David Haber: The Biggest Mistake Founders Make When Hiring l Trailblazers Podcast Episode 54

0:00Erica Wenger: Today on the show, I am so excited to be joined by David Haber. David is a general partner at Andreessen Horwitz, where he focuses on B2B software and financial services investments. He currently sits on the boards of Camber, Crux, Eve, Moment, Rudder, Setpoint, and Tenor. Before Andreessen, David spent years at the intersection of finance and technology. He was a senior executive in firmwide strategy at Goldman Sachs, helping lead partnerships, new ventures, and M &A, a role he landed after Goldman acquired his own company. That company was Bond Street, which David founded and ran as CEO with the aim of transforming small business lending through technology, data and design.

0:33Erica Wenger: Before its acquisition in 2017, folded it into Goldman's digital finance business. Earlier still, he was a venture investor at Spark Capital and a founding associate of Locus Analytics, an early stage asset management startup. David graduated from Harvard with a degree in biochem. Let's welcome David.

0:49David Haber: Thanks so much for having me on.

0:50Erica Wenger: I'm excited to be here. There's a lot to get into. We got a lot of meat to work with.

0:54David Haber: Let's do it.

0:54Erica Wenger: Let's do it. Okay, so let's start with an icebreaker. We like to get to the hard questions first.

0:59David Haber: Okay.

0:59Erica Wenger: Okay, hopefully you've been prepped on this. But what is a time in your life that almost broke you? Can be personal, can be professional.

1:08David Haber: I mean, it has to be running Bond Street. You know, it was definitely the most rewarding part of my career, but also at times, certainly the most painful. And I'm sure every entrepreneur can kind of empathize with that. And, you know, in particular, you know, we started Bond Street with sort of the ambition of trying to become the sort of financial advocate for small business owners. That was sort of the mission statement, you know, and we had long live small business, which are sort of like tagline, you know, and we started that by by offering small business loans. But again, the ambition was to be kind of much, much more than just a lender.

1:45David Haber: The business really benefit. We started the company basically at the end of 2013. the business really benefited from kind of the first wave of online lending in kind of 2014, 2015. As an example, you know, we had raised a million and a half dollars in seed equity. And before our series A, I convinced Jeffries to give us a hundred million dollars of their balance sheet. Okay. Spark letter A, they put$10 million in the company. We ended up raising $800 million more of debt. So 11 and a half million of equity and 900 million dollars of capital. I'm still very proud of that. I haven't seen quite that ratio, you know, for the most part.

2:21David Haber: The challenge, however, was, you know, and this will date me, but like, you know, Lending Club went public in, I think, 2016. OnDeck went public. Funding Circle. These were sort of the early waves of online lending. Lending Club, I think at its peak, had a market cap of$12 billion in 2016. 2017, that declined 90 % to$1.5 billion. And that basically happened across the entire industry and so really what happened was the tide went out in the market and you know it was a very valuable lesson that you know in some ways like timing is really important and often out of your control I mean really is out of your control but as a former VC as you know you had mentioned I kind of saw the writing on the wall right we had the business doing fine we'd gone into a couple hundred million dollars a year in originations, so not revenue, but originations.

3:14David Haber: I didn't really know how to get us to like billions of dollars a year without raising meaningfully more capital. And then the challenge, because the market kind of fell out in this category, you know, I recognize that like no, none of the top, let's say 50, maybe even 100 firms in venture were going to fund this company, you know, and it's been a valuable lesson to sort of understand that in any period, you know, different sub markets go in and out of favor. Unfortunately, venture is sort of mimetic in this way. One of the people that I pitched back in 20, I pitched him twice. I pitched Andreessen for the Series A.

3:55Erica Wenger: I thought you were going to choose Spark, though. I mean, obviously with the connection, right? Were you actually looking at other places?

4:00David Haber: Well, so we benefited. Actually, one of our angel investors was a guy named Nathan, who I sat next to my sophomore summer in Silicon Valley. It was his first job at Harvard. This is summer of 2007, when the Facebook platform had just launched. We were at this disaster, but not online education company. I was pitching all these silly business ideas. He goes on to start Airbnb. So he was the co-founder and CTO of that company. He was an angel in my business. So I go to Nathan. I'm like, Nathan, who should I raise money from? And he's like, oh, Alfred Lynn and Sequoia. you know jeff jordan and andreason horowitz like and so you kind of went down the list of like kind of the s tier you know firms uh and so i had conversations with all of them um spark i think we had other options but they were we both knew each other i mean i had worked there for three years and they were amazing partners to me mo uh coifman was on my board um i realized mo was at spark before he was yeah okay we opened the new york office together in 2012 yeah i was like the one junior kid at the firm was you know six gps and me wow 23 year old sort of analyst or whatever but all that is to say one of the people i ended up speaking with was alex rampell and alex basically was like david you're amazing i think you've built the best team or the best product in this space but you know on deck is trading in a 300 million dollar market cap and they've raised 300 million dollars in equity like there isn't really a there there and he sent me this very nice pass note which he still likes to remind me of but you know it was challenging we ended up you know landing the plane you know at Goldman as you mentioned but it was you know it's not exactly what you expect when you start a company and you know the one wing was on fire you know broken and the engine on fire and but you know we didn't fly the plane into a wall.

5:56David Haber: So I'm proud of that as well.

6:00Erica Wenger: It's remarkable, I think, that you had the foresight. There's this narrative in our business that VCs who become founders, really? If you're really a founder, you've been a founder the whole way and you've dropped out of school and this is your 10th business. What's your take on that? As someone who was a VC, then became a founder and now is back in the VC seat, Do you have an opinion on that?

6:23David Haber: So I'd say a few things. I mean, one, you know, it has always been easy for me to come up with business ideas. It has always been much more difficult to figure out which ones to pursue. And so I always thought of myself more as an entrepreneur in many ways than in a semester. And once I found the thing that I was really passionate about, it didn't feel like risk. I kind of knew that I needed to leave. And actually, my now wife was the one who kind of really encouraged me to go start it. You know, my litmus test, which is funny for how do you know if this is an idea worth pursuing, is sort of a funny one, which is like, would you pitch your mother-in-law?

7:02David Haber: You know, my parents weren't really in a position to invest in the company, but they'd love you and they'd do it if they could. You know, not a VC because it's our job, you know, to take risk, but insert somebody who would be very awkward to essentially ask money from. In my case, that was my mother-in-law. But if you're passionate enough about whatever you're thinking about building, that you're willing to pitch your mother-in-law, your professor, whomever, that's probably a really good indication that you're ready to go start the company because you're going to spend 95 % of your time selling.

7:34David Haber: You're going to sell investors, you're going to sell employees, you're going to sell your co-founder, you're going to sell customers, you're going to sell the press. And so if you can get over that sort of like awkward energy of selling your mother-in-law on the idea, I think it's time.

7:50David Haber: Now, I feel best somewhere between being an investor and an entrepreneur. And so I always say opportunities live between fields of expertise. And I like living in the intersections. That's sort of been both a metaphor for my career and also an investment philosophy, which we can get into if you want. But I don't like being bucketed.

