How Also Capital Bets on the Physical World | with Mike Annunziata, Also Capital

0:00You kind of came out of nowhere with a killer portfolio. And I think that's how a lot of people seem to think about you and also Capital. I had a very acute understanding of where that bar was, of where we needed to be, and how our story needed to be not just like a hope and a dream, but like a series of pragmatic steps. How do we create processes that control our biases and be very self-aware of what those biases are to try to get to the correct decision. The connectors for AI to interact with the physical world is robots, right? So if robots everywhere is true in 10 years, that's a big opportunity.

0:37Mike, welcome to Going Solo. Thank you very much for joining me. Great to be here. Thanks, Dan. Thanks for having me. When I think about you and I was looking forward to this interview, the main thing I think about is from my perspective, you kind of came out of nowhere with a killer portfolio. Leo. And I think that's how a lot of people seem to think about you and also capital as well. Early days in your career, you actually started out working on the LP side. You worked for the Soros family office, you were at the Cornell endowment, I think for like seven years across those two roles, which is pretty interesting.

1:10I don't know many VCs who have an LP background first. How did that set you up for VC investing? And I'm also interested if there was anything you learned from that experience that actually was not helpful. yeah it's uh it's it's a question that i definitely get a lot you know having having been an lp so yeah i went to cornell for undergrad and then started my career at the soros family office funny enough when i thought i was going to be a lawyer early in my career i guess that was like 15 16 years ago now um and i worked with the legal group and then with all of our different direct investment uh groups so on the on the private equity side and on the hedge fund side and our manager selection group across both hedge funds and private equity and some venture funds as well.

1:53I think one of the biggest learning experiences for me there was basically as the note taker in the private equity pipeline meetings for about two, two and a half years. And it's amazing how many early careers get started by people either, you know, in the proverbial mailroom or the note taker. And I think the biggest thing is just like learning, being a sponge. And I learned a lot from that group and how they invest, you know, billions of dollars, permanent pool of capital just by kind of being a fly on the wall. And that was an incredible privilege that I had an opportunity to go work at the Cornell Endowment after a few years at Soros and on the LP side.

2:25And we did a little bit of co-investing, but most of it was fund investing. It was just an incredible education in how to be kind of a thoughtful investment thinker and strategist and prudent risk taker. We'll get into a lot of that. But I think, you know, when I was at Cornell, I spent most of my time doing private equity and venture investing, but I did cover all asset classes. So I invested kind of in public and private asset classes. I did credit, credit and equity. I did some structured investing. I did some real estate, did some resources. So you get to see a little bit of like how money moves and how money works, but also think about it in more of a structured way and got my CFA while I was there.

3:04And then they sent me to business school. So I got like a lot of really, you know, well-rounded education as an investor and got to see one of the most interesting things, just kind of like how the best firms in the world do it, how the best firms in the world came to be, where the bar is in terms of talent, in terms of return expectations, how institutional managers think about portfolio construction. And I think all of those sort of things definitely informed how we built also in the early days and how we're continuing to build it over time is kind of that education. And I think Like, you know, you asked the question of like, is there anything that was helpful or was there anything that was not helpful?

3:44Like, I would say the most helpful thing is really just, you know, where's the bar? And I think the number one question you get as a new manager trying to start a firm is, you know, why does the world need another X fund? And I had a very acute understanding of where that bar was, of where we needed to be and how our story needed to be not just like a hope and a dream, but like a series of pragmatic steps that you could believe that for the best LPs out there that you could find, you know, they could continue to invest with you over many generations. and I knew where that was. And I don't know that anything was necessarily not helpful, but I would say the moving the thinking from kind of being at two organizations that were effectively at the top of the money mountain, you know, people always wanted to take your call.

4:29People would always give you information and you would be kind of receiving a lot of that flow very easily to moving to be an entrepreneur, which we can talk about. And now starting a company. And then after that, now starting also, those of starting a firm, the optimization function is very different. The Soros Cornell optimization function is picking the best stuff from what you're seeing and you're seeing a lot. The optimization function as an early stage entrepreneur and as an emerging managers is really much more about you making sure that you're seeing enough really good things and what does great look like.

