Elon's Twitter Takeover and The Future of Social Media with Sriram Krishnan

0:00why am i drawn to web3 one of these is like all this stuff is brand new but it is a totally unexplored like design surface right it's like 2005 and people are figuring out what the rest apis are and user generated content are for the very first time so we'll figure out a bunch of these were even taos for example last year and a half we learned so much about governance and you know we learned tons more about token design but i think the possibilities are just like it blows your mind [Music] what's up dude what's going on i like your outfit tonight thank you uh i like the buttoned up all

0:33the way button down i think it's like a it's a sharp look the stock market is is tanking right now so i've taken a second job as a busboy that's that's kind of where i'm at can we talk about the market actually for a second i'm not i'm i'm zero percent market analyst um but i do find it funny i tweeted and then aborted a tweet today um because i didn't want to offend people like for the last 10 years everyone has been tweeting out like warren buffett quotes about you know that quote um be uh be fearful when others are greedy and greedy when others are fearful uh

1:10you know like everyone tweets that out it's like this common wisdom that everyone throws out and um you know then when everyone actually is fearful everyone just panics and you start getting texts from all your friends being like the world's ending you know like nikita and all these other people in our group chat sending us texts telling us the world is ending yeah i mean you and i are on the same page with this like we're just kind of like every week buying a little bit just you know trying to keep it calm looking for good businesses to buy and invest in today's episode is brought to you by

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2:28business you will too check them out today at marketerhire.com again that's marketerhire and tell them sahil sent you i mean i when i look at the market right now so first off i buy the s p 500 every single monday like without fit i just i always do that that's just like my dollar cost average and that will always be like my biggest position long term um but i i mean when i look at the market today and i see some of the things that i'm like personally um excited about the trends around i think it's hard like i'm just pulling random stuff up like look at um

3:06random like random growth trends that are in the market that you know are going to be around and be big for the long term and they're down like 40 off their highs or 50 off their highs it's just hard to imagine if your time horizon's long enough that it's not a good time to buy these like tech forward names and it's not financial advice but like when i look at it that's why i like personally on all of these massive collapses i'm just like go buy a little bit of basically everything in my portfolio yeah i mean same here not financial advice but i was just

3:42just looking at uh robin hood so robin hood uh just announced a few minutes ago that they're laying off nine percent of their workforce um and the reason why is because of they're like we have duplicate functions um which is obviously terrible that people are losing their jobs um and the stock is down um at the same time i look at it and i'm like okay the market cap for the business is 8.6 billion they've got like almost 6 billion dollars of cash on hand so the enterprise value is like two you know three billion dollars something like that and it's robinhood they've got like 20

4:20million plus customers um you know you gotta think that that's a decent bet yeah i in again like i know nothing about the fundamentals of these i don't actually buy single name stocks you know this like i only own one single name stock it hasn't gone so hot since i did it because my the only one that i bought it was like right into the peak of of the nasdaq but i don't really buy a single name stock so i'm just like some of these industries are just going to be massive and continue to exist if we're going to have a future as a society like

4:53semiconductors down smh which is like the name that i'm in there is literally down from like 300 plus to like 220 or something 230. like that is a massive drop um and yeah like is it gonna get impacted by all this stuff probably but the reality is like semiconductors have to exist and continue to develop for us to have a technology driven future uh do you know raoul paul um yeah the real vision guy um he sent me his latest piece um he calls it the exponential age um you know his whole like thesis for the future here and um he basically is like tracking this basket of what he calls

5:30the kind of exponential age stocks and looking at where they are relative to their trans trend lines and whether they're buys and for the first time this week he started saying um on the drop that he was going to start legging into this stuff because they're so far down off of their trend lines that you know as these become a bigger and bigger part of our technology future they're gonna be like life-changing returns on the um you know on the upside coming back from this so it'll be interesting to see i mean there's tons of macro involved obviously like the fed continuing to tighten and raise interest

6:02rates is a huge driver of the markets i personally think that if we see my gut tells me that we're going to see like a pretty bad q2 from an economy standpoint like i wouldn't be shocked if we actually saw negative growth and people panic i think the fed will just like reverse course very quickly because they've shown an unwillingness to allow pain um and i think if they do that growth stocks will rip like we've never seen them rip in history uh and anyone that was actually you know kind of had the guts to be buying i think we'll be rewarded for those guts but again not financial

6:38advice and uh time horizons matter if you're planning to retire and you need this cash soon for some purchase or something completely different story than you and i sitting here just basically like you know i feel like it's toy money because i don't need it for a long time switching gears from public markets to private markets i don't know if you saw you mentioned nikita but he tweeted the other day if the startup you're working for is valued at more than 100 million dollars and the exercise window on your options is 90 days you should pencil in that your equity will be worth nothing at this point

7:13um and i'd love you to just to explain that for folks uh what is he saying and then how do you think that these you know big drawdowns of 50 60 70 on public markets are gonna affect you know seed series a series b series c startups yeah i mean i think broadly what he's getting at is the idea that um you know equity to to employees was issued at you know sort of the most recent valuation of the company and in an environment like this if you were joining like a series c or series b startup that had raised at a big price and your equity was being issued at that

7:50price um you're under water you know on a true mark to market basis private markets do not have a mark to market function and the way that public markets do i can go check the coin based stock every single day and know that the value of my equity is lower but in a private market if my company just raised at a billion dollar valuation and i got equity granted at that valuation now a few months later the market has clearly adjusted that billion dollars which was based off of a lot of public comps in the market is worth it could be worth 40 50 less just

8:22off of like pure public comps because of how much some of the public names have dropped from a multiple standpoint and so what i think nikita's getting at is just this idea that like oh my god a lot of startup equity in these employees that have that equity are wildly underwater and there is like a massive return in the market um that needs to be achieved prior to those people having any value in that equity um and it's a challenge i mean we saw instacart i think i think it was instacart a few weeks ago like repriced their uh repriced their internal valuation for this exact reason

8:58so i think you're going to see um more and more startups having to think um really deliberately about doing this like instacart i just pulled this up march 25th instacart basically um cut its own valuation to 24 billion dollars which was a markdown of almost 40 percent off of where the last funding round had been done by fidelity d1 sequoia and andreessen so all those guys invested um you know at like yeah 39 billion dollars in march of 2021 and a year later um you know the company was actually marking it down from 39 billion to 24 billion for the purposes of making sure that employees you know had real value

9:45in the equity that they were that they were granting because you know it goes without saying if if the whole market knows that you're worth less than 39 and you're trying to incentivize employees by saying hey i'm going to give you a grant based on the 39 billion valuation if i'm looking at it i'm saying like well that's worth half what you know that's worth half what you're telling me it's worth basically um so it's an interesting dynamic i do think you're going to see more companies having to reprice and uh and think about employee incentives in a more comprehensive way yeah and you know you say it goes

10:18without saying but i actually think we we should talk about this stuff because i think there's like you'd be shocked how many employees like just don't know the fundamentals of all this stuff um well there's a business idea there by the way like the the lack of education and transparency around how options work um how exercise periods work you know the tax side of it managing liquidity managing your tax implications all of that stuff is crazy and that goes for like public companies it goes for private companies all of it i mean my sister-in-law works at twilio and you know has had equity over a long

