How AI and remote work is coming for your job | E1940

33:49But when you hit stormy seas, it's invaluable. I don't know, Ryan, if you want to add any color to that. But to me, it was a huge part of your process. Yeah, absolutely. But the other part of it too, though, just kind of Jason, go back to your comment too, about when you throw that audacious goal out there, like Jeff, something you talk about a lot is just creating situations where there's nowhere to hide. And that's one of them. When you go to a team and you say, Oh yeah, I know we only put 100 customers on the new product last quarter. So this quarter we're going to do 1 ,000. You don't have any more money or any more people to do it.

34:24The right people are going to jump out of their chair and be like, I don't know how we're going to do it, but man, we're going to go try. And the wrong people are going to kick and scream and come back to you the next week with all the reasons why they can't do it. But now more than ever, as companies are making changes like this, that's one of the things that I think... And it's a piece of advice to give to other founders. That's what you need to ask of your people. It's not about the little incremental improvements each quarter. If you're going to reduce costs, let's really reduce costs. if we're going to launch a new product we want to scale quickly like let's really figure out how uh you know how far we can take it and and all of that is is made much much easier by having people around the table who are ex-operators who bring a diversity of viewpoints and um you know in my case seven out of ten times i bring a question to someone like a tim or emmanuel on my board they might just agree with me or kind of repeat that but it's you're building that muscle memory and that validation to trust your instincts and make decisions faster.

35:28And so I think all of these things are critical right now. Listen, we all know generative AI is revolutionizing every industry. In fact, we talk about it here on this podcast every week. And companies that are slow to leverage this technology, well, they're going to risk falling behind their competition. But new innovations also bring new threats. How do you safely accelerate your company's gen AI adoption while also managing the risk? Well, let me tell you about Hidden Layers AI detection and response platform. It's a security solution specifically designed for generative AI and large language models, LLMs, you know that.

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36:36So here's your CTA, the old call to action. With Hidden Layer, go from pause to possibilities and step into the future of secure AI innovation. Learn how to protect your Genitive AI today by visiting hiddenlayer.com slash twist. That's hiddenlayer.com slash TWIST. Speaking of cutting costs, United's CIO, Chief Information Officer Jason Birnbaum is going all in on AI. United is reportedly using AI for everything from chatbots to pilot announcements and will be piloting AI applications across the entire company. Ryan, you're founder and CEO of electric.ai, you were early on the AI thesis, and you help small businesses integrate IT solutions, including AI.

37:21What are you seeing across the thousands of SMBs that you service? My guess is that this airline CEO, a year and a half ago was all in on Web3. I'm half joking, but I'm somewhat wary of people that make big, splashy public announcements. I am not poo-pooing the commercial applications and the potential business transformation that a lot of these new tools can bring. Specifically for us at Electric, we're making IT really easy for small businesses. They don't really care how we do it. They care that it gets done. They care that they can click a button and the computer gets provisioned and sent to the new hire.

38:07They care that they can click a button and we can tell them a whole bunch of things about how they can make their environment more secure. I think AI for the time being is certainly a useful buzzword. It's a useful hook. It's getting a certain type of early adopter SMB customer into our funnel. But specifically on this end of the market, if you do a great job with your software, it kind of disappears in the background. And so I think ultimately, one of the things we talk about a lot internally is that AI didn't all of a sudden overnight change the fundamentals of product management. You start with the problem and work backwards.

38:46And I think there's a lot of great things that AI can do to accelerate the solutions that you want to deliver to your customers. Beyond that, I think I probably have a bit more skepticism than some people. I'm very curious, Ryan, you've fractionalized IT services for electric. Do you see the fractionalization of AI in the future where large companies will have their internal AI teams and tools, but you'll see SMBs benefit from broader platforms? Yeah, specifically, I think like vertical SaaS and SMB vertical SaaS stands to gain the most from AI, as we've probably all seen playing around in these LLMs.

39:20They do much better when they can index something more specific than the entire internet, right? So when you're dealing with a constrained set of problems, a constrained set of intended solutions, and like many vertical SaaS companies, you're sitting on a pretty juicy proprietary data set. You can do some really cool stuff with that. And you can produce, I think, extraordinary customer outcomes. So that's the part I get really excited about is I think a lot of these companies don't need to be built new from scratch. I think there's a lot of great companies that might have been around 7, 10, 12 years that are actually in pole position to become the next great AI story because they have a 90-yard head start with an existing solution, existing data, existing set of customers.