5:02So having to kind of relearn or at least acknowledge the self-awareness to know the volume of stuff that you were seeing and that you kind of shift that optimization function over time when you move from a big branded platform into a standalone entity. I think that's one of the biggest things to learn that I've spent the last decade building with both Farther Farms and that with also. You mentioned being able to like pass the bar. What is that bar for like an endowment like Cornell? Is it like you've got to be able to beat a public market equivalent? Is it a certain percentage? Like what is the expectation?

5:38It depends on the lens that you're thinking about it, if I just take the lens of, let's say I'm an emerging manager or even like a fund three manager, which is like pseudo emerging, right? Like, how do I get a caliber of institution like a Cornell to give me an LP commitment? The frame of mind is not why am I a 10 out of 10 on a standalone basis. It's always an opportunity cost thing. So positioning what you're doing as clearing that opportunity cost, right? So what's the opportunity cost for somebody like a Cornell, for example? Well, it's putting a marginal dollar, if they can, into a Andreessen or a Sequoia platform.

6:16It can be many funds, right? That's kind of like the base case. And over time, they've shown pretty consistent top quartile returns. And you have to basically clear that, but clear it by enough that you compensate for the risk of not being able to potentially not clearing it. And just to give some very specifics around that, it's cool. If you say we are going to go do a 3x net fund is kind of our target, or here's what needs to be true in our portfolio construction to get to a 3x net fund as our base case return. And your fund is like less than 100 million. It's probably not enough for a 10 billion dollar endowment to take the risk on a fund two, fund three.

6:55I think you have to show them a very logical path of what needs to be true. And it can't be, well, if we find a 50 billion dollar enterprise value company will be a 10x fund. I don't think the outcomes are bigger narrative really justifies some of the portfolio construction that folks put together. And I think it needs to be much more specific around what is unique about this fund. Can you diligence their ability to execute against that? And if it is true, if they do execute against it, you feel pretty good about being able to outperform your kind of core early stage funds while understanding you're taking more risk in some places competing with the established platforms.

7:31So 2016, you were going through a dorm room fund program, which I think was a first round program created by the great Josh Koppelman. Other alumni of that include Michael Trull of Cursor, Will Monidus, Alex Emmerman of A16Z, Claire Smiller of Box Group, Talia Goldberg of Bessemer, Sean Zhu of Lower Carbon. It's a pretty awesome hit rate for an investor program. yeah like first of all i'm curious like did you get to learn a lot from from josh and the first round team like what was that like and generally like what was that experience like yeah i mean just an incredible experience um so yeah i've been doing venture about a decade now going back to the dormant fund experience i've had different experiences as a founder and lp like we were talking about but um you know dormant fund was my first foray into the direct side of investing and And I often like to say it was just an incredible privilege to learn how to do pre-seed and seed investing from some of the people that effectively helped create kind of the category, whether that be Josh or Finn or Haley or Bill or even, you know, he was a close friend of the firm.

8:44David Tish at Box Group would come in and do sessions with the dorm room fund people. So I can distinctly remember that. And we would do these off sites and we would kind of meet these really interesting, amazing people that were in the prime of their venture career or had just started a really great company that was backed by First Round or one of the other people. And I think you just learn the craft of early stage, particularly like pre-seed and seed investing from people that have been some of the best at it, maybe the best to ever do it. Right. There's this recurring theme of understanding where the bar is.

9:13And I think I've been very fortunate to get to experience that in many different places, starting with Soros, you know, start as an investment manager or family office, you know, Cornell on the fun side. and then first round like what is a truly great founder like what does a truly great seed deal look like um you know how does a top tier gp approach and underwrite that opportunity um to even like the little tactical stuff of like how do you operate as a venture investor it's as simple as like the idea of a forwardable email i can remember you know first round doing a whole thing on and the dorm room people and ray wang and then later chauncey and and now molly like Here's how you do a forwardable email.