10:56period of time and it did extraordinarily well over the you know period in 2020 it rose to 400 a share now it's all the way down to 120 and she was having to pay taxes on things from you know gains that she had had and it was just like this massive headache of things that candidly very few people that are joining a tech company really want to or would have learned about that stuff right and so i think there's a business somewhere in there of like it's probably a b to b to c sale like you go plug in some sort of software or something easy

11:28that's an education and kind of management tool for employees plug it in with the companies card has tried to do it but their platform sucks man when you go look at it and try to like manage your options on there it's really not intuitive and non-educational to me so either they should acquire someone and adapt it they should improve it or someone can come in and disrupt this market and provide something better yeah i like it i think there's there's definitely like a need for that just like people who understand tech like you understand like hey like your ceo might say this company's worth 39 billion but it's really worth 24

12:03billion so um i definitely think uh there's a business there um i want to pull up um a text message that i got right before this call from a founder i invested in um because i think if he's texting me this a lot of people are probably thinking about this and it's related to our conversation so he said do you really do you think that the fundraising environment is changing or is it just a lot of unwarranted fear um and then i said what stage are you talking about and he writes i guess any sage seeds or series a and then he links to me a tweet by uh harry steppings yeah

12:40i saw that tweet founders you need to hear the truth the funding market has changed that raise you wanted you aren't going to get you're raising too much with too little you will go out burn lots of discussions raising too much then come back with smaller requests don't do this um so you want to plus fud from harry man yeah so he's and then he writes lol after that um and first off i think vcs are a little self-serving when they tweet stuff like that and i will tell harry this harry's a friend um you know like look i personally if you're a series b series c you know and

13:18later startup has the funding market changed yeah absolutely because uh you know like i had i told you about this i just had a conversation with um uh one of the heads at one of the big crossover funds and he was telling me like what we're looking at now because we invest in both private and public is we're basically those late-stage private companies we have a direct comparison point now to look at a public company that has the same growth profile is of bigger scale and that is liquid and so he's like with what those have traded down to why would i invest in a private

13:51late stage software company that is illiquid uh when i could get the same growth and fundamentals in a liquid name in the public markets at a better price he's like it makes no sense and so what he's seeing is he thinks there's going to be like kind of a rush out of that late stage growth market so companies that went and raised big rounds in 2021 don't really maybe have to worry about it because they've got runway and hopefully they're being prudent from a cash standpoint but if you were planning to raise a big you know series c this year at a big price it's really really hard you're

14:23just not going to find a lot of capacity in that market on the earlier side of the market i'm curious what you're seeing greg i haven't seen a massive change in like seed and maybe like the the high priced series a's probably aren't gonna happen quite as crazy as they were which is probably a good thing candidly um but the like pre-seed seed market and it's just so long-term and it's you know 10 plus year horizons that i i don't see a massive change in the valuations yeah couldn't agree more precede seed you know mostly business as usual you're back in great teams basically so um

15:02i still i still think great teams and great products are going to be competitive but yeah agreed on the later stage um i think there'll be some correction um i just what i don't love about that tweet um harry stebbing's tweet is i think a lot of his following are founders who are you know seed series a or even precede and i want to encourage people to to go you know to go and build and don't be afraid like a big part of raising money like i've raised money a few times like is the confidence and so if you're listening to this like just because you're seeing some tweets um

15:38that like prices are going down it's gonna be harder to raise like you know keep your head keep your head up high yeah i completely agree and look like builders build um you know fundraising is fundraising but if you're building something valuable and you're building real value um there's going to be a market for it and there's so much capital that has been raised by all of these venture funds it has to go to work somewhere and the truth is i don't know the truth is like if you're going to see a tweet a fun tweet and it's gonna stop you from raising money like are you really an

16:10entrepreneur right yeah like like that's plus who cares like if it's at if you raise your series a at a you know 100 million versus 150 a few months ago yeah there's more dilution but if your goal is to build a 10 billion dollar business um yeah you're going to own less you know percentage points is it slightly worse off you're still going to be rich like if you go build the big thing you're still going to be rich it's okay uh so i don't know man i i um i just think it's like separate the signal from the noise a bit here uh i know we've got

16:42sriram in the uh waiting room so let's uh let's go ahead and bring him in thank you so much for having me on you know the cliched saying of like long time listener first time caller i just love what your books do i watched all of it i watched you know the one with alexis and such you know i would say okay i'm gonna say a bunch of good things and then like one really bad bad thing okay a bunch of good things is you know love the vibe of the show and you know love like the couch and the the comfort and the conversation it's all great i just feel

17:10like you know you know i was watching alexis uh the one that alexis um which is great episode it's amazing minimal uh minimum viable community and in the middle alexa just kind of calls off camera and someone just brings him i think some vodka or tequila or something and i just want to say first of all i have like a coke zero over here so i feel like i'm not getting the full-blown guest experience well i'll actually see like you know the big shot like let's get him you know let's get him like the full container like oh so yeah yeah let's get him one like a you know like a

17:40shitty you know internet connection and let's get this one out so yeah i feel like so i okay first off very fair criticism i blame um i blame kovid i guess i blame omicron because the last ones we were able to do in person were like art basel week in miami and since then we've been doing these on a remote uh you know on a remote setting on on zoom or on riverside uh which is one of the lexus's portfolio companies i think they just raised their series b so we've been doing them remote although super excited post my baby and once my like paternity leave is done to be able

18:20to come back and do the the couch vibe and we will have you back on and we will have someone walk into the shoot and give you a tequila i think that was babak by the way greg that did that i will hold it by the way i just want to say also congratulations in advance you know i was sort of expecting you know well it might still happen any moment you might just kind of disappear and it's gonna be me and craig i hope not i hope not but um i will take you up on some uh father advice at some point soon so anyway man thank you so much for

18:50joining um we have been really excited to have you on and so the feeling is is really mutual and a bunch that we want to want to chat about with you so i personally would suggest we just dive right into it the the first thing that i want to talk about before we get into the obvious around elon musk and all of this twitter stuff um the first thing i want to get into is um this uh aku world the akutars uh hack or or exploit or um thing that happened greg did you see this i did so i can give everyone anyone that hasn't seen this i can give a a quick

19:26primer on so aku world aku world um the website is aku.world i believe um it's created by this guy micah johnson who incidentally is like a friend of mine and um someone who uh i think extremely highly of he's from the baseball world actually which is where i know him from he played baseball at indiana ended up going and playing professional baseball um and since has become an artist and he's this incredible artist um and basically in the early days of the nft uh rise he created this project called aku world and it was all based around this pretty amazing story of his nephew who is an african-american kid who

20:07basically told someone that he wanted to be an astronaut and was told that black kids couldn't be astronauts uh and so uh micah created this whole art and world and project around um around that idea basically uh it's a young boy with an astronaut's helmet on is kind of the basis of this whole world and it's really incredible our incredible thing they've had a ton of success with the early drops but the latest is um sort of an unfortunate thing that's happened in their most recent drop which was a error in the code around the smart contract that was exploited and caused about 33 million dollars to be locked forever uh in the

20:52smart contract and so i'm curiou like you guys are my web three guys i'm curious um i'm curious uh what you guys think of this situation in general how we can prevent things like this from happening and um you know and how we can sort of um come back from stuff like this uh good question okay i probably have a disappointing answer because i don't think i followed the situation too closely i saw it on twitter but you know um i didn't follow the situation too closely so uh this might be very more general um i think it's like kind of a couple of things right um you know i think if you

