How Chaotic Capital Bets on Founders, Pre-Idea | with Alex Miller, Chaotic Capital

0:00Alex Miller: Alex, thank you very much for joining me. It's great to have you here. Absolutely. Thanks for having me on. I'm excited for this. Likewise, really excited. I've known Julie for a while. This is the first time we're talking, but I'm really excited about what you guys are doing. So to start off, could you give a quick intro to you and Chaos Capital and what you do? Yeah. So I'm Alex Miller. I've been in the startup world for the last roughly 20 years, let's call it, pretty much ever since I graduated college. I actually originally weirdly got into startups. I used to be an event producer. I was like a concert producer for big shows and stuff.

0:32And I went to work for a world famous first angel investor in Uber, Jason Calacanis, as a, as, as a conference producer and things. And so I produced like TechCrunch 50, launched This Week in Startups. And that gave me like my real first actual like day-to-day working in startups and exposure outside of like, you know, little projects and businesses and things i started like as a teenager um and you know kind of thrust me right into the deep end on it so went from working uh for him to yext spent eight and a half years at stack overflow and kind of built up the whole private q a business there been a number of other you know kind of advisor and things to developer tools companies uh and then currently run labs company and developer tools company for uh on top of bitcoin and so you know through that whole time too kind of went through i think what was like the traditional journey that a lot of tech people go through of you know starting to put a little bit of money into your friends companies you know you first do it when you are being a little creative about whether you meet the accredited investor threshold and then you actually meet it you know back in 2021 julie and i were sitting around and talking about like whether we wanted to kind of bump up the angel investing to the next level right and actually start um doing some kind of a fun structure of things and we were sitting around talking and she kind of ever being the futurist started talking about what became the thesis for chaotic capital i think this is something that had been brewing in her mind for a while and ties back to a lot of the stuff that she'd always been thinking about but it really goes to this idea that look the world is getting increasingly chaotic right you just you can't predict stuff well humans in particular are really really bad at predicting the second let alone the third or fourth order effects of changes right Right.

2:21And because of that, you can't really you can't predict the future. You can't actually try and control the future. Right. The tighter you grip it, the more it slips through your fingers. The only thing you can do is be more adaptable. And I think that's a big lesson of anyone who's worked in startups and early stage stuff. Right. And you hear most investors talk about this, at least in an abstract way. Right. When they talk about in the earliest days of investing, you're not really investing in the company. Right. You are investing in the founder themselves because they're going to figure it out.

2:48and that's because without a doubt when you're dealing with early stage companies and things, the adaptability of the founder, the ability of them to be focused on the end goal but a change with whatever is required is absolutely the most important thing. Far and away, no question. The only thing that's really different in how we think about it, I think, is number one, we don't just want the founder to be adaptable, it's that we want adaptable founders who are building adaptable companies that make people, society, or companies more adaptable. So it can be a very wide range of things. We're completely sector agnostic on it.

3:24We've got everything from crypto to AI to biotech to energy, all kinds of things. And the way we try and do it, right, this was the other kind of big thing is we are true like inception investors. Our best investments, ironically, have literally come from when we met the founder before there was even a company, right? Maybe they were working on a previous company. They had ideas, we were talking to them. Because the thing that we really want to see, going back to that idea of adaptability, is how do they actually integrate information? How do they take in those new things, counter their existing beliefs, think through it, try something new with it, you know, invalidate their ideas and move on?

4:07And in our ideal case, if we can get a month or two working with that, watching them go through a product development cycle. There is more signal in that than in anything else that you could ever do. And so that's kind of our goal, just meet them as early as possible, which we do mainly by Julie being weird on the internet. We say same way, same way you met her, just like go on Twitter, find her, come across her, start DMing with her and you'll like become friends and she'll do it. And that's where really like all of our, you know, kind of most of our investments, almost all of our investments came from there.

4:37Some also come through, you know, friends who are angel investors or things and would kick things over to us. But like the majority of our best investments have been people who just like cold DM her on Twitter and were really able to carry on the conversation, which I think actually hits on another really important part. We don't really do a lot of live calls with founders and things. It's almost all like asynchronous on Twitter DMs and Signal for that initial getting to know you. If you cannot communicate effectively through that medium, not going to make it. If you cannot communicate effectively asynchronously and be like direct and clear and well written in your communication and even understand how to structure and run a conversation in that format, that is how so much of communication is happening these days, especially if you're trying to get access to higher level people who are busy, who have constant stimulus on them.