8:12Erica Wenger: yeah it's also i think the power of andreason that they hire people who have that archetype that can run with things like i think of you know they they american dynamism is just like an obvious example like really letting katherine and david and that whole team just run with it and like i think of them as founders within the firm which is actually very very rare 100 and that's been, you know, two things. Like one is I wrote this piece called Firm Over Fund, but it was sort

8:42David Haber: of something I'd been thinking a lot about as I was sort of trying to weigh what I was looking to do post-Goldman. And I started saying that phrase, again, to kind of describe feeling best in between being an investor and an entrepreneur in the sense that I'd always been more interested in helping build a firm than run a fund. I get a ton of energy running around and hopefully making good investments but I also find that I need a place to channel my like builder energy and through my lens most people run funds. The objective function of a fund is how do I generate the most carry with the fewest people in the shortest amount of time possible.

9:17Erica Wenger: By the way you

9:18David Haber: can be incredibly successful doing that so it's not really a knock. But the other variable in my opinion in building a firm is how do I build a source of compounding competitive advantage like what are my moats right and that is a very entrepreneurial question right every entrepreneur wakes up every day saying, what are my moats? How do I build a stronger and stronger business over time? And so if you think about Interessen Horowitz as a company more than just a collection of funds, I think it kind of really reframes how you operate. And I think that is furthered by kind of what you said, which is it's really a collection of entrepreneurs.

9:53And I give a ton

9:56David Haber: of credit to Mark and Ben for the way that they've structured the firm and the way they lead the firm And it was actually a surprise to me, candidly, for two reasons. One, just how deeply engaged in everything they are. Like Ben effectively is our CEO. Mark is sort of our chairman and chief strategist, sort of the way I observe him. But they are in every meeting. Like they have no hobbies. They're like, we don't have to play fucking golf. Like all we want to do is work with the best entrepreneurs and build the best venture capital from the world. and that intensity flows top-down. I feed off of that energy and it's very rare because in most cases that I've observed people hit some level of success and they're literally or metaphorically on a beach and like these guys are just all in.

10:43David Haber: I mean it's really remarkable. The second thing which is kind of the point you were describing which is they've really made the firm feel like a platform for smart entrepreneurial people to build on top of and so So there's actually very little top-down direction. We have a CEO, but Ben is not the CIO. Most other funds have the same person as both. Even some of the biggest venture capital firms are really a single investment decision maker. I can name them, but I'll hold back.

11:17Erica Wenger: Yeah, yeah, yeah. But they're pretty obvious, actually, too. You could look at a firm and know.

11:21David Haber: 100%. And so you have other partners, but it bubbles up to one person. Basically, every hedge fund operates this way, and that's more of a fund versus a firm. And in recent, it's very decentralized, right? Each fund that we operate is almost like a little division run by its executive team. And so we manage our kind of P &L, you know, and org kind of semi-independently. Obviously, we have shared resources and brand and compliance and fundraising and stuff collectively. But I think it was really wise to structure the firm this way, because if you want to attract and retain the type of talent that they have, you know people like David Yulovich like had incredibly successful careers before and recent.

11:58Erica Wenger: And also don't have to work like a lot of these people too are so successful they don't need to actually even have a job.

12:02David Haber: Correct. I mean look at Martine like he sold his company for a billion and a half dollars you know Chris Dixon unbelievably successful for coming in the firm Jeff Jordan I could go on Alex by the way most of them far more successful than me when I arrived but but they were entrepreneurs right beyond just sort of the monetary success that they had had before, they're entrepreneurs. They don't want to be micromanaged. What they want is like the biggest canvas and the nicest paint and paintbrushes and told to go paint your masterpiece. And so there isn't a world that I could imagine where like Chris Dixon works at Andreessen Horowitz if Ben has to approve every investment.

12:35David Haber: Like they would never fly. And so it's actually there's a lot of humility, I think, actually, in the way that they've architected the firm and Mark made this very clear to me too. He's like, listen, don't feel like you need to go off and be a hero and try to like win a deal on your own. In fact, if you do and you lose, you're fired. He's like, you should not be afraid to call me or Ben or any other partner at the firm. If you tell me this is, you know, the next open AI, like I will fly anywhere in the world tonight or I will fly the founder in tonight to my house to have dinner. We will get this thing done.

13:10David Haber: And so I think the firm at its best is that, which is sort of delegated authority. Like he's like, we hired you because you are going to be on the frontier. You're going to know what's happening in your area of expertise far better than I am. Like, why should I believe that I know it better than you? But if you tell me this is the thing, we will throw the entire way to the firm at it and sort of group tackle. And so I think it's this sort of interesting juxtaposition of sort of decentralized decision making, but like the compounding advantage of the firm, if that makes sense.

13:39Erica Wenger: I mean, yeah. I mean, talk about the weight of the firm too. It's like there's no firm also that has like bigger weight, you know, because you guys have gotten so big in size and also just, again, these compounding top talents, which is wild. One thing I've learned talking to GPs on the show and in my own experience as a GP, your back office is a signal. How fast you close deals, how clean the LP experience is, how your K1s land, investors notice all of it. The more buttoned up you are, the more likely they are to give you more money in the future. That's why I want to talk about Sidecar. Sidecar is the SPV platform built for fund managers who want institutional quality execution without hiring a full back office team.

14:14Erica Wenger: They'll review your deal within hours, handle full secondary transaction support, and give you transparent pricing up front. No platform carry. Also, your LP relationships stay private, which is super important. It is not a marketplace. If you're running a professional fund, your infrastructure should look like it. Sidecar makes that possible without the overhead. Check them out at sidecar.io slash partners slash trailblazers. When you were deciding where to go, was this obvious to you or is this now in hindsight? Like you say, you know, you're in the meetings and you see Ben being the CEO. A lot of this is kind of hearsay actually too.

14:46Erica Wenger: Like I'm obviously, I don't work at Andreessen, so I hear from friends. But how much of it did you know going into it?

14:51David Haber: Not a ton, to be honest. Like, I mean, I'd known Alex for a decade. You know, I'd gotten to know him.

14:57Erica Wenger: Because he rejected you.

14:58David Haber: Well, in part, yes, through that. But our COO at Bond Street, this amazing guy named Eddie Serrell, used to work for him at TrialPay and then worked for us. You know, one of the companies that I'd helped invest in at Spark was Plaid in the seat and then Alex Lid later around. So we kind of had always intersected. And I would tweet about this firm over fund distinction actually since like 2017 or maybe even earlier. And he was always riffing with me on kind of like the future of entries in Horowitz and like or the asset class broadly. But again, in my mind, the firm was kind of like the ultimate archetype of this.

15:35David Haber: The difference though is I never really considered injuries then because they were so west coast. Right? And I actually left, it's not on my LinkedIn, but I actually left Goldman in October of 2020. I made kind of an unusual first move, which wasn't the right fit for me, but it was I think an interesting idea. I went to go work with a good friend of mine named Alex Klaben, who is this very successful hedge fund manager, who pitched me on building a holding company called Ancient. This is sort of pre-AI roll up, right? This is 2020. Great name. Really good name, actually. I like respect on the brand name.

16:12Erica Wenger: It's giving eternal thrive.

16:14David Haber: It's very good. And the idea was he was going to go acquire and transform legacy businesses with technology. The first expression of which was he bought a stake in Sotheby's, the auction house. And we took over the financial services division of Sotheby's, which I helped kind of lead for, I don't know, six to eight months. But that move was sort of an expression in this direction of like, how do you build a firm? You know, like it was a different idea. It was sort of opportunities, you know, between fields of expertise. It was private equity like, but mostly grounded in technology. We were sort of building an embedded fintech business within Sotheby's, which itself was sort of the oldest publicly traded company in America at one point.