9:53Here's how you do an opt-in. Here's how you ask for something. Here's how you do backchannel referencing. These fundamental skills that you have to have to be a great venture investor and an operator in the space. Learned all of that from first round and from the Dorman Fund team and also our peers. I think that's the underappreciated part of Dorman Fund is how a disproportionate amount of the value does come from the peers and helping each other. right so people that spike in different things teaching you how to do those things that they spike in so people would have questions on lp stuff which i was doing at the time and i would raise my hand and i could give people perspective on the lp side of it um you know we would have questions about you know a particular category and one of the partners maybe was starting a company or had started a company in the category um and you could go to that person and ask them and then that network is really compounded to dead like the number of you know partners at venture funds and you named a bunch of bunch of them or founders that were back you know they did shield ai early um they were even early to like block stack which was like a early crypto thing back in 2013 out of princeton um which did the stacks token that did really interesting things um so it's just an incredible network and it's just my privilege to be part of it and try to give back how i can over the years and pay it forward to different folks and it's amazing how molly has now since like taken that um with first round support and kind of scaled it she just announced the 50 million dollar fund like um it's really cool to see how it's grown and i think it's incredibly well deserved it's a hell of a legacy for sure yeah it's an amazing program things like first rounds uh like questionnaire process when they're reviewing deals and they they all go away separately and score the deal and then they come back and discuss it it's such a smart way of handling that process i'm just curious is there any parts of that like what like practical little tips you took away from from working with them yeah i think you mentioned since sounds sounds like you know a little bit about it but uh it was definitely one thing we did at dorm room fun which piggybacks on the first round process which is really getting at the core idea that you want to do everything you can to control group think and bias to try to get it like the true reality not the deformed reality or influenced reality so it's like hey here's what i thought coming in and this was my unbiased view.

12:09And then here's what I think after the pitch and after the discussion. And you can see how views changed over the course of that. I think that's like really interesting metadata to collect, to understand, okay, did this founder sway you? That's actually a really interesting data point to collect that somebody could, you could be very negative and then a founder can change your view in 60 minutes. That's really interesting. Or the reverse. You can be very positive and then the founder can negatively influence your view and say, oh wow i really didn't that person didn't explain it in a way i understood it may be less bullish right that kind of thing um so the big takeaway for me is how do we create processes that control our biases and be very self-aware of what those biases are to try to get to the correct decision right or the true true north decision not um not just the the decision that is influenced by the loudest person in the room yeah makes sense the previous episode i did was with uh yohei of untapped and he talked about this paper he's written called the shared discovery paradox and essentially game theory optimal way of of making decisions around discovery is to make sure everyone has access to the same information but then make sure they make independent decisions more or less which is like kind of what this what that process is designed to do which is interesting yep well it's like there's the bessemer research i don't know if you've seen the bessemer research I can't remember.

13:33I can't find. I haven't been able to find it lately, but they did some research where they looked at all of their investment committee decisions and they like plotted it like the votes against their ultimate performance on deals. And it was basically like if it was uniformly for the investments did like, OK, but the best investments, the outliers were always like five, four. Yeah, they were always contentious. So it's almost like when you're when you see that, you're like, you should be seeking out the conflict in your investment decisions in order to know that you're doing something that is truly potentially non consensus and thus potentially really outperforming.

14:07You know, those nine O deals probably can do very well and still be accretive to the portfolio. But like your Airbnbs, right. Or I'm sure even your investors get maybe a rocket lab. Right. I'm sure doing a rocket lab was not a nine O decision, but that has worked out probably pretty well for them. any like fun anecdotes from the dorm room time like any any experience you had that you took a lot out of one was we had an opportunity to invest in i mentioned block stack earlier and like the token is 2017 and like the stacks token offering we had like a pro rata right and i got to do i had been thinking about blockchain at that time like 2016 17 i was like this is kind of an interesting space like this makes sense like sovereign internet like it's kind of interesting so when we had an opportunity to do that they're like hey we need somebody to do the research and like decide whether we should invest in this we have like 24 hours so i like spun up and did the research with another two other partners and we like quickly did a memo and you know we were going to do it at all time like we were just gonna it was like a hundred dollars it was fun to partner with folks and spam quickly on a totally new category and then like form of you and then see how that investment ultimately like that token thing like really ripped for a while and and did like quite well.