5:29If you can't do that, you're going to have a big, big problem.

5:32Alex Miller: Getting back to the thesis a little bit, because that's fascinating. I guess if you reduce venture capital firms to two camps, one which are like, we have a thesis, these are the categories we focus on, this is what we invest in. And then the other, which is, I think, probably like a more purist generalist view of, we don't know what the world's going to look like, but we have money available for founders who think they can figure that out. I guess you're the latter, right? Yes, we know. I think we know some of the attributes or characteristics that the world is going to have and that we think are important to exist in the world.

6:07But exactly what it's going to look like, yeah, people don't know. And this is also obviously a big difference between when you're doing very early stage versus mid versus growth stage. Once you're at a growth stage on a company or even a little bit later, like you can see the contours of what the company is going to be. but in the earliest days like when you're first time out there's just a founder they've got an idea you have no idea if it's going to work or not absolutely not and it really does come back to in fact the only thing you do know is that the first idea is going to be wrong I don't know that there's ever been a single company where the founder had the exact perfect idea they knew it exactly and it became exactly that which is why even if you like the idea you want to validate the business sure do all those things but if the person can't adapt to the insanity of early stage and the amount of information that's going to get thrown at them.

6:59And most importantly, has a low enough ego to be able to constantly be proven wrong by the world. This was actually one thing that when we were getting into it, I didn't realize as much, but we've seen it come up time and time again. Our best founders have no ego about being wrong. And you have to, because you're just going to get battered by the world. And if you are holding onto these, I don't want to admit I was wrong at that. Again, you've heard other investors say these things as like, right, strong beliefs, weakly held and that kind of thing. But to me, I don't think that captures it quite right, because I think when you hear people talking about that, you're talking about a very data driven structural thing of I'm going to make a hypothesis.

7:38And yes, that's important. But again, what we've seen from some of our founders is it's the they realize that they've gotten six weeks into a fundraising cycle and they've been making completely the wrong pitch. and they've had the door closed on them 30 or 40 times, including from some of their top prospects. What do you do then? Do you keep pressing forward with what you're doing? Are you able to say like, hey, I made the wrong pitch, right? I need to change this. I need to redo how I'm approaching this. And I might have to accept a lower valuation on this round, which means giving up more dilution.

8:11I'm not own less of the company because I made that mistake. That's a brutal thing to have to do as a founder or is an executive of a company. And the ones who are going to make it are the ones who can internalize that really quickly and really accept it and just move on and get done what to be done.

8:31Alex Miller: Yeah, I can't resist dropping in a little bit of data that some of the stuff that I like to share and write about. There's two awesome reports on exactly this. So one is a startup genome report on premature scaling. Looks at companies that raise too much money too soon and how that's linked to a surprisingly high rate of failure because they end up over-investing in growth on an idea that is not ready. So that's one. Another one is a really interesting report on pivots. And it's looking at real fundamental pivots in the business. And I believe they came to the conclusion that high-tech companies were actually more likely to grow faster or to find success faster after one pivot.

9:14Alex Miller: it's like the initial idea most of the time is probably wrong exactly as you're saying but we have this habit of like hindsight bias right you're making guess which is good that you want someone who gets in there and makes the guess but you know what no good plan survives contact with the enemy no good no good business idea survives contact with the real world and real customers but that's because the data in that is incredibly valuable there's a another interesting thing i was listening to a very old i think it was like a 2016 uh talk by cyan banister i think it was at uh at the angel angel launch summit back then and she was talking about her relationship with scott the way the two of them work as a partnership and they're very complementary because they each like doing very different things obviously i think in a kind of similar way she's a bit like julie in that she's the one going to events and meeting founders and perhaps Perhaps you're similar to Scott in this example as well.

10:13Alex Miller: But I'm curious, how do you guys break up responsibilities? How do you divide and conquer? Yeah, so actually, it's the inverse on that one. I am the in-person person. Julie will mostly talk to people online when doing it. I think actually, especially for meeting founders, she would much rather, I think, a lot of times meet them. Because you're not going to write a check based on a 20-minute meeting at a conference or something anyways. We really want to see him over time. So yeah, definitely I'm the kind of like out in the world person. She's more of the online person for it. But at the same time, yeah, everything else, it's all very complimentary.