16:56David Haber: and like one of the world's best luxury brands, but also, you know, sort of a marketplace and a canvas for fintech. And I could go on. It was not the right fit for different reasons, but it definitely got me fully convicted in this idea of wanting to like build a firm. And Alex, you know, we would catch up every few months. He pinged me in, I think it was March of 21. He's like, how's Goldman? Like, wouldn't know. I haven't been there for six months. He's like, what do you mean? I'm like, yeah, here's this thing I'm doing. with Sotheby's and he's like oh uh can I put you in front of Mark I'm like well twist my arm I've never met Mark and Dresden before and and we kind of hit it off and um you know what one thing that Alex did which I really am grateful for in retrospect was um kind of in the like recruiting process whatever he's like just come to our GP off site I had no offer yet and I show up and it's the first time the group had all spent time with each other post-COVID so they hadn't seen each other for like I don't know a year and a half in person maybe.

17:58Erica Wenger: This is spring of 21.

18:00David Haber: Spring of 21. This is probably like April or May of 2021. And what was the offsite? The offsite was literally a portfolio review where they handed out documents of every single portfolio company and its marks organized by GP and they would walk through line by line and basically say like this company is doing unbelievably well this one might go to zero. It was like full open kimono. I'm like wow this feels like a one-way door but it was an amazing opportunity because you could kind of get a better sense for the group dynamic how the firm operates the level of transparency kind of camaraderie um and it was obviously like an interview of me too um but it was it was really valuable i think in both directions for me to get a sense for like is this the place that is gonna you know does this resonate with what i'm looking for and um and you know what was special too is they wanted to open in the New York office.

18:53David Haber: And so, you know, they recruited me to basically help do that. And so it was both to kind of, you know, be a GPS investor, but also help plant the flag here in New York City. And that's just been a really amazing, you know, journey of the last five years. We've grown from basically two people in New York. We now have about 100 full-time employees. Crazy. You know, something like 70 ,000 square feet in Soho. We're opening two more floors. Beautiful office too.

19:17Erica Wenger: Thank you. Yeah, it's unbelievable. And it gives you your builder bug, you know? Yeah, exactly. You can really create this beautiful new space that you are the owner of here in New York.

19:26David Haber: Totally. So it's been really fun.

19:28Erica Wenger: Yeah, that's very exciting. I wanted to ask you, this firm over fund thing, I think it's a really thoughtful concept. And we talk about it a lot, but I think your essay is a really good articulation. Andreessen's an obvious example of a firm.

19:40David Haber: Yep.

19:40Erica Wenger: Are there any other firms that you look to that really stand out as, wow, they are also building a firm? Maybe not in the exact same formula as Andreessen. I think you guys are very unique. But I'd love to hear if there's other firms that really stand out to you.

19:53David Haber: 100%. I mean, you know, I think First Round, as an example, is very much a firm. You know, it's also run in large part by entrepreneurs. You know, Brett Burson is one of my very good friends. I think he's one of the most talented people in venture today. He's really an operator inside of a venture capital firm.

20:10Erica Wenger: He's like the CEO or COO, I guess. Yeah.

20:13David Haber: Yeah. He gets energy from building the machine. That's sort of my observation of Brett. And I think they have always been sort of pushing the frontier of what platform looks like, what content looks like. And they play the long game. I benefited as an individual from the firm at first round because they invited me to do Angel Track in like 2018 or something. Why did they do that? I don't know. Because they were, again, investing in the network and sort of playing the long game. And I think it's I'm sure it's paid massive dividends for them.

20:51David Haber: But it's just this, I think, sense of like. It's sort of a very entrepreneurial question and a willingness to sort of experiment, you know, to ask, like, is this working? Is this broken? A willingness to tear shit down if it is broken. The willingness to really put chips on the table and take risk to build an organization, you know, as an entrepreneur might. I think a lot of people get in venture because they don't want to manage teams. I think the firms often aren't afraid of doing that. But beyond venture, I mean, part of why I'm so interested in this idea is that I think there's actually a lot of very compelling examples of the ways that people built sources of competitive advantage outside of venture capital.

21:33David Haber: Venture capital is a very unique asset class in some ways, in part because brand and reputation has always been paramount, right? There's this human network effect that exists in venture. You know, there's a reason Sequoia's returns have been so good for whatever, 50 years to their credit and success sort of beget success in some ways. And this isn't to say that we're trying to be these other people, but if you kind of broaden the aperture and say, okay, how have other investment firms built sources of competing advantage? I think there's a lot of really interesting examples. I did a podcast recently

22:09Erica Wenger: with with mark rowan who's one of the founders of apollo of course legend yeah and like their

22:15David Haber: source of compounding advantage is permanent capital in the form of their insurance company balance sheet in athene and you know he sort of describes the business to me once at a dinner which was like you know we effectively have we have a simple business we have a cost of liabilities which were kind of uh you know decreasing the cost of liability effectively cost of capital and then building sort like proprietary sources of origination that can generate yield, you know, per modicum of risk. And so it's sort of this spread business between cost of capital and yield that he's just like, we're going to widen and do at scale.

22:49David Haber: And that's it. That's the whole business. If you look at, you know, probably some of the best quant hedge funds, they've done this through data or technology, right? Renaissance or Jane Street now or Two Sigma certainly have built compounding advantage in the technology as a differentiator. Even a firm like Goldman, I would argue, has embedded distribution. They have a merchant banking business, which is essentially like a mini Blackstone and a bunch of private credit, real estate, private equity, private markets, investing businesses. But then they also have this wealth management division. Which is wild.

23:29Erica Wenger: Yeah.

23:30David Haber: Which is massive. Yeah. And so when you want to raise a new fund inside the merchant bank, they like, yeah, they like snap their finger, they distribute it to the private bank. And it works because, you know, clients want access to those. These funds want access to the clients. And it's sort of the self-fulfilling thing. Anyway, I could go on. And even Back Inventure and even what you're doing with this podcast, like how do you build brand? How do you build audience? You know, I've talked a lot with like Patrick O'Shaughnessy about this between invest like the best and positive some. You know, what Harry Stebbings has done, obviously, with his podcast as well.

24:09David Haber: You know, these are sources of compounding advantage. And so I think it's like these are the types of things that I admire most in the investment business.

24:19Erica Wenger: Yeah, it's so funny you say that. I think that's also probably why you were drawn to the holding company structure before Andreessen. because I do think, you know, this venture business can be very, if you do especially the fund model, very binary. It's very power law, you know. One outcome, a lot goes to zero, a couple go to one.

24:33David Haber: Yeah.

24:33Erica Wenger: This is an example. And so this idea that you could almost have this like diversified approach where you're doing the one or zero bets. Yeah. And then you're doing these like small compounding bets. And that together feels very full and well-rounded and, you know, gives you a moat. Totally. And so, yeah, I completely agree with you. And I think you guys are doing media in a very interesting way too. let's talk about the messy middle of building an audience. You've got your newsletter in one tool, your podcast in another, your website hosted somewhere else entirely, and your community is scattered across multiple apps.

