Kevin Hartz | Backing Teen Founders, Lessons from the PayPal Mafia

28:23Turner Novak:And I was very wrong on that one. Yeah. What do you think you got wrong? I should have thought through the capital light model more appropriately. And then certainly the size of market. But I wouldn't say Series B is later, but it was$300 million versus I think the market caps, what,$170 billion? Yeah, that's usually my threshold is like 100x, you know, post dilution, etc, like changing share price. If you get 100x increase in share price, that's, that's a venture investment. Like that's, that's kind of the target. And you can, you get all nuanced, maybe 95x counts. But like, if you get into something and it's up 300x, like, that's pretty good.

29:15Turner Novak:Like, that's hard to do. that most people, 99.9 % of investors will never get that. And one thing you mentioned was, you mentioned Founders Fund. They're really good at finding these kind of weird, wonky things. I think you kind of joined early on for, it was maybe like a fund cycle. I think you were there for like two-ish, three-ish years. Yes. What was it like back then? Was it pretty much the same? or has it changed much? I mean, it's such an extraordinary group of investors. It is weird. It's like I grew up in the East Bay near Berkeley and we used to call it Berserkly and Founders Fund was this weird place that was so kind of, it was like counterculture.

30:12and, you know, the anti-VC. And so it had this, and that just like gave it this like coolness around it. And then, you know, like process and all these things that anal retentive people, neurotic people like myself, like hate. Like there was, you know, no partner meetings and, you know, like no organizing your list of deals. And it was, you know, like very much each individual would go out and, you know, kind of find, you know, that next great company.

30:50Turner Novak:So how did, how were like investment decisions made? Because usually you think your classic venture fund is like a Monday morning partner meeting. Maybe there's a Thursday. Everyone talks, kind of pitch. The founders come in and present. And then, you know, you vote. or sometimes it's just like a dictatorship. How did it work at Founders Fund? There was voting and it was based on number of, or, you know, check size. Like, so the larger the check, the more number of partners needed to get something through. So there was, you know, so there's always some aspect that reels it back in. But the most important part and what Brian Stingerman would always say, you know is like he would always kind of like come up to you and sort of berate you like are you sure you have absolute conviction you know and you would lie down on the train tracks and this is going to be bigger than google you know and and um i didn't maybe appreciate the berating as much at the time as i do now like that's you know you like if a individual partner at Founders Fund has like that high, high, high conviction, then, you know, like votes, all that is almost irrelevant to, you know, just saying, okay, like, we'll do it.

32:20Turner Novak:And I feel like that's kind of the point of venture. Like the point of it is, we are putting some capital into this pretty early, like business or product or team, go up or down the list of how early or late this thing is, and it will become one of the most consequential companies of all time. It's going to become a generational business. And we don't actually know. The statistics say that it probably won't. But if it does, we're going to make a lot of money. The fund will return itself multiple times over. And that's kind of the point. I feel like a lot of people maybe lose that. It's more of like, oh, people are blogging about this certain thing.

33:02Turner Novak:And like, we know that all these other funds are looking at this, like if we can just get in before them, then they'll mark us up and we'll be able to raise the next fund. And by the way, the product doesn't even work or like they have no customers, but you know, we got markups, but who cares? No one needs to talk about that. Yeah. I, you know, while I was there, Trey Stephens and Palmer got together and started at Andrual and, you know, inside of Founders Fund. And that was extraordinary. I mean, it was exciting. But I, and, you know, watching them go through the process and seeing, you know, the company get off the ground was exciting.

33:46But now it's extraordinary in light of, like, you know, how far that business has gone in just these few short years.

33:56Turner Novak:And it's interesting, like when you just look back at the time they started the company, like you had, you know, Google was signing a deal to basically provide cloud services for the military and employees were protesting it. Like we will not serve the like the U.S. military because it's unethical or whatever. And just like it was like the most contrarian possible position you could have is like we're going to. And also selling to the government is like on paper, you'll talk about VC blog posts. Historically, it's like, you know, the government moves slow. Don't sell to the government. They never make decisions.

34:36Turner Novak:It's like all corrupt, et cetera, whatever. But then you flip it and you look at today, Palantir has like, I don't know, I'm sure they have some nine figure customer deals with certain governments around the world, like enterprise software, like the beauty of just these massive contracts. So I mean, same thing with Anderil. It's like, I'm sure they have some customers where they're making nine figures. They have nine figure contracts or probably will eventually. And just like contrast it today and back when they started, it's like so different. Yeah. What's interesting is like, yeah, both Palantir and Enduro were these like, you know, contrarian beliefs rolled into companies, you know, with Peter very much.