40:09And now with the air cover of all this macro uncertainty and a lot of businesses rewriting the way they do things, this is a great time for a lot of those companies to reimagine themselves and what they can do with this technology. Jeff, I see you nodding your head. How do you see enterprise companies integrating AI? Yeah, I think, look, Ryan makes a great point about companies wanting to sort of jump onto the bandwagon. We see this in venture capital. You go back a decade ago, and there were folks creating funds dedicated to mobile apps. There were people who created cling tech funds that sort of were there and then went away.

40:44So I think, look, I've been in Silicon Valley since 1995. You get these paradigm shifts every decade or so. We had it with dot-com and the internet. We had it with cloud and mobile. I think this is a massive paradigm shift. I think this is probably bigger than those because the world is ready for it. The infrastructure is there. The compute is there. If you think about the S &B segment where Ryan plays, one of the reasons we're so bullish on that segment, it's 42 % of US GDP. It's 55 % of US employment. Because SMBs 15 years ago didn't have any technology. Most of them didn't even have internet access in their shop.

41:23Now they're running Shopify for e-commerce. They're running Square for payments. They're running Toast inside their business. They're running Homebase for payroll and time clock management. They've all bought technology. And the layer is there for now, to Ryan's point, for the incumbent vendors to roll out AI features and modules that make those businesses more productive. I think one of the cool things there, it's not going to be a headwind for labor. In big tech, we're definitely seeing a headwind for labor because of AI. We saw that Jason mentioned the efficiency wave with Zuck and Elon and others.

41:56And I think everybody's gotten religion around the idea you can build much bigger companies today than you used to with less headcount. In small business, if you take the average 10-person shop, the owner is doing accounting, the owner is doing finance, the owner is doing sales, marketing, payroll, etc. etc. So when you give them an AI tool built on top of their existing software or a module on top of their existing software that can do those things for them, it's going to make that shop that much more productive. It's not going to allow them to eliminate headcount inside the shop because nobody's doing those functions inside the shop.

42:27If you take that 42 % of US GDP in America, and you give it a 5 % or 10 % boost because of AI, that's huge. That's huge for our economy. And so one of the things I'd love to see us get the narrative out, there's a lot of negative headlines around AI, it's going to reduce labor, the robots are coming, et cetera, et cetera. I'm not saying those are valid questions. I just don't know why nobody's focusing on the potential benefit of this technology, particularly to small business, which is almost half of our economy. I think it's going to be huge and we're betting big on it. I think for LPs, it's a category that will generate a ton of returns.

43:02As Ryan mentioned, it'll probably come from companies we've already funded. But one of the challenges in the venture capital world today, it's not that easy to go fund new ideas and AI other than the infrastructure space. In the application layer space, it's a little bit hard to imagine a brand new company today coming in with something with AI that will displace a, call it 100 million ARR business that already has thousands of customers because they're rolling out that same functionality. It depends on the category. It depends on the category. Yeah, I might take the other side of it. I think it's a low probability that somebody coming in with an AI first solution displaces the incumbent, but it's possible.