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26:12Erica Wenger: During the call I jot down whatever stands out, maybe it's a keyword or a decision I make, and Granola handles the rest. It'll transcribe in the background on the call and then turns my rough notes into clean, structured takeaways the second we hang up. There's also no bots joining calls. It just works in the background. I use Granola for several things. If I finish a meeting with a potential investor in my fund, I'll ask Granola, what could I have done better to get my point across? If I'm meeting with a founder I like, I'll ask Granola to point out any major green flags or maybe red flags I may not have already caught.

26:41Erica Wenger: For people with a lot of meetings and decisions that require endless context, Granola is a game changer. Actually, we're running Granola on today's episode. So you can read the full show notes at granola.ai slash trailblazers. New users get three months completely free. That's granola.ai slash trailblazers. How involved are you on the media front? And is that something that you think a lot about? I know you're not officially like on the new media team, but you do a lot of media.

27:04David Haber: Yep.

27:05Erica Wenger: How do you think about that as a compounding advantage for Andreessen?

27:08David Haber: I think it was one of the, you know, again, back to kind of Mark and Ben and even Margit, who was kind of leading, you know, was one of the first hires of the firm and led comms for many years, like I think they were early in using content as sort of a, you know, like a magnet, you know, to sort of elevate the firm's brand and be top of mind for kind of a new generation of entrepreneurs. You know, I've been really excited to, I've known Eric Torenberg for, I don't know, over a decade just as friends. I was an angel in On Deck and, you know, when he was at Village, he was an investor in my sister's company.

27:40David Haber: So we've had a lot of wow um you know kind of overlap um and i think he's done an amazing job kind of breathing new life into the you know new media organization and um like the editors on the video team we have this this kid kid because he's like 20 years old richard who's like a savant like video savant um i've seen his stuff he's amazing yeah elon now retweets it i'm like richard you're legend. But I think it sort of serves the same purpose, right?

28:14It helps elevate the brand and

28:17David Haber: visibility for portfolio companies. And it's sort of, I forget how Mark described it, but it's a lot of our job as a venture firm is to sort of lend power, lend credibility, and amortize kind of the cost of the platform for the smaller company, right? Any individual portfolio company isn't going to build a 40-person media team, but we can and lend that to them to help them at the seed stage build a brand that they might not have otherwise been able to.

28:49Erica Wenger: You're such a fintech guy. We're talking about media and you're like lending, amortizing, you know, it's in your books. It's true. I want to just jump back to the New York point. Yeah. You know, I think New York is becoming a booming ecosystem. Lots of great companies. CalShe being one of them. I knew as a big investor, they sponsor the pod. Shout out CalShe. But, you know, there's so many epic New York businesses right now. What is your take on New York versus Silicon Valley for like the future of software businesses and the future of tech?

29:17David Haber: I'm obviously very biased. So am I, by the way.

29:20Erica Wenger: So we're going to we're going to both be biased.

29:21David Haber: Yeah, I'm very long. I mean, look, I moved here in 2009, kind of in the wake of the financial crisis. And so I've seen the New York tech ecosystem kind of evolve a lot. I mean, I think there were like six associates in venture capital in 2009 in New York City. And we have more than that, you know, just an interest in today, which is kind of wild. And I remember going to the New York tech meetup, you know, which was like 200 people or hackers and founders in Madison Square Park with like 75 people. So it's been amazing to kind of watch the New York tech ecosystem evolve. It's probably, I don't know, 50 or 100x or something since then.

29:57David Haber: I think it's really hard to bet against New York, right? I think if you're a young, entrepreneurial, ambitious person, there's no better place in the world. It still attracts that type of person. And I think, I don't know if this is an obnoxious thing to say, but because the city is expensive, it acts as sort of like a filter for people that are ambitious. In any domain, by the way, like you can't just chill. You have to hustle in whatever it is that you're doing. You know, whether you're a restaurateur or an entrepreneur or, you know, an executive at a company, like people are grinding. But I think it makes the city really interesting.

30:36David Haber: I also am very long New York, largely because, you know, every big company across lots of different industries has a big presence in New York City. And back to the, you know, opportunities between fields of expertise thesis, I think it's also a metaphor for New York, right? The companies that are most New York, in my opinion, are those that live at the intersection of technology and one of the big kind of incumbent markets here in New York, whether that is financial services or media or advertising or healthcare, you can go kind of down the list. And different themes have kind of evolved over time in the city, but I think that's largely been true.

31:17David Haber: And it's a great place to pull talent out of these kind of incumbent markets into your company. company. And the nice thing is that tech has become less, you know, it was very non-consensus, let's say, to join a tech company if you were an executive at a big bank or something in 2009. But it's become easier and a more permeable kind of like talent market. And so I think that all of those things benefit, you know, building software companies. You know, the thing that I think has been more challenging for New York historically, people used to knock it because it lacked kind of the depth of engineering talent.

31:53I think that's been resolved

31:55David Haber: in large part and I don't think that's actually the biggest challenge. I think the harder challenge is actually the kind of executive layer of like VP, you know, of people that have seen hyperscale, right? It's the VP of marketing or COO that's taking a company from 100 to 1 ,000 people. There's not that many examples. I think there will be. It's sort of a matter of time, but But the depth of that talent pool in the Bay is far deeper. The other thing that obviously they do quite well is just like very technical businesses, whether it's I think there's a reason why a lot of the frontier labs and, you know, a lot of the robotics or semi, you know, businesses are based there.

32:37David Haber: But, you know, I don't think I think New York is its own thing.

32:42Erica Wenger: Yeah, I think your comment about this, like technical piece is really strong. And, you know, you almost have had to like live through that wave of Silicon Valley to have learned that hyperscaler thing. And, yeah, it's tricky. If you weren't there, you're not going to want to come to New York City. I want to ask you about context is king essay. Okay. I thought that was really interesting. There's this ongoing debate in our business, like technical or domain expertise. Right. What matters more? A lot of people are saying in this age of AI, this technical piece matters less. unless you're building true infrastructure.

33:18Erica Wenger: Talk to me about where you think the bets are going to be made and what you're most excited about. Is it the really technical founder? Is it the founder with domain expertise? What has it been historically and what will it be going forward?

33:29David Haber: Yeah. And look, we have successful examples of both. But it has been interesting for me to observe that like, I don't know, six or seven years ago, if you were investing in a vertical software business, the sort of ideal archetype of a founding team is like somebody who is like very deep in that industry, you know came from I don't know healthcare or construction or whatever like knows the market knows all the players paired with a technical co-founder and they both started together and they started together yeah I think today what's been remarkable to see is just it's it's become more important to be fluent in the tool set than sort of native to the industry in some ways I think it's just a matter of like where we are in the kind of diffusion of AI is like a technology and people's understanding of how to apply LLMs to workflows, that is still rare by and large.

34:20And so as a result, I think you've seen younger and more technical founders than ever

34:27David Haber: finding creative niches for where to plug LLMs into work and becoming domain experts over time or hiring for context. The point of the essay was like, it's not to say that context doesn't matter. context is king, right? Like at the end of the day, the distance between, you know, a model's capabilities and, you know, delivering value in the context of somebody's job or work or industry, that distance is basically the application layer opportunity. And so you really have to deeply understand, you know, who your customer is, what problem you're solving. And a lot of that really does come from people that are deep in that industry.