10:50Like she's the investor, she's the futurist. I'm the operator, the tangible person one. She can read people and I think, you know, makes really incredible calls on who's going to got the capabilities of founder. I'm the one who like knows how to build a model and do that, but also, you know, and even breaks down to like, she's the pre-investment person. She's going to largely make the call of like, what's a good investment to make she's really amazing at emotional support and stuff for founders afterwards but that's again especially where like i'll step in and helping them both on kind of the the what it takes emotionally to help a founder through but also the like tangibles of okay how do we actually like literally get you a lawyer that's going to work right how do we deal with this co-founder dispute that's come up how do we you know whatever the like miscellaneous operational issue that come up is so yes very i think we both have a lot of overlap in view of the world and what's important and that's like kind of the unifying element to it but very different skill sets very different ways that our brains work very different ways that we even just

11:50Alex Miller: kind of communicate and think through problems and is that reflected also on like the the lp side the fun side like one of you deals with lps and the other one like doesn't touch that or Yes and no. I'd say actually the same kind of basis that you're seeing mirroring there comes up there. I think ultimately LPs, I think, want to see, they want to understand the fund, right? The same way that, you know, investors want to understand like the company and see it and that, you know, for the most part, they're not going to write a check. You know, you as an investor aren't going to write a check into a company where you've only met one of the co-founders.

12:27I think it's very true often with LPs as well. like they want to know the partnership they want to see who's there so those ones will tend to be i'll run the process around fundraising much more which again just aligns with kind of that operational approach but i think a lot of the ways you know especially for lps who are less institutional allocators but like really want to align for the vision and stuff there's no kind of substitute from hearing it for her mouth interesting yeah and i'm talking about the the

12:53Alex Miller: fun side of things i believe you have like more of a mix than a typical firm in terms of like what you invest through through a traditional fund versus like maybe doing more spvs than normal could you talk to you're thinking about that yes we've done we've done a mix of things we've done both spvs and um and a rolling fund on angel list so again we kind of started with that traditional like write a few angel checks and things like that and then when we started thinking about doing the fund in particular we got an opportunity to do an investment into a company called squads which is the original kind of multi-sig on Solana and now has a whole stablecoin payments approach.

13:32They've done kind of amazing on that. And that was our first foray into SPVs because we didn't have like a fund. We couldn't write as big a check as we would have liked to on it. And we just kind of jumped right in. We're like, OK, let's just like see if we can raise this SPV thing, which we did. And yeah, that was great. Thank you. And I think also kind of gave us the confidence to be like, OK, we could go do this. But also it's like, you know, SPVs have a lot of advantages and a lot of disadvantages to them. Obviously, the biggest problem is you can't just commit to a round with an SVP. You can say, well, I think that I can raise this much to it, right?

14:07So it kind of became clear to us we wanted the ability to actually commit to founders and like, say, boom, we're in for this much. We know we can do it. We have the money. And so it was after that, that we decided to go and raise a rolling fund, which we did, and then started writing checks out of that and then still kind of held back the ability to for later rounds in particular do spvs so you know our goal there is like we'll do kind of the inception slash pre-seed as well as the seed out of the fund directly and then for anything later than that and actually in one case too we even did a large we both did a direct seed check out of the fund and then also an SPV for the seed and then, you know, also seeds for anything like Series A or special opportunity there.

14:54And I think when you're getting started, that's a pretty good balance, I think, from it. You know, when we've talked about like larger fund strategies and things, OK, maybe you can extend fund checks all the way out through the Series A on it as well. But if you if you can build up a good LP base or especially, you know, connections to people who also have it, the SPV structure can be a really good way to get going because just it's so much lighter of a commitment for both you and the organizational structure you have to have rented but also for the lps it's a lot easier in many ways to get people to commit to one deal than to just entrust you with like tens of thousands of dollars hundreds of thousands

15:33Alex Miller: of dollars so there are money in it for sure yeah absolutely there's been an interesting theme with everyone i've spoken to so far of they all went into raising their first fund or beginning to invest thinking like that lps were all kind of similar and they've all like over time realized that like actually no lps all have like suit very different interests very different priorities and that obviously impacts like the kind of funds they're willing to invest in and so on it's like is there a particular like commonality between the lps you work with or some kind of theme you think that makes your strategy work we're definitely like weird high net worth individuals okay it's it's a lot of tech entrepreneurs and folks adjacent to it and um you know not a lot of of like large you know old family office stuff or like we're not going to endowments obviously they also want to just be deploying like a hundred million dollars a check and we're just not at that size on it.

