound.

Jason Calacanis: 35:04 We’ll see, there might not be though. I mean this is the problem—I mean I have this on a personal level, right? Which is, uh, you know, I have a relatively small—it’s all relative—slice of like the SpaceX, you know, thing. And I’m excited—I mean like, you know, that’ll be a great return for me personally just from a PA perspective. But it’s a really interesting question about whether you sell and redistribute back into other things or not, right? And it’s not clear. And I’ll give you the two—

Jenny Fielding: 35:27 But if you were an institution and that was really your job and you were waiting—

Jason Calacanis: 35:30 I don’t know, but I mean I talk to a lot—we have a lot of institutional LPs—and it’s a similar question, which is like, there’s a really big difference between institutions that pay taxes and then those that don’t, right? So if you’re a tax-free institution, you can reallocate for free. That actually makes sense, you maybe take some… but if you have to pay taxes, you’re paying 40% taxes, 50% taxes—we’ll call it 40 in California. It is so expensive to redistribute. And on the flip side, you know, we are living in this new feudal age of like a—

Lon Harris: 36:00 effectively these like fiefdoms where number go up because number go up and everyone has to buy SpaceX and yada yada. So it’s actually really unclear, I understand historically how this would work, but it’s really unclear to me how this redistribution is going to work on these IPOs.

Jason Calacanis: 36:12 Dave, what do you think?

Jenny Fielding: 36:14 Just to get to some numbers here on the Cerebras IPO, projected float’s going to be probably between four and a half to five billion dollars back to investors. That’s meaningful capital. Might be the only IPO we see before SpaceX. And after that, because SpaceX is going to take up a lot of the available capital in the market and maybe Anthropic and others might be before the end of the year. But, you know, I think our numbers are way out of whack because we’re focusing on Anthropic, you know, SpaceX, and OpenAI being these massively large IPOs. Venture capital doesn’t need that big an IPO to have meaningful paydays. Like it’s still fine to have billion-dollar IPOs. That creates meaningful returns.

Jason Calacanis: 36:57 I think Sam brings up a really good point, which is if you are a family office, right, and you’ve got 20% allocated to venture and you’ve got, I don’t know, 40% in equities. You’re eventually, if your pipeline is your VC firms, you know, and you’re in Founders Fund or you’re in Sequoia and your VC fund is delivering you SpaceX shares or delivering you, you know, WhatsApp, Facebook shares via the WhatsApp and Instagram acquisitions, and then you had sold those previously, booked the gain, and then you wind up buying them in the public market, like it’s just not tax-efficient. So you might as well just sit on them forever. And then, you know, this does create a redistribution issue. I think Sam’s correct there. And then it’s going to really matter the company. If you’re—if it’s an Elon Musk company, because of the Elon premium that he’s created the future so many times now, that’s like a venture investment and a public investment. If you look at Tesla’s valuation now, it’s not a car company anymore. It’s going to be remembered as Optimus. The company will only be remembered, nobody’s going to remember robotaxi or cars, I predict. They’re going to remember Optimus because that thing’s going to sell a billion units and they’re going to charge by the hour for that product. It’s got unlimited upside. And if he figures that piece out or data centers in space for SpaceX, this is like unknown TAM. These TAMs could, could break people’s brains in terms of how big they are. So you basically have no choice but to hold it forever, I think, if it’s a SpaceX or Tesla.

Lon Harris: 38:35 Which, which becomes self-fulfilling because if everyone’s holding forever, then number go up. And like, this becomes an interesting disconnect of what’s going on, which is if you believe the future is a feudalism 2.0, where you have a few hyper-winners that have the cost of capital zero, they have all the things, right? And AI is fundamentally a compounder, then like, it’s just an incredibly different configuration of the market. 39:00 Venture landscape and like what you want to allocate to than what we’ve seen for the last 20 years where the whole story was software helps insurgents beat big guys. I you know I’ve been saying this for a while that AI is just a strict benefit to like the winners effectively like cheap cost of capital these are like the things that matter but I just think we have to come to terms with the fact that like the venture capital of the next 20 years is just going to be massively different than it was the last 20 years right?

Jason Calacanis: 39:25 What do you think Jenny? How how is it going to be different? Do you just take your fund when you raise your 50 million put it into a Mag 7 index and then slowly draw down from it? And I mean I know this sounds ridiculous but in a sense you know that’s what these crossover funds do.

Jenny Fielding: 39:43 Yeah and we’ve we’ve been seeing that for years. I mean people were getting really grumpy when all those funds were putting money into Bitcoin and Solana and the LPs were like screw you I could do that too why are you charging me a fee? So I’m not sure that’s the future of venture capital but getting back to like the trickle down I would say maybe I’ll amend my answer you know a slight bit that some of these you know although it may not be enough to transform the liquidity issue I mean a small investor like us we’re we’re not in some of those names you mentioned but you know what the folks that put money into us are and I don’t mean the LPs like you know the benchmarks the foundations they all put money into early stage funds and so then I have more money that I can deploy to early stage founders. So I actually think that it’ll be very healthy for the cycle even though small ones. I mean obviously you know the bigger ones would be even better but um I’m pretty excited about it.

Lon Harris: 40:28 I think we need to temper our enthusiasm for tech and vibes and the potential for investing in companies that are going to have big outcomes with the strict valuation fundamentals that are still required like you know when my son was 16 uh over the summer during covid I I sat down with him every week we said hey let’s go take a look at a public company I’ll give you 100 bucks you can go buy it on robinhood but I want you to explain to me like why it’s a good buy let’s talk about revenue growth and profits let’s talk about balance sheets and capital and like know whether you’re investing on fundamentals or whether you’re investing on vibes and it was okay if he wanted to invest on vibes but I was like you know why the fuck are you investing in this company when PE multiples are way out of whack and this one’s a reasonable. The same is true for venture we can’t just say like hey everything is going to be a 100x 2000x you know sort of outcome and throw fucking valuation out the window you know early stage valuation entry points still matter and and fundamentals still matter. Like I don’t want to invest I don’t want to give my money to VCs who think that it’s all vibes and not based on fundamentals fuck that I want you to understand the numbers of the companies you’re investing in I want you to understand your portfolio model and I want you to understand whether like makes sense to do follow-on investments or not at new prices math still fucking matters. 41:41 Of course like Dave I’m like you like look I like we’re incredibly cheap at slow ventures like we don’t do any like we often

Jason Calacanis: 41:51 it’s okay to not be cheap sometimes

Lon Harris: 41:53 no we’re cheap we’re cheap motherfuckers right

Jason Calacanis: 41:56 You are allowed to say that on This Week in Startups.