35:21you know involved in in both and i mean and now the value i mean the value of what's of palantir is just extraordinary like of you know how far it's come then you know in the case of palantir it took you know 20 years to then like really inflect because like palantir kept like moving along at like a good-sized business um and it was almost like kind of lying in wait of of transformers and you know this awareness of this being needed and it had found the perfect audience of you know government and so on to to spend those first 20 years and then exploded is as you know this ai boom has happened

36:09Turner Novak:yeah i remember there's even maybe like as recent as like six or seven eight years ago maybe it was like 2018 you'd you know someone do a presentation of like these are the most overvalued private startups and Palantir was like always on those lists like it was always pretty close to the top of like this is like an example of like you know bubbles in the private markets and these companies are zero for deployed engineers we're called consultants and we're a negative thing and you know it's just a company that does consulting and shouldn't get any kind of high you know marks so yeah like the you know and seeing that from like its creation it was really based on your one of the kind of currents that like pushed it forward was the fraud models at paypal which could you know in a networked way you know kind of find find similarities like amongst, you know, say devices or IPs or otherwise, and then, you know, identify and find this kind of networked fraud.

37:23And that was like the inspiration, you know, with Palantir as well.

37:29Turner Novak:Interesting. So like using just data of, you know, broader internet usage, like pick up potential threats to a nation or to a democracy or to like civilians or the military, et cetera. Correct. You know, like Max Lepshin and the team would see that, you know, a whole set of IPs had somewhat similar attributes or some tie and then, you know, transfer that over to discovering, okay, there's a terrorist cell and they used a phone over here and computer in a different country and tie those all together and find gain insights was like the original premise. Interesting. So you think that the premise of Palantir started at PayPal?

38:28I think so, yeah. And in fact, the day that the day that uh that paypal announced the acquisition i i'd been i had lunch with peter and he said that you know he said like i'm going to start this company and it's going to be based on like similar to how paypal models are used um to you know like find to find fraudsters we can use them to catch the bad guys interesting i've never heard that before that's crazy

39:04Turner Novak:I guess, well, you also sort of started a company off of insights from PayPal. Yes. Was it the very first company built on kind of like the PayPal platform or API? I guess I don't know the inside full story. But what's kind of the story with kind of getting that one started? It was called Zoom, right? Is that how you pronounce it? XOM. Not to be confused with the video conferencing. Yes. XOM is a money transfer business, much like a remitly or wise or so on. And, you know, the business is really about helping immigrants send money back to their family overseas. But, you know, how it began, my business partner and I, Alan, who went to UIUC.

39:55and so he was in school with folks like Max Levchin and, you know, Libor and all these other, there's this like whole mafia of UIUC folks.

40:12And like I had had a conversation with Michael Moritz and he said like, you know, the most successful companies are not just companies, they create industries. You know, enormous industries sprout out from it. And, you know, certainly you look at Apple and the iPhone and, you know, the App Store. Like, there's just an enormous sort of, like, universe created of value, which, you know, Uber and Airbnb benefited massively from, despite Apple's hefty tax on everything. And, you know, and so when I saw the world melting down, you know, in 2000, March of starting March of 2000, 2001 and so on, you know, everything was kind of collapsing except for Google and PayPal.

41:12And like PayPal was like rocketing up. And so, you know, the thesis was like, well, let's build apps on top of PayPal. And there was like a kind of mutual desire to do this by the PayPal team because at the time they were like 99 % relying on the eBay auction markets, marketplace. and they were concerned that Meg Whitman, the CEO at the time, would shut them off one day. And they wanted to drive non-Ebay GMV. So Alan and I, we talked to David Sachs and convinced him to open up an API and became the very first developers on that API.

42:05Turner Novak:What was that process like? Like, was this like 2001, I'm assuming? Yeah, it was towards the fall of 2001. And in fact, like, I think we launched Zoom not long after 9-11, which, you know, it's like.com plus 9-11, you know. It was like a crazy, but, you know, like, I guess I've always found that a time to be very sort of counterintuitively greedy is during these really terrible times because, you know, one is like you kind of can't fall off the floor. And, you know, it's like this time where you really learn how to be scrappy and build like great bones to a company. And, you know, and it's the warm up and the run up to, you know, the next kind of accelerated period.

43:06So, you know, no doubt there were a lot of great companies that were started or came out of that, like, kind of downturn period, as the same as with 2008, 2009, as the same as with, you know, that 22, 23 period. Yeah.