21:29kind of look at any sort of technology shift over the last you know 20 30 years uh there's kind of been like a period of time when you know we've kind of hit oh here's this amazing new platform they can do a bunch of amazing things and then there's a bunch of like you know i think there's two things which happen right i actually don't remember the details in this case i think it was kind of a error of some sort it wasn't like a malicious hacker uh you know and as a but you know in the last six seven months there have been like you know

21:54multiple famous incidents you know the the wormhole incident there's a few other famous incidents there are actually you know people on the other side so i think they have two broadcasts or things which happen like one is uh you know um engineers and developers over time you know discover like what are the patterns and practices and make like painful errors uh i like a great story from 90s they'll just get to the other other version of this they're just bad guys and you know the bad guys get smarter and then the good guys get smarter and there's kind of like a warfare which keeps going on and i think

22:22you see this over time and time again one of my favorite stories is from a close friend of mine steven synovsky uh you know who we all make fun of you know uh because for all his history of windows and offices he's amazing he's yeah he's one of the most senior people at microsoft and he was running office uh or probably a very senior role at office in the late 90s any of you room with the i love you bug right um i do remember it vaguely yes i'm dating myself uh this is no i remember this my dad it was the it was like an email that went out from aol

22:53it well no it was like it was like an email that went out from aol where like it you it sent out to your entire address book i remember this hitting my dad it was an email that went out to your entire email address book that just said i love you uh and so it was the subject line was i love you and so like a bunch of your colleagues were getting an email from you saying i love you and people clicked it and opened it and it continued to spread and it was like this malicious it was malware or something right exactly by the way half your audience is

23:18going i have no idea what i love your bug is and the other half are just feeling triggered that you just said well i know this because my dad told me what back in my day well i just remember when this happened to my dad and it was a big deal because it was like the first hack i had experienced too it was not like a big part and what would happen you know it's basically sort of like you know misused some scripting capabilities and steven stafford has a great story of how he got all these phone calls you know from all these reporters saying like what is

23:43going on and you know micros involved in this and you know even without knowing what is going on he was like well we're going to beef up security you know i think what's an output express or outlook and we're going to make it harder to run scripting code yet right and so i think it's kind of this constant you know the good guys put up more defenses the good guys teach developers how to write better code uh you know audit more code you know they're kind of like open source repositories or patents and practices and the packages now crypto obviously has a uh uh an added sort of incentive

24:13because there's like real economics at stake um you know which makes it a lot more lucrative uh but you know i think you know one thing i've been seeing is that there's just so much community effort and just making things more secure like here's a plug uh uh on the uh i don't you know we kind of recording this in near the end of april and on the a16z side we put out a blog post from the security team on you know who uh riaz who kind of works on a bunch of our security efforts and a couple of others talking about like bunch of security

24:40practices right so it's going to be a constantly evolving thing we probably haven't seen the last of it but i think the community is going to get stronger with each one yeah well the interesting thing that you pointed out there so it was a dutch auction um which for people that aren't familiar it starts at the top and sort of steps down until you find the buyers for the entire pool um and basically they were going to issue refunds to anybody that bid above what the ultimate uh resting price was on the auction and um it ended up that all of those funds because of a mishap in the

25:12code that got exploited basically got locked and trapped and to the credit of the team you know it was a coding mishap they basically didn't audit the code sufficiently to make it function at the appropriate level to the credit of the team they came out of pocket from the treasury to refund the people that were supposed to get refunded and micah who i will admit is a friend i thought handled it with a lot of grace in terms of just stepping up owning it and um you know and basically saying we're going to build back brick by brick and it doesn't change the quality of the world that we're trying

25:44to build the point that you made uh street ram that i thought is also interesting is the way that web 3 works um around you know like someone came and exploited this like somebody exploited this mishap in the code now in a market level this became a big incident a lot of people knew about it it shines a huge light on making this type of mistake in the code that should not happen again now because so much money was lost in some in a mishap like this the next people that are going to build the next project should actually benefit from the fact that this has happened because now

26:18they've learned there's been a light shine on this someone's going to audit that specific piece of code very carefully and so you have this like market mechanism now to hopefully continuously improve so for everyone that shines a light on like oh there was this mishap in the code and look at all the money that was lost web 3's broken et cetera actually the flip side of that argument would say that now everyone gets to know that exact mistake that can be made and improve in future projects against it so i think it's really interesting i think so i think with every one of these the you know the patterns and

26:51practices you know you you probably end up making different mistakes like we live in a world of technology in code uh you know um and we can throw a lot of tools at it and a lot of interesting new tools from like formal verification to auditing but there's always going to be like threats like you know for example you know there are uh you know what folks what apts are like advanced persistent threats which basically means you know uh governments like you know folks like north korea or other countries you can imagine trying to go after these always be these people um but you know i think i'm just gonna

27:18build on something you said i i i didn't follow this instant pretty closely but i always find it very remarkable when communities can survive and continue with legitimacy one of my favorite blog posts in the last several years not just in crypto in anything is from vitalik it's called legitimacy is uh you know the the best cash resource if you haven't seen it you can probably drop a link in something go check it out um and it talks about how you know one of the you know one things that crypto really deals with and not just why are not just good about life is how scarce legitimacy

27:48is i'll give you an example all of you probably remember the dow hat right it was kind of the famous thing which caused uh this uh ethereum fork and i think only recently we actually figured out actually what might have happened uh you know because of the book this came out um but you know at one time you know there was a big question of you know will eat actually survive um and in a lot of ways i think it was metallic and the community having the credibility which made them all you know switch and you know actually survive and obviously you know they've done really well since then

28:16so you know i sometimes think about there's a monetary aspect but one of the most interesting things for me about web3 uh you know as kind of a cultural social force is sort of legitimacy technology and economics kind of all being mushed together right because i used to work on social media and you know be there with social capital like you know people having millions of followers but there's not real economics tied to it but web 3 kind of brings those together which i think is really really interesting i'll give i'll give my point of view on this because i i do a ton of drops uh via our agency

28:49late checkout so we we build drops and if i ever have bags under my eyes it's because we're doing a drop that day um i i think my what i would love is i would love web 2 infrastructure in a web 3 world and what i mean by that is in webs exactly a great a great song title what i mean by that is like a lot of the time what we're doing in web 3 is we're writing custom contracts custom software um or we're grabbing multiple things and sort of putting it together and be and because of that and also because there's a shortage of

29:28talent um and because people just haven't been doing this that long a lot of the time there's mistakes um and there's a lot of processes that you can do to to mitigate the mistakes and like what we have a ton of those processes in place like for example like when you do your first mint you know make sure that you can withdraw the ethereum from that first mint to somewhere else make sure it's not locked and there's like 100 things like that that you can do but my only advice to people listening who potentially want to do a drop is it's important to to to basically have those processes in

30:09place and and you know work with people who've you know aren't doing their first drop you know work with people who've done multiple drops i think is really really important um i do want to switch gears a little bit and talk about twitter because that's that's that's on my mind right now um did something happen with twitter it happened you just stole my lines you just stole my line [Laughter] so you know we're sitting here uh it's been about 24 hours since elon musk has been uh you know it's approved that he's buying twitter so it's very exciting [Music] um do you think that elon is going to