Lon Harris: 41:58 Okay good and like you know

Jenny Fielding: 42:00 Like if you look at like cash flow based deals is like it was reported by the FT and a bunch of others that, you know, OnlyFans just did a transaction valuing it at a $3 billion valuation. Financially that’s a steal, right? Like it’s an incredible —

Jason Calacanis: 42:11 Yeah, ‘cause what is their — what is their earnings? Like, they make four or five hundred million in profit a year?

Jenny Fielding: 42:17 I — I shouldn’t comment.

Jason Calacanis: 42:18 But okay. I know you were trying to buy it.

Jenny Fielding: 42:19 The — the point is only that like, yes, there’s always going to be a financial clearing price to things based on growth and fundamentals, but in the last, like, 5 to 10 years, the people who have done well have not done that at all, right? And the question is what happens to the industry because of that. Like, you know, one tweet from Elon about space data centers makes your company worth a billion dollars, right? On vibes, right? In the market. You know, versus like if you go double, triple, triple, double on a software company right now, truly no A-round investor cares, right?

Jason Calacanis: 42:53 Which is insane. Like, it’s such a great business, it could be a money-printing machine. I — you know, at some point free cash flow is going to matter to people. And I think it’s going to be this time next year. After these companies get out, then there are going to be institutional investors who are going to start looking at Anthropic and OpenAI and they’re going to take out their abacus, their spreadsheet, whatever, their back of the envelope, and they’re going to just go, ‘Hey, math doesn’t math. You’re losing this much money on every transaction. When does this become a free cash flow machine? When does the J-curve end?’ How do I know this? I watched it with Uber up close and personal. The entire narrative of Uber and ridesharing was it can never make money. It will lose money forever. It’s going to constantly go down that J-curve, it’s never recovering. And then I was on CNBC famously one time and I just said to one of them like, ‘Would you pay — would you stop taking Uber if it was $3 more a ride?’ And they were like, ‘No.’ And I was like, ‘Okay, who would?’ And they’re like, ‘The bottom 3% of users.’ I was like, ‘Okay, great. You fired your bottom 10% of users and then you became wildly profitable.’ And that’s exactly what happened. But it took —

Lon Harris: 43:29 A changing of the guard and the changing of the cap table for that to happen. And that’s about to happen for SpaceX, Anthropic, OpenAI, and Cerebras. They’re all going to start getting weighed —

Jenny Fielding: 44:01 — unless it doesn’t because the retail investor base of your upper middle class, Jason, is big enough and vibey enough, right? That it’s a GME situation, right? Where it actually doesn’t have to reflect reality at all. 44:22 No, I don’t think Sam’s right. I think that we’ve hit the top. I think we’ve hit the top to a certain extent.

Lon Harris: 44:27 Jason, why do you think Elon’s making a 30% retail allocation in the IPO? Because they’ll buy it.

Jason Calacanis: 44:33 Elon is a total exception and I think it would get filled. The question is when that gets filled for SpaceX, who — what other stocks are going to go down? Where is that money going to come from? Is that coming from somebody’s 401(k), from a Vanguard fund? Is it coming from their cash on hand? Is it a second home that they sell to buy more SpaceX? Where is that incremental money coming from?

Lon Harris: 44:57 If Elon gets his way, it’s going to come out of the Nasdaq 100 and eventually out of the S&P 500. 45:00 500.

Jason Calacanis: 45:01 Yep.

Lon Harris: 45:01 Correct.

Jason Calacanis: 45:02 Yes, and so that’s my point is this rebalancing over the next year is going to be vibes now, get on get your shares, and then a year from now, people are going to start weighing these things and saying—

Lon Harris: 45:14 Well I think what I could imagine, Jason, is that people, I mean this is already happened in some places where people are you know on the margin pulling out of Mag 7 and going to chips in various places. But like I could imagine that the PEs on some of the Mag 7 become so attractive that people just can’t help themselves, right?

Jason Calacanis: 45:32 The PEs on the Mag 7 are actually not crazy. Like, you know, again Meta at 20, Alphabet at under 20, Microsoft, Amazon, Nvidia, Apple at what 30. Tesla’s the only one that’s really out of range.

Lon Harris: 45:46 Right, because it’s a meme stock.

Jason Calacanis: 45:47 Yeah, but if you buy into those companies you get allocations to the other private firms you care about because they’re all investors. Next up, J, you said something that I thought was absolutely fascinating. You told the story that I don’t think I’ve ever heard told before. You said that you heard about a founder that closed a $15 million Series A from a top-tier VC and then a half year later, they planned to return the cash to investors. You add that Claude will displace the product in a relative value. This is really happening. Most people are not talking about it. It’s kind of wild. Tell me more about the story and how common is it.

Jenny Fielding: 46:19 First of all, I think people don’t want to talk about it because it’s scary to admit that this is happening and it doesn’t really serve their interests of raising capital from LPs or telling the narrative, you know, that Silicon Valley is healthy and everything’s good. Now, I’ll preface this by saying like I’m long-term bullish, I will keep on investing in startups and I’m very excited, but I think people have underestimated the impact. And this isn’t just about, so in this case it was a founder, he’d raised about $15 million Series A and he’d been working in the legal tech space, but not, I mean this wasn’t just like an application layer, this was a deeply technical, second third time founder who, you know, thought that he had a really interesting data moat, and that was working very, you know, hand-in-hand with a few firms to kind of pilot this and design it. And he wasn’t saying that just because, you know, Claude released their MCP connector that he was going out of business. But what I think is interesting is that these savvy founders are basically taking a long view, kind of looking back and not saying what’s happening today but like where am I going to be in five years and where are these models going to be in five years. And I think that’s what scared him and that kind of freaked me out. And then when I started telling some of my peers at other firms, they all seemed to have stories about this. Maybe this one seems extreme, although it is quite true. I think it’s a real, it’s a real thing and it’s a threat and we’re not talking about it. I don’t think that serves our founders. I think we need to have more, you know, open conversation about what moats can be and not moats today, right? I mean I think everyone has a theory on, you know, what’s interesting today, but five and ten years out.