16:34I think you're very correct that the number of types of LPs that are out there, it's the same thing as someone who tells you, like, we sell to businesses. Okay, what does that mean? There's a lot of businesses. You could even say we sell to, you know, large enterprise businesses. Okay, great. There's a lot of very specific large enterprise businesses. And I think making a sale for fundraising is no different than making a sale for anything else. Like you have to come up with an ideal customer profile and you need to really understand the differentiations and what's what's you know, you build up a qualification pipeline, the exact same.

17:10You really have to understand what are these people looking for? What is it that they want? What is it that's going to scare them and figure out who's going to be a fit for you and who's not?

17:21Alex Miller: And I guess naturally, because of the kinds of people you work with, they're also way more tolerant of you investing in companies like doing nuclear power, where there's unknown capital needs in the future, unknown horizons for when that might exit or whatever the future may hold. But I can see a lot of LPs might have been a bit concerned about that elsewhere. Yes and no. I mean, when we raised the fund, we did not know we were going to be writing a check into a nuclear power company. So that's part of it. But I think, you know, we were talking to people who just kind of want to see something a little quirky and interesting in the world, right?

17:57Who understood like, yeah, you're making a bet on a founder. Hopefully they do something cool. It's super high risk investing type. It's going to either work really well or not particularly well at all. You know, it's not it's really hard to protect, predict what the return profile is even going to look like. so it was definitely and i think that's again why we went mainly with like people who just think there's an interesting future out there and who maybe you know a lot of folks who had talked to julie online or been following julie online on twitter and liked her view of the world because again it really is the exact same way that like we're making a bet on these founders just kind of figure out something that works when you don't have a particularly long track record in investing and you're trying to get going, people can either bet on like, you know, kind of the market thing, or they can be betting on you.

18:48And again, when you're getting started,

18:50Alex Miller: you kind of need people who are going to bet on you. Do you think it's a requirement that an LP in a firm like yours be entrepreneurial themselves, like to see the potential of this stuff or not? I don't think so. I think they need to have, they need to like the idea of it and be inspired by it. But we've definitely got folks like in our fund who are not entrepreneurs themselves. The usual like dentists and so on archetypes. Yeah, maybe not quite dentists, but don't take money from dentists. But yes, but in that same general realm, like they've been working a, you know, nine to five job or they're a lawyer or something like that.

19:28You know, you'll have hints of it. I'd say they're all high agency people, right? You usually see a crossover between entrepreneurship and agency. So you'll definitely get that. But I think definitely not all like tech titans or tech entrepreneurs.

19:46Alex Miller: Yeah, for sure. Makes sense. Well, I want to talk about Valor a little bit, Valor Atomics, because I think Isaiah is amazing, like one of the greatest founders of our time, possibly. Incredible company, not long ago became the first nuclear startup to generate electricity, which is like a crazy milestone. what was the like what's the backstory of meeting them and getting to know them yeah so Isaiah is literally like our canonical example of how we want to meet a founder doesn't hurt that he's also doing very well but even before that he was our canonical example because he DMs Julie on Twitter cold when he was working on a previous idea we didn't love the ideas working on or the people he was working with it was a couple big law lawyers and Julie kind of warned him like hey these guys are probably not going to work out And the reason we knew that is we got on the pitch with him and his co-founders, and he was the CTO, and he did the whole pitch.

20:45And we're like, that's wrong. A CTO should not be doing the whole pitch for a company. But again, like, you could immediately tell how special he was. He was incredible. He just got it, right? And so we kind of kept talking to him, and we told him, like, hey, we don't like this idea. We like you. If you go do something that you really want to be doing, we'll totally back you. And he came back to us like a month later, again, talking about like how quickly people integrate information and things. And he said, hey, I've got this crazy idea to like make synthetic hydrocarbons using nuclear power and to produce nuclear reactors really cheap.

