SPVs have a brand problem

0:05Today on Great Chat, we talk about the latest SPV drama and the broader pressures around access and liquidity that are keeping us firmly in a gray zone. I'm Ashley and today I'm joined by Helen and Angela. Great chat is brought to you by Mercury, radically different banking loved by over 300 ,000 entrepreneurs. We use Mercury to run this podcast and love recommending it to other founders and fund managers. It's free to get started. Try it for yourself and visit mercury.com to learn more and apply online in minutes. I've returned unscathed from my cruising adventures. Yeah, you don't even have to quarantine for your norovirus.

0:42That's great, Angela. I know. I know. Well, the scary thing is my kids did take the Ruby Princess from San Francisco like a year ago. And that's the ship that's currently docked in San Francisco that has the norovirus outbreak. Oh my God, Angela, this isn't even your first cruise. Well, I didn't know. I didn't go on this cruise. My parents took our kids on this cruise, which was amazing because then I just went to New York to YOLO for a week without kids. But yes, I'm glad they survived their cruise without norovirus. I'm glad that we came back from Alaska to know norovirus. But actually, while we were on the cruise, one of my worst nightmares, there was a medical emergency that happened.

1:22And so we changed the itinerary of our trip so that the ship, which was originally going to be just in the middle of the ocean, went to port to drop this person off for the medical emergency. Were they super clear that it was not like some viral infection? I would imagine that any medical emergency on a cruise ship just has everyone thinking like, oh my goodness, this is the next pandemic. It's a heart problem. Don't worry. They said that it was specifically because this person needed access to some type of medical grade equipment that they did not have on the ship. And that's why they were being dropped off, which does not fully like, yeah, I would want the possibility of an outbreak.

2:07But this thing, my first cruise in like 30 years, there's hand sanitizers everywhere. There's people like there's literally staff members standing outside of the restaurant as you go in handing you sanitizing wipes, like asking you to wash your hands inside of the bathroom for like, I don't know if this is just an Asian thing. But like, there's literally a paper towel dispenser and trash can right by the door and a sign that says, please open the door with the trash. Oh, that's so specific. And then throw the towel. We place this here so that you don't have to use your hands to open the doors.

2:37And then throughout the ship, the doors don't respond to physical force. There's little sensors by the wall that are touchless that open and close the door. So it actually dissuades you from... So I'm sure this was implemented for COVID, but I was surprised at how many measures there were in place to prevent contact. But then, of course, you're, like, sitting together and sleeping in tight quarters. Anyways, but they did a lot where they could. Yeah. That's great, actually. Like, normally I'm doing, like, the gymnastics of, like, the paper towel, open the handle, and then, like, reach to put it in the trash can.

3:16On an airplane where you're, like – Yeah. And the trash can's open. So it's not – you know, like, the airplane. It's, like, the trash can. Yeah, because you've got to, like, push it. You've got to, like, put your hand into it. Yeah. It defeats the purpose. Wow, this is real innovation. How did Starlink perform on the cruise? This may have been like an obvious thing for anyone who spent two minutes thinking about it, which I didn't. But like Starlink needs exposure to the open air. Like you can't have a Starlink inside of a building. Was Zach just on the deck the whole time? But we had to be on the deck.

3:47And it's like Alaska. So it's like raining and it's cold. And so like you're literally just like huddled there while being rained on. so that your star, I mean, it worked great when we had, when we did it, but you know, you can't be like in your stateroom accessing Starlink because you're like in the bowels of the ship and there's no connectivity, which is why I couldn't pod because then we had to be like on the deck where they're playing a movie and there's a character, you know, like if there's like a Mickey Mouse in the background, that would have been fun though, Angela. Like, I feel like that would have been a level of spectacle to rival Taylor Swift's wedding and maybe would have been an appropriate theme for that week.

4:27How many steps away from a wedding in Madison Square Garden do you think a wedding on a cruise ship is? In some ways, a cruise ship is more respectful because you're just not shutting down the streets nearby. Were you impacted? Were you impacted by the wedding as a New Yorker? I never go to Midtown unless I have to. So I was not remotely – I was over in Brooklyn just trying to stay cool because, of course, that day was like 100 degrees or 104 degrees. We were having an insane heat wave. And it was funny because obviously that's not Taylor Swift's fault. But like some of the online commentary was like, I heard she has ice sculptures at her wedding and it's 103 degrees out.