43:36And so, you know, when they do, it'll be big. Yeah. Yeah. Or they can, you know, M &A can, can take them out. So it's just such a transformative technology. And I don't see a world in which all workers do not become a minimum of one or 2 % more efficient every month because of it. I'm picking the lowest possibility, 2%. that means every 35 months everybody's twice as good at their jobs just take the rule of 72 right um now if people were you know became you know five percent six percent maybe even seven percent better at their jobs every month which i do think in certain jobs is not just possible but probable we can all think of a developer getting seven percent better every month at writing code we can all think about a writer or a researcher or an sdr or an account executive getting seven percent every month that means every 10 months or 10.2 months you can look up the rule 72 they're gonna get twice as good at their jobs and so this is why i think it's it there's you know like all these hype waves whether it's mobile broadband cloud you have this weird you know overhyped underhyped you know moments that happen overfunded underfunded um you got to take a relentless paced approach to this as a founder for those founders who are listening and as an investor i think you just have to let the founders show you how they're using it and then look for those those clues we have an incredible company called podcastai.com and they did a very simple thing for us and the podcast the liquidity pod.com uses them and uh so does this week in startups.com it started with taking every episode transcribing it by the way that used to be a 500 to a thousand dollars per hour to get a decent transcript you know then it became an international thing and it because it used to be like five dollars a minute here ten dollars a minute in the u.s international made it one to three dollars a minute using people in manila but you know had error rates now it's getting better and better and better now it's telling us the chapters in each of these then it's giving us what clips we should do now it's uploading those clips to twitter and linkedin for us so you start looking you know every quarter this company pockets ai.com which we've invested in three times they release something that we buy i pay 500 a month for this and i'm like charge us two thousand a month thousand a month and we'd still pay it but anyway and then our producers here at this podcast and you know uh and at this week in startups they free up 10 hours a week well what can they do with that 10 hours they can do better research uh for each episode they can book better guests there's always something to do to make this better um and then they came to me today and they said oh by the way um if you tell us who your next guest is we're going to go out for all the web find the podcast youtube videos social medias of that person and build you some notes and i'm like okay here we go now this idea of getting seven percent better a month at being a podcast producer is here and who are they going up against a wordpress site is what we used to use but it didn't have any of this functionality the wordpress site was just you know shout out to my friend matt mullenweg and brian alvey over there fantastic the greatest publishing platform in the world but you start thinking about a niche like podcasting and then you put ai on it and you have a team of you know right now they're three people but they were 30 people oh my lord like what they're gonna do is just gonna you know free us to do so much more work so i am over the moon with the application layer imagine every small business in america you're you're running a 500 000 a bit small business that does 500 000 a year and you get a 10 bump in cash flow because you're better at sales and marketing, you're better at finance and accounting, you're saving money on your taxes, that 50K almost just sort of appears out of nowhere.

47:31It doesn't hurt anyone. Where does that 50K get spent? It gets recycled back into the growth of the business, potentially gets recycled into more headcount. So I just think long term, I put a long thread about this on Twitter, I started writing and just kept going. I just don't see how this isn't a huge tailwind for our economy. I feel like this paradigm, and you and I lived through the dotcom era, ryan i'm not sure how old you are if you did but i feel like if you take all the different paradigm shifts we lifted live through and i lived through the pc era which was after client server and the cloud era the online era broadband era mobile era cloud era i think that's all the eras and then ai it feels like this is the culmination of all the in other words everything has been a setup to this point and we're seeing and we're funding companies in the precede stage that get to 250k in revenue per year with two people three people and they're like yeah i'm like how much you're gonna raise and normally it would be three million dollar seed run and they're like yeah how about 500k for five percent and i'm like well if you're gonna go out and raise why not raise two million like i don't think we know how to where we spend it oh whoa that's a very interesting moment for lps and vcs to noodle on maybe they don't need as much money from us maybe we're the problem maybe dropping too much money into this you know system the same way in america we dropped too many calories on america and 60 70 of the country got fat who's responsible for that you know big ag we had a really great idea there was this thing called dwarf wheat and they did these wheat studies of how to get more calories out of a hectare um you look up the dwarf wheat studies i think it happened in mexico and all these great scientists came together into all hybrid versions of wheat and the book wheat belly and other things go over they were so good at concentrating calories into the wheat chaff that they made it so fat and the husk so then that it made it a super wheat that wheat spiked your blood sugar and made you fat and the reason they call it dwarf is because it was so fat the husk that it would break the long strand of a wheat like you know amber waves of gold kind of situation so they just said oh let's just make them shorter so they don't fall over.

49:41Sometimes you can just make something so efficient that it makes everybody fat. And the reason we're fat today is just bread and calories and cereal. When you started talking about super wheat, I thought you were talking about something else that's very popular here in California. A whole different economy. But it's a great point because if you think about it, my first company started in 2007. Okay, back then, it was impossible to raise money. If you did raise money, maybe you raised a few million bucks. Maybe really big. raised like 10 or 20. And that was like the absolute most. And like, there was a time when we all believe like software is efficient.