15:18So that was a really cool one to see. But I think the other thing is not, you know, every year we do an offsite at Dorm Room Fund, which is, you know, you call it like an annual meeting, but it's really like a partner offsite. And it's just really amazing to see the power of kind of shared background and then relationships and trust and how that really makes things turn and getting to know people like outside of traditional work things where that can often be transactional, but really understand like who is this person? And I think what was really special about Dormen Fund was like, everybody had a really interesting story and background and it was always fun to get to know people and understand what motivated them and what that background was.

15:55And then that creates this more of like high trust type ecosystem, which means you can get a lot done when you have that type of an ecosystem. So those annual offsites are things that, you know, I've gone back for many years, like as an alum and met many new people that have become a big part about of how what we're doing here now and the relationships are just really precious and special for me from that community and that starts at this annual off say which we like to joke is the allen and company of of student vc the allen and company conference of student vc is a bit of the inside joke nice well i mean i guess it was a valuable experience from from from all of that and clearly it led you on to to great things so you finished up with dorm room fund in i think 2018.

16:40Then 2019 is kind of the origin of also capital, although not formally for another few years. You started, I guess, angel investing personally a lot more. At some point around then, like I'm not sure exactly when the year was, maybe a bit later, but you came across VADA. Like I'm really interested from all your background. One day you come across this like drugs from space company incubated by founders fund. Like how did that come about? So one of my oldest and best friends from college was actually Will, who's the CEO of Varda. So we were pretty good friends in undergrad. You know, I went off on my investor journey and he went off to SpaceX and worked there for six years.

17:22And then around 2018, we decided to start doing some small angel investing together as kind of partners. Me with like this business investment brain and I was running a company at that time. I started a company and him kind of with the engineering brain. And we both said, hey, this will be really just fun. Like, let's find some smart people that we're excited about. I had done dorm room fund. So I had a network from there. He had some of his SpaceX people that were starting to really spin off in greater volume and coming across interesting opportunities. So it was really, you know, started as like a group chat, an email thread of friends looking at companies.

17:51So me and Will, and then I brought in some more friends and he brought in some more friends. And we did, we were doing it for maybe like 18 months. We had made a handful of investments. And then he ran into Delian through one of the investments we were looking at. And Delian said, I'd been thinking about this idea. Somebody said I should meet you. And then Will said, that's actually not a crazy idea. And then he basically hung that phone call up and picked the phone up and called me and said, hey, I think I'm going to do this founder fund incubation and make drugs in space. This is going to be our next investment.

18:21And I was like, tell me where to wire. This sounds great. Now, that's the short version of the story. Obviously, if you double click on it, there's a little bit more thought that went into it. But I think one of the special things about Will, he can take fairly complex things and distill them down into easy to understand, like, bite-sized pieces. So, you know, you hear, oh, we're going to do reentry technology. And you're like, oh, my God, has anybody, like, have we, like, done that since the Apollo mission or something? He's like, well, actually, low-cost reentry was done by the CIA with the Corona bucket missions in the 60s.

18:57Like, this is something that has been done before. It's not science. Like, we can do it. We just need the right team and we need enough capital to get it going. I said, OK, cool. And you said, well, what are the applications? He goes, oh, well, there's actually plenty of proven research already that's taken place on the ISS. So then you can very quickly look at kind of what the supply curve might be if you change the cost input, the cost structure of actually providing access to microgravity for things like tissue printing or making drugs in space or semiconductors. and then there was this added benefit of kind of this hypersonics business which has become pretty good you know just collecting data as you re-enter space to inform hypersonics development for the U.S.

19:35right you started to build all that case together like this is this is super interesting so we had done it's funny we had done Radiant the first check into Radiant a couple months before that and then VARTA came together so we did like those two within a few months of each other and that was like a really exciting time for us because it was moving away from like some people doing some angel investing to like hey we're actually you know in in some some interesting names now and then just kind of built built from there and now will you know so will's a co-founder here's adventure partner like he's a big part of what we're doing and um yeah i always learn so much when i spend time with him and like very quickly you were investing in some pretty serious stuff too i'm curious you know i'm i definitely don't think you need to be like a nuclear scientist to invest in a nuclear startup.