5:14And it was like kind of a – They're trying to make it like an environmental – oh, gosh. I don't think we can blame Taylor Swift for the ice sculptures. I mean, I'm sure Madison Square Garden required quite a lot of AC to keep everything nice and cool in the midst of that heat wave. But no, I was not remotely affected by her nuptials. But now I can't stop thinking about if Taylor Swift had her wedding on a cruise ship. Like in some ways, that's like total privacy because you're like out in the middle. You know, like she should have. But you know there would be like lots of boats circling, right?

5:52Like the paparazzi. But you'd be inside. So like, you know, you should have been her wedding planner, Ashley. That would have been like an amazing. They can still do that for like the five other weddings they can have. You know, people do like their, you know, SF wedding and their New York wedding reception. They can do their Madison Square Garden wedding and then like a cruise ship reception or like the Ambani's had like a month of celebration. They can do the Crypto.com Arena wedding and then they can do like the, I'm just kidding. Normally I would say like the cruise ship vibes aren't like romantic enough, but MSG is a very low bar.

6:29So if they could make that into an enchanted garden, I'm sure they could. What a year for MSG with the Knicks and this T-Swift wedding. I mean, what a season. What a year. I did see a lot of people on the internet upset that she didn't invite her fans to the wedding. And I was like, I don't know. I don't know, guys. That feels like it could be a weird mix. Like all the celebrities and then the Swifties. So they'll get the documentary version. No, that's the cruise. That's the cruise. It'll be the fans and Taylor and Travis on a cruise. Normally I'd say that's too tacky, but I feel like they like leaned into the tacky with this wedding.

7:11My joke was like, this is like if you ask like, you know, my nephew in the 2000s, like what his dream wedding would be. It'd be like Madison Square Garden filled with NFL players and Adam Sandler officiating. I'm like, what is this? Like these details are crazy. It's funny. They did such a good job keeping details private and sort of like on lockdown, right? Like guests can bring their phones in. We have no images. And so I have a really hard time parsing reality for misinformation. And so I feel like there are a lot of people who are having fun, like leaking. I don't know if this is true, but like apparently like Taylor performed at her own wedding and walked down the aisle to one of her songs.

7:55Yeah. And like those things may be true or they may be absolutely false, but I feel like people are getting to – in a vacuum, people are getting to construct their own narrative of the wedding. And so I am curious when she will sort of set the record straight. Can I just say that the wedding I think was happening at the same time as the Argentina-Cate Verde game and the World Cup has made us all fans of Cate Verde. That's why I felt like I wasn't following the wedding at all. I was just like, not that I'm a sports person, but watching the game and feeling very invested in this team. No, the stories, it's like the 40-year-old goalie who like, I forget what his name is.

8:38Was a bus driver. A bus driver. Like it was such a good scrappy underdog tale. I know I'm not following the World Cup at all, and yet I feel like I know these players. Well, okay. Back in tech land, Fable is back. Has anyone played around with it? No. Do you have an update for us? Because I just feel like I keep getting this pop-up when I open Claude, and I'm not even reading it. I'm just sort of exiging it out. It's so funny. I think they are doing aggressive in product marketing right now. And it's very specific because if you pay for Claude, you have access to Fable through today, the day we are recording, July 7th.

9:24And then you can no longer use Fable within your plan. And you will have to like pay for it separately, which doesn't feel like a good long-term solution. But I think it like consumes a lot more tokens. And I looked last night because I had been playing around with Fable quite a bit yesterday and some more today. And I was like, what am I doing to my usage limits? They have it gated. So you can only spend up to like 50 % of your weekly limits on Fable. So they've made sure that no one's going to be like, oh my gosh, I ran through my entire Claude token allotment, doing a few projects with Fable.

10:00But it feels like kind of a weird marketing motion where they want you to use it so you see how good it is before they take it away and charge you more for it. Helen, I don't know what you think about this as a marketer, but I'm like, I don't know. Give me a taste of a better model. Weird. You know, your like comms rule of assume people are smart. Mine is assume people do not have the patience for you. Look at that. It's a crazy annoying. I mean, just when it comes to like user experience or like if it's a marketing thing, it's like, no, they will be upset by the bitterness of just that experience more than clamoring for it.