50:17Software businesses have these big margins and you can, you know, and I think there's almost kind of like it's come full circle in that sense, because, you know, Jason, to your point, it's like this culmination of all these different eras, right? Like this, you know, and Jeff, to your point about the productivity increase, right? Like this isn't an AI headwind that's going to negatively impact the average and worker like this is an ai stimulus that no one's really talking about yet and back in the 99 2000 era we raised money to build data centers we there was no aws we ran little mini data centers all over the country that's where the money how much did that cost cost a fortune right it cost a fortune what did it cost per startup to put up your co-location it was so expensive it was so we weren't even the world sass hadn't been invested invented we were an asp back then but you had to raise capital to buy hardware build your own data centers pay for the bandwidth and then amazon came along and solved that for everybody so i just think this is the net this is knowing what we know now about how transformational aws was it's hard not to look at this wave and say gosh this is going to be a huge turbocharger for our economy i just what aws did yeah that went from i think the average startup probably spent 500k in the first year to set this up about 250k service i know we did at mahalo when i did my last startup mahalo we spent about a quarter million dollar putting servers together and putting bandwidth together at a co-location facility plus you had to have two sys admins sys ops people so you're at about a half million dollars and then steady state probably a half million dollars a year so first three years we probably spent 1.5 million our friends at microsoft uh our friends at oracle um they're being really aggressive and trying to get into the startup community i've had good relationships with both of them um they'll offer our startups you know 100 000 250 000 in credits and that covers them for the first five years so it went from 1.5 million over three years to free i mean that's extraordinary and just going up a level jason you know david you mentioned lps how are they looking at this whole ai universe and there's been a lot of capital thrown into the infrastructure layer all that money that is being spent on infrastructure not only by amazon microsoft Google, etc.

52:33But some of the newer companies, OpenAI, Anthropic, and these other companies are raising capital, is going to benefit the startup community that we're talking about. And I think the output of that, one of the reasons all of us are bullish on the next three, five, seven years, you're going to have more well-run companies that need to raise less capital. The founders are going to own more. Investors will get a better return on their capital. And the outcomes could be bigger. We should have more profitable companies where the outcomes are bigger. Because some of those infrastructure companies today are absorbing, they're going to spend a lot of money.

53:05I mean, one of the challenges Sam has publicly talked about with OpenAI, he had to go out and raise billions of dollars to build out the infrastructure for OpenAI. It wasn't doable on a shoestring budget. But once all that infrastructure is there, it's kind of what Level 3 did for the internet way back when. Go back 20 years ago, somebody had to build out all the bandwidth that we're now running the internet on. And it was very expensive and there was a bubble and it popped and level three stock tank but the output of that was there was fiber everywhere and we take sort of gig to the home for granted but you know wind back the clock 15 17 20 years ago you couldn't get fiber to the home yeah look at this the headline you just put up all that fiber that people thought was crazy yeah 2002 people thought it was crazy and today it's all getting used and think about all the amazing things that are happening in science and healthcare and banking and all these other things.

53:54We're in the first or second inning of even understanding what this next wave of AI is going to do. You know, they overbuilt fiber to the point at which the companies went out of business. Yeah. They invested so much and they couldn't sell it. They went out of business and then Google and other folks bought this fiber up. It became, there was a term, dark fiber, fiber laying around. Jeff and I are all of them to remember these days. Yeah, yeah, yeah. um and the the the paradox the irony was internet traffic they were correct internet traffic continued to grow who was the beneficiary the beneficiary of all this was youtube and netflix dropbox you couldn't build applications like that in the 90s in fact my friend mark cuban who did broadcast.com said youtube and netflix are insane it will never work they will break the internet and in some ways he was right if everybody had gotten onto netflix at the same time youtube at the same time and it had gotten to where it is now but we were able to keep up with it a lot of other things happened with compression and storage and plumbing costs of storage but sometimes it overbuilt in a glut it kind of makes people be like oh yeah you know i can get uh truffles and lobster at a lower price yeah let's make you know lobster sandwiches for everybody and we'll charge 20 bucks like if there were too many lobsters available and you know in new york at the turn of the century lobsters were so available it's what poor people ate they were considered like the cockroaches of the ocean and they take them out of the east river in the 1800s and that's what poor people ate because everybody else is like oh my god you want to eat those things those bottom feeders like nobody wants that supply went down they became elite uh items but it's really such a great thing and i just wonder are we going to be sitting here in two or three years and there's h100s and data centers everywhere and the software developers have figured out how to build these language models so efficiently and small and in verticals that you don't need all this um and you know people like grok doing inference so well and efficiently they you know get rid of 99 of what people need in terms of compute this could go in the opposite direction if we overbuild so i am fascinated to watch this um one of the things i think with these generational transfers is that every time the game changes you mentioned the early 2000s is about who could fundraise five,$10 million pre-product.