20:18But how do you think about like diligencing really technical stuff? Yeah, look, I think, especially for solo GPs, but really anybody in venture, your scarce resource is time. And you kind of want to understand how do you get to a no as quickly as possible for your own time, but also to be respectful of founders, right? And that means understanding What are you kind of looking for? How can you ask questions? There's many questions that you control the answer to or you control the processing of and evaluation of. You want to get as many of those answers as you can. So for us, the way we tend to operate is, you know, I'm not an engineer by trade, but I did build a company that scaled supercritical CO2 systems to 25 ,000 square foot pilot facility.

21:09You know, I hired a team of PhDs and engineers, kind of managed and had oversight for that. I like to joke like I know when an engineer is feeding me a bag of goods versus when they're like actually a good engineer like I don't know I'm not like the expert in the physics equations that they're talking about. But I kind of know what the risk is that I'm taking based on how I'm being presented an opportunity or where the status of things. So I'm not technical by trade in that respect, but we're very good at like forming views on where do we think markets are going. We're very good at understanding or developing an intuition on a founder's ability to build an early team, tell a story.

21:44We're very good at like market mapping to understand what the different tradeoffs are. And we can do a lot of that work. We just say, hey, assume your technology works. Do we even agree that the company will generate a lot of enterprise value or you have a strategy to capture the enterprise value, assuming your thing works? right so we will answer like 10 questions like that before we even say okay now let's focus on how risky this fusion reactor is that you're proposing is right and we will call somebody from our network and say hey can you talk to this person and let me know like do you think this is crazy as it's been tried before what was the technical risk i think a lot of investors have a tendency to want to answer the question they're least familiar with versus answering the question that gets them closer to the global maxima, right?

22:32So they kind of kill things they're uncomfortable with versus like get to the actual root question that matters for creating value in this company. And that's what we try to spend most of our time early on doing. And then we have like a bunch of folks that we can call to help us across various domains that are experts in what they're doing, whether it's lasers or nuclear or space or manufacturing or robotics or simulation technology, right? All those kinds of things. we have experts that we've built over many years um but we only want to call them when we're like hey this is mostly like a gut check you know that it could be a no if you think this is a crazy idea technologically but our thing is like hopefully you're validating us that this person is you know taking the right degree of engineering risk in this company if you think about like a using ai for making investment decisions as an early stage manager like my gut feeling is like probably that's a very bad idea.

23:25Curious if you have any takes on that. But particularly, do you think using AI for this particular question of like technical diligence becomes more interesting? If you really want to just challenge the science and the theory and find prior work, does AI become more interesting for that role? It depends on how you're using it, right? So we will use AI tools to like scope a technology map, if you will, like what are the different substitutes for this and really just try to understand like where does this proposal sit but we're not really we're kind of underwriting the first derivative of that which is the founder having chosen this approach how did they think about why did they choose this what was the judgment and decision making that they used to arrive on this solution amongst all the solutions I think a lot of times the first order process is there's all these other solutions.

24:24Why is yours the best? That doesn't get you closer to an answer on will this person consistently take smart risks? So what we more want to underwrite is, okay, how did you choose this problem? Or how did you choose this solution? What are the tradeoffs with the solution? Like talk us through why you didn't pick this, right? And how well can they articulate the different tradeoffs? Like Doug from Radiant is a perfect example of this. you could have asked him everything about well why can't we use solar well why can't we use diesel why can't we use why do we need a nuclear reactor and he would be able to like go very deep on each one to understand why he chose what he chose for the one mega out reactor in 2019 really he was looking at even before this he was looking at that all right and that's really what we're looking for is like a thoughtfulness because very few venture-backed companies that achieve outlier outcomes are like doing one thing and then they execute the thing and then a trillion dollars of enterprise value comes out the other side.

25:16It's just like compounding judgment and sound decision making over many, many years that get you to a product that the market falls in love with and equity in your company, the market falls in love with. And that's where venture returns going to come from. So you need a leader that can think that way. And we're really trying to suss that out early on when we're investing. You know, you start angel investing, you have Vada, you have Radian. At some point you're like, it's time to turn this into a fund. Why? First of all, because everybody knows fundraising sucks. Like if you're already doing very well, quite comfortable, like why raise a fund?