Lon Harris: 47:54 I think it’s moats, I think it’s also just like what people want to work on in this moment. Like, to run a company and build a company like you need two things. Like one is you need a great—

Jason Calacanis: 48:00 Business, and seconds you need to care, right? And like the great business part, I couldn’t agree with you more about like, we spend a lot of time on like, what’s a moat, da da da da da, how do you really think about that long term? But like, we’ve also, we had one founder, this is years ago now, one founding team, excellent founding team, like couldn’t be a better group of people doing a thing. 48:18 And, um, they called up and they said, ‘Look, AI is about to happen. This like, LL— this is the LLM moment. And we’ve studied this our whole lives and we’re building this company and candidly, like we really need to work on this. Like this is like what we’ve trained for and the moment we’re waiting for.’ And they’re like, ‘So we’re effectively returning capital and going to go take senior positions at OpenAI.’ 48:36 Good for them, like to have that like perspective which is like, ‘This is my life, you know, this is my next decade. And if the world is changing so fast and things change and like all of a sudden like I just emotionally have to do something,’ like I respect that.

Jenny Fielding: 48:51 Yeah, I think there’s opportunity cost especially for seasoned founders and in this case it was that, it just seemed quite extreme. Um, they just raised the money, they just, you know, convinced top— top investors.

Jason Calacanis: 49:03 I just— I’m sorry. If, if for instance if Jenny and you and I are— this is like— I am extremely serious about pro-rata rights, like hear me now startup world, like do not… I’d say we’re like, I’m crazy about that, but actually if the founder comes to me and raised money and like six months later is like, ‘We’re wrong’ and like by the way our opportunity cost and like the really expensive thing especially early is your time and effort. It’s not the money, right? 49:21 And you’re like, ‘I’m going to return money because like I— this is not— it’s better for everyone.’ Like they’re not going to win at a thing they’re not super passionate about, right? The world changes fast. I candidly would rather have the money back and redeploy it if that’s the situation.

Jenny Fielding: 49:34 I mean I’ll just take the other side and that, you know, you’re betting on people at the pre-seed and you’re betting on them to figure it out and I’d rather not get my money back but have them try a few different things and try to, you know, skate where the puck is going. And I think you have to just be fast in this market, you know? 49:49 I was talking to someone that runs a kind of quasi-consulting AI consulting business but there’s they’ve productized some of it and they said our team, you know, rips everything out every two weeks and starts again.

Jason Calacanis: 50:02 I get it. It’s just like ultimately like it’s running a zombie company as a great person in a moment where the world is changing so fast is like, it’s like the worst feeling you could possibly have. Like there’s this amazing thing going on and you’re boxed out of it because— I’d rather just fix that and like life is long.

Lon Harris: 50:18 I think whether I’m investing in an entrepreneur or another fund manager, I want them to feel like they’ve got an edge and have conviction and passion for what they’re doing. And so if they’ve lost that, then sure, I don’t want them doing it either, but I want to invest in people who think they can still figure it out.

Jason Calacanis: 50:34 All right, we got to drop Sam off. Sam thanks for coming on the pod. Good to see you next time. Thanks. Hi. He’s got a high— hot take per minute, so we allow him to leave early. Check out his podcast, More or Less. Everybody has to have a podcast now, so More or Less. Got to have a podcast. You need to control your media channel.

Jenny Fielding: 50:56 He’s he’s got to go beat up those founders who didn’t give him pro-rata.

Jason Calacanis: 51:00 He yes, somebody just said, ‘Oh my god, pro-rata.’ ch-challenging you on this. He’s getting on the phone with his attorneys. You know,

Lon Harris: 51:04 if a founder gets to the point, Jenny, where they’re like, ‘Um, I just can’t do it. Um, I’m not living my real life.’ I kind of feel like it’s, uh, like one of these kids who, uh, goes and does ayahuasca or they go to Burning Man and they, they, they do LSD or something. They come back and they’re like, ‘I’m living a lie. I need to go be a yoga instructor. I need to start a surf camp in wherever.’ I’m just like,

Jenny Fielding: 51:30 Godspeed. Godspeed.

Lon Harris: 51:32 I mean, everybody has somebody in their circle who came back from Burning Man and their brain was broken and whatever they were doing is over. Like, they left their spouse, they left their city,

Jenny Fielding: 51:44 Right. Right.

Lon Harris: 51:46 and they’re in Kauai living their best life. Mazel tov.

Jason Calacanis: 51:49 Or they came back with a great vision for a new startup, and I’m like, ‘Great, I want to give them more money.’ But it is frustrating, Jenny.

Jenny Fielding: 51:53 100%.

Jason Calacanis: 51:54 I always think to myself, like, I always say to the founders, ‘What are your three other ideas? Do you have another idea? We’ve already got the capital here. We bet on you. What else?’

Jenny Fielding: 52:06 I’d be curious, um, if you’re seeing this too, Jason, around first-time versus second-time founders. Where we’re finding that the first-time founders will just, like, you know, put their nose down and just, like, try to get through. And burn the money potentially, but they’re going to try to find something.

Jason Calacanis: 52:21 The passion.

Jenny Fielding: 52:22 The passion, maybe the ego. And the second and third-time founders who’ve had a lot of success or some success, it’s just opportunity cost. And in this case, it felt like a team very seasoned, very technical, had a lot of success, and they just said, ‘You know what? Like, it’s not going to work.’

Jason Calacanis: 52:36 It’s a function of how great those offers were. I’ve seen some of these offers and to put your nose to the grindstone at a startup for 10 years, 15 years, and the outcome is unknown, or you get a guaranteed, you know, 10, 20, 30 million dollar package from OpenAI and you know it’s going to 10x from here so it’s really a 300 million and there’s a secondary market as we talked about in the first thing and I could just start selling my shares immediately. You know, I told somebody recently they were like, ‘99% of my net worth is in one of these companies,’ and I just said, ‘Sell it all and put it in index funds.’ Like, or sell at least half of it, put it in index funds. Go buy yourself, you know, a house and a ski house. Like, by the way, that’s the advice I gave myself, which is just keep building that foundation that’s rock-solid with the speculative stuff and get yourself diversified and out of these because if these companies are trading at 30, 40, 50 times revenue, okay, there’s a chance that they’ll catch up and their earnings will get there. There’s also a significant chance that open source and other products win a big part of this and tokens just are the the fastest declining commodity in the world are tokens. Like, the cost of a token is plummeting because… 54:00 More data centers, better energy, photonics between the chips, language models that are more efficient, open source, distributed computing, Tao subnets that are, you know, racing to the bottom. So if these things keep going down, I’m not going to give myself a clip like you’ll only ever need a 10 megabyte hard drive. Obviously, people are just going to keep using a phenomenal amount of tokens, but it just may not be the most profitable business. What if the business looks like a bandwidth provider? What if the business looks more like a hard drive provider and it’s a commodity business that races to the bottom? It just… it might not be the money-printing free cash flow machine that people think it’s going to be. That’s a possibility.