30:54make twitter a more web-three version of twitter and if so what would that look like good question by the way i have to say you know if you follow this story for the last uh couple of weeks from you know him you know revealing that he has a stake you're going on the board and all of that it's only been two weeks so i don't know when you first plan on getting this podcast out but this could be like hopelessly out of date by the time you know we might as well be talking about something in the 90s uh given how fast the story is moved uh no so first of all

31:24i just want to say like you know twitter is a company and a product which is just very special to me on multiple levels uh one is uh you know just my personal story i think so much of my professional connections personal connections uh uh you know have come to twitter you know i'm pretty sure like sal and i started dming on twitter at one point in time i made a lot of relationships uh through twitter uh i also you know over the years you know built up a little bit of a following and people have been a bit so good to me on twitter that's not just on the personal

31:53side i also worked there for a few years and you know i had uh ran a variety of products over there so i got to see the company on the inside i work closely with jack and the team over there so i feel like i'm very connected and you know very grateful for the product in multiple ways now uh okay experience there's things which i think elon has said that he would do uh and there's things which i would you know i would love for somebody to do and you know that somebody might be elon or something i think might be fun if he does i think

32:23what elon has talked about uh in public so far has been a you know he wants to you know he has a point of view about content moderation and censorship and free speech which we can probably get into if you want to get rid of that uh he's talking about bots um and he's talked about uh you know just kind of just improving the product right and i think a lot of people have very very strong views to put it mildly on elon and some of these but uh uh which you can also get into uh but for me you know uh you know i i think in some ways even jack has

32:54talked about is i would love to see twitter get decentralized and it might be just kind of like talk about like what that actually means and i have no idea about that elon i don't think you actually talked about it jack has a little bit but i think elon has talked about it so we'll have to see uh so uh i think the best way to talk about is through analogy so we all grew up using you know email um and i remember april 1st i think it was 2004 when there was a rumor of google launching this new email product which had one gigabyte of free

33:24space and you know you could you know the invites were really hard to get but fun fact i tried to impress my wife arthi uh back when i was doing her by getting her one of these really hard to get invites and we got married so uh uh kids there's a story for you there uh you know but you know but the truth is email had existed for i think a couple of decades you know before gmail came along um and even to this day right you all just using tcp and smtp and imap and pop i can send you an email no google nobody else in the middle right so there

33:54is a protocol uh you know which is built on smtp imap pop etc and there's a bunch of like infrastructure that goes along with it then there are a bunch of clients like i grew up in a uh age when like yahoo and hotmail emailed us were really popular the gmail became popular and all of us i'm sure had a variety of like work email addresses and so on so um but at no one time did when you forced to use one company's product it's not as if like google says hey you know what folks you're off gmail today and then you're banned from the word of

34:21email right so i think that that is one lens of decentralization which i think of it as like you know you can pick the client that you want to use and by the way the gmail client very different from you know your client i have one of these nerds who likes to sometimes check email with emacs uh gunus fans represent uh i'm sure you have no idea what i'm talking about but that just perfectly works you don't need google in the middle um and i think there's something really powerful about that concept of uh hey there is a right to exit even if i don't even if i can't use google or

34:51google makes me not use them for some reason i have an alternative that's one very important uh you know factor the other important factor is you can build your own client experience right so for example gmail has a spam algorithm they have a recommendation algorithm right all those different things but that's not what gmail is doing on the client it does nothing about the nature of email itself like in fact you know i'm sure if you have like a non-gmail client they're not sometimes going to spam they don't do the recommendation or whatever so so you have a client which is doing ai in ml which is trying to detect your

35:21spam or not trying to sort it to offers or social or all things that gmail does so what you're having is you have a protocol which basically kind of transmitting you know electrons really uh but then you have a client layer which is doing ai recommendation gmail try to guess it what you might be interested in viewing it tries to you know send out all the you know the viagra ads off into spam like it does all those things for you now um you know when you think about say twitter i i don't mean to pick on twitter i think it's a very special company or facebook

35:50or any one of these companies i've been very grateful for all things they've done to many amazing companies but you don't have a choice right like if twitter says you're off you're off it's not like you can code up something on emacs and be like oh i'm going to use twitter in my own way so there is no right to exit which i think is like one key bit on decentralization so this is one key factor now the second key factor is uh now this whole debate on speech content moderation we can by the way i was there on the inside we can spend hours talking about this right and i

36:18think you know beginning and you know we probably won't make most people happy but let me kind of like oversimplify right there is one set of people who think certain sets of things should be allowed to be said on twitter but there's another set of people who think certain things should not be noticed on twitter right incredibly broad oversimplification here folks that's the name of the game now the challenge is uh if any one of these people say you know uh you know win or you know are right on twitter the other side has no alternative you're basically banned from twitter like you have nowhere else to go the same doesn't

36:50exist for email right on email like in if gmail bans you that's fine you know i can still find a way to get email to you now of course you you may not use the email client that actually read it or whatever so i think that's also important in terms of like uh twitter needs to be decent to life one into a protocol so people can use a different client the second is they can use their algorithms of choice right so you could get banned off say you know the twitter that uh let's pick an example uh uh uh again name your favorite personality today's episode is brought to you by

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38:11too check them out today at marketerhire.com again that's marketerhire.com and tell them sahil sent you elon musk uh well let's pick somebody from our world um my favorite vc twitter personality um shoot this is while you're thinking about it i'll give you nikita beer yeah nikita is a good one no i don't want to give nikita that much credit okay fine nikita hopefully nikita doesn't hear this nikita deserves all of this right he deserves it uh so let's speak nikita right let's say nikita you know uh you know what you know obviously is a brutal dictator i mean look i know the guy right he's gonna be

38:57a brutal dictator and nikita says look you know on my twitter you know all of you are gone right it's going to be me and logan and you know a bunch of people i like and a bunch of people i control everybody else is just gone from my twitter if you know that right that's why because you can still go use uh you know i don't know like cream twitter or solid twitter or greg twitter and you can be perfectly fine now of course we kind of joking around here because the stakes are much higher like today if you get remote on twitter right you lose a

39:24massive audience on what is a world which can really shape the discourse and i think that's kind of the other part of decentralization which is you can say hey you know what i can pick i was i was explaining talk about nikhil today on this podcast right but so you can be like hey i picked nikita twitter which has a certain set of algorithms maybe nikita twitter says look when you open up twitter the nikki test tweets are going to be pinned like 500 pixels at the very top and then you get everything else because yeah that's the rules right for your twitter and if you want and

39:49naked pure is the best product you use it if you don't want it you can pitch it pick a different algorithm but i'm clear we've tried to do this also over there so we're trying to say hey you know maybe we should have uh ranking algorithms maybe we should do only latest there's always in this controversy of only latest ranking which by the way took up three years of my life which we can also talk about if you're interested but i think the point here is you don't have a choice and so decently i think this one is a rate of exit where you can pick any client and

40:16the second part of deselect is really interesting is when you pick the client you now have a choice of the algorithm so for example just like gmail picks a spam algorithm for you nikita twitter which is going to be now trending on twitter after this can pick the algorithm for you right and of course we're kind of goofing around here but you kind of see you know how you know choice can be really important so this is one level of decentralization now let's get now where it gets really interesting is uh how many followers do you have on twitter uh