43:25Turner Novak:So was there anything that you did differently between Zoom and the first company? I think it was called Connect Group, the one that you sold to the hotel internet. Okay. So what was your approach second time? Or maybe there's multiple companies in between here that I'm missing, but what was the difference between the first time and with Zoom? Well, the first time with Connect Group, there were five founders. we had you know we had hardly got off the ground you know we hardly really built we didn't really build a business you know we had one installation and you know then a suitor came calling and we went with them so I don't know I honestly didn't learn that much you know from it why did you sell the company then if it was still so early i think we maybe felt there were greener pastures and you know they they came calling and it seemed like a good option that would but i don't know i i don't at that time you didn't have like all these great podcasts or you know material sub stacks to read up on like when you should exit your company and when you shouldn't.

44:50Turner Novak:So it's basically just like you thought it seemed like a good deal to take. Just risk-reward seemed good, make some cash. Good enough, yeah. So then obviously you didn't do that with Zoom right away. I think you guys sold it like 13 years in. Yeah, well, Zoom was yeah, we were founded in like 2001-ish into 2001 we went public in 2013 and were acquired by PayPal in 2015. However, in 2005-ish, I moved on to the board out of the CEO role. You've done that like a couple of times. I know we're going to talk a little bit about Eventbrite. I think you did a similar thing. How did you know it was the right time?

45:38Turner Novak:How do you think about when you kind of shift away into more of like a chairman role? Yeah, I think in general, the best practice for it is really spending time with those that mentors, people you respect, to hear through, is this a net positive or net negative for the business?

46:06What are the trade-offs one is doing?

46:10Turner Novak:so it's kind of like is there somebody else who could actually do this better than i can and let's plug them in there's certainly that yes but you know do always be aware that you know it's it's if you have somebody an outsider come in it's rare that they'll have that founder quality they may have great skills and leadership and building but that you know kind of founder variable would be absent but we kind of got the best of both worlds with Eventbrite because it was my co-founder Julia who took the seat. So then with did you start Eventbrite around the time that you stepped down from Zoom? I'm just I'm trying to remember the timelines.

46:58Yes in fact in in fact we back to that period with Alan when we were becoming the first to build on PayPal's new API, we built a whole range, like over, you know, a number of weeks or months, we built a number of different payment related applications. And one of them was like a very rudimentary ticket, ticketing application that, you know, when I've done myself with more time on my hands was like this, you know, took a look at the like admin and there was like volume and people were publishing events and nobody was touching the thing. It was just like running on its own.

47:47Turner Novak:Oh, so this was just like a little mock-up that you had built? More than a mock-up. I mean, it was a functional application. Did you just like take it and say like, this is Eventbrite, let's go? Or are you like, let's like rebuild this from scratch? Uh, well, I, with the two new founders, the founders of Eventbrite, Renovasage and Julia Hartz and myself, we, um, kind of took a close look at it and also would kind of debate, maybe there's other things to work on or what do we do, but let's start working on, on this. And we just started to kind of iterate like the product. I mean, it seems like obvious or no big deal, but, you know, it was a PLG product like at a time that there really wasn't much.

48:47Maybe Netflix or something and Gmail, you know, out there. and we would have this 24-hour dev cycle because Renaud was over in, and he was based in France for most of the year, hit a flat over there. And so we would, you know, like I'd kind of work on product mocks and specs and things and file bugs and throw them over the fence and he would go after it.

49:17Turner Novak:You'd wake up and he'd have it fixed? Yeah. And we did that for a fairly long amount of time. You know, I had felt like, oh, we raised too much money for Zoom. And so the reaction to that is to like be in a very like go the other direction. And so we kind of worked like almost two years on just kind of iterating and optimizing that. and what what like was or is event right for people who are not familiar i've done like some research over the years followed it but i'm sure i don't even know exactly what like the core product and like customer base is got it it's it's really kind of ticketing for the rest of us not for Madison Square Gardens or the large, you know, football stadium, it's ticketing for everyone else.

50:17And it's, you know, simplicity, ease of use allows you to really kind of get the word out about one's, you know, event, but also around, you know, we like benefited greatly on lowering the cost of acquisition because you would see, you would get these Eventbrite invites and you would see these pages, Eventbrite registration pages. And that really helped spread the word.

50:53Turner Novak:and i think you like there there's a a significant chunk of people that like that run businesses on eventbrite if i'm remembering right like there are people who they just host a lot of events as sort of like how they make money and make a living and and i think you guys essentially just like take a cut and then there's maybe some advertising revenue too once you hit scale that that's right it was it was kind of this religion for us to you know one take very low fees as opposed to, you know, what you would see from, you know, the incumbents in the space.

51:30But, you know, also just this notion that we only take a fee if you actually make a sale, you know, was kind of like this religion at the time that was, like, substantially different than most of these or most of the services or so on out there. Yeah.