Lon Harris: 54:41 If it’s not then what is? Because if AI really does subsume a number of industries, like we’re seeing progress on the legal field from Anthropic, they just dropped S&P products, and if they don’t make money Jason, then who does?

Jason Calacanis: 54:51 The hardware, the energy company, the data center, the application layer, the person running a law firm that needs half as many people and charges, you know, the same amount of money, or they charge 20% less, but the cost to deliver the products’ 40% less and their margins went up. Like, there’s a lot of permutations of this, and anybody who says they know exactly which one works and where the value gets captured, it’s just not telling the truth, right?

Lon Harris: 55:13 Jason, I think you pointed out a good, you know, thing for a lot of founders, and actually for VCs this happens later too, is you’re concentrated in a single asset, you don’t have access to diversification or liquidity. That’s literally why the secondary market exists, is to, you know—

Jason Calacanis: 55:31 But you help with that, Dave. Go ahead and give a plug, yeah, I mean it’s…

Lon Harris: 55:35 Well, I’m just saying, I did the same thing five or six years ago when I was looking to sell a piece of my carry in my first two funds at 500, which had become very concentrated in a couple of winners, and I wanted to take a little bit off the table and buy a house. I think that’s the big reason the secondary market exists, at least for founders and employees who are selling, is there’s 100,000 people in the Bay Area who own 1 to 10 million dollars worth of equity. There’s probably 10,000 people in the Bay Area who own 10 to 50 million dollars worth of equity, and they can’t afford to buy a house in the Bay Area that costs 3, 4, 5 million dollars. Can’t even qualify for the loan, you know, to buy a house. And I think that’s why you’re seeing more of these tender offers and a lot of companies providing, you know, regular liquidity programs, is to give them an outlet because, you know, IPOs are taking 15 years now. The employee vesting schedule happens, you know, in a third of the time it takes for a company to go public.

Jenny Fielding: 56:26 So I think that’s great, but I also think like, you know, these companies like Intercom, you know, that have to reinvent themselves and they’re pushing through, are very inspiring as well. And if you find a founder like that who’s just gritty as hell and wants to, you know, then become an AI native company after all these years, I think that’s pretty awesome.

Jason Calacanis: 56:44 And I was an early investor in Intercom, and Owen coming back and figuring out Finn was amazing. That doesn’t always happen, right?

Lon Harris: 56:51 There was a lot of commentary on the how much money does it cost to be kind of set in San Francisco conversation. OpenAI had a tender offer for employees last year, turns out 600…

Jason Calacanis: 57:00 investors, 5-600 employees sold stock, $6.6 billion dollars, which led to this tweet from Shruthi from Array VC that went incredibly viral. She says ‘The people who sold their roughly 10 million will still be quote SF Broke, 50% in taxes, 3-4 million in cash for a house, probably needs another million in improvements, leaves with 1 or 2 million, kids on the way, nanny’s 100k a year, daycare’s 45k a year, camps, extra-curricular 30 to 100 thousand dollars, Tesla 50k. They will still be at the office 996 and not going to enjoy any of this, only have money to hike and camp.’ 57:32 I think they’ll be just fine. Thank you, yes.

Jenny Fielding: 57:35 There’s a high class problem there. 57:38 Yeah, and that’s also just one secondary that they did, so they have a lot more upside.

Jason Calacanis: 57:43 Yeah, but I don’t think the perspective there—she got dunked on a little bit—but I don’t think the perspective is that far off when everyone looks up to mere billionaires now as a second class compared to the 100 billionaires and possibly compared to the first trillionaire. I think people’s expectations have really changed and I don’t think it’s the right time for technology to become richer in a visible way given how AI is polling right now. It seems to be a mistake.

Jenny Fielding: 58:06 Well, first of all, get out of the Bay Area.

Lon Harris: 58:09 Yeah, by the way, in Austin. 58:13 By the way, you can buy an acre of land for 100k 20 miles outside the city. And so you want to buy like your 10 acres for a million bucks? Like, and people have no idea how big 10 acres is. It’s huge.

Jason Calacanis: 58:31 Go buy your 10 acres.

Lon Harris: 58:33 Austin and Miami are great places to move after you’ve made money, but there’s a ton of people who are still here in the Bay Area who are making money in spite of the high taxes or the high cost of living because they’re making a lot of money working for the company.

Jenny Fielding: 58:46 Totally fine to make it there and then when you’re ready for your second or third company. If you’re doing your second or third company and you’ve got a crew, like basing yourself in Austin is such an unlock.

Jason Calacanis: 58:54 Which is why you see so many people saying like ‘Yeah, why not put my company here and if I move my team there, they save on the state tax.’ So that’s a whatever it is, 10, 12, 14% raise. Then their cost of living goes down a third, so now they’re at a 50% raise. And your 100k nanny goes down—well, that’s in the cost of living. These are life optimization strategies after you’ve made money or you’re running your second company.

Lon Harris: 59:30 Nannies aren’t down-priced that much if you leave the Bay Area. Just in case, just, just let—just in case.

Jason Calacanis: 59:35 Well, I thought that was the one thing about her tweet that I was like 100k for a nanny? No. 59:39 I think Keith Rabois was going to be mayor of Miami for a few years, but he decided to come back.

Lon Harris: 59:44 Is he back in the Bay? I thought he was in New York most of the time.

Jason Calacanis: 59:48 Well, I’m just saying that a lot of people came back to the Bay Area to either make money or invest in people who were here.

Jenny Fielding: 59:54 Yeah, absolutely. I just think like, isn’t entrepreneurship about zigging when others zag? So if like you have to live in Pac Heights and you… 1:00:00 have to send your kids to Alpha School and you have to do all these things and then like you’re going to have to pay the price. But otherwise, you have to get scrappy and move to Austin or wherever. And I think you can do really well.