40:42575 000. okay so that's quite a bit right you know this is like a popular guy right uh now you know so i could argue and i'm very clever that you add value to twitter right i mean you there are 5 000 people who follow you and get value so you're adding some value to the company right now i hope so when was the last time peter sent you a check for your thoughts and followers and the work you do on twitter i haven't seen one yet unfortunately okay when was the last time they asked you for input into addition that they're making in their offices in san francisco

41:15uh very rarely well you know so and by the way either again i was at twitter and i mean pick on them but you you know been seven to eight years ago when social media but maybe 10 years ago when social media came out the construct of social this so there was kind of a an agreement on social media right the agreement was we will give you an audience and you in turn will give us content right and that's that's the deal right and you grow your audience and by the way you know we will show ads against it and you know it'll be great business so that is kind of the deal but

41:47over the years i think that concept has slowly shifted like i think the rise of the theater economy the rise of companies like cameo has been like kind of a shift where you know you've seen these creators who are like saw the creator right like saaho could be like hey you know what you know i you know i deserve to be compensated for my service to twitter because we can obviously see he's adding some value uh to twitter now i think so just to pause you there so the flip side argument to this is something that our friend at sweaty startup nick huber tweeted out which is a flip of this entire model

42:21which is that large creators should actually have to pay more uh for use of the platform as their audience scales so rather than me getting paid or me being able to harvest value the whole idea is like look i have not been paid by twitter no i have not gotten a check from them but i have made a whole lot of money off of having a large following broadly from a lot of different things you know and that that fact probably holds for a lot of people that have large audiences who are active on the platform maybe not like famous people that just have a large audience for the sake of it but

42:53people who have built audience of the platform have have monetized pretty effectively and nick was saying and got a lot of flack for it that basically it should be a fee that you pay per follower so per 1000 followers you pay you know a dollar per month or something so i'd be paying 500 a month um you know plus in order to use twitter and it would kind of scale up and it was an interesting thought experiment he got massively dragged for it as he does on a lot of things that he tweets um but it was kind of an interesting flip of the model that

43:24you're talking about well i didn't see the tweet but uh but you know i kind of reject i think i disagree with the premise and the reason is um you know let's say for example you were first pitch better right and an alternative social platform came to you and they said you know what you're paying those folks like why don't you come over to us and we will pay you instead now we see this happen all the time like you know you know like you know streaming companies like netflix and hbo compete for movie makers or podcast companies you know sign up you know compete who gets an exclusive to

43:52some famous person next podcast so you basically the market will decide and i think what web3 is doing or could do for twitter is give give the people who give value twitter two things one is economics and the second is government so what economics means is uh imagine and i'm just making stuff up and i have no idea how this could actually work uh you know but imagine there is a token and you and the token basically incentivizes behavior you know this is a very naive version it basically says you know what sal should tweet x number of times and the street should be positive and it should spark the right kind of

44:28conversation you should do it over a long period of time it's not like you know you can take a check and then um run away um and you know and but it's some more communicate with the value you're adding to twitter all of a sudden you know i think two things happen one you're getting rewarded for the work that you're putting in uh second that token could be tied to governance and you know we can get it kind of obvious if you kind of follow like you know a lot of like stuff exactly you know you could be like hey decides you know to make you know to

44:51ship something new or a different algorithm change you could have a stake in it so it's kind of the very bad bones basic version of what could happen but let's get more interesting right imagine you could say hey you know what you know uh been on you know we've been somebody new comes into twitter because you know own twitter token you want the token to grow in value i want to bring in new people so sars would be like hey there's a you know joe unknown over here and i'm going to stake my token in him because i really believe in this guy or right and i believe they're going

45:20to be good for twitter right because you know have kind of like a value which occurs when they do reality really well we do this today by the way in twitter in a subtle way we do this using social capital now i was whole theory by the way if you're want a tangent about how twitter is all about social capital which is not converted to financial capital like right now if i could tweet sahara and say follow this guy right like i am sort of imbuing or giving someone special capital i may say hey i endorse this person i'm going to trust that you know you trust me that i'm not

45:46a jerk and you've solved the survey to be like somebody terrible to follow my followers to be like oh my gosh like serum is just a total muppet right but so you kind of stick you're putting something on the line which is why like quote reading kind of means something unless you're talking of course so uh but in a token world all these mechanics can be brought in and formalized in some really really interesting ways so imagine for example somebody is like you know can be an investor in the next big twitter user uh where they can be like i'm gonna go and find maybe the next

46:13charlie demaio of twitter or you know the next you know dwayne johnson or pick somebody who's going to like social media native celebrities so a lot of things you'll start opening up and then users could have a direct voice instead of this model now where you have a bunch of people making decisions you could be like hey i don't agree with your latest algorithm change or i don't agree with changing to dark mode or just go ship edit i don't care what you say i just wanted to ship edit and let's take it to a word so those things would be really transformative this one thought i'm

46:41gonna steal a lot of lines from you know chris dixon who heads up our crypto fund who's kind of really you know all the credit for ac and crypto should really go to him he basically tweaks bezos line of your margin as my opportunity and he says you see a lot in web 3 where there's kind of some value which is not being given to the right set of stakeholders and website kind of fills in that spot like we see this as artists right artists there's so many middlemen between the music and the fans but i think you might see this in social media and we actually

47:06seen start seeing some very interesting companies uh hopefully i can talk about them soon which are taking the same model to social media or just kind of community-based products uh too and being like hey you're not rewarding your stakeholders appropriately we can empower and reward the product anyway i'm gonna stop that okay so there's a ton to unpack here um and i have a handful of pushbacks as opposed to to a bunch of this so um social tokens uh is like a general concept that i think you kind of talked about or around that i find conceptually quite interesting um you know the cynic in me says that

47:45this stuff just like sort of asymptotes to being like a ponzi scheme and you're like where's the real value and how is it you know how's it being created or managed is any of this stuff um in your guys's opinion viable for them to actually like progressively decentralize or layer any of this into existing twitter or does it have to be built into a completely different platform where you're trying to like spin up scale it's a great question um i can attack it in a few ways right i think there is kind of a there's a technical answer there is an economic answer then that's going to

48:24become a social cultural answer um you know on the technical and economic and so that's why this is great paper by one of my um you know teammates miles jennings he's uh general counsel for acne crypto but it's kind of a real genius when it comes to all things decentralization it's only the pin tweet that's like a 25 page paper it talks about how companies in web 3 can progressively decentralize and then actually some social media style examples in there so and it talks about different kinds of decentralization like there's a kind of a technical architecture that's kind of a legal architecture and i think there's a

48:55special word for twitter give it to existing company so the technical architecture i think is kind of a sequence of steps right like the first step would be kind of my gmail uh you know smtp example imagine the world where twitter says hey instead of just using the one blue app or twitter.com you can use any app and it's perfectly fine and you can use the algorithm of choice and all we're going to do is provide you the api of choice by the way you see this in web 3 today right like they're a company like for example you know you could unisop's website yeah they can

49:25go off and it's perfectly fine because it's kind of a protocol which runs by itself and you don't need an actual website there are multiple clients which can do the work of the website so twitter could basically say hey the twitter.com url and the website or the app is just one lens but it doesn't really matter you can pick any lengths right whether we intuitively know that about gmail you know that you can use superhuman you know that you can use outlook and you can you know you can use a gmail app and you know it's all the same view on your email and it's kind of