56:19Then it went to the engineering phase where it's who could build the best product. One of the inevitable things that I think we'll see in the next five to 10 years is who could distribute their product in the most effective way. You see the rise of influencers, you see other clever ways to hack distribution. I think will be an inevitable battle line once you have products that are able to scale very quickly and very cost effectively. Well, one of the reasons I love where Ryan is sitting is he is sitting at the epicenter of the way small businesses buy software and technology. If you wind back the clock to why Bessemer and Notable and a bunch of other good firms got excited about his vision, it was, here's a$500 billion category where small businesses spend on technology and we're going to sit at the center of that.

57:02And Ryan, you mentioned earlier, we're joking that you bought the domain for$50 because nobody was buying AI domains, but you were ahead of the curve. And I think we're seeing that today. a lot of businesses that we're pretty excited about at series B and C and D got started seven, eight years ago and made the bet on this AI trend before it was cool. Yeah, exactly. And also, Jason, your point about YouTube, for example, being the beneficiary of kind of in the dot-com era, everyone laying all this fiber and building the infrastructure. I think folks in the application layer, we're going to reap a lot of benefits of a lot of the money being put on the ground.

57:36Now, I mean, one thing we've talked about internally here is if you think about like who was the biggest winner as a result of refrigeration technology it wasn't the refrigerator companies it was kookola should give us another minute to figure that out who was it i was gonna think ice because ice you know you had to um there were people who were taking ice from canada or something cutting it up or whatever putting in boxes and putting in boxes there were ice delivery so like then all of a sudden you could make your ice at home and that was like pretty crazy i'm also wondering if like meat and milk going bad and you know you can have your milk for longer but that's more efficient on the consumer side but yeah coca-cola yeah stuff like this warm coca-cola is awful right and so with that ice cold coke is delish yeah and so i think you know all of this stuff to me it kind of feels like a a tale as old as time right you know you look at sort of like the size of a computer that would be you know needed to to do basically what a Casio watch could do today.

58:39It's the same. I mean, how many times has this cycle repeated itself? I think the other point about some engineers somewhere are going to figure out how they can operate their own models with vastly less compute. That's probably something that will happen. And again, I think folks in the application layer who are solving very specific, often vertically oriented business problems stand to be some of the biggest winners. And it's all tied together in the economy, right? I had lunch yesterday with a guy who started a chain of restaurants. He's got several locations in the Bay Area. And he was telling me how he started his business pre-pandemic, but just as DoorDash was starting to get scale.

59:21And he said, I don't know if you could build my business today without that. I rode that tailwind on Uber, Uber Eats, DoorDash. We built a social media business where people understand what our brand is. We're doing a lot of volume. has a location in San Francisco that the area no longer has as many people living there, no longer has people coming into the office. And so the foot traffic went way down, but their door dash traffic has gone way up. And so there's just, there's all these interplays in the economy that I don't think we quite understand yet. I think economists are really, you know, everybody's projecting recession for the last two years.

59:52It didn't happen. Why not? People are having a very hard time getting their head around all these different variables. We've got a record number of people that have started small businesses, right? 10, 15 million small business applications in the last three, four years. We've never seen anything like it and nobody can get their heads around it. Well, guess what? They've got Shopify, they've got Square, they've got all these tools and technologies they can use to launch a business today. So it's just, I just think we're in the middle of a really interesting timeframe where all these things are connected.

1:00:18And AI, Jason, back to your point about productivity, it's gonna be a turbocharger. It's gonna be like lighter fluid on a fire that's just getting going around technology. It's gonna be, it's a good reason to be long. Having said that, I do think we're just entering into the it's over hype cycle. so back half of 24 it's overhyped stocks are going to take a hit people are going to be on tv saying all these guys have no real ai yep and then in 25 and 26 you'll see these things that come out of nowhere and everybody's like oh my god i can't believe all the success i think there's like a major macro discussion that has occurred for the past two or three years that we're going to need to reset going into 20 or as we wrap up 2024 and go to the back fact nine which is wait a second all these layoffs were done companies got stronger we thought that earnings were going to go down but earnings are a function of how much you spend to make money and the earnings are doing fabulous and the efficiency means you can be uber and uber i think didn't add any employees for two years but they keep growing 30 percent and you know obviously we saw what happened at x but meta getting rid of 20 or 30 000 people i'm not sure what the exact number was and you know he's going to do it again there's a rumor he's going to do another 10 it's like already you you five extra stock from 92 where i bought it up to 500 or whatever it was it took a little hit today but there's a macro discussion here of how come unemployment is so low how come inflation you know gets to three percent we can't get it back down we're still at five whatever we're at you know in terms of like the rate cuts and we're not having rate cuts like what is going on in the actual economy in america that you know it feels like people should be in a panic and then i open up like tiktok or twitter and i i start seeing because i like to look at layoff talk which is like a very specific tiktok um because i i like to have my finger on that because i'm i'm hiring i'm gonna i'm gonna hire three four or five people this year um and i'm investing in our business i'm like hmm These people are saying they can't find jobs or that they're finding jobs that are 50 % that are offering 50 % less salary.