Lon Harris: 1:00:09 I think New York and the Bay Area are still great places to build companies.

Jenny Fielding: 1:00:13 I mean, I run a fund called Everywhere Ventures. So, it’s…

Jason Calacanis: 1:00:16 It’s in the name folks. What is the story about the company rebranding that you mentioned? Intercom.

Lon Harris: 1:00:23 Yeah, we kind of skipped over that. But tell us about that. I think it’s a really cool story. 1:00:27 Well, Jenny brought it up. So Intercom is a company that early in the AI era said, ‘We’re going to re-architect our firm around building an agent.’ And they said it early enough, Jason, that people were a little bit like, ‘Hey, maybe. Is the technology there yet? Is it going to be there yet?’ And as they worked on their customer service agent called Fin and saw real success with it, they talked about this over the last, Jenny help me out here, year and a half, two years, something like that.

Jenny Fielding: 1:00:48 Exactly.

Lon Harris: 1:00:49 They just announced, Jason, they’re going to rebrand the whole company Fin and Intercom will then be a sub-brand of it. They’re still going to work on the core Intercom product. They said in a blog post that Intercom 2.0 just came out and they’re going to invest more in it. But the company’s clearly moving in the agentic fashion. And what I think really matters here is this is not just a new product, it’s not just a new name. They stressed that they have changed how they price, how they build, etc. So they’ve really done a full architect re-architect of the company and they’ve made it through. So when Jenny was talking about moats earlier…

Jenny Fielding: 1:00:54 Well, they’re starting to make it through. I mean, I think we all have portfolio companies that are series C and beyond and they have to go through this chasm right now. I have probably five or six that are late stage and they have to transform and like some of them will work long-term and some won’t. But I thought this was like a great story and I mean, Intercom, customer service, you think that would be the first thing to be displaced. So I kind of love that it was a bold statement, the founder coming back and I’m rooting for them. I’m not an investor.

Lon Harris: 1:01:21 Do you think that the companies in your portfolio that are facing the similar chasm, going from the SaaS era to the AI era or the agentic era, are going to make it? Like 50% of them? 80%? How many make that jump?

Jenny Fielding: 1:01:31 The ones that move fast and took action when they didn’t want to. They had to fire their executive team because they weren’t AI native. They had to change their pricing from SaaS to usage-based. That was hard. So I think in my portfolio, it’s probably 50% that I think might make it because they were very decisive, they had great leadership and they had vision. And it was painful, right? They didn’t want to fire those people that took them two years to recruit. But they did. And so I think that’s the key.

Lon Harris: 1:01:54 Jason, same thing in your portfolio? Are people taking the medicine to actually get across the chasm?

Jason Calacanis: 1:01:58 Yeah, there’s an interesting story about ZoomInfo, which helps you find leads, right? And sales teams use these. What was like one of the first things people did when they saw OpenClaw? When they see CoWork? They’re like, ‘Find me 10 leads, find me, you know, everybody who…’ The first thing I did with OpenClaw was I was like, ‘Take these 100, the top 100 podcasts, tell me who the advertisers are, then go put those leads into our SaaS product, which is PipeDrive, and then tell me if they’re in there already and when was the last contact date.’ It did that beautifully. And it was like, okay, that’s an SDR job of, you know, 30-40k offshore, working for a big company. 1:03:00 from home or a 60, 70, 80k in the United States, work from home or in a city, you know, in Austin or in Phoenix. So ZoomInfo is like the perfect example of a company that’s going to have a heck of a time. 1:03:13 That’s like a private equity home company, as I think it’s a private equity company or a public one.

Lon Harris: 1:03:16 It’s public, yeah.

Jason Calacanis: 1:03:17 It’s public. So they’re getting their ass handed to them. They’re going to need to cut half the staff, they’re going to need to take an AI approach. But we have a company, LeadIQ, which was nipping at ZoomInfo’s heels, has eight figures in revenue. 1:03:30 Go to leadiq.com. Their homepage is, ‘Here’s AI.’ ‘Here’s our AI solution to the same problem,’ as opposed to, ‘Here’s our SaaS software for the same problem.’ 1:03:43 So, ‘Accelerate revenue with AI-driven data.’ So they’re like, ‘Here’s the next person you should talk to, here’s why you should talk to them.’ But this is going to require a totally different company. And I remember talking to the founder, Mei, and she was like, ‘Okay, we have these, you know, offers to get acquired. They’re not quite where we want them to be. We’re still growing, but AI, you know, and AI-first companies are super dangerous.’ 1:03:59 And I was like, ‘There’s really only one choice: sell, if you don’t believe in your ability and you just want to get off the train and accept, you know, a… what might be to you, I don’t know, the bronze medal or like a participation trophy. Or do you want to go for the gold? If you want to go for the gold, then you have to skate to where the puck is going while dealing with a board of directors who wants the number to go up.’ And that really is the problem. 1:04:26 You might have somebody like Jenny or myself who’s like, ‘Yeah, we don’t care about a little revenue destruction and shaking up the management team in order to get to the future because we invested at whatever evaluation.’ 1:04:44 The later stage folks are like, ‘Wait a second, you know, we were supposed to, you know, double, double, triple, triple, triple, double, double, double and then exit, and this was going to be incredible, and Salesforce was going to buy us, and HubSpot was going to buy us.’ Those folks are the ones who are over their skis. So the real dynamic is the board issue.

Jenny Fielding: 1:04:57 100%.

Jason Calacanis: 1:04:58 And it’s just unfixable. And I’ve had to have these conversations multiple times with the late stage board members and just say, ‘Leave the board, sell your shares back to the company at a discount, or just leave the board and we’ll take it from here, you know, and you’ll see if you get a return or not. Write off the investment, whatever you’ve got to do.’ But yeah, it just becomes untenable.

Lon Harris: 1:05:21 What was their response to that? What do they say when you tell them that?