51:51Turner Novak:And I think I remembered you've, you've said before in the past that when you did decide to raise money, it was kind of tricky because this wasn't like a well-known market. Like you couldn't Google, you know, what's the TAM of this thing. How did you kind of size this and figure out how big of a company it could be? Yeah. I hated this part because coming from Zoom, like you know you could just get the the bank the like the the central bank figures for remittances in the philippines in india and mexico and you had this like very clear enormous tam and take your percentage of it but in in this case you know it was it was like a kind of smb audience You know, I would call them creator.

52:40Like it is a, it was an early creator audience. And those that, you know, made their living with this type of craft. And there's, you know, and this is now just multiplied. I'm on the board and we're investors in a company called WAP, which is general creator tools. think of it as like Shopify for services. And, you know, their volumes are now in the, GMV is now in the billions. And, you know, this is just the general notion that you don't go and you don't do what your parents did, like which is go to one company and work your whole career and get a W-2. Now you get a 1099, you know, and you're like your own boss, but you need the infrastructure to do that.

53:37But that was like, Eventbrite was very much a kind of early version of that. There is.

53:46Turner Novak:And I know people listening to this are like, Turner, you got to ask me this. I know you guys recently, there's some news that came out. You had, I forget like what the phrasing around this was, but you're under an LOI or closing an acquisition, you're getting acquired. Not sure what you're allowed to say, but what exactly is going on right now with Eventbrite? Yeah, so Eventbrite announced that it is being acquired by Bending Spoons, a Milan-based.

54:19I kind of describe Bending Spoons as kind of like a new age IAC. so it's sort of like a holding company. It's a number of different companies that are assembled together

54:33and Luca has just done an extraordinary job of building that business. We just announced this happened and because of all the SEC regulation and so on, it can't go into grand detail until it closes.

54:54Turner Novak:Well, I did want to ask you a little bit more about... We kind of hit on it a little bit, but we didn't get too deep into it. So there's a headline, if you look at TechCrunch, and it's like a sensationalist headline. Like, oh, this fund invested 20 % of their fund in teenage founders. I think that's the headline, if I'm remembering it right. We hit on it a little bit more. So that's a pretty big thesis for you at A-Star right now, is just finding people very, very early in their professional journey and their building journey and just helping them out, giving them some capital, seeing what happens?

55:28Well, it's funny because we didn't really seek it out. It's happening. If you're in the pre-seed market around universities or the Twittersphere or so on, And, you know, you're seeing like the age has been dropping precipitously, whether it's through YC or whether it's through. Like I do a lot of work with Corey Levy. You know, known him for years. And he is. He's got a program called Z Fellows and he backs dropouts. and it was always drop out from college. But, you know, in the last like 18 months, like drop out from high school, it's like extraordinarily high. Then running into and meeting founders that, you know, one of the Z fellows was the creator of the Cal, you know, the calorie counting app guy.

56:40And, you know, I think at the time when I met with him, he had something like$30 million in net revenue.

56:47Turner Novak:That's wild. He's like a bootstrap company. He's not raised any capital. Correct. He hadn't raised a dime. And, you know, and he was like, you know, and had this great, you know, business he had assembled. Yeah. It's interesting because there's like two sides of the coin of this. When you look at Facebook was started, I think Zuck was like 1920-ish, something like that, when he started it. Now one of the most consequential companies of all time. On the other side, there's like a lot of cases you could say, you're giving this 17-year-old or 18-year-old like, you know,$10 million. This could end in absolute disaster.

57:29Turner Novak:Like they have no idea what they're doing. Like in some cases, you know, like a Facebook or an Apple computer, you know it's almost like you need that style of you need that new manner of thinking you know describe it as kind of seen around corners like like that age segment just knows what the world is going to look like in five and ten years whereas you know we all like don't see the world that way anymore, if that makes sense. But it doesn't, but there are certain businesses, like if they were going into like, you know, enterprise resource planning, the ERP systems for the enterprise, it's probably not the best place for a teenager to try to mess around.

58:20Turner Novak:So you think it makes the most sense when it's something that's like, they have an insight or an industry is like, obviously going to look radically different. and you're like, holy shit, this is like the craziest thing I've ever heard. And like, it could work. Like this could be, you could be the kid to do this. And then, you know, look, like there's the reason why Marines are 18 years old is like they charged into battle. And, you know, that energy is, you know, and like fearlessness is pretty amazing to see. Yeah. Like I think when you, when you think about like Facebook, like we were talking about earlier, like there was 15 other social media companies.