21:21And we're like, cool, that sounds insane. I love it. Like, we'll give we'll give you a check for it. And, you know, we obviously talked to him a couple of times. That was pretty much it. It wasn't like we technically vetted the idea or anything. It's that we liked him. It made sense. The way he thought about how to go about it made sense. And so we burbled in and we're like the first investors to give him a commit and join the round on it. And, you know, I think everything we've seen, the crazy thing is that was barely over three years ago. And everything we've seen since then just reinforces that idea is watching the speed with which he integrates information, the quality of his leadership, how he can get people to buy into his vision and join up and take the chance.

22:05on him, the relentless focus that he's had. And that thing I said about having no ego about it, being able to take the lessons, even the brutal ones and do them and move on. And, um, it's just been an incredible journey to watch on it. Uh, and, and, you know, another word that again, we both use, but especially Julie, like he's the idea of like hyperstition, right? And the best founders just have a way of making things happen in the world, right? It's a lot of shots on goals. it's a lot of just again being relentless in it and a lot of it's just having good judgment right i think that's one thing that is really hard to quantify sometimes some people are just better at intuiting what the right takeaway and the right lessons from something were interesting and he's been incredible at that especially when it comes to like what it means to do manufacturing and what's important.

23:00And so being able to integrate all that and just kind of trust it and go in that right direction and pick it up. That's just something that like the best founders in the world are just good at doing. They just kind of have a gut instinct on it. They trust it. Again, they don't, they're not going to overcommit into it in some ways. Like they're going to test, they're going to be methodical about how they go about it, but they just kind of have a gut instinct that they trust and they happen to be right. And at the end of the day, it is that kind of thing. And it's the reason you see, I think a a lot of cargo culting sometimes in investing and in entrepreneurship is because people think if they just do those behaviors, it'll work.

23:36And that's not how it works, right? It's the part one is part one is you have to be good, right? You have to actually have like that right gut instinct thing. And two, you also have to be lucky somewhat. It has to be that the right things come together at the right times.

23:51Alex Miller: Correct me if I'm wrong, but like, I seem to remember listening to or seeing Isaiah talking about like a family connection, like a grandpa that worked in nuclear, something like that. Yes, so his great-grandfather Ward, for whom the reactor, the Ward 250 Reactor, worked on the Manhattan Project in Tennessee. Gotcha. Yeah, that makes sense. Because my suspicion was probably this idea was in the back of his mind initially before he approached you with the first idea. Oh, absolutely. I mean, he'd had this idea since he was like a high school student and self-peaching, you know, maybe not the detailed nuclear engineering part, but certainly like the conceptual level.

24:32Alex Miller: So the thing like the ingredient he was missing was to have that first conversation with you and to be told like, this idea is not right. But like, by the way, if there's something like in your mind that you might want to do that you really care about, exactly as you said, like, come talk to us. So we had that first believer to come back to. And, you know, I know from talking to him and even talking to his family about like that first believer part is big. Yeah, I'm telling you, yeah, go for it. Like you can take the chance on this. Yeah, at the risk of like getting on the soapbox a little bit myself, a real conviction of mine is the venture capital world needs like loads more investors with less capital each, probably, but like way more first believers out there all over the place to find people like Isaiah.

25:19Absolutely. no question about it though that's that and that is the difference between like the a lot of the u.s venture capital landscape and the really successful communities in the u.s versus other places is you have all of these angel investors who made some money who do it and like yes the money is important but much more than that it is the signal it's the expertise it's the encouragement for people that it is worth going after that they should give it a try are you worried at all about

25:46Alex Miller: all the talk about like concentration inventor and the you know the megafunds and so on or do you feel like that kind of doesn't really touch you yeah absolutely i mean one it does make life for an emerging manager harder but it's also it also absolutely leads to more group think and concentration and you know a loss of the art of let's call it of investing and and you know or the the witchcraft of it, I think is almost a better term. Yeah, you end up with more capital kind of being thrown to waste a little bit and, you know, on clones, on things that aren't going to work just because everyone feels like they have to have a bet in that place.