Jason Calacanis: 1:05:23 I mean, it’s always… the late stage folks always want to believe that they’re the early stage investors and they have that gestalt and they have that passion for, you know, a blank white board. They want to have that passion for a blank sheet of paper and we’re going to come up with a product this weekend. 1:05:44 ‘Let’s do a hackathon at the company, we’ll break into five teams, come up with five different product ideas, and one of them, you know, Evan Williams will say, ‘Oh Jack, your version, this Twitter thing, is what we’re going to put all our eggs in that basket. Let’s go.” They want to believe they’re that. But their LPs are not that. Their LPs, if they’re… 1:06:00 Late stage like that are looking for five-year term you know returns on invested as opposed to ours which might be okay with 10 to 15 years. So time horizon is everything right? And you just can’t make unnatural… late-stage company pivots are not very common.

Lon Harris: 1:06:16 No.

Jenny Fielding: 1:06:18 That’s why we don’t take board seats so we can be you know the whisper in the founder’s ear and you know the voice of reason and they don’t feel nervous about it. I think it’s a real advantage.

Lon Harris: 1:06:26 Yeah, I think the difference between VCs and late-stage private market investors that are not quite PE is the divide that Jason just outlined like are you willing to do revenue destruction or do you have to have this steady rise? So are you modeling or are you believing?

Jason Calacanis: 1:06:43 Yeah. 1:06:44 I mean, and go to grin.co, this is another SaaS era company that we incubated, did fantastic, and if you scroll down on their page you’ll see their GIA product, G-I-A, and… yeah go to keep going down. So this is like their existing product and then they’re like ‘And by the way, if you’re done with that affiliate product to manage influencers, here’s GIA, the AI that lets your team focus on relationships, not the busy work.’ And what happens over time is you have the existing product, the paradigm is shifted, here’s the new product, and you’re trying to service both of these revenue lines and educate your market on ‘Hey the new product’s going to be more effective’. And man, it’s just it’s hard to sell two different products concurrently. I saw this with Google right now, they released the Google book yesterday, and I tweeted like ‘What’s the difference between this and the Chromebook?’ and people were like ‘Oh well it’s Android but it’s built on Chrome but it’s got the Google…’ and I’m like ‘Yeah but my Chromebook had the ability to load these apps’. It was like ‘Yeah, we don’t know’. It just… people’s perception is they want a Gemini Google book, they don’t want a Chromebook. Chrome means browser, Google Gemini book means like new AI book. It’s essentially the same thing. It’s an Apple Neo laptop competitor, it’s a less than $500 laptop.

Lon Harris: 1:07:59 And here’s an important picture of Google announcing the Google book recently.

Jason Calacanis: 1:08:04 Yeah. I mean it’s… it is really hard. It is really hard running a legacy business that’s printing money, that’s growing, that has constituents internally, on the board, customers…

Lon Harris: 1:08:23 Satya made that work.

Jason Calacanis: 1:08:25 Satya made that pivot work. That’s a really late-stage pivot.

Lon Harris: 1:08:28 Yeah. I mean it’s just it’s just hard. You’re going to be having… you have to have… I can tell you exactly how to say it. The only people who can figure this out is people with a high tolerance for ambiguity.

Jenny Fielding: 1:08:41 Okay. 1:08:42 Give people more about ambiguity in this case, Jason. Ambiguity about what’s going to happen or ambiguity about which direction?

Jason Calacanis: 1:08:47 A tolerance for… I’ll give you like the idea of a tolerance for ambiguity. Taiwan is a proud nation that’s part of the incredible China story, and we respect… 1:09:00 Taiwan and China. This was the strategic ambiguity that the world gave China and Taiwan for the last 30 or 40 years and it’s worked chef’s kiss. You don’t need to challenge China—

Lon Harris: 1:09:11 So far.

Jason Calacanis: 1:09:12 So far it’s worked pretty damn well. Now you’re talking out of both sides of your mouth, right? Is it a lie or is it you’re holding space, you know, to use the woke term. You know, our company, Intercom, is loved and super helpful and has… it’s a catalyst for growth in over 10,000 enterprises. And our new product, Finn, is the future of customer engagement.

Lon Harris: 1:09:41 Like, okay, wait. I think as soon as they realized that Finn was working and becoming the future of the company, they decided to go all in on that and just recently—

Jason Calacanis: 1:09:52 But they didn’t fire their customers for Intercom, and people can still log into their Intercom accounts. Now, if you want to understand somebody who burns the boats, Elon said Tesla Model S and X, there’s a hundred left. You can buy one of the hundred to end the run. My wife bought one of the Model X’s—God bless her—you know, she had one of the first… I had the first signature Model S, she has one of the last Model X’s. And he’s like, ‘I… those are loved cars, but they have to die so Optimus can live.’ And they’re re-tooling those. Like, there are burn-the-boat founders. They’re very rare. Most people in Elon’s shoes would have been like, ‘Absolutely, we’re going to put these on a paced rollout, you can still buy your Model S, we’ll incrementally improve it.’ They wouldn’t have the boldness to say that business is nothing compared to the upside of Optimus.

Jenny Fielding: 1:10:43 So you’re basically saying that Google doesn’t have that agility anymore.

Jason Calacanis: 1:10:47 Only a founder can do that. It’s founder authority that allows you to kill products. What a company like Google does is they just let it taper off. They just let it taper, taper, taper, taper, and then someday you wake up and they’re like, ‘Yeah, the Nest is the Google thermostat.’ Took them like 10 years to have the boldness to say, you know, or Dropcams are now Google Cams. Or the Chromebook is now the Google Book. Like it’s just, there’s somebody internally fighting for… there’s two camps internally fighting for each product, and then the CEO wants to be magnanimous and, you know, she, he, they, them, it says, ‘Yeah, you know, okay, you made a great argument. So yeah, let’s launch that new product on this date, and we’ll keep supporting that other product.’ And then in two or three years, we’ll slowly phase it out.

Jenny Fielding: 1:11:38 I mean, I don’t think you can count them out though, right? I mean, they came back with Gemini after, you know, they could have been ahead and did a phenomenal job and I actually love that product, so…

Jason Calacanis: 1:11:47 And I made a huge bet on it. I bought Google at $100 a share when everybody said it’s over and all the searches are going to chat because I was like, ‘Wait a sec, I watched them after Mahalo take all the little innovations we were doing—’ 1:12:00 Looking at Mahalo and put them onto the Google homepage when it was 10 blue links and I was like, there’s nothing stopping them from putting the AI answer at the top of the page. They did that with the one box. So, what if they put the AI answer at the top? Which is exactly what they did. I’d seen them do that my whole career. They would put flight information up there, they would put their local information up there, they would put the one box, the sports score. What’s to stop them from putting the AI answer? They did it and their revenue went up.