59:06Turner Novak:It's like any rational person might say, I should find a different market with fewer competitors, I guess. But, and so aside from just investing in people dropping out of high school, any other areas you're really interested in right now at A-Star? Well, we're generalists, so we try not to take sides to say. We're just looking for those extraordinary people. And that has brought us to everything from all the AI application layer companies. You know, Decagon is exemplary of that to, I mentioned, WAP on crater services that isn't AI oriented to general biological, which is where Avi is a graduate from Yale at age 21.

1:00:01And he's a chemist that is really building this industrial biotech company. So instead of using petroleum to make chemicals, he does this with sugars. And there was like a kind of wipeout in the market about five years ago, 10 years ago, with a number of companies that didn't make it. And how the market has changed and how things have evolved. We think this is the right time and he's the right person. So he's got a, he's got a, he just bought out of, you know, quasi bankruptcy, a factory in Louisiana to make his product, which is interesting. And then we're on the defense side. We're in companies like Mach Industries, which is, you know, like propulsion-based drones.

1:01:00That was started by an 18-year-old dropout of MIT for NEROS, which is a military drone business.

1:01:12Turner Novak:And I think you also have incubated some companies too, maybe more than I know of. Is that also kind of a part of the strategy or is that more of like a one-off thing? Yes, we've incubated three companies. in the five years that we've been around. And we try to be very thoughtful and deliberate about the incubations. So we're not like churning them out every week. There's some people that do. I guess, you know, like, what is it? Like, I guess you have more chances of success with higher numbers, perhaps. But, you know, our first is a company called Multiply, which is AI mortgages.

1:02:05And that's backed by Mamoon and Kleiner. The second is a company called 15th. And that is a kind of AI-powered tax accountant. So you get your tax return done.

1:02:23Turner Novak:On the 15th of the month? Is that what it is? That is, yes. Okay, nice. That's a nice name. And then my kind of like little darling incubation has been Sauron, which is home security. Yeah, I wanted to ask you about that. So what's the thesis there? Because that sounds, some people might say that sounds super boring. Market might not be that big. Like, I don't know. What makes it interesting? Well, like the notion behind Sauron and the home security market is just we haven't seen innovation there. And, you know, maybe it was maybe Ring 10 years ago. There's just not a lot of change. Like the companies that were in the space, they've been like gobbled up by the, you know, big players there.

1:03:16And there is a, in the big players, the oligarchs have this, you know, kind of third rail of privacy where they can't do aggressive things like face recognition and so on. And, you know, and of course we can and we are. But we're really, you know, what we saw was that over the last like two decades, you have had, you know, 100 billion plus dollars put into self-driving. So all the different sensors have come down dramatically in price, all the different, like the perception stack, a lot of innovation has happened there. And so I take the self-driving stack and move it over to home security. And, you know, we think that's that's pretty exciting.

1:04:09Turner Novak:Yeah, because I guess I kind of think about I did have a home security system for about two years. We lived in a not the not greatest neighborhood and we had a baby. So we were like, we should probably get a system. I think we use a company called SimpliSafe. I don't know if they're still around. I think it was like most affordable slash seems like the best option. And then it seemed like I think Comcast had like a home security, but it was basically like a bundle with your cable bill. And I don't know, product never seemed that great to me. I think like AT &T maybe had one. ADT maybe was a big player.

1:04:47Turner Novak:They're really expensive and didn't seem that great. Kind of your classic big conglomerate price increases, etc. etc. So and it was all like no tech. Like it was like, you'd have like a box on the wall right next to the door. And then there would be like a motion sensor on the door. And like if the door opened, you had 30 seconds to like press a button and then and then the alarm wouldn't go off or would. I think maybe there was an app if I'm remembering right, like, yeah, you can maybe control it remotely from an app. But it's just like, you know, didn't seem like people were doing that much with it to your point.

1:05:22Yeah, it's interesting. In some cases, maybe the innovation failed as it settled into is a number of the assets you mentioned settled into private equity or again into the like big oligarch, tech oligarchs. But all of them, like what they don't share is like the kind of real-time nature is that who's really, like, is somebody going to come if there's truly an emergency? And you described the sensors at ADT. Well, that alerts their help center, but it doesn't mean the police are going to be dispatched because, you know, 90 % of the time it's a false positive. of somebody set the alarm off by accident and they call to confirm and go through this.

1:06:15So what we're trying to do is have that situational awareness, be able to see what is happening in real time and have high resolution sensors to know if there's an urgent situation. Wow.

1:06:34Turner Novak:So depending on what you sense, you might just call the fire department. And so it doesn't even go to the Sauron help center and just go straight to calling 911 and say, there's a fire. We need someone in the house. Will it always be, you know, kind of confirmed by people, the help center? You know, it's kind of like self-driving where you had humans in the loop. So we have humans in the loop and ours are very well trained. I think all of them are military veterans, and a lot of them had exec protection and so on. And that you're not paying 20 grand a month to have a security person on site. You have this virtual security.