26:28Yeah. Look, having multiple companies pursuing something is obviously a good thing. Competition is a really important and good thing. And some level of the concentration, having these giant funds is a good thing in the sense that if someone has really big capital needs, you can now get billions of dollars to scale a hardware play. Like that's, that is a great thing. That is important. But as it turns, the more it turns into like a business in some ways, like obviously you want it to make money. It's a capitalistic endeavor. But like one problem in the seed space right now is that you have all of these late stage firms with, you know, 10, 20, 30 billion under management who are willing to write absurd prices into seed rounds, right?

27:16Five, 10, 20 million dollars at 50 or 100 million dollar value. I'm not even talking about like the, you know, two billion dollars for thinking machines or whatever. I'm talking about even just like what, you know, hot seed rounds are in general because they don't care. It's a loss leader for them, right? Like they're just trying to basically buy access to be able to put $100 million or a billion dollars into this company later. So they don't really care about the$5 or$10 million up front. But it does really fuck the economics when it comes to smaller funds and angel investors and things up front.

27:50And so you've seen companies even adapt that where they'll like raise an angel round, they'll raise like a million bucks in an angel round on, you know, day one of the month at a very reasonable like$10 or$20 million valuation. And then three days later they'll raise an institutional seed around 5 or 10 million dollars at like a 60 million or whatever right because like they know that it's not fair to like the angels to do it but it really does end up shooting shutting out a lot of like the younger emerging managers folks who that and then they're getting squeezed doubly on the LP side too where the LP is just like I just you know have so much capital I want to deploy I want to shove it into these big large names out there and then the third leg of that is there's just is less again unique LP capital out there because of sort of the delays and returns there.

28:37So I know, you know, a lot of folks kind of holding out hope that with SpaceX finally hitting the IPO market, other folks hopefully doing it well, that it opens that up. But we absolutely, as we've gone through, you know, the number of people we talked to who were just like, hey, I'd love to, but I'm, you know, 2x over allocated to venture right now because all of the valuations have gone up so much and nothing has exited. It really ends up squeezing and creating that more and more of that concentration that you're talking about.

29:07Alex Miller: Yeah, and the cynic in me wonders, going back to the point about like overcapitalization and the threat that that has to companies, if the big firms are like kind of okay with that, like either it's a rocket ship or it explodes and like that's a fine compromise for them. Even though there's this whole middle ground where like the company could find its way and do something really interesting, which we never get to see, but like, you know, it keeps things simple. Venture is a power law return industry. So yes, I blame founders least of all, usually when they overspend, because their entire incentive structure is telling them to.

29:45The entire culture around it is telling them to, because in the, you know, one out of five or one out of 10 times where that is the right call, you have to do it. And it's an incredibly good decision and it returns 100x. So yeah, if you can have five or 10 companies go to zero, but one go to 100, that's that's a pretty good return for the investor and the incentive side

30:06Alex Miller: yeah in in theory but like tbd how this all actually plays out yes in theory yeah uh going back to velar for a second what was it like like obviously you did the the first round then i presume there were subsequent rounds when the company needed money but wasn't yet hot like pre pre-consensus whatever you want to call it what was the process of of like helping them raise downstream capital like brutal yeah the first two rounds were the hardest without a doubt i think that's that can often be obviously the case for company also some companies hit problems later on fingers crossed that was the last hard round they'll ever have again i think when you're a really early stage investor there's only two things you can do about at that point.

30:53Number one is obviously connections to other potential investors and, you know, calling folks, trying to get them interested in. And two is just supporting the founder, making sure that, you know, they know you're there for them in it. Like in our case, we absolutely wrote as soon as like was needing it, wrote in the second check out of the fund into the bridge round, that check will end up being worth, you know, be a very good decision in it all. So would have done it regardless though, right? It was just, it was like the right thing to do in that situation because again just like they need help getting out the gate on the first one supporting through those times is one of the most important things investors can do or and frankly if you can't then just be up front about it to the founder even that is a gift to them in it there's way way too many investors out there who kind of will string along and wait and you know want to be half in half out like no if you're going to do early stage investing like part of that is you just got to be actually with them in it and be frank and direct and real and like either you can put up or you can't but don't don't string them along don't drag them out like that so absolutely first couple rounds again back before there was kind of like the market dynamic shift on it before we really had the story nailed down and everything were absolute brutal rounds and you know there's always all kinds of stories later things too there's there's a million points in a company's history where things feel unsure and feel like, you know, you're moments away from that.