Jenny Fielding: 1:12:24 Yeah, very successful. It just took them, how long did that take them, two years? Well, that’s until they felt like they were gonna be outrun pretty quickly. They had to feel the pressure.

Jason Calacanis: 1:12:34 And then who actually made the decision? Right, the founder had to come back. The founder had to come back and put down his foot and say, the founder authority search, somebody came in and did that.

Lon Harris: 1:12:41 Yeah, I was gonna say, that was a pretty important part was somebody came back and did that.

Jason Calacanis: 1:12:47 No, Larry came back and said, enough, the decision’s been made, we’re going AI first.

Lon Harris: 1:12:51 I think there’s only so many Steve Jobs who can make, you know, company-changing pivots and make that work, and sometimes if they’re no longer there, that pivot might not be as easy to pull off.

Jason Calacanis: 1:12:59 Which is I think why Tim Cook is retiring, is they’re at a crucible moment, as Rolof would say at Sequoia. It’s like a crucible moment for Apple. Are they going to play a role in this next universe? Are they going to leverage their massive hardware footprint or not? I think they put a guy in charge who worked on the chips and is an engineer for a reason. Their future is local models running on massively powerful Apple silicon with 128 gigs, 256 gigs of RAM on your laptop, and you’re going to pay $4,000 for the privilege.

Lon Harris: 1:13:37 I hope so. Oh my Macs are constantly out of RAM. I wish someone would fix that bottleneck. All right, listen, before we go Jason, I want to get to a question from the Noty Gang that was submitted before we even went live today, we’re taking questions from our awesome Noty Gang group chat over on X. If you want to join, there’ll be a link in the show notes. But from Goldilocks Ville, Jason, how should I manage a meeting with large venture capital firms in New York City without losing credibility as both a newbie and someone who’s still determining who to build the company with? I apparently need a co-founder. So they’re looking for some general advice talking to New York.

Jason Calacanis: 1:14:00 I mean, if you somehow got a meeting without your co-founder in a very nascent company, you should just own the state of your company. Hey, it’s great to meet with you Fred Wilson, I’ve been reading your blog and I heard your recent podcast. I need really three pieces of advice from you. Here’s my vision, here’s our progress. Number one, do I need a co-founder or should I just go to building a founding team? Number two, should I raise a friends and family round or should I go directly to seed? And, you know, we have this B2B or B2C function, I’m leaning towards B2B because that seems to be where I can get the flywheel going and, you know, what are your thoughts on these three questions? And if you come in and you say it the way I just said it, I’m owning the state of my business, I’m self-aware, I’m confident, and I have questions for you. I know that you’re a wealth of knowledge, you did all these dot-com era companies, you did Cosmo, you did…

Lon Harris: 1:15:00 …Twitter, I have specific questions for you. So you’re just basically Kung-Fuing it. You’re saying to the person, you know, here’s where I’m at, here’s my problems, you might have solutions for me. I want to make the most of this meeting and I need to get this information out of your brain, which then makes the person realize, ‘Oh, this person is good at collecting information and listening. They’re a sponge.’ If I back them, they’re going to suck more information out of other people’s brains, as opposed to they’re an arrogant 21-year-old who’s telling me like, ‘I’m going to miss the boat.’ 1:15:34 I miss being an arrogant 21-year-old.

Jason Calacanis: 1:15:36 So delusional, like a little bit of that’s okay.

Lon Harris: 1:15:39 No, just life grinds that out of you slowly.

Jason Calacanis: 1:15:40 What do you say, Jenny? You were nodding, I think, a little bit.

Jenny Fielding: 1:15:43 I was. You know, I’ve actually personally changed my tune on the solo founder. So it used to be something—I ran two companies, I had co-founders, I actually had a founder break-up and I know how awful that can be. But I think for the first, you know, five years of my investing career, I always said, you know, you need a co-founder mostly because it’s a lonely road and you need a thought partner. But I have really changed my tune on that. I think solo founders that have great foundational teams and support can be great and very successful. And so I guess my advice is I wouldn’t really bring it up, you know? I would just run it as if things are going smoothly. I would talk about the momentum in the business rather than the traction, right? So you don’t have to worry about that you don’t have metrics, that you’re super early, especially if you’re talking to, you know, an early-stage investor, but just talk about all the progress that you and potentially, you know, your founding team have made. So that’s how I would approach it.

Jason Calacanis: 1:16:37 All right, friends, this has been another amazing Venture Capital Roundtable. We’re doing these nearly every single Wednesday. So if you want to hear from the VCs who are writing the checks, come to us on Wednesdays. Jason—

Lon Harris: 1:16:50 This is my favorite one so far. I mean, this is the based, candid group. I like this one a lot.

Jason Calacanis: 1:16:54 Absolutely. Uh, Jenny, thank you so much for coming. The URL is everywhere.vc, and for Dave, it’s practicalvc.com. Please get together, figure out your TLDs, harmonize them. I’m going to forget those—get them all wrong.

Lon Harris: 1:17:05 And we—can we plug something before we wrap up here?

Jason Calacanis: 1:17:07 Yes, of course. Jenny, add me to your syndicate.

Jenny Fielding: 1:17:09 Oh, yeah, for sure.

Lon Harris: 1:17:11 So, well, before I plug my other stuff, I want to say Jenny’s an amazing VC and invests all over the place and I would plug her as, you know, investing in her fund.

Jenny Fielding: 1:17:19 Thank you, Dave.

Lon Harris: 1:17:22 But I would say for folks who are interested in learning more about Secondary Trading Places is our podcast. Every week we cover news in secondary, we do a valuation corner, profile—

Jason Calacanis: 1:17:32 Who’s your co-host?

Lon Harris: 1:17:33 Aman Verjee, my PayPal colleague from way back.

Jason Calacanis: 1:17:36 God, he’s good. He’s a little spicy.

Lon Harris: 1:17:38 He’s a lot smarter than I am and he actually had glasses.

Jason Calacanis: 1:17:40 Spicy, I was going for. Okay.