1:07:24And over time, you know, as we train the system, the computer vision will allow us to kind of scale many more homes, you know, and not have 10 ,000 virtual guards.

1:07:40Turner Novak:I know we were talking about this before we started recording, but it's kind of like, it's like a way to get into someone's home, right? Like, it's like, almost like land and expand. Like, people spend, the average person, their biggest line item on their monthly budget is their home. and it might be like rent mortgage if your home is paid off you're just like buying shit for it basically like you're making your upgrade and stuff so it's like an interesting way to just kind of like get into that kind of budget of a high percentage of someone's income honestly yeah we like to even think you know as we wouldn't trust like what would it look like to have store on sensors in the home, you know, and it'd be something like, you know, where did I leave my keys or where's my blue sweater?

1:08:27Turner Novak:That'd actually, that'd be amazing. I run into that problem daily. Yes. Or catch your, your child's first steps, your baby's first steps. Yeah. That'd be awesome. The thing I w I like can't wait for is so like I make my kids breakfast every morning and there's so many mornings where we're like out of peanut butter or out of oatmeal or yogurt and you know it just like turns into like a disaster in the morning because like they don't get the yogurt they thought they're going to get and you're like trying to figure out what to make them for breakfast it'd be awesome if it's just like hey we placed an instacart or amazon order and just there's going to be peanut butter that shows up tomorrow like that'd be amazing what's your go-to breakfast in the morning for me personally or for the kids for the kids for the kids i have one that likes oatmeal and i have one that likes yogurt and specifically vanilla yogurt and i so the the the oatmeal one will she'll have like strawberry yogurt she'll have oatmeal whatever but like the one that only likes yogurt she will only have vanilla yogurt so if you give her anything any other flavor she completely loses it What can you put fruit in the yogurt or like nuts or anything?

1:09:43Turner Novak:Yeah, you can, but it has to be vanilla flavored. So like if it's vanilla yogurt with like cut up blueberries and strawberries, she's fine. But if it's strawberry flavored yogurt that has whatever else in it, she just doesn't, she like won't eat it. Is that the nine-year-old or the five-year-old? It's a five-year-old, you know, she's, she's gotten so much better over the past year, like trying different foods. And I mean, huge credit to my wife of like being super patient and like, you know, strategically introducing different foods. And we always encourage her, like we make it a big deal of like, oh, you tried, you know, beef or, you know, you tried green beans or something.

1:10:20Turner Novak:And, you know, we make it a big event and celebrate it. And, you know, we make it because I don't know, some kids, she like she used to be really good at eating. And then suddenly she just decided she doesn't like anything that's green, which is basically no vegetables, which is, you know, not good. Is it an age thing? It's just like all of a sudden, yeah, there's, you know, what they say is that there's, I think they say like at a certain age, you become very picky about food because you don't want, you know, the four or five year old to like walk out in the woods and just pick a mushroom and eat it and drop dead.

1:10:55And so it's actually a like Darwinistic thing because our 16 and 11 month old daughters, like we were feeding them, you know, broccoli and salmon and like just best food. We're eating everything, you know, like they're just taking like down stuff. And now I'm like thinking forward like, oh, God, yeah.

1:11:18Turner Novak:Probably the funniest thing was both my kids really loved sushi when they were babies. And it got really expensive. They wanted sushi every night. And still, when I'm like, hey, let's go out for dinner. And they always want to go to the most expensive sushi restaurant. I'm like, we can't go out to get sushi every night. That's like a six-figure run rate on the dinner meal for the family. We can't do that. It's like a conundrum. You want to get the high-end sushi too. You want to get the nicest fish for the kids, but you can't go every night. And we've evolved. So when we used to do date night, when we were first married, you're scrapping every penny and we'd go to a place where we could split a meal.

1:12:06Turner Novak:You could pay 20 bucks and get a really nice dinner. But it's super fascinating. The past couple of years, I think it's like we make a little bit more money, but also the price of everything has gone up. So like there's almost this like relative difference of like before, you know, family meal was like 50 bucks and like a really nice meal was 100. And like the difference in price was like 2x. And now the family meal low quality is like 100 bucks. And the really nice meal is like 150. And like on a relative basis, just getting the better food, it like actually seems cheaper. so what we've been doing is we've just been like you know what if we're gonna go out to eat we're just gonna go to like a nice place and we're gonna enjoy it because it's actually not that much more expensive than going to the you know like we'll go to steak shake shack and it's like a hundred bucks for the family and i'm like what this is insane like let's just go to like the fancy you know fine dining and pay 150 for the family and it's like way better and the the kids like it a little bit more.