25:50What was that process like? What was your experience talking to LPs and like what did you learn in that process? We got to this place by like 2022 where we were starting to see more and more external validation of stuff that we were doing early and then the ability to continue to invest in those companies. And then the capital we had available to us in our group relative to the allocations we were being given, And there was just an increasing gap. It was quite it was kind of simple where it's like, OK, we need to find like we like what we're doing here. We think this market is moving in the direction that we want it to go.

26:21We think we're at the front end first or second, any of this. Like, let's go put together some more capital in a more systematic way to go write bigger checks. Our hit rate when we were syndicating was very high. You know, people were following on or coming alongside us and then they were continuing to do well. So it was kind of simple on the why. Now the bigger question was, okay, well, what are you doing? How do you position that? How do you sell it? Right? This gets back to the beginning of our conversation of like, what are you actually building? Because it wasn't, hey, we've got some deals, we want to raise$10 million.

26:51It was like, okay, but we need to frame it in the context of like a firm and what we want to do with the firm, what that firm stands for, what the strategy is for the fund and how that gets allocated. but it was inspired by the, hey, we have more opportunity than dollars we have to fill it. That's the starting point of any potential outperforming vintage, in my opinion. And we were able to just kind of go execute against that. We were fortunate for a number of years to be investing and we had done well on paper in a couple of things that there was some support of early LP. So we went right to, and they said, they've actually been asking us, hey, can you just do this in a fund structure?

27:23Like we like all these deals you're showing us. So we went out and closed a few million dollars, like decently quickly within like two months or so, I want to say from like first deck to like doing a close to like get into business and like do a close, be able to allocate dollars. But make no mistake, I think most first time managers, if you're not of a certain kind of background, will struggle to raise in 23 for the first vintage, right? In 23, 24 was not like an easy time to raise. I don't think it's ever actually an easy time to raise. I often will describe fundraising is like you're selling a luxury good.

27:58You're selling something that nobody really needs. So they have to kind of want it. You have to make it desirable or you have to make it special. And that's really hard to do when you're doing it the first time and nobody knows who you are. So it was a lot of exercise in like, just keep pounding the pavement, like have conviction, you know, be authentic and wait, you know, a couple balls will bounce your way. And And we raised our first fund out of that first close. We put some money into AnySignal. And then we put money into, we wrote the first tech into Northwood before the Founders Fund and Andreessen round.

28:33And those two investments did pretty well for the first few months. That gave us more to talk about. We did some more investments that did well. And you just kind of build some momentum. But you're always answering the same questions the first go around, which is like, who are you? What is hard tech? How is it different than deep tech? How is it different than frontier tech? What's this portfolio construction? How big is the fund going to be? Like, I don't really know. Is it going to be 20? Is it going to be 10? Is it going to be five? You're kind of like juggling the best you can. Like, it really is entrepreneurship, right?

29:00It is how do you actually get a business started? And there's just no substitute for pounding the pavement. And it took us time, but we landed in a really great place. And it's funny going from fund one, which took us like a year to raise, to fund two, which we raised in about 10 weeks, right? So it went a lot faster once we were a bit more on the map and people kind of had known us. And we spent 18 months going from, you know, first meeting people to starting to talk to them again about fun too. We had a bit more of kind of like a track record and a history and some early outliers and fun one was performing pretty well.

29:32So that made fun to go a lot faster. But I think like the number one lesson is just like patience, patience and trying to raise from a position of scarcity, which is hard. um and a lot of times new managers are like very type a people who are used to being able to like control outcomes by through through effort and the reality is for most this is the first time they're really running an enterprise sales product an enterprise sales process where the product is you and it's a very interesting cognitive experience to go through the first time until you get going and you have more of a product to sell.

30:13Yes, you are the product. You will always be the product if you're the managing partner of the firm. But increasingly, you have more data to show what the product does once you have more track record, when you have more returns to show, when you even have some DPI to show. Then it starts to get a bit easier. It's never easy to raise money, but a little bit easier to do over time. I think from the outside, I would say one of the differentiators for your firm It's something we've talked about in the past, which is origination. And that ties nicely with Bridget from Northwood. Incredible founder, shows that even deep tech founders can really look like anyone.