35:05David Haber: But as I look at some of my more successful companies, the founders themselves weren't super deep. I mean, if you look at, you know, here in New York, you know, Trey and Diego from Tenor, this is a healthcare company.

35:20Erica Wenger: I knew you were going to mention them.

35:22David Haber: Classic example. They're amazing. You know, they were, you know, machine learning undergrads at Stanford and had kind of wandered in the dark building different things for a while. And then kind of, you know, I think Trey's mother is a physician, but kind of stumbled upon this kind of referral, you know, patient intake problem and recognize that actually LMs are really good at like solving what I call the messy inbox problem of sort of hooking into, you know, all the unstructured data sources, your email, your phone, your fax, your, you know, what have you, basically sucking out relevant patient information and plugging into a downstream system of record and using that wedge to sort of eat away at all the downstream workflows, whether it's prior auth or eligibility benefits, scheduling, etc.

36:06Again, they've become super deep in the healthcare domain,

36:09David Haber: but their backgrounds weren't, you know, they were, I don't know, 24 or something when they started the business and hadn't worked in healthcare before. You know, same is true of Eve. You know, the two founders of Eve, where I sit on the board, serve today the plaintiff law market. They were the first employees at Rubric, which is now a publicly traded um uh in a data infrastructure company and their original idea was um basically a document processing business similar in some ways to like a reducto um you know uh and but they found that like the strongest commercial pull that they had for that technology was in the legal profession and in particular they were really interested in plaintiff law largely because they operated on a contingency basis.

36:55David Haber: So unlike other areas of law where you're charging by the hour, here you only make money if you win. And so there's a ton of opportunity, like there's a ton of work to be done to sift through mountains of medical records or employment documents to even figure out is this case worth my time? Because any case I take on is basically an investment of my time and my labor. Again, LLMs are quite good at doing that. Now they have voice agents that collect evidence programmatically from clients and they kind of own the workflow from intake all the way to outcomes. But again, had no background in the legal profession.

37:31David Haber: So there are examples in both directions, but I think this has sort of been a noticeable trend, certainly over the last few years. I think as LLMs and sort of the technology becomes more diffused, we'll probably flip back.

37:46Erica Wenger: I was going to say, like, when do the tides turn?

37:49David Haber: probably when just the understanding of how apply AI into jobs to be done becomes less rare. And actually the rarer thing is now the kind of depth of domain expertise and relationships in the industry. And so, but I think we're still early in that pendulum.

38:04Erica Wenger: Yeah. What's so tricky about our job, and I'd love your take on this, is sometimes when things are working like an eve or a tenor, it's because you invested with an idea many, many years ago. And so like actually you're like, oh, this is something I'm noticing. But actually you should do the reverse now in terms of investing if you want it to be matching the times in five years. You know, like it's this awkward thing where you don't get that feedback loop till much later. And so the trends you're noticing like, oh, my companies that are doing best right now, wait, but I invested them a few years ago.

38:30Erica Wenger: So maybe I shouldn't invest with that thesis because it's going to be a whole new trend that's hot right now. You know, it's tricky. And I think in both of those examples, and actually I could go on, like even momentaries

38:41David Haber: on the board, like these were all pivots. Some of my most successful companies were pivots. And so I think the thing that keeps me grounded is that technology can change, but people don't. And so I sort of half joke that I feel like I don't know much, but I feel like I know people. And I've always been most convicted in the investments where I just had deep conviction in the individual.

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41:27David Haber: It's hard to describe. I often say it's like, do you feel the pull? It's like almost a physical feeling. I think if I had to sort of isolate it, I think clarity of thought is one of the things that I look for most. Like, do you have a clear articulation of what you're trying to build and why? Why you or your team are uniquely qualified to go tackle this opportunity? Even if the idea changes, I think just being able to clearly articulate a strategy is very valuable. Alex Rampell often talks about us looking for kind of students of history you know it always makes me very nervous if I understand a market better than the founder does like if you're going to spend the next 10 years of your life focused on this space why wouldn't you have studied every prior attempt why like and actually the best founders have often gone and talked to the people before them that have tried and failed or had partial success, gotten in some cases them on the cap table and had a clear articulation now, like what is different about today?

42:35David Haber: Like what is unique about our strategy or the kind of why now from a technology perspective kind of unlocks that wasn't possible previously. And so it's this sort of like, you know, humble confidence, I think that I look for as well, where people aren't just like totally dismissive, like, ah, those guys are idiots. It's, you know, where the genius is that are going to go solve this for the first time. It's like, no, I've actually like deeply understood and studied the market. So if I'm learning from them in that sort of conversation, that's always a very good sign.

43:04Erica Wenger: I love that. I'm going to ask that question in a slightly different way. So separate from like the founders you meet and you get excited about, if let's say there's a lot of founders you're excited about all tackling the same idea. And that's happening a lot in our business. I mean, I'm sure you get sort of like get these waves of like 10 to 20 pitches with kind of the same idea.

43:20David Haber: Yeah.

43:21Erica Wenger: How do you think through who's going to win?

43:24David Haber: It's really hard, you know, but I think it's important to meet many of them. Like Martine has this framework and I'm going to butcher his sort of articulation, but like he basically says he's very skeptical that like somebody can identify a single team and say this is the best company. But you can often stack rank and so you can understand kind of relative strength. So if you've seen the 10 companies, it's not perfect. Obviously, we make mistakes all the time. But instead of sort of trying to hit the bullseye with a single dart, actually seeing the landscape, seeing the field really helps you sort of understand who is working.

44:09David Haber: Even just understanding whether it's the founding team and their articulation of the opportunity, how the metrics are trending. Like there's a lot of kind of variables that could go into, you know, who you back. Again, really hard if it were easy. I think we'd all be super rich.

44:28Erica Wenger: Yes, correct.

44:30David Haber: You know, our jobs would be easier, but it's not.

44:33Erica Wenger: Yeah, I think that's also something that like, you know, you everyone struggles with in the beginning. You meet one team, you're like, oh, they're brilliant. This market's perfect. I'm backing them. And then you forget that there's another 25 plus that are really interesting that are doing the same thing.

44:43David Haber: But it's something I struggle with, too. like um and maybe i often find that i'm most attracted to businesses that feel to some degree like n of one um you know it's hard for me and we look we invest in these too obviously where um you have yeah 10 yc fast followers kind of slicing up the market and in in thinner and thinner wedges um but you know a business like moment for example like has no competition they they have competition with large incumbents but it's somewhat esoteric. They build capital markets infrastructure sold into the biggest financial institutions. And to their credit like that is because they live at the intersection of like hardcore Wall Street and Silicon Valley.

45:29David Haber: And so it takes a very unique team to be able to deeply understand fixed income trading infrastructure and be able to recruit out the Stripe or ramp engineer to go work with them. And so, yeah, you know, and then it has network effects and other things that I think makes it a very difficult business to compete with. But it's an end of one in some ways. And who likes competition?

45:56Erica Wenger: Oh, no. You know what I want? I just want to clear the path. I will set, just as a quick aside, you saying Stripe engineer or ramp engineer is such a great way to indicate if a company is end of one. Because when you just say Stripe engineer, like I know exactly what you mean. When you say Ram engineer, I know exactly what you mean. And just as an aside, I think that that's something to like notice in people's language. When they want to hire from a certain company, it speaks so much more than just, you know, giving list of traits or something like that. Totally. Yeah.