10:41And last night, like my husband and I were chatting and he's like, well, if Fable's that much better, you should just cancel. I paid$200 a month for Claude. He's like, you should just cancel your plan and spend that amount on Fable. And I was like, it's just so weird. I feel like this could backfire for Anthropic, the weird way they're setting this up. If I, as a loyal subscription customer, get a taste of this model and it's so much better, and then I'm using it today and tomorrow you take it away from me. Well, two questions. One, since you tried it, because I don't think I even have, what is the difference?

11:20What did you experience? And then second, what do you mean you have to cancel your current plan to get on Fable? Isn't it just like a model upgrade? I don't think that they have made that path clear yet. I think I would have to upgrade to a different plan. Whatever Claude plan I'm on will not include access to Fable. I think you can either pay for Fable on a usage basis or there will be higher tiers of Claude that you can pay for. The interesting thing is OpenAI is almost certainly going to be unveiling better ChatGPT models. There's going to be pricing pressure. So I'm kind of of the mind of just see where this all lands.

12:07I don't know that I used Fable in the most optimal ways, but I would say for the projects that I did give it, it was 50 % better than Opus. Oh. And so it's going to feel a little painful going back, but it wasn't so mind-blowing that I'm like, oh my gosh, I need to drop everything and spend all of my management fees on Fable. So we'll see where it lands. Not to take this in a different direction about a topic that I've only read very superficially, but I was... That's what this pod is for, Angela. I was reading some headlines today about Alex Karp. Palantir is sort of like railing against the model companies like Anthropik and OpenAI being like, you guys are spending all this money on things that actually don't actually add value to your life.

12:56And you're just letting these models train on your company data. And so I'm curious, as an individual user, do you feel like you are getting value from your$200? Is it like, can you actually measure a net improvement in ROI? Or is it more like so table stakes and you want to just understand how to use this technology that you're willing to pay that fee? Yeah, I have a lot of like low hanging fruit workflows that I've automated. and as someone who is the only full-time uh employee of my font that's like very valuable if I can have um as much sort of like admin um or lower level work delegated to Claude um so yeah I think I'm getting I think I'm getting the value and I think I also have like a lot more time and creativity to invest to really maximize it.

13:55I think I'm doing a lot of baseline stuff. And then the stuff where it's also awesome is just still the very basic research, help me understand this category or this, even for today's pod, doing some research for our main topic. So yeah, I feel like I'm getting that value when I compare it to how much I'd have to pay a human to do these things. It's an incredible deal. There is no human I could pay $200 a month to do the things that Claude is doing. But has it completely changed my business and made me way more competitive somehow? No, not yet. But I feel like that's both on me and maybe we're just not quite that phase of the technology.

14:42Yeah. So my thoughts on AI is I feel like we're now in the diminishing returns phase where like iPhone has like been in my mind for the last like four or five iPhone releases. Because I think for most early adopters, they've integrated into their workflows. It was mind blowing. And now it's like incremental, which is why, Ashley, I mean, clearly I didn't try Fable. You saying 50 % improvement, that's pretty significant. I will definitely give that a spin. Well, do it soon, Helen, because today's the last day. But everything is marginal. It's sort of like, okay, I guess it was a little smarter than the last thing.

15:23But to me, value is accruing at the workflow level, not at the model level where it's integrated into everything that I use and it can anticipate what I need next. And that's definitely more in the workflow camp than in the model camp. So I don't know. I think that we're entering a new phase, which is why I'm willing to be wrong, but this Fable discourse is interesting because I'm like, oh, I thought we were already moving on to whoever has the deepest integration and can get really smart about how enterprises, and I say enterprises because I think ultimately it'll just touch the most people. It'll just have the widest amount of impact.

16:05we're sort of like in that phase but maybe not maybe we're still exciting where we're still competing at the model level and i guess like again cynical take and maybe a wrong one but like i pay for gemini pro and so you know since everything is on google like my assumption that things will just work better since all of my sort of like life personal life and fund life and everything like is is google based getting gemini to just sort of like embed deeper has been really helpful. And then I still use other things for... I use town, the app layer. And then I use Claude heavily just for general search, which is interesting.