32:23One of my favorite old phrases, right, is that like the emotional journey of being a founder is like waking up in the morning, Googling about food stamps, having one amazing call and then Googling for private jets, right? It's just the roller coaster of it's absolutely insane. So yeah, plenty of ups and downs on the company for it. And now, of course, yeah, now you're at a point where it's like this exciting company. they're clearly running faster and executing better than anyone else. And so now I will just get calls in the middle of the day from someone being like, how do you, can you get me into the next round with them?

32:56Right. Can you introduce me to the company to do it? And I'm like, the time to call me on this was like a year or two ago, right? Like that's when they needed it. Now that it's an obvious and like a consensus thing, like, yeah, of course you want in, but guess what? So it is like all of the biggest funds in the world. So what's the thing that you're bringing there? And like, that's why, yeah, if you, if you want to do these kinds of things you really do have to be oh god so literally one of our favorite movies obviously was some of the best scenes ever margin call i assume you i assume anyone watching this has seen margin call on multiple occasions right yeah uh you can be smarter you can cheat or you can be

33:33Alex Miller: first yeah right and it sure is a lot easier those are the only three ways to make business to make money in business right it's like it's the do you think you're smarter maybe i don't know I definitely don't cheat. And so being first and being willing to take that chance, like that is kind of the only way if you're not going to have some giant brand where you can leverage it, because look, that is the advantage to some of these later stage firms or, you know, someone as big as like, yes, they have they bring credibility, they bring the ability to bring not just massive amounts of money and capital out of their fund, but out of, you know, other folks that they're close to and things.

34:08So if you're not going to be able to move that, then yeah, the thing you have to do is you just have to be able to get the conviction to write before someone else.

34:15Alex Miller: I think there's like a weird cognitive dissonance or like confusion in venture where people know like competition is good, markets are good, it's good for venture firms to be competitive and LP should want that too. But the way that competition manifests is firms competing for access to deals and not firms competing to deliver the best results, which is what it should be. So you see like this competition for access and for hot deals and talking up like the potential for these generational companies, which, you know, are predicted to be winners, but like, who knows? There's a quote I love from Tim Draper.

34:52Alex Miller: He's talking about like, what to do if you find yourself in a position where you're like, you're a VC firm and you're bidding against another for a deal. And he said, like, just don't do it. Like they already have a check. They don't need you. Go find someone else who needs you. And I think that's a great way of looking at venture. i absolutely absolutely goes back to the idea of like needing a million people like like you and julie in the world to to fund founders right and that's that's exactly why you need that um and you know the other advantage of having a lot of different check writers is it increases the confidence of people that they can get follow-up money right it was absolutely i'd say a concern not enough to make us obviously not invest in valor right off but we did have the question of okay, how are you going to raise like a billion dollars for this?

35:39And again, Isaiah was clear from the front he was going to need to raise a billion dollars for it. That's just what you kind of have to do. Unfortunately, there were a couple of SMR companies out there that had already, you know, raised like nine figures worth of capital. So it was clear there was at least some appetite for this out there. But yeah, you need that is one other challenge with concentration is that, okay, it's great that one fund can write so much, but you also need to know that there's enough competition that people will take the chance on things and and do the follow-up capital writing um now again that's part of the reason that i think people will take the cop out of like oh i would have done that deal but i thought there wouldn't be you know that that excuse get used gets used for a lot of things like again that is one of the things you can do as an early investor is write the check yourself and then help them go get the rest of the damn money.

36:30Yeah.

36:31Alex Miller: Yeah. And I think like traditionally, this is this has been a little bit lost in all the mess of like, platform teams and like media and, you know, helping founders win the internet for the day or whatever. But like, traditional role of a VC was two things. It was monitoring. So making sure they're like not doing something super sketchy that will get them in trouble or whatever. And it was capital formation, helping them raise the money they need so even once it grows beyond the like the the capability of a small early fund you can help them form that downstream capital as well that is the job but the the monitoring has been lost i think because it's seen as not founder friendly and the like forming capital has been lost because venture is less collaborative than it used to be than it used to be i think right Right.