1:13:06That makes perfect sense. Like Shake Shack probably has like 17 MBAs figuring out like how to keep pushing the price up.

1:13:14Turner Novak:And Shake Shack is good. I love Shake Shack. It's like a family favorite. Yeah, yeah. It's who's the famous chef that's behind it? I don't remember his name, but he's got the book. It's like tabletop manners or something, or it's like how to treat your employees really well. And like that leads to a good business, I think. But I actually wanted to ask you, So you have two older daughters, but you mentioned you have two younger daughters. So how did that come about? I think you described it as like your second cohort of children. Yeah, a second cohort. Nice antiseptic term for like our child rearing.

1:13:53Turner Novak:Cohort analysis. You're running like spaghetti charts and analyzing. Cohort one, cohort two. Keep up on their growth curves. so we have four daughters 17 years old 13 years old and then 16 months and 11 months which is like the most confusing thing to most people yeah five months difference you're like what's how did that happen yeah julie and i just decided like we weren't done and and you know we were kind of exposed to all this different tech. And so we decided to kind of like have two more babies, or should I say like, like cook up or, you know, like grow two more babies. They create with science, two more babies.

1:14:40I'm an angel in a company called Orchid. Nor is an amazing founder and that's like a full genomic test for babies, something, sorry, for embryos, something that just hadn't existed before. So we were able to see like this, like fine grain resolution of, of all the embryos that we chose from. So I don't know. I think it's, it's, you know, it's a little bit costly. And but, you know, I would imagine in 10 years time, that as the prices of all this cost of all these go down, that you'll have a lot of different families having kind of later in life children.

1:15:30Turner Novak:Hmm. So how does this work? Kind of practically, like, if I was going to go through this process, do i like so what was it like kind of from the like beginning then can you just kind of explain how it works for somebody because i'm i'm curious but i've never done it so i just yeah yeah well we you know first like one would create like the you know the embryos like you know you need sperm and egg put them combine them in like a lab environment of some kind in And yeah, like IVF style, combine them and then like freeze them and keep them on ice. And then you have, you know, kind of optionality. And that was relatively inexpensive versus some of the other areas.

1:16:22The next component there is that you do need a surrogate to, you know, carry the baby to term. And that seems to be growing in popularity. In the U.S., the Wall Street Journal reported that, I guess, there was some foreign national who was trying to have something like 100 babies with circuits. And so...

1:16:47Turner Novak:Yeah, I saw the headline. Yeah, I foresee regulation coming in the area. And it's probably a good idea because, you know, there's kind of scary things that can happen on both sides. um and you know and and once that happens then you know it's the surrogate that is going through the different checkups and making sure everything is healthy and and so i mean i described a relatively simple process but it just ours took quite a quite a long time to get everything together properly. So you mentioned you, you get to see the embryos and does it, does it like simulate kind of what might happen to the baby in terms of like, I don't know how they like grow health things.

1:17:39Turner Novak:Like what all do you get to see when you're kind of getting like all the data around it? Um, you know, it's, it's like, it's like just it's really describing traits and you know i should probably like pull the report back but you know there's this dystopian you know sort of like concern that you'll choose babies based on iq and you know and honestly that can be done to a certain extent or these like traits can you know, now be like, you know, you could pick embryos that have, you know, certain traits versus the other, but, you know, you're looking for a healthy, healthy embryo that there's not some significant disease or the like.

1:18:33Turner Novak:So the main thing that you get from this is it says like, there's a percentage chance of like this thing, this thing, this thing, and you're kind of looking for like the lowest percentage of there being some kind of like life-threatening or very debilitating issue that will come up throughout the course of the baby or the child's life? Correct. And, you know, like one, you know, thing like a embryo, if the embryo has like a BRCA2 gene, you know, there's that very high likelihood of breast cancer then occurrence. So then you would say like, okay, let's try to select one of the embryos that just has less of a, less lowest likelihood of probably like as many things as possible.

1:19:20Exactly. Yeah.

1:19:23Turner Novak:Cause I think, I mean, if you don't have kids and you're listening to this, me and my wife were just talking about this the other day, like literally our worst fear is something happens to the kids, like something that we can't control. And so, So, I mean, it's like, I feel like it's most parents. It's just like, you really just want a healthy kid. Like, it's not even like, I want my kid to be the smartest in the world. It's just like, I want them to have all the opportunities of everyone. And like, the worst thing you want to do is like, you have a child who struggles with something that's kind of like outside of their control.