1:02:29And I'm like, huh, so that's what's going on here. It's not that the economy is going to crash or something. It's that I think leadership is taking it really seriously. This, you know, get fit movement that Brad Gerstner talked about a whole bunch or that Elon kind of led. And I think Brad kind of named it after that and then pushed Zuck to do it. And he did it. Now it's got all this momentum about getting fit. you know part of getting fit is saying you know what we used to pay 150k for your position but we can have somebody out of school do it for 70 and you know what there's people in portugal and manila who will do it for 35 and that's a very weird thing that occurred jeff because you mentioned remote work essentially i think what remote work is such a major driver of this what lead what leadership figured out during covid i know i did was that you know hiring somebody in another country who doesn't care about stock options or carry in a venture firm like this they don't have this in portugal or manila whatever so that's like they don't even want it you would have to like spend months explaining it to them for them to even care about and they probably wouldn't they would think it's some kind of a scam putting that aside i have uh two virtual uh folks i'll talk about this another i'm gonna make an announcement about this virtual investment i made next week in a virtual uh assistant company and i'm the first investor in it um but i don't want to spoil it yet i'm gonna announce next week and this company um we have two virtual assistants for 36 000 a year each and then i compare them to entry-level americans and they're both in the slack there and they cost half the price and somebody else manages them and trains them and if they don't work out they give you a new one next week and i'm like huh i don't know there's about a third of jobs i could see these folks doing uh what are the constraints jason so obviously they could replace many other functions but what functions could a remote not replace you tell me you know because how much of what we do is in person now and did you see the uh new york there was a restaurant that had a uh you know the standard you said you're an investor in toast by the way jeff no but one of the former exec from toast is on the board of electric with ryan emmanuel scala she's terrific i mean think about how toast just has changed the restaurant business you don't need waiters you just transformational transformational and by the way if you've got kids and you got to order an extra round of dumplings trying to flag a waiter down for 10 minutes is death but ordering it and getting it to your table in 10 minutes is life you know especially when you know two eight-year-old daughters are fighting over who got the last dumpling they had a person from manila philippines somewhere or india it's like 1 a.m their time they're taking new yorkers orders over zoom they're literally just in a zoom window and zoom basically 24 hours a day for free and so you could order from the kiosk or you can order from the woman on the computer okay that person's getting paid i can tell you what people in manila get paid cashier manila gets paid a dollar an hour um a serious person you know with a college education gets paid five an hour so you start thinking you know ten thousand twelve thousand a year is like what a college educated person gets two or three thousand dollars a year is what a cashier would get a non-trained person a very you know entry level first run so um yeah it's kind of nuts and if a restaurant can figure it out what's happening in corporate america ryan i just hired a phenomenal executive assistant in the philippines he's fantastic on top of things uh hard to imagine going back and yeah got us thinking internally you know what what yeah what What else is there?

1:06:27And I think when I moved back to New York City in 2016, Google had that big office over meatpacking. And a couple of friends who worked there, said, Oh, come by, we've got this sushi chef and all this stuff. And we go over there and there's a table full of product managers bragging about the fact that they can't remember the last time they did any meaningful amount of work in a given day. And they're all making$500 ,000,$600 ,000,$700 ,000 a year. And I think rightfully, that was the biggest heist in tech for a long time. It's like, I'm just going to go there and hang out and do nothing for a while and make way too much money.