30:54So maybe using Bridget as a case study, how do you think about origination? But what is it about origination you think other managers tend to get wrong, perhaps? Yeah, look, I think I distinguish origination because what it means is we want to be someone that gives credibility to new ideas, right? We lend credibility to new ideas or new people, people that maybe are sometimes can be a little less legible to the more traditional venture establishment. but we are maybe shorter on capital, but longer on time, right? And other firms may be longer on capital, but shorter on time, which means we can kind of help manage some of that signal to noise as you build a reputation of someone who has been able to find new ideas early and introduce them to the market with an understanding of here's what the risk reward kind of looks like.

31:51If you're imagining you're a big, you're at a big fund, you're a GP at a big fund, like the gravity well for deal flow at those firms is so significant that the scarcest resource is attention. So if you can raise your hand and say, hey, if also capital is going to send you two deals per year, they're going to be very straight about the setup on those deals and the risks. And then when you do the work, you're hopefully just going to uncover a bit of what we saw. So then when you're choosing how to spend your time, you decide that spending time on an also capital deal is worth it because you're going to get to a place where it's interesting.

32:25You don't know if you're going to do it or not, but it's going to be interesting. It's going to be viable. There's a Jeffrey Katzenberg quote when he talks about movies and he says, look, like not all of our movies are going to be hits, but they're all going to be viable. And I think that is a bit of how we think about like our job is look like we're not going to have 100 % unicorn rate, right? That's just a reality. But we can have a very clear view on what needs to be right for the company to be big. And then people can decide whether they want to take the risk or not, whether they want to partner with that founder or not, that's totally fine.

32:55But our job should always be what is totally new about what we're doing. And I'll give you a perfect example of this. We led the pre-seed in Atlas doing advanced motion systems, robotics stuff. And I think there is a big prevailing narrative around re-industrialization and domestic production. And we met those guys and they said, hey, we can do that, But we're actually going to start by quickly and at manageable cost producing in the Philippines because we have an unfair advantage there, which is a source of a lot of venture outperformance. And we can get to a similar place, but dramatically faster and dramatically cheaper from an equity perspective, like the cash actually needed to get there.

33:39We'll develop process IP. We will show that our motors work, that the customers love them, that they perform the function, which will reduce our cost of capital when we're ready to go scale in the US. we were the first ones to say hey we actually buy that this idea like allied production right when a lot of the narrative is domestic production creating a narrative around allied production was a really interesting thing now that's expanded to be a lot more about robotics and yes you're you're doing allied production but it's like what are they actually going to do in the long run but that's a good example of an idea that i think we got behind is hey hey like here's the fundamental way that we think about it and then people were able to kind of get behind that and get excited about it.

34:17So we're looking for things like that. Same thing with Bridget, right? I mean, she clearly is an outlier, amazing talent, you know, Griff is an incredible RF engineer. And then Char did a bunch of ground station stuff at Capella, like very, very key, amazing, like kind of core team there. But Bridget hadn't started a venture-backed company before. So us being able to come in and say, hey, we actually agree with this ground station problem And our half dozen SpaceX engineers that lived it also agree. So then when I'm introducing it to Founder Fund and Andrews and Horowitz, I'm saying, hey, you know, the CEO of Varda and one of the founding team members of Vast, like, agree this is a really big problem space.

34:57Like, here's what you have to believe for this to be a big business. It takes it from, like, you know, former Disney Channel child star starting a space company to, like, wait a minute, you get that. and there's like actually outlier technology here on top of it in like one introduction like where do i wire kind of set up so origination you know it's not we're not doing sutter hill style structured originations it's much more hey how do we try to find people early and make bets on them you know we're not we we will close and wire on investments we don't kind of say oh you got to get to this minimum amount raised and well if the tier one is leading we'll do it that's not really our style our style is like hey we believe in you we think you're going to take this a distance like we want to be your partner and we do 15 investments per fund.