46:23David Haber: And, you know, early on, they also hired their like boss's boss who was the head of fixed income trading at Jane Street and Citadel. I have one of those who just hired someone and you're like, how did you do that? Yeah, I'm like, wow, you probably took like a 98 % pay cut, but respect, you know.

46:37Erica Wenger: Or like, are we being honest here? Did we like, you know, convince their child to make them do it? Like, how did you get that to happen? Speaking of, I want to talk about how you picked Plaid back at Spark. Obviously, like, you know, you've made a lot of really exciting fintech investments. Moment, you're just talking about being one of them. How did you pick that team? How did you pick that company? I mean, obviously, everything now is the Plaid for blank. I literally just invested in something that's not in fintech, but we're calling it the plaid for blank. It's a really just foundational company that has changed the way that money moves.

47:12Erica Wenger: How did you pick them and how did you find that investment?

47:15David Haber: Well, look, like, first of all, like credit to Zach and William for everything they built. And I didn't fully expect that they would become such a foundational piece of infrastructure for kind of the subsequent decade plus of kind of fintech applications. part of this you know I had like somewhat of a prepared mind I guess in the sense that in 2009 when I first moved to New York I met this guy named Peyton Sherwood who ended up being my co-founder of Bond Street and again this will date me but like one of the companies that was most popular here in New York City at the time was Foursquare and so you would check into you know restaurants or locations at the time and effectively what a check-in was I mean they were building effectively an ad network.

47:57David Haber: And a check-in was a proxy for your transactional intent, right? If you checked in in the East Village where we are, you know, you'd know, okay, David likes, you know, sushi and these bars in the East Village and also on the Upper West Side. But part of me was like, well, why can't you just go to the actual stated preferences, which is the digital breadcrumbs of your credit card data or your actual transactions like your actual spending and so Peyton and I went to American Express and we're like cool can you give us access to all your transaction data like fuck off you know like they're like no you know we went to Yodley who was sort of the incumbent version of Plaid at the time and they're like sure here's our like terrible you know not API I think it was like, you know, soap interface or something.

48:50David Haber: And also you're going to pay us$250 ,000. And we were like 22, or I was 22 and had no money and whatever. So that was tough. But the idea at the time was how do I build sort of a geolocated ad network based on your transaction history, you know, and it was at a time when if you looked at your transaction statements, you might see Starbucks, you might see Starbucks on 59th and Park, or you might see 45620 sort of a unique merchant ID code from the processor. For all those reasons it was hard, we sort of shelved it. You know come 2013 I ended up meeting Zach and William, they were based here in New York at the time, and they actually originally had built a consumer product.

49:40David Haber: But in order to build this sort of consumer PFM like thing they had to build an API that hooked into a bunch of transaction data from all the banks.

49:52David Haber: And I remember one of the first meetings where I was like, imagine if you could geolocate this transaction data, like what you could do. And Zach spun around his, or maybe it was William, spun around the laptop and they're like, you mean like this? And they had sort of like a real-time view of all the users spending data in Manhattan. I was like, wow, that's awesome. The other sort of analogy at the time was Twilio was a very successful, developer tools company and that it sort of abstracted away the complexity of of telcos and it built a very strong API business. And so, you know, that was a bit of the mental model was that like Plaid could be sort of the Twilio for financial services.

50:32David Haber: I at least had some inkling of that you could build like some ad network or something on top of that data. Didn't, again, fully anticipate that it would become huge. But fast forward, you know, Peyton ended up being the head of engineering at Venmo. And Venmo was built on Yodely at the time. He was always complaining how terrible Yodely was. And so I remember introing Zach and William to Peyton. I was like, hey, you should meet this company. I have still an email, you know, plaid.io. It's similar to kind of what we were thinking about in 2009. You should talk to them. And so he ends up ripping Yodely out and replacing him with Plaid.

51:08Erica Wenger: This is before or after your investment in him?

51:10David Haber: This is before.

51:11Erica Wenger: Wow.

51:11David Haber: So Venmo became Plaid's first customer. And I think it was the biggest customer for the first like four years because of PayPal's acquisition. So pretty wild stuff. Again, better be lucky than good. They're amazing. I mean, you know, what Zach has done today with the business and what William is now doing with Column is pretty insane.

51:33Erica Wenger: It's epic that he continues that fight too. You know, it's like he's got this North Star and he's just attacking it now from a different angle.

51:38David Haber: 100%.

51:39Erica Wenger: It's absolutely brilliant.

51:40David Haber: Yeah. Yeah.

51:41Erica Wenger: I mean, hindsight is always 20-20, but when you look back, it sounds like a lot of it really is that founder that stands out. I do want to ask you one quick question before we get to our Trailblazer trade-offs, okay? I read it in your bio, and after doing some more research, you have this secretive biochem background, okay? You know, you've done some healthcare, obviously, like Tanner being an example, but does biochem ever pop up anymore? What happened to that biochem interest? Give me a little bit more there because it feels like, huh, you could have gone a different route. you could have gone pre-med you could have done something a little different with that it's true

52:13David Haber: yeah I think from like uh you know I don't know age 7 to 17 or something I thought I was gonna be an orthopedic surgeon um I have like flat feet and so I'd gone and I grew up in San Diego and went to this like uh famous like or San Diego famous sort of uh pediatric orthopedic surgeon as a kid and I was like I want to be like that guy and uh you know so that was sort of my dream at the time i'd always been you know pretty good at science um and i thought that's exactly why you should go study you know biochemistry um i think i recognized early on fortunately in college that like you know i always thought about like if i became a doctor i'd open a private practice and i was like wait a second i don't have to become a doctor become an entrepreneur you know like one thing does not require the other and I think I just like people too much candidly like a lot of the prerequisites of going to medical schools you have to like spend a ton of time in lab and you know do the MCATs and so I still I stuck with biochemistry I graduated you know from Harvard with that degree but and I'm grateful for that because I think it taught me how to think and there was never another time I'm sure that I would have studied organic chemistry to that depth or whatever.

53:31David Haber: But my interest changed a lot. My first boss, which I guess I didn't mention, back to the firm and fund idea, was an unbelievably successful serial biotech entrepreneur who, aside from starting a few biotech companies that he'd taken public, had also started the largest billboard company in Japan, ran a railroad.

53:53Erica Wenger: Quintessential entrepreneur right there. And then started this giant, effectively private equity firm called Royalty Pharma, which has become the largest buyers of pharmaceutical royalties in the world.

54:05David Haber: And he sort of invented this asset class in the mid-90s. But talk about a firm over fund. Royalty Pharma is now a publicly traded company. It has, I think, something like 50 to 100 employees and a$25 billion market cap. I literally don't know any other business on the planet that has more market cap per person than royalty pharma.

54:28Erica Wenger: It's like the early majority vibe. Like when you do the calculation. Yeah. Wow.

54:32David Haber: And it's in part because again, knowing like what intellectual property to buy is really challenging. Anyway, he built a permanent capital vehicle. It wasn't a fund. It was a holding company. He had sort of a cost of capital advantage over time with lower cost of debt but I could go on but like that's like one of the purest expressions in some ways of a firm over fund um and he was just this incredible first boss and mentor and so that was probably actually the original seed of the idea um and so I still try you know we have a biotech and healthcare fund um so I still try to uh to listen in on biotech pitches when I can but my any knowledge of random, you know, protein pathways or something that I memorized is pretty far gone.