1:07:04And then people are surprised when those jobs start evaporating. So I think there's going to be a flight to quality. There's going to be a flight to what are the things that you as a human can do and you can do better than anyone else. But even for us, we've got some phenomenal stateside engineers. We also have a lot of excellent people in Brazil, both ICs and engineering managers. And so it's hard for me to imagine a world where to be competitive, you don't think globally and don't think much more holistically about where everyone sits and what that means for the business. And that process of working with those folks overseas has gotten so smooth.

1:07:44I have another company that I'm involved in where, Jason, back to your point about setting aggressive goals, I remember we were having a December board meeting and the founder said, we want to move all of our basically front end lead gen and go to market to this other area in Argentina by June. And several of the board members said, well, why don't we do it by April? And he said, well, that seems a little crazy. We got a lot of this. And ultimately he said, you know what? Let's do it. We'll do it by April because we're going to learn in that three month window from April to June. We're going to make some mistakes.

1:08:15We're also going to learn a ton. Guess what? Rolled it out, did it, cut their tack in half. It's going to be the reason that he's pointing the company towards profitability later this year. So, savvy, sophisticated founders, they're not waiting, they're figuring this stuff out. AI is going to play a role, offshore is going to play a role, and all of it is connected because of remote, right? We are now much more comfortable as a society working remote. Think about our industry. I mean, we're a tiny microcosm of the universe, but how much more effective are we as investors meeting people over Zoom than we were five years ago?

1:08:47I remember driving around San Francisco, walking up and down streets, you maybe met two or three people in a day. Now I can meet five or six founders in a day, half hour, it's better for them, it's better for us. If there's a great fit, we get together in person. I met somebody today, we're getting together tomorrow in person for lunch. It's a way better model. It's way more efficient. You apply that on a bunch of other industries that really matter to our economy. And I just think it's going to be not only the virtual piece, but the AI piece is going to be a huge tailwind. And to your point, Ryan, how much time did you spend raising money for your startup pre-COVID and like going to Santo Road and taking meetings you even in an aggressive day where you said I'm going to do four meetings a day you know that's a lot and you'd have a driver and you would be you know two hours at Sequoia two hours at Kleiner two hours at my last company it got to a point where my co-founder I said he goes literally he's like you need to stay in the office and run the company I'll go handle this because even at the seed stage it was a full-time job and you know every every round you know at electric covid you know onward was hop on zoom do the thing get back to work yeah i mean and you had this weird thing where as human beings if you're going to fly out for a meeting well of course i'm going to take you for a meal of course we're going to have a meeting and we probably should do one other thing so you flew out i mean to fly out and do a half hour meeting be like bye i mean it was like well ryan ryan ryan can attest to this he crushed me in soul cycle before we invested oh yeah well i'll give jeff a lot a lot of credit i think he emailed me on a monday i said hey i think the round's coming together quickly he's like we can be there tomorrow to take you for dinner i said hey well i promised the team i would go with them to soul cycle after work he goes i'm there love it we had the little barbecue uh we had a little barbecue steak and and uh and soul cycle and ryan ryan put thankfully there was somebody else on the team i'm a larger human being there was somebody else who was my size who rode in the back with me we i didn't have to be too embarrassed to there under the candlelight at soul cycle but ryan was clocking you know however fast you were riding while i was in the back huffing and puffing well what matters is you might you might have lost the soul cycle class but you won the deal yeah i was gonna say that's how you know around is truly over subscribe jeff when uh when you get beaten in soul cycle yeah yeah it was fun though on that note uh let's wrap up uh with With Jeff's latest three investments and also Ryan, you can tell the audience a little bit about Electric and what you're looking for in the market.

1:11:14Yeah, Ryan, you get a full plug. Go for it. Tell us about the company, who your customers are, and who you're hiring. Thank you. Yeah, Electric is the easiest way for small businesses to manage IT. You want to manage your devices, software, get more secure. We are designed specifically for companies that don't have any in-house IT staff. So if you are a small business and you care about the security of your employee and customer data, and you care about your staff not wasting time doing things like buying and provisioning computers, go to electric.ai, check it out, sign up for our freemium product online.