Lon Harris: 1:17:42 A little spicy. And then a brief plug for a company we just invested in, not a secondary. We invested in a company called EquityBee that provides employee option financing. You might not know this, but a ton of options go unused, unexercised because the employees can’t afford to exercise them. 1:18:00 exercise their options before they leave companies. So EquityBee helps people finance the purchase of their employee stock options so they can still keep some upside when they need to leave the company.

Jason Calacanis: 1:18:11 Tel Aviv based?

Lon Harris: 1:18:12 Uh, they were, but now they’re Palo Alto based.

Jason Calacanis: 1:18:15 Got it. I remember, I think I heard this pitch, great job.

Lon Harris: 1:18:18 And we’re actually running an SPV, ooh, I don’t know if that’s still legal. Uh, but if folks are interested, Jason I’ll drop you an email.

Jason Calacanis: 1:18:25 Yes, send me that deal memo, I’ll read it. Absolutely.

Lon Harris: 1:18:28 Will do. And I’ll see you at Liquidity Summit.

Jason Calacanis: 1:18:30 Oh yeah, you’re coming. Awesome. Great. Yeah, liquidity is going to be nuts this year. Liquidity was my original Angel Summit. I renamed it Liquidity, did it for a year, the All-In guys did me a favor and showed up and we taped an episode there for the last two years, and then Chamath was like “I like this event. Can we buy it?” and I was like “It’s just for angel investors and early-stage folks.” He’s like “Well what if it was for everybody?” and I was like “Okay.” So we took the price from $5,000 a ticket and now we just break even on it, and then we doubled the price and we tripled the attendance from, you know, 150 people to 500, and we took over the town of Yountville. So the budget, the revenue, everything year over year or year over 18 months went like 10x, triple, and it is going to be absolutely nuts. We said no, I think everybody who got a spot there, we said no to three or four other people who applied. This is applying to buy a $10,000 ticket. It is pretty bonkers.

Lon Harris: 1:19:27 What a privilege.

Jason Calacanis: 1:19:28 Well, I mean, the amount of money we’re spending is crazy, like we literally took over the town of Yountville for the entire duration. It’s going to be nuts. And people are coming in from around the world. And I have like, speaking of people in the Middle East, I have people like “Hey, I met you when you were over here, I run this sovereign wealth fund. I applied for a ticket, I didn’t get in, is there any way you can get me in?” and I’m like “Ugh, we need a bigger boat like the Jaws movie.”

Lon Harris: 1:19:54 I think you should have let in the people with sovereign wealth funds, Jason. That would probably be a good idea.

Jenny Fielding: 1:19:58 I know, but tell them to buy the next town over.

Jason Calacanis: 1:20:00 The problem is it’s everybody comes at the last minute and then there’s like, you know, four besties, each one gets 30 requests, 40 requests for last-minute tickets, 40 requests times four besties is 160 seats. We’re out of seats. It’s a physical limitation.

Jenny Fielding: 1:20:18 And that little town can’t handle it, but that’s so great.

Lon Harris: 1:20:22 This is a good NBA playoff game problem.

Jason Calacanis: 1:20:23 Absolutely.

Jenny Fielding: 1:20:24 So Jason, you know the last time I was on a platform with you was at your Launch Festival in Fort Mason, and your producer Jacob sent me the clip and I was like “Oh my god, that was 10 years ago” and honestly, yes, and that was such a great event, I loved that venue, it was so fun.

Jason Calacanis: 1:20:40 Holy cow. 1:20:41 Yeah, it’s been 10 years. You know, I did that event, I had started TechCrunch 50 with my friend, and then we broke up, or I should say he kicked me out and screwed me. And I was like “Okay, I’ll just do my own, I’ll do Launch Fest” and he went on to rename it Disrupt. And it was the best thing that ever happened to me because I got away from somebody who was a bit toxic. 1:21:00 I was able to do it the way I wanted to do it, which was I used to do it, anybody can get a free ticket if they’re a founder, they just had to fill out a form. We had 15,000 people at the peak register and then you had six, 7,000 people there and the audience size was, like the number of seats was 2,000, we had like video rooms to watch it. So I brought it back this year and we had Launch Festival in San Francisco, only 400 seats, free for founders. I sold like 30 tickets, you know, for VCs or whatever to sit in the front row. And we really had a great time making it intimate again. So I’m gonna do it again. I’m gonna do it twice a year and I’m gonna make it themed. So launch your company for free. 1:21:39 And I had done it, Jenny, as a reaction to Demo. Demo was charging $20,000 to be on stage. They would then charge you five or ten thousand dollars to be coached. So they had like a mandatory coaching product. And then you had to buy tickets. And then you had to buy a booth. It was—do you remember those days?

Jenny Fielding: 1:21:56 I mean, I just remember being on that stage and looking at the audience and there were thousands of founders there. When I got off the stage, it wasn’t like a line of 10 people, it was like hundreds of people. It was like so exciting. And that venue was just amazing.

Jason Calacanis: 1:22:08 Well, they made it impossible for me. The unions then attacked me for using non-union space, started banging on the doors and protesting it because I used robotic cameras. And I was like, ‘I’ll never do an event in San Francisco again.’ And here I am, I did one recently, but I think I’m going to move it to like the Peninsula because San Francisco is just too hard. They make it way too hard to do anything. But you were at the early ones, you were at every one back in the day.

Lon Harris: 1:22:31 Back in the day.

Jason Calacanis: 1:22:34 You were admonishing me to take my iPad off the stage.

Lon Harris: 1:22:37 Yes, we had a showdown because he was using his iPad. I was like, ‘these guys have 90 seconds, please pay attention to them.’

Jason Calacanis: 1:22:42 I was doing due diligence on the company. I wasn’t playing around.

Lon Harris: 1:22:46 You have ADHD, my friend. You have ADHD, and I am your Ritalin. I am your human version of Ritalin. I think everyone here has at least ADD. 1:22:51 I’ll just throw in my historical context. I was in late high school during the TechCrunch 40, TechCrunch 50 days, Jason. And you guys got me drunk enough that I threw up on the wall outside the venue as a baby. So, there it goes.

Jason Calacanis: 1:23:08 I got you drunk enough? Yes, I put the gun to your head.

Jenny Fielding: 1:23:10 I think that story, that story wins.

Jason Calacanis: 1:23:13 You win. Puking at TechCrunch 40. All right, everybody. We’ll see you next time. Bye-bye. 1:23:16 [Ad: Founder University, Launch Accelerator, Angel Syndicate, This Week in AI]