55:21Erica Wenger: It's also one of those fields where like you really have to stay up to speed. You know, like it's one of the things where like, God bless the investors who do it, but it's just so over my head that we don't even.

55:29David Haber: And knowledge compounds like you can't fake it. Like you really have to know your shit.

55:32Erica Wenger: So yeah, yeah, yeah. And things can go really south if you invest in something that's just like stuck in FDA approval forever and just dies.

55:37David Haber: Like, yeah, not good.

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56:12Erica Wenger: From seed stage founders running lean to larger orgs dealing with serious data complexity, Hex is built to scale with you. It's game changing for people like me who want to understand what's going on under the hood, but we are not the data experts. It's funny too, because I feel like every time I look over my operator friend's shoulders, whether they're in product or marketing or ops, they often have a Hex dashboard pulled up. It's a great tool. Trailblazers listeners get an exclusive 30 day free trial at hex.ai slash trailblazers. Let's do the Trailblazer trade-offs.

56:38David Haber: Sure.

56:38Erica Wenger: Okay. Let me know what comes to mind first. book in hand or podcast in ears podcast any favorites besides patrick's shout out patrick's but yours obviously oh yeah other than mine other than patrick's um

56:54David Haber: i love i mean i've always loved like strutectary i think ben thompson is one of the best tech thinkers um and and then he and patrick did a podcast recently i was like wow this is like the

57:05Erica Wenger: it's really good again i'll watch um love it hire slow or fire fast

57:11David Haber: both you had to pick high or slow at the beginning uh i this is something i emphasize a lot with um the founders i work with like getting exceptional people like holding the bar to really find the exceptional person at the beginning of building a company pays massive dividends and it's a really hard thing because you have a thousand things you have to do and there's this sort of pull to just want to throw bodies at the problem it's like oh my god i need help and so having the restraint to sort of keep the bar super high and find like the person for whatever role you're looking for is hard to do.

57:44David Haber: But again, I think it makes hiring the next like, you know, 30 people that much easier.

57:49Erica Wenger: Yeah. Well, especially now as things are growing so much faster than they ever have before. Is there like certain agencies or certain people or is it really just like keep the bar high, spend all your time doing it? Any other advice?

58:02David Haber: Keep the bar high, I guess. The other phrase that I often use is like find people that are safe hands. The best feeling as a founder, I think even as a manager, is this notion that you can like give somebody a project, a business unit, you know, a big piece of responsibility and just know that like it's going to get done with quality on time. You don't need to micromanage. It doesn't mean that like they're not going to face challenges, but they're going to be communicative. they're going to raise their hand, they're going to be entrepreneurial in how they solve the problem. And especially at the early stages of company, you don't have time to micromanage people.

58:43David Haber: And so you need people with that level of agency. And even as you scale, I think this becomes really critical. It's how you sort of evolve from being an IC to a CEO. So it's like having the right team around you, you know, that like, you know, okay, the marketing team is going to get like the, you know, sales organization is in good, is in safe hands. You know, the engineering team is in a great place. Again, it doesn't mean that you're sort of abdicating responsibility for understanding all the details and digging into the weeds when it matters. But the only way that you're going to be able to scale and build the machine is by having, in my opinion, people that are safe hands and all those kind of functional leadership roles.

59:24David Haber: Yeah.

59:24Erica Wenger: We all only have 24 hours in a day, you know, so you can only do so much.

59:27David Haber: Totally.

59:28Erica Wenger: 10 small wins or one big moonshot?

59:32David Haber: 10 small wins. I knew you were going to say that because now as we're talking, I'm really noticing

59:37Erica Wenger: this like compounding language is really strong for you. Yeah. Tell me more about that.

59:45David Haber: I think you just learn by iterating, you know. you know I think something that I don't know I've kind of been excited about recently is just like going super deep in all these coding tools I've been building this like whole AI operating system for myself

1:00:01Erica Wenger: separate from Andreessen because I know you guys have your own within the firm

1:00:07David Haber: it's this product I built called Vantage

1:00:08Erica Wenger: this is different than the one I'm thinking of you guys must have a lot of different but tell me what you're building I want to hear

1:00:13David Haber: yeah I mean the original insight was I had this amazing associate that worked with me. He went off to go take a new role, which I was very excited for him to do. But I'm like, wow, shit, I've been spoiled the last like four years having this amazing person kind of ride shotgun with me. And so, you know, like how do I kind of rebuild a lot of the work that we would do together? And the initial insight was, I think I took 750 meetings in Granola last year. Like there's a tremendous amount of sort of unstructured information that sort of lives in these, you know, meeting transcripts. And so it started by just using that as a wedge to sort of categorize my meetings and then kick off, excuse me, a bunch of work in the background.

1:00:55You know, whether it's, you know, board notes or monthly updates or pass note or investment memo, you can really get kind of pretty far with that context.

1:01:05David Haber: But that was just sort of like the first wedge. And then once you're sort of building, you're like, oh, wow, here's another whole surface. You know, how do I sort of point this infrastructure at sourcing? How do I point it at building a CRM? How do I now have a whole Slack agent that sort of lives ambiently in our team conversations and it's fed the entire kind of Andreessen canon. So every blog post we've ever written, every podcast transcript, every tweet for the investors, every investment memo we've ever written. And so it'll jump when we're debating an investment in Slack. It'll listen into the thread and then jump in ambiently, proactively when it has something sort of thoughtful to say grounded in effect.

1:01:47David Haber: And I put all this into like a vector database so I can find sort of like interesting, you know, points of comparison between theses that people have written about and new deals for evaluating, even from like, you know, six years ago. Again, that wasn't the initial idea, right? That wasn't like, hey, huge moonshot, boom, application. It sort of happened iteratively. And now it's like really powerful. And I'm super proud of it.

1:02:14Erica Wenger: It's incredible. It's only going to get more powerful. Yeah. Yeah. And I shout out to Granola, too. They sponsor the pod. We love Granola.

1:02:19David Haber: We love Granola. Go, Chris.

1:02:20Erica Wenger: Yeah, exactly. Go, Chris. He's amazing. But this reminds me a lot of your Everything is Recorded essay, which we didn't get to talk about too much. But it is just a very exciting time that we can productize this data set. Like conversations, I think, are the most valuable data set out there.

1:02:34David Haber: 100%.

1:02:35Erica Wenger: And there's just so much nuance that you cannot pick up in other places.

1:02:39David Haber: Totally. And I think if, you know, as we're entering this world of kind of AI agents doing real work, most of the data that lives in conversations doesn't live in any other system of record, right? If you think about it, like it's beginning to because of tools like Grinnell and other transcription note takers. But ultimately giving an AI agent the right context to do real productive work requires feeding it culture, right? Like conversations are where culture resides. It's where expectations handling live. It's where or exception handling, you know, where expectations reside. Like it's all this sort of unstructured stuff that actually an agent will need to sort of, you know, understand like where are the edges, right?