49:50fine but imagine the same for twitter so that is like i would say step one um where you're like one of many and then everyone is kind of equal uh step two would be some form like tokens that i described and i will be the first uh admitted a lot of this have to be figured out we have some ideas you know there are some amazing founders working on the space but it has to be figured out in terms of how do you incentivize creators how do you incentivize various clients like for example you need different people to build you know the versions of gmail client or thunderbird

50:17or superhuman or one of the the equivalents of twitter so i think it's all like to be interesting so that's on one side um and i think it's kind of like a sort of a legal sort of variation of this or how do you do this in a way uh you know where uh you know the way you kind of like pass the hinky test now i think the harder problem to be super honest with you is cultural and i don't have a great answer for that um i i think like so far a lot of what we have seen in web3 is we have three native

50:43companies from the ground up and i don't have like a really good existence proof of somebody who used to be web 2 but now moved into web3 so it's going to be hard lift right because you have to turn over power and economics to your community and i think it's a hard culture but but i'll say having said that if somebody can pull it off elon would be the person to pull it off can you can you so ben thompson wrote an amazing piece maybe like a week ago like back to twitter's future i think it was called where he he sort of sketched out a world

51:13where um in a private market you could separate twitter into effectively two companies where it's like current business model with the social graph and the ad monetization existed as one company and then there was sort of like a twitter services company that licensed access to the social graph plugged in by apis and then that kind of becomes like an open protocol layer where people can build on top of it gain access to the social graph and the great high value part of twitter but build in their own ecosystems on top of it in an open world that kind of strikes me as like an interesting middle ground that you could

51:48start to see a sort of transition like if it becomes a more open ecosystem it's been traditionally this closed ecosystem and personally i think that that has made it so that twitter was not able to innovate they were trying to do everything like exclusively in-house with their own engineers rather than i mean i'm a free market guy right so like i i believe that harnessing the value of amazing innovators everywhere is the way for these platforms to you know exist and thrive so i should you know just in twitter's defense right like there's a good reason why they did what they did though it was unpopular the reason was ads right so

52:24for the last 10 years well the early part of last year actually the dominant internet model that people knew how to make work was advertising so it would have basically two choices i did early for the last ticket by the way this is i wasn't there i'm kind of speaking like from what i've heard from other people one was you could build an api business and you know where you know you basically charge people for access to tweets and then people you know build fines or did things where they paid money for that uh and whether other people actually tried to build companies you remember dalton caldwell who's in

52:52our y combinator built a company called app.net which was purely like api twitter uh and uh the other model was as uh it turned out and you know who knows at the time like you know um we don't know that the ads model was much more lucrative easier to kind of like figure out than api twitter watch now you could play you could play hindsight and you could be like you know maybe they didn't execute well they didn't have right people in place we don't know but they said okay we're going to do ads now the challenge is when you want to do ads is you need

53:19to actually show ads to people because you're going and telling advertisers hey we have all these human beings and they're like great but half your users are using a client which does not show ads right and they are like so you don't have a real problem and i think that actually pushed twitter over the years say like if look if you're in the media business and you're showing ads you need to actually show the ads to people so i think that's why it led them down this road and look i'm not totally defending them because i think uh you know a lot of startups you know uh you know we're

53:44destroyed like crystics and you know it's kind of close to a lot of those companies and they very rightly feel agree but i think that's kind of what the sequence of events was going to happen yeah i think but i think what we're talking about now is now you're a private company a lot of options now open up right maybe you don't need to do ads anymore maybe you can do a subscription business subscription isn't really a thing like eight ten years ago uh like for example like break and start how much would you pay for access career every year how much dollars you would uh i mean yeah i mean i make a lot of

54:12money off of it yeah i mean we we use twitter i mean it's like in a lot of ways it's like how much do how much would we spend on like business events and networking events and travel right it's like the same sort of thing yeah i mean i'd pay i'd pay a thousand dollars a month yeah me too probably probably even more just given the value it gives me right professionally so uh you know maybe there's a word and this way this model didn't really exist in 11 years ago so maybe there's a world they do subscriptions but i think that'll be the private company that some of the

54:44pressure is off of them but elon can directly sorry i need to stop you there so i so public company like totally agree ad model they've had to do it public market it was their golden goose it was the only way they were generating revenue their ad stack sucks uh they serve up really bad ads there's no signal really bad conversion like it's just a bad ad stack and so when advertisers are comparing it to like snapchat instagram you know tic toc all the other places they can advertise it's never really performed really well especially not on direct response advertising which is the most lucrative so

55:17um they now go into the private market everyone is like oh now they can experiment and do things sort of agree sort of disagree there's 25 billion dollars of debt sitting on the business now and that debt has interest rates on it that aren't super low and in an environment where a sofa the you know the baseline rate is rising right now it's actually going to be a shitload of interest payments that they're going to have to be paying so you can't just like a lot of people have been asserting that he can just like go rogue on the model and shut off ad monetization but someone

55:47has to pay the interest and like and so i like jack tweeted today this whole tweet about um oh it's a great step to take back twitter from wall street and i was kind of like yes sort of but 25 billion dollars of debt doesn't really feel to me like it's taking back you know twitter from wall street it's just different hands on wall street that now own a whole bunch of twitter and if things go wrong it's not very good the other thing i would point out and this is all just from my like private equity days that i come back to it in my head is

56:18elon took out a 12 i think it's like 12 and a half billion dollars of the purchase price is a margin loan against his twitter stock uh or against his tesla stock what that means is uh he doesn't have to sell his tesla stock and bankers are loaning him 12 and a half billion dollars that has recourse to his tesla stock so if the value um or if he's unable to pay the interest on it or if something happens they can go grab his tesla stock as the collateral against that the challenge of that which i would not be happy about if i were a tesla

56:48shareholder by the way is if tesla drops for whatever reason they miss a couple of quarterly earnings if the stock cut starts to come down those bankers are going to get a little nervous about the value of that tesla stock and the coverage they have against it they can ask him to put up more collateral against that 12 and a half billion margin loan how does he do that he has to sell assets that he has in order to put up cash collateral what assets does he have it's all tesla stock that's liquid so suddenly you get into this like bad spiral of he's having to put up

57:18more cash as collateral against that loan and the only way to put up more cash against that um is by selling tesla stocks so tesla stock's dropping you get called for more collateral you have to sell more tesla stock which further pushes down the price of it it's like this is literally how people have gone bank i'm not saying that's going to happen to them but this spiral of like taking out a loan against your stock having the stock drop and having to sell the stock to put up more cash against that loan is the spiral that leads to people going bankrupt sometimes so it's not like a fun thing actually by the way

57:50for tesla shareholders here um and i don't think that's something that anyone's talking about well look i i i have absolutely no insight into sort of the financial engineering here uh okay first but i just want to say i want to kind of defend the twitter ads team you know i think you know there's some really amazing people there they play really hard uh you know we can sort of get into you know something they try really hard uh you know but i think there's you know there's a really good tech there and i think they actually deliver some great resources from brand advertisers uh you