1:19:54Turner Novak:So, I don't know. We've thought about that a lot. It's like our worst fear. It's just like, your kid is hit with something that like, is uncontrollable. So, I don't know. Yeah, I recommend any couple just also freeze a bunch of embryos and then be able to have some degree of preventing these bad things from happening by being able to have this higher fidelity look at the embryo. our mutual friend, Navia, who works for you at the moment, mentioned you've been getting really into art lately. I was like, what's something I got to talk to him about that he's probably, you know, might be interesting to get into.

1:20:43Turner Novak:So tell me what's your favorite art piece of everything that you own? Well, I mean, first I have a mentor, Michael Ovitz, who is like just this incredible collector he's collected since the like late 70s he was the he was the founder of CAA and so I have him and he's very shrewd and in how he collects and how he conducts business and so on and so it's been great to have him you know help me or provide insights and then I also collect alongside with rompton naemi from abstract whose fund is just a block away and so we get this like kind of fun little competitive element to you know like collecting although i don't know i i have to admit i think he's like has an incredible eye and he's like done a great job um but you know my i would say like i i'm into this there's this this group of artists that have come out of like they came out of yale in like the mid 80s like john curran and lisa yuskovich and and others and they've been they've been out of vogue in some regards like from you know like art goes through this in and out um you know sort of thing and you know i just love their work and, um, you know, see it as an opportunity to, to, you know, build the collection more.

1:22:27Turner Novak:So do you, when you're investing in art or do you see it as investing, like you're trying to buy things that the value will appreciate, or is it like, this just kind of looks cool. I want to put this in my house. I think it would look nice, like on the vase on the table or picture on the wall? Like, how do you think about it? It has to be both. So, you know, I have to love it. And, and I want to believe that, you know, the, the artist, him or herself is, is something very, very special. You know, that kind of, you know, like those very few entrepreneurs that in this case, is producing something that's going to stand the test of time.

1:23:15And that's represented by the appreciation over time. Interestingly, over the last five years, we've had this terrible market where art has been overlooked, kind of hit rock bottom relative prices. And so, I don't know, Ramshan and I think it's a great time to like... Scooping up, scooping up new pieces. But it looks like, you know, just as expected, you know, with the super cycle that we've entered, the art market's starting to pick up. And just in the last like couple quarters, you're seeing like pretty astounding records happening in the auction houses and elsewhere.

1:24:03Turner Novak:So how do you get into art? Do you have to have like a broker? or do you like, you know, like email the contact email on like one of the auction houses? Like, how do you get started? It's a very particular space. So you, you know, the best thing to do is to go to the major art fairs. Art Basel in Switzerland is like sort of the major one over the summer. And there all the galleries gather together and bring works from their represented artists. And, you know, like, then there's Basel, Miami just happened. And they tend to be a scene and a lot of parties and things of that nature. And then you build relationships with the galleries.

1:24:56So, like, Gagosian is like a very well-known gallery. Larry Gagosian has been, you know, running his gallery for, you know, what, three or four decades. And he is probably, they probably sell like a couple billion dollars worth of art a year, which he takes a nice cut of that.

1:25:18Turner Novak:A nice cut. Yeah. It's going to be a good business. Yeah, but I have got a representative over at Gagosian that will help me. Or if something comes into the gallery, they'll share a PDF of a particular artist. They represent John Curran, for example. and there's a and then the other piece is Christie's and Phillips and you know on the auction house side so that's interesting to see where prices are happening and it's great to have you know friends at the auction house that that also can give you insights, you know, at the same time. Yeah, I'm probably not quite there yet where I can start acquiring art, but I want to, hopefully soon.

1:26:22Turner Novak:Need some liquidity on the venture portfolio first. But you can start, like, you know, local artists or, you know, some of the, like, you know, you try to get somebody coming out of art school. Yeah, that's true. Maybe, plus, it's like pre-seed investing in art. like, you know, buy something for a hundred bucks versus 10 ,000. It's like investing early. Exactly. Well, this has been a lot of fun. Thanks for, thanks for doing it. Where can, where can people find, kind of find you? Do you tweet LinkedIn? You don't have a podcast where, where, how can people follow you? Twitter and LinkedIn are, you know, are, are fantastic and DM me, but love doing this and thank you so much turner yeah this is a lot of fun and i hope you had fun thanks again to numeral and flex for supporting this episode if you missed it make sure to check out last week's with jason calcanus going inside the all-in podcast and everything he's learned from elon oprah and travis kalanick tune in next week for remote.com co-founder marcello libre on building one of the largest companies in europe if you like this conversation please like, comment, subscribe, and name your next child after me.

1:27:34Turner Novak:If you don't want to miss a future episode, subscribe to my newsletter, The Split, linked in the description to get each episode plus the transcripts emailed directly to your inbox every week. Thanks again for listening. See you next time.