35:39We're super concentrated. Like you mean something to us. So let's go make this thing happen. And so far, so good. Yeah, it sounds like it. There's a couple of questions, regular questions that we kind of finish on, which I'm curious, particularly for your background, actually. So the first is what's the best piece of advice you've been given, particularly related to like being an emerging manager early stage investment but like given your background and everything you've been through i'm very very curious about this best piece of advice as an emerging manager just get into business just put money to work yeah i think that the biggest trap that i see like i think that the best thing we did was like doing a close and making investments and not over indexing on how it was not going to be the perfect portfolio construction that we were pitching in fund one Like I've just seen so many managers like say, I want to get the full number because I want to have the portfolio construction right.

36:36And then they're in market for like nine months raising and not in the deal market. Right. If we didn't close and get a couple wins on the board in our first six months of fund one, I think we would not have raised the back half of fund one. And I think that advice of like just get in the game. Right. Is so important. and even prior to that would that cover like the the angel track record the syndication before that as well yeah it's funny right like just like we're trying to ask a bunch of questions and figure out how to say no to companies to try to manage their time i think lps are trying to do the same thing right so like this default skepticism of like it got to be candid like i think when you saw some of the names we were in and that the concentration of the names are in there was a little bit of like dissonance of like wait what like how are you in these names and i think people were like ah maybe maybe not like but does it continue like i'm gonna assume it doesn't and then if it does i'll come back later and i think there was a lot of that happening for us in fund one the only way to answer that question is just to keep coming back and finding more hits right and i think at least you know publicly the ones that we can share obviously northwood's an outlier any signals done great that's in fun one you know we had mesh optical in fun one like we just continued to kind of hit on these and the question is repeatability how are you doing it it's like it's not rocket science, it's just really hard to replicate.

37:54It's being good partner to founders, having a great reputation as somebody who has high conviction early and being willing to kind of write the first high conviction check or being willing to be kind of a number two or partner alongside a bigger firm. Like both of those models work for us. And it's just about being available and supportive and kind of long term oriented to founders and ultimately being good brand, right? Like that's really what the founders want is they want like a good brand and we're not going to win 100 % of the deals, but we're going to win enough and it's going to be kind of setting that'll be ultimately what sets us up to how perform.

38:27Makes sense. All right, next question is, as a venture investor, you probably have some view of what the world looks like in, you know, 10, 12 years. If you're right, you know, just like headline data, like what do you think that looks like? Robots everywhere. i like this robot well it's it's a good you know i make the statement because when it's true what it really means is the you can talk about ai you can talk about hard tech and reindustrialization but if it's robots everywhere the downstream of that is totally new mass volumes manufacturing to support that all the technology to deploy it you know the intelligence layer to operate it right The connectors for AI to interact with the physical world is robots.

39:16So if robots everywhere is true in 10 years, that's a big opportunity. And what does that mean? Is it humanoids? I don't know. Is it purpose-built? I don't know. Is it 20 OEMs or 200 OEMs or two OEMs? I don't really know. But I do think the directional arrow that we're following is more output per unit of labor. And the big breakthrough on that on the digital side is obviously AI. And the big breakthrough on the physical side of labor productivity is definitely robotics. It's a pretty good bet to expect that knowledge work stuff is going to probably commoditize more and a lot more of the equity dollars probably are going to accrue to places that allow AI or enable AI to interact with the physical world where a lot of the defensible output is going to be able to do.

40:07going to be to invoke uh carlota perez it's almost like the golden age of robotics you're describing yes yes i think we're getting close i think we're getting close fingers crossed we are long overdue a golden age as she would say yes all right last last question if someone wants to find you wants to reach out to you what's the best place for them to do that yeah you can dm me on twitter as as as you know dan like my my dms are pretty open um i do look at most of my linkedin messages and I think those are probably the best two places. And, you know, if you want to see more thoughts on how we think about the world, we write every week on also blogposts.com and on like a range of topics.

40:47So I think those are some good places to definitely to get in touch. I'm a particular fan of your sub stack as well. Oh, thank you. Thank you. It's a labor of love, Dan. It's a labor of love. Yeah, writing ain't easy. Well, Mike, it's been a real pleasure. I really appreciate you taking the time. You know, I'm a fan. And maybe we'll do this again at some point in future. That got you. Big fan of what you're doing too, Dan. So thank you for having me. I appreciate it.