58:17know i have a bunch of friends that i'd be the most if i didn't like point it out um look i have no incentive in the financial engineering but i would say one thing i think this one of the ways and we have to see what happens nobody knows you know by the time this podcast comes from the whole situation that has shifted one of the way this could help is you know you now are off the earnings treadmill and you now have maybe a longer leash on time to go build something right totally and i've actually visited like other companies in the past where you're sometimes on this

58:47treadmill where you can't really go take like a deep long-term bet uh that's kind of one dynamic the other dynamic is i mean elon's like a strong opinionated guy right he has opinions so and he's gonna go try them out and i think having somebody who has like a very clear sense of what he wants and by the way a lot of you on twitter may not agree with what he wants but that's you know but you know but he definitely has a strong opinion and the second part is having sort of the bandwidth or the runway to go to go for it instead of being like

59:16well you know if we you know this we can't actually get out of this dynamic because you know our employees rs used to drop and it's going to cost a lot of people leave and go through this whole thing so um i'm very excited because i think for the first time look we're not talking about twitter there's a bunch of energy in the air yeah it feels like they could try out a bunch of stuff they could ship edit they could try a bunch of stuff and uh it's a cop it's a service that i think is very valuable to humanity i'm very excited i do

59:40i do hope and believe long term it's going to be decentralized i do think it's a i think twitter's ethos has always been about the community it's always been about the community and we are in service of the community so it feels natural and for me some way that the community in some days should own twitter in some shape or form whether jack has actually talked about this you know if you look at blue sky you know uh i'm not telling you from how well blue sky characters progress but the idea of blue sky originally was that it turned should be decentralized in some shape or

1:00:06form so uh i think it was always the arc hopefully it gets there someday but it is not boring right now so i want to clarify the the point around like the governance token and what that means the social token piece and what and what true i'm saying around like what does it look like if twitter users like have a piece of this pie in in forms of tokens so did you see when elon musk tweeted uh different polls about like basically where he should take twitter like should we ship an uh edit button and you know should we open source the algorithm and people were voting on it

1:00:42did you see that so we voted you know millions of people voted and elon could basically you know if 99 said we need an edit button and one percent and said no elon if he's the new owner could basically say like you know what i don't feel like shipping an edit button but if we actually had tokens that represented uh some amount of governance what's who i'm saying is he would if it was on chain he would actually have to go and do it and that's a really really powerful concept yeah i i that makes sense to me what i would say is like my pushback to you guys on that

1:01:23is i think that all sounds great when everything's going well um and when it's sort of peace time quote unquote but when you are in wartime and having to make dramatic you know bold decisions quickly the idea of going and asking you know 100 million users to vote on something and trusting that it's going to be the right long-term decision when they're operating with imperfect information relative to you as the general is a little scary to me and so like that's my general pushback or maybe not pushback even that's my general question for dows um as a prospective future i love the idea of community governance i love the

1:02:04idea of communities owning more of the equity of a startup if they've created a ton of value but i do have serious questions about the ability of a community at scale to make rapid bold decisions uh during war time wait i just my push back to that the first thing that comes to mind is isn't that the democratic society that we live in like no no no it's not actually because we live in a representative representative democracy right like okay let me let me let me first of all this is let me let me explain let me explain myself and by the way this is coming

1:02:38from someone who doesn't vote in the american elections because i i'm not allowed to because i'm an immigrant and who doesn't follow politics at all so take it with a grain of salt but the way i understand how politics work is or democratic countries work is you vote and depending on what country you live in like let's say in the us i think there's a senate and there's a congress and these people are voted in or sworn in and then you sort of trust that these people who represent you are going to make decisions is that is that correct yes so that's the exact same as like a

1:03:15shareholder of a public company voting for board members at the you know proxy whatever and you vote the board members and you vote the ceo in or out and then you trust that they're making the decisions and i like i actually think that works reasonably well yeah i think i think social tokens in a lot of ways are is very much like owning a share in a company and getting a vote the only it's just the only difference in it is instead of like if i want to vote in a twitter shareholder meeting i have to go and buy twitter stock and i'm not sure that i can vote

1:03:51on like product decisions however with um if if you know what true i'm saying is basically if you know you brought a lot of value to the network and you were able you were rewarded with tokens for giving that value it doesn't make a difference if you didn't have the money to buy those tokens but because you created that value you would have the ability to influence the product yeah i think that i mean like i think the ethos of that makes a ton of sense right like if i i i have contributed more value to twitter um and like probably more innovation to twitter than some random billionaire

1:04:28that owns a hundred million dollars of twitter stock like just full stop i i understand the product probably better i understand the puts and takes i understand the ecosystem better and um if i were to have received like governance tokens accordingly with the value that i've created and could have a say in the decision making and the changes in the product and the development i definitely would be more valuable to them than some random person and so right now in the system it's just driven off of dollars and so a really rich person has more influence than a poor person even if the poor person has

1:04:58done so much more for the community totally agree with the ethos and and what you're saying there i'm just curious to see how it actually plays out um in a more challenging you know environment and context yeah i mean just just to close on this you know if i could zoom out i think the internet has kind of always had some version of what a dao is like i grew up in the open source world right and you always said it's kind of you know bdfl these benevolent dictators for life liquido for python and linus for linux and the idea was you know they were there just

1:05:28like vitalik for ethereum like they had legitimacy right they were there for the trust of the community now they've been totally rogue or they've been crazy the community could just fork and go somewhere else right but there was a sense that they were your representative and you know you didn't like look at every pull request that dennis was uh opining on but you trusted him you know because of the legitimacy he pulled over time to be like okay i'm gonna trust him to make positions and this is gonna be the official kernel for and i think in some ways tokens you know do two things one they formalize that they formalize

1:05:58the relationship between you know for example so many people contribute value to linux you know but how many of them actually got the same value back you know you could have a token with the mechanism which actually orchestrates the second point is what you said which is sahil i don't make this about twitter same is true for instagram same sort of ticked up it's not just social media think of any marketplace company right a lot of marketplaces have on the supply side you often have these small set of suppliers who basically generate a lot of the transaction volume or it's in a lot of the economics but

1:06:28they often they probably don't have any presence on the cap table right like you know any sort of like marketplace ecosystem now you know we have three version of that would say hey we are going to take over and give them economics where the marketplace it's as if you know ebay 20 years ago came and said i'm going to take our top 10 sellers uh they have to write some version of this but it's kind of like i think a symbolic move but we're gonna take our tops and sellers and make them like some meaningful stockholders in like on the ebay capital and we're going to give them governance and whether it's

1:06:54gonna constantly shift based on their you know uh if they leave ebay they lose that right now if they can you if they stop selling somebody whatever it is so and i think we actually by the way we actually just you know partnering with the company which is doing for some version of this so uh i think all of this kind of like very interesting i'll be the first to point out that this is very early it's a this by the way i think there's a question i think we're talking about is like why am i drawn to web3 one of these is like all this stuff

1:07:17is brand new but it is a totally unexplored like design surface right it's like 2005 and people are figuring out what the rest apis are and user generated content are for the very first time so we'll figure out a bunch of things we're even taos for example last year and a half we learned so much about governance and you know we learned tons more about token design but i think the possibilities are just like it blows your mind so i know we're running up against the end of time i have to ask you this um because i think a lot of our listeners are you know builders um ambitious