37:19I could the cynical part of me would say that part of the thing that has gone part of the reason that monitoring, I'd say, has gone out of mode is partly it's the not founder friendly thing. Sure. But I think it's that most people just don't believe it matters that much. And this goes back to the power law distribution thing. Right. If you're really tight and holding on and gripping it. it's not are you going to catch something wrong it's are you going to catch something wrong that if you fix becomes right right because if you have a false positive on it and you shut something down that could have made it big you just lost an insane amount of money right but if you catch something that's wrong the company's still probably going to zero so what do you care right like the odds that you caught something wrong and the now the company became successful because you caught it what do you care again you're already expecting 80 or 90 percent of your companies to go to zero anyway so like what's the difference again very cynical view i don't think that people are doing that super explicitly but even on top of that too right especially there's also just a diffusion of responsibility when it comes to investor right especially on a hot company now they've got what 30 or 40 different people and funds on the cap table and one or two of those are going to have a board seat and each of those people also has a few dozen other investments like there's just asymmetric uh time investment and and and context and knowledge investment on it so yeah the monitoring thing's not really there and it leaves it as yeah the one thing you really can

38:53Alex Miller: do is capital formation yeah which gets more and more important especially as absolutely companies get bigger and more ambitious they're going to need a lot of money yep um we have a few like regular questions that we ask the first one is is there like another investor another manager out there you think is doing a great job who's like you think is worth like a shout out for what they're doing oh there's i mean i think there's a bunch there i think all right the one that always comes to mind and i know i'm also thinking because he had a good day today with one of his companies getting huge contract uh is ian at canto so i think you know one of the og legend investors um obviously cyan so cyan banished is old friend uh of ours i think you know is finally getting like the true recognition she deserves for being one of like literally probably the best angel investor ever born like beyond good and also just an incredible human being um root ventures team also like kind of love their whole team and like started kind of betting on this and growing their fund early on uh and then like the bold start ventures team who again like someone else who grew themselves from a million and a half dollar like initial seed fund the first time out to like a billion plus under management now and like they've done that by just being like amazing guys to work with as well as being like really good at what they do so i don't know i just named several but yeah i love like all those guys those are all fantastic picks like zero zero argument for me uh scion obviously is like on level of her own i think yeah um next question is if there was a piece of advice something you know today that you wish you knew when you started what would it be for any any particular person or like category to people if like if you were if you were starting chaotic capital today like brand new and there was something you you know now that you you wish knew when you started gp relations if you want to raise a fund gp relationships like your relationships with other general partners other people who run funds are critical because like you want into deals you need to pull them into deals and you need lp introductions from them and then you just need someone to commiserate with right there's a reason founders become friends like with other founders and things too so absolutely if you're just getting started like working on your gp relationships hugely important and is that just a matter of like shooting them dms like starting the chat about twitter right people like just apply to dms on twitter twitter events wherever i mean it doesn't matter however you meet people and want to network with them but like get to know other people who run run funds both kind of at like your staging area as well as like a little bit after you perfect and the last question well second to last question i should say is if the kind of general thesis of chaotic capital is is correct like if the if the world goes in the direction you think it's going to go do you have like a picture of what it might look like in 10 years from now no i mean it's like it's you know we don't have an apocalyptic view of the future or anything it's that it's really hard to tell what it will look like even if you're good at predicting some of like the specific events that might happen again what the second or third order events of those changes might be really, really hard to predict, especially over time and things.

42:24So, you know, I don't know. It's just to be ready for kind of whatever happens.

42:30Alex Miller: Yeah, that's a that's kind of a funny question to ask you, given your thesis is basically like the future is so unpredictable. Yeah, exactly. You know, and it's funny, like we live on five acres outside Bozen, Montana, house that can kind of go completely off grid, not because I expect to like survive an apocalypse or anything. I have no interest in surviving an apocalypse or anything, but just because like it's quieter and it's smoother. And you know what, if there's a giant disruption, it's going to hit me a little bit less because of it and because I'm prepared for it. But I don't think I know what that's going to look like.

43:02Alex Miller: The last question is, and I think I know the answer to this one already. I think it's going to be a DM on X, but if someone wants to get in touch with you, like what's the best place? Yeah, definitely a DM on X to me at Alex L. Miller or to Julie at Almost Media. All right, perfect. Alex, thank you so much. It's been a pleasure. Like I said at the beginning, I love what you guys are doing. I'm personally a supporter of you and like most of your portfolio companies. So I appreciate you taking the time. Absolutely. Thanks so much for having me on.