16:46I'll reflect on that. I pay OpenAI too, but that's my personal... I know. I was just thinking as you were talking a year ago, we were trying to convince you to try Claude because you were like a very, you're a JetGPT loyalist. So, you know, this pod is following the arc of our own AI adoption. I mean, in a year we'll be using the open source models. That's right. It's going to be so fun. It is interesting. I feel like that's my only takeaway having come back from like a week of isolation in the Alaskan wilderness aboard a cruise ship trying not to get norovirus while huddled over my Starlink is that the vibe shift seems to have been like just discourse around, you know, how much people are going to be willing to pay for frontier models and like the rise of open source, even though like this dynamic has always existed, but it feels like that's been a lot bigger.

17:42Like the number of like research notes in my inbox that are like the all in podcast talks about like open, like it's just, it's interesting to see having stepped away, but it also, the world feels so bifurcated. Like there's a camp of people that have like, we've just fully lost to AI and they're seeing like increasing returns, I think. And that's probably more on the codex side than like the chat side, I would say, in terms of like where they're driving additional value. And then a whole host of people that are just like being left behind. And it reminds me of that tweet that we talked about on posts on X tweet.

18:16I don't know what we're calling it these days. SpaceX. SpaceX. SpaceX. The SpaceX that we talked about. You know, if you're an SF, you're, you know, whatever months ahead. Oh, yeah. You're like three to six months ahead of San Francisco, which is six months ahead of New York, which is six to 12 months ahead of the world. Like, yeah. I was at a wedding in Pittsburgh, like a suburb of Pittsburgh, like an hour outside of downtown. So we're kind of like in the farmlands. And I was talking to one of the guests there. And they were like, oh, I've always wanted to visit SF because of the trolleys. And I was like, yeah.

18:49And like, if you like transportation, like Waymo's and they're like, what's a Waymo? And I was like, wow. So amazing. I thought you were going to be like, if you like transportation, you'll love fable. But it's just, it was just like a, it's just like a reminder of like how different speeds are, you know, and they're living their life. Great. Like doing their thing and like untouched by Waymo and AI. And so, yeah, like, I don't even know if it's diminishing returns. It's just like the bifurcation to the barbells of how it's impacting people and maybe the diminishing returns for everyone. Yeah, totally.

19:26I was in Cleveland last week. It was similar. It's not that they don't have access or like they don't read the New York Times and they read the same, you know, like it's not, it's just not like 24-7. and you're not going to make it unless you're adopting all of these workflows and you're integrating it with your home AI or whatever. It's not at that level. And so to me, it came up organically in conversation a bunch, but it was just sort of like, yeah, I've tried it. Wow. What do I do with it? I was at an event with a bunch of emerging fund managers and this was in San Francisco. So this is not a New York versus San Francisco thing.

20:09and one of the topics that came up was you know like how everyone's using AI it's like a like group level conversation and I remember having these like I remember like two or three years ago people were stitching together all these tools and there was like so much like enthusiasm and so much optimism from like early adopters and there was like a real vibe shift where a lot of people were like, yeah, we've automated some stuff. It's great. We've even hired some people to do custom stuff for us. But honestly, the most important parts of our job have not changed and they're still there. People were much more realistic about the impact of AI for their firms.

20:54Maybe there were some truly AI-pilled people who were keeping quiet in that group. But I was actually surprised. It felt like people had gone through a whole sort of cycle of like hype and enthusiasm and had come out the other side like, yeah, it's useful, but it's not the thing that is going to make or break my business. It's now just like the new way of building and it changes how I hire. And it was very pragmatic. And so it's funny. So even for people who are like on the AI side of this bifurcated world. I think there's so much variation in terms of the people who are like, if you don't have a thousand agents doing things for you 24-7, you're going to be left behind.

21:39And the people who are like, yeah, this is like an incredible tool. But the important parts of what I do are not tied to directly correlated with my AI use. And so I think the whole spectrum is fascinating. I would say it's wider than ever. The dispersion is greater. And yeah, the closest thing I have to compare this to is just on a consumer level. I worked at Facebook kind of early. And I remember one time I was visiting my cousin and he was like, I'm not on Facebook and I don't think I ever will be. No offense. And I'm like, it's okay. We just passed like 100 million users. We don't need you.