1:11:53And anything else you need, I mean, feel free to hit me up directly. I'm very easy to reach and we love our customers. Who are you hiring for? you hire a bunch of it professionals across the country to work on this uh no you know at the moment we we really don't have have too many open positions we've just got a absolutely absolutely rocking team so um speaking of remote work do people want to put employee monitoring systems on is that becoming a thing it keeps coming up like um and you know i wouldn't do it with the high-end employees we have but call centers record everything on a computer if you want to work from home for jet blue doing customer support you don't expect that like the screen's not recorded the whole time and they're tracking you how many calls you're doing and i looked into it because i wanted to increase productivity at our company and i was like hey is there a way people could get a private report or maybe them and their manager of just how much work they did because we can see it in slack and notion and google docs like we could see your activity so if you think somebody was screwing around you could say how many days did they log into slack and i look at I don't look at it every month, but I've looked at maybe twice in the last year, just who logs into Slack every day, right?

1:13:03And it was pretty interesting to see who was like 30 of 30 days and who was 19 of 30 days. And did they take vacation days? That famous incident when Marissa took over as CEO of Yahoo, and they had like 10 ,000 employees that were all working from home. And I guess they pulled the records for their VPN. And ultimately, what she found is that the vast majority of employees, when they were working from home, were in fact not working because they weren't even logging into the VPN. So they couldn't actually engage any work. I think what a lot of companies realized was that was more a function of working at Yahoo at that time than it was with anything else.

1:13:39Yeah. So do people want remote employee monitoring? And what's the best practice there? Yeah, we don't see that. And that's also something that we always tell our customers. We have an agent that's installed on the machine that cannot see anything that you're actually doing. It's really just looking at the health and the security of the device. We have no idea what you're doing. But yeah, I mean, I think what we see across particularly our startup customers, the departments where that really matters is ultimately either sales or engineering. Pretty easy for engineering teams to see just what the amount of code that folks are committing.

1:14:17and pretty easy looking at Salesforce reports, who's actually getting in there and making calls. So I don't want to say it's a solved problem, but I think for the people where it matters, a lot of the tools they use today can kind of tell them who's busy and who's not. All right, lightning round, Jeff, you're at three. Go. All right, three companies we recently invested in. We have a company called Homebase that is kind of an operating system for small businesses. So 200 ,000 merchants in America, roughly 2 million workers are on the app. This is obviously something I'm very passionate about. We talked about it earlier in the pod.

1:14:50Great company, John Waltman, terrific founder. He and Rishi have built this thing over the last decade. So note to founders, it takes time to build great companies, but this is a company that is valued in the hundreds of millions of dollars, north of 50 million in ARR, growing very quickly, doing well, and just a company that we're really excited about and extremely well run. And I will just tell, note to the world out there, it is very challenging to raise capital right now at this stage for companies. And this is a real testament to the cohort data, the margins, all the things we talked about earlier.

1:15:24These guys have their stuff together, and it's just an impressive team that we think is building in a great space, similar to what HubSpot did, Toast did, Square did, Shopify did, going after this 40 % of the economy that is small businesses. So Homebase, really exciting company. Second, I'll give you Arteria. It's an AI AI that Ryan mentioned earlier, vertical AI. So this is a company that's going after the banking industry, probably also will go after insurance, healthcare, energy, places where a lot of contracts, agreements, documentation, a lot of data surrounding all of that. Very important to the businesses.

1:16:03You think about the banking industry, literally executing contracts and trades every day. There's a lot of data there. They've built a proprietary set of AI that can extract information from that and help companies make better decisions on the fly and also just understand risk exposure and things that are really important to these very large companies that are very important to our economy. And then the third one is a company called Vercel. Hopefully all of you guys have heard of Vercel. It's an incredible infrastructure company, modern developer platform. Every month, over a million developers are building new projects on Vercel and launching them.

1:16:35Huge beneficiary of what's happening with Gen.AI and just an amazing founder in Guillermo, who has also become a great co-investor for us and great angel investor that we've partnered with on a number of new investments. So Vercel is one of those companies that we think is very well positioned to take advantage of everything that's happening in AI. It's on the infrastructure side, so not something you will hear as much about unless you're a developer, in which case you probably love Vercel. So another company we're excited about. Fantastic. Take us out, David. What a great episode. I love having Ryan on because Ryan is an angel investor and a founder.

1:17:08That is It's really dynamic to have you have both of those hats on. And Jeff, great job. Excellent. Well, it's been another great episode of the Liquidity Podcast. I love the discussion. For Jeff Richards, Ryan Dennehy, Jason Calacanis, this is your host, David Weisberg. Thanks for listening.