1:07:48people that are trying to go create you know these different futures you're a general partner at andreessen horowitz one of the most famous venture funds in the world if you were to give advice to prospective builders who are looking to raise money for their startups and for their projects what are the couple of things you would say to somebody like what stands out to you uh when you meet a founder um for the first time uh good question um so it's interesting because uh you know uh my you know my wife is a multi-time founder and you know i saw her go through the whole like fundraising

1:08:22process uh you know in silicon valley you know some good meetings vcs lots of bad meetings with pcs and now it's kind of weird that i'm on the other side and you know like people ask me how i spend my day and most of my days been talking to founders and often it is for the very first time i'm meeting them for the very first time and they're coming in uh these days over zoom and they're telling me about something amazing that they're building and their vision for the future it's honestly one of the best jobs on the planet uh okay so there's no i'm gonna give a i was thinking about this

1:08:49question because you asked me about this before i think there's one bit which i often missed uh when people bcs give advice uh which is my job right or any vc's job is to go invest in founders like if i spent a year or two years without investing any company like bill and mark would or should fire me because the job is to actually go invest in companies right so if you're a good vc um you know you are going into every meeting you know hoping like this you know is going this is going to be someone amazing this person is going to build the next google or the

1:09:23next facebook or the next coinbase or you know take your pick then you know because that's the job like your job is to hopefully the next person who gets from the zoo meeting or walks into the door is going to be that founder so first of all you know i i think you know my wife other founders you know like i feel like you don't understand like you know the venture capitalists need you you know uh maybe a lot more than sometimes you need them uh because you know they you know we're kind of giving away one of the most commodity of products which is money um now like i'm putting that

1:09:51aside i think every every bc firm and every individual are very very different in their own ways and of course you can kind of go into like what it means when you're a seed stage company when it's a very first investment it's two people in the proverbial garage and you know they just have an idea all the way to somebody who's been there for five six years and they're raising i know at several billion dollars because their growth run but i spend most of my time on the earliest of stages where it's either the very first round of capital or it's close enough to the first round

1:10:19of capital right i don't think there's a few things i'm looking for um and uh by the way none of these are original i've kind of stolen them from a lot of people i've worked with offered assistance especially chris dixon and mark himself and alex rumpel the first one is there is a phrase called the idea maze and i think it comes from either chris or balaji which is has this person spent a bunch of time figuring out you know going through all the you know the various versions of before they've kind of settled on this thing right like for example you know uh you know i've spent like close to 10

1:10:49years working in social media companies right like so i've been a lot less positive that i spend a lot of time thinking about social media right so if i say you know with mobility social media company you could probably say after a lot i'm thinking about this as opposed to if i started like a database company right i know nothing about databases like you know and unless you could you know i could prove to you that i spent a year talking to every single database developer every single customer or spend your time with the insight i don't think i could kind of credibly say i have gone through the idea maze and i

1:11:17think that is one big difference and it's probably one of the first things i'm looking for which is has this person gone through idms by the way that doesn't mean they need to have worked in that space before and web3 is often new but i'm looking for you know how has this person somehow explored every version of this idea maybe they've spoken to customers maybe they built some prototypes maybe there's a lot of time thinking about it maybe they've worked there for many years it could be in one of many kinds of categories but in just step one because if you don't have that right this won't be somebody

1:11:44else who's probably gone through idms who's probably going to build a much better version so i think that's step one uh step two is uh i think you know uh i'm going to steal this from alex rampell uh you know he looks for can this person you know manifest things can they manifest talent can they manifest uh fundraising can they manifest sales uh very simply the best founders uh when you meet them right they've already put together something they've already maybe hired one or two people or they already built something very quickly or they already have like a you know a bunch of customers in some hacky prototype

1:12:19somewhere right but they already they're very good at just having high output in short periods of time and it's very you know and often when you see that kind of trajectory you can sort of plot the dots and be like okay this person you know probably has a good probability of continuing doing that so uh and i think the other part of it like so much of startup life is very hard i think one of the best things about ben and mark is they are founders themselves and they drill into every single person of the firm which is kind of respect for founders and respect for startup process

1:12:49because it is very hard uh you know you should i highly recommend ben's books for that um and so you know what that means is you know uh you know can you actually demonstrate that you're able to actually go sell people on the thing that you're doing because it's going to be hard right can you maybe close a higher close the sale you know maybe you raise capital only whatever it is i think so that manifestation thing i think is super key i think the third part is uh it's a dual-sided relationship right i invest in a few companies every single year and uh let me ask you a slightly different

1:13:26question people ask me what's the difference between being an operator i hit the word operator and being a vc right and one of the biggest differences as we see at least you know our firm when we invest in someone that's a relationship for life like 10 years from now every company i've invested in or 20 years from now will you know will be like somebody i've worked with hopefully i'm calling in the middle of the night and we'll back them and support them and go to the ends of the earth for them so that means that you better be very very careful about you know the nation

1:13:54because you know you have to it's going to be a very very long-term relationship right uh you know and when i joined the firm it was amazing because my very first week we had this off-site with all the general partners 16c and i saw everybody kind of talk about all their companies they have worked with and and it was something so so much connection with companies like been around for seven eight years you know because the firm is like you know or ten years old i was like wow these are like really deep long relationships right so on the other hand so when i'm talking to founder you

1:14:21know i'm trying to think of like okay will i want to work with this person for the next 10 15 years like will i want this but you know will i want to you know talk to this person in the middle of the night you know attend their wedding or you know whatever it is like i think it's kind of like a interpersonal thing so i think so on the founders side i think there's kind of a chemistry aspect to it there's also an aspect of like how big can this be because you know we are very much like a power lord driven business so i think one of the things

1:14:46for founders is being able to articulate a vision of hey how big can this be how can this be world changing um and then having all these proof points to go get there so i'm massively oversimplifying what is a really complex process i'm still learning uh um but i will say it's probably one of the best jobs in the world um and the reason for that is you just you know every single day some really passionate smart person comes to you talks to you about their hopes and dreams and you know and if you if you're lucky you know you get to work with them and it's just one of the best feelings

1:15:19ever you said so many things that resonated with me there i mean i i just in general i every day um kind of pinch myself at the novelty of like getting paid to give money to really smart people that are building big ambitious things um and that's just such a cool thing greg and i you know constantly text about this like how neat of a job it is to be able to invest in companies um and so what you said there i mean it really resonated i appreciate all the advice i know a lot of people um will find it really valuable as they continue on their builder journeys so

1:15:54i feel like we got through um you know four hours worth of content in uh in an hour and a bit because you my friend talk as fast as anybody i you're you're like a podcast on two and a half x speed we're gonna we're gonna have to uh um you know normally i think people have to put us on one and a half x because greg talks kind of slow i talk like pretty fast and so we're like balancing out but we're gonna have to uh suggest everybody listens to this on 1x speed um you're amazing man that was it was awesome um got through so much in a short period of

1:16:25time and we promise to do an in-person episode in the near future and we will bring you we'll bring you that tequila uh we'll we'll bring you that tequila thank you so much for joining man thanks for taking the time with us thank you i just want to say i'm a big fan and uh you know i love what you folks do and i love working together with you on multiple multiple ways and thank you for having me and thanks for everything thank you thanks so much for listening to today's episode if you have any questions that you want featured in a future episode email us at hi

1:16:57trwih.com leave us a review at apple or spotify to help us grow the reach of this podcast until next time we will see you soon [Music] [Music]