22:20you know but like eventually he got on it right which is my point is sort of like we're not even there yet so i don't know it's it'll it'll be interesting i'm interested i have not looked this up but i will after this this this recording is just like the adoption curve of like yeah past sort of like consumer internet adoption waves and like what the shape of this looks like and where we are in in the sort of like long cycle of things as you guys know i'm not like the most AI-pilled person, but I spent the weekend with somebody who was at Google and is not open AI and someone that I think is generally pretty, like, reasonable and down to earth.

23:01But I do think there's something in that SpaceX slash tweet slash post that we talked about where I think when you're, like, in the center of the action, you just see where things are going. And so we had this discussion. My husband's in synthetic biology, and there was some big update that just came out about synthetic biology that was in the New York Times or Wall Street Journal. And he was like, yeah, but like, it's not that impactful. And, and this person was like, yeah, but people just consistently underestimate like the exponential increase of capabilities. And it's the same thing that Dario said when he spoke at the Morgan Stanley conference, which is like, if you look at a chessboard and you serve one piece and you double like, you know, every square, like the exponentiality, when you get to the second half of that chessboard is so much more than what you see in the first half.

23:43And, and, and so I just also do think that that's driving a big divide where it's just hard for people not in the labs to appreciate the first derivative, like the rate of change and what's happening and how that applies. I mean, we could also debate whether that's like even a goal. What does that help us achieve collectively as a people? You know, just do a mass capital by investing in these companies, which will bring us to our main topic of the day. Our main topic is actually one that we've talked about before, but it feels like it just keeps coming up as like a source of drama, which is SPVs, but more broadly, just questions around access and liquidity in this crazy, crazy moment we're in where so much value is concentrated in so few companies.

24:34Access is, you know, sort of limited to, frankly, like a smaller group of funds and people, which is part of what's driving the insane interest in growth and SPVs and maybe some gray area behavior. And the recent dramatic event that kicked this off, which I think we were kind of watching unfold in real time on Twitter slash SpaceX was is USVC, which is... Is it officially like AngelList fund that holds all the best? I know it's AngelList affiliated, but I don't want to miscategorize it. But it's essentially a way for anyone to invest even just$500 into this fund that has a portfolio of top logos.

25:29Yeah, it's an index fund. It's a private market index fund of hot companies that you've heard of. And it's run by this guy, Encore Nagpal, who has been, I think it just launched a couple months ago, and he's been sort of hyping it. And the idea is like for people who can't get access to Anthropic or OpenAI or Andruil or Ramp or some of these like very sexy late stage private companies, this is a way that you can buy in. So anyways, the latest logo that he was promoting in their portfolio was Andrew Royal. And for anyone who has followed SPV discourse, one of Andrew Royal's co-founders, Matt Graham, is like very anti-SPV and especially SPV access that is not sort of endorsed or known by founders.

26:28So one of the big challenges in this moment is there are a lot of SPVs that are layered on top of other SPVs, and there's a lot of opacity around fees and carry, and is there actually even real access to the underlying asset? And so, of course, as soon as Encore tweeted out, oh, our latest holding is Andruel, Matt was there, and he was like, don't lie. No, it's not. Like, you don't have access. And so then I think there was some back channeling and some digging. And it came out that part of how there was access was through an SPV that Paki McCormick, a fund manager, a firm called Not Boring Capital, had led into Andrew Rill with like Andrew Rill's permission, obviously, in a recent round.

27:22and that one of the LPs or one of the investors in that SPV had decided to sell their position to USBC. But it took a while to unpack all of that. And so in the interim, it was Matt going after Paki and saying, I can't believe Paki sold this position. There was some misinformation going around. The whole thing was very messy. Eventually, Paki chimed in and sort of explained what had happened. And it seems like the crux of it was that USVC had said that they had Andrew Royal's permission to do this, but they actually did not. And Paki didn't like double check that. And so that was like a source of a lot of attention.

28:11But anyways, so kind of a really fun eating some popcorn, Twitter moment, watching this all unfold in real time. But also just another really good example of why this gray area is really tricky. And there are so many different stakeholders. There is obviously the founders and the companies who care deeply about their brands. And Matt did not like how this was being represented as part of the USBC portfolio. There are the fund managers who are trying to create liquidity opportunities for their LPs, but also maintain good relationships and access to these top founders and top companies. there are LPs who want liquidity and there are very few like real liquidity options these days.