1:03:29David Haber: If you're just giving it sort of this super structured deterministic logic that exists in an ERP or a CRM, like you're missing out on this sort of broader context and um and it's partially why i think like ai just think the overton window of like recording things has shifted pretty dramatically i kind of assume now

1:03:48Erica Wenger: every meeting is is it crazy it's like illegal that we just go with it yeah yeah i mean uh

1:03:55David Haber: yeah and like whether i'm recording or not whether i say it or not like i kind of assume somebody's recording in the background. And if you're not, I think you're basically explicitly saying that you're willing to give up all of that context to actually train agents. And I think that's risky. Part of the bigger idea, even for this product that I'm building, is how do I deliver value to the individual at the edge? How do I make my own workflow less redundant or whatever and that free up time to kind of spend time with founders. But if you think about a firm like Andreessen, there is signal everywhere.

1:04:37David Haber: There's signal in every conversation, in every pass note, in every investment memo, in every investment that we make and how those companies perform over time. But historically it was just very difficult to organize that information in a structured way. And so while there's signal everywhere, there's no sort of central nervous system or brain that builds sort of the collective intelligence of the firm. And so at the limit, back to the compounding of advantages and firm over fund, I actually think what I'm trying to build is sort of the central nervous system for the organization. Maybe that's too bold.

1:05:16David Haber: And how do you sort of codify the thinking and decision-making and lessons learned And so that doesn't have to be only passed down, you know, by having, you know, have chancing, you know, being in a meeting with, you know, Jeff Jordan when he was here because he had so many amazing lessons or Martine or whomever.

1:05:33Erica Wenger: It's letting you be a student of history without needing the human intelligence of the person that's memorized all the things.

1:05:38David Haber: Correct.

1:05:38Erica Wenger: And that's also, I think, how you can build something that outlasts a Jeff, a Mark, a Ben, like because it maintains that same culture and the same learnings and all that.

1:05:46David Haber: Totally.

1:05:47Erica Wenger: Yeah. Super exciting. I do have to recommend, did you read Rebecca Caden's Data at the Edge essay?

1:05:50David Haber: I haven't. Okay, I'm going to... I need to. It's like, it's everything we're saying. She's the best. Yeah.

1:05:56Erica Wenger: I won't get into it now. It's so good.

1:05:58David Haber: And they've been experimenting a lot, you know.

1:06:00Erica Wenger: It's the same concept that they're doing, like a lot of stuff internally. Totally.

1:06:02David Haber: I mean, it's funny. They have agents in email mostly. I think they use Slack that often. But one of them is called Parker, who's named after Andrew Parker, who used to be at USV way back in the day. He was the one who recruited me to Spark.

1:06:16Erica Wenger: The world is small. This is the other thing people don't understand. And like everyone is just the same like 500 people. Amazing. Okay. Being early or being right?

1:06:26David Haber: Oh, man. Being early. Okay. Yeah.

1:06:32Erica Wenger: What's the best teacher, a mentor or a mistake?

1:06:37David Haber: Mistake. Okay.

1:06:38Erica Wenger: Any crazy ones come to mind? Any mistakes you've made?

1:06:42David Haber: All of them at Bond Street. I mean, I make so many mistakes all the time.

1:06:45Erica Wenger: Okay. Okay. Is the future of AI abundance or chaos?

1:06:50David Haber: I think abundance.

1:06:51Erica Wenger: Okay. And why do you think that?

1:06:55David Haber: I think we just choose to be techno-optimists. That's sort of like the natural disposition of the firm. But part of this is even this own experience that I was just describing. Like I'm not a developer by training. And the fact that I can write a product that has, I think now like 400 ,000 lines of code blows my freaking mind. You know, I had this funny dinner where I was showing an early version of this product to Mark and Ben. And Mark's like, have you ever looked at any other line code that you're writing? It's like, hell no. He's like, have you ever looked at any code you've ever written? Hell no.

1:07:33David Haber: He's like, exactly. Like, that is where we are. And so I think we're just democratizing access to this technology. You know, one expression that is coding, it's no longer precious. and so anybody can be a builder if you have sort of agency and an idea and context like context is really the rate limiter knowing what good looks like it allows you to iterate incredibly quickly in building something um you know but my sister for example is responsible for the youth product at open ai and i think like every kid can now have a tutor in their pocket you know and i think that or a doctor or you can go on and i think that's like an amazingly powerful thing that i think will raise, you know, people's lived experience in the world.

1:08:19David Haber: So I'm very excited about that.

1:08:20Erica Wenger: What an awesome job your sister has. Really hard. Extremely important.

1:08:24David Haber: I agree. She's amazing. You know, she deals with all the really challenging stuff that exists in AI, right? Yeah.

1:08:33Erica Wenger: And her role, like, we always say about, like, steering the train off the tracks, right, or on the tracks. It's like, she is, like, in the passenger seat. Like, I think that, like, Like education, kids meets AI, like that's all essential.

1:08:44David Haber: And how do you ensure that they have a safe experience and create the right guardrails at the model level, at the application level.

1:08:50Erica Wenger: And like data consent, like that's a whole other conversation. But like there are a lot of people give away access to everything. I mean, at the time of this conversation, like instinct has been blowing up. And, you know, what does that look like for a child to do that?

1:09:01David Haber: Totally.

1:09:02Erica Wenger: There's a lot. There's a lot there.

1:09:03David Haber: And, you know, she has three kids of her own. And again, hard job. But if anybody's going to do it, I'm glad it's her. She's amazing.

1:09:08Erica Wenger: I love that. That's awesome. Killer product or loyal niche audience?

1:09:13David Haber: Killer product for loyal niche audience. I don't know.

1:09:19David Haber: I think niche audience to start, actually. I mean, that's why you asked the question. They're hard trade-offs because you can be so successful in either. I think it was Henry from Carta has this great line, which is, do you want to build an end of one company or one of end company? and uh it's sort of i think also peter keelism which is like do i want to be a monopolist in a small but very fast growing market um or a one event company and often a very large market but almost by definition a large market means that it's their stasis um and i think people just back to like fintech for example people were often head faked a lot by like TAM.

1:10:04David Haber: They're like, ah, if I just got 1 % of all of consumer lending, that would be a giant company. And sure, that's true. But almost by definition, because it's such a big market, it is very competed. And so I think if you start small, you can use that wedge to expand aggressively. But it's often better, in my opinion, to be a monopolist in a small, but very, again, fast growing is sort of doing a lot of work because you don't want to be a monopolist in like a tiny market that's not growing.

1:10:33Erica Wenger: Yeah, that's not metric backable, yeah.

1:10:36David Haber: But, you know, and I remember the early days of Carta when it was eShares. We were, Bonstry was one of the first few customers. We were a logo on the homepage. I love that. It was a weird business, right? It looked like a services business. It was cap tables. How big was the startup market? And to Henry's credit, like he's used that as a wedge to build a much bigger thing.

1:10:53Erica Wenger: I'm going to use that. I'm stealing that. I've never heard one of one or end of one. And I just think the way that you describe that is so thoughtful.

1:10:58David Haber: And I stole it from him. So, okay, well, we'll give Henry credit out, please.

1:11:01Erica Wenger: But it's really good. I love that. VC or bootstrapping?

1:11:06David Haber: I mean, depends on what your ambitions are. I don't think venture capital is right for every entrepreneur. You know, Bond Street is an example. We were small business lenders, right? And I think you saw from the thousands of companies we worked with that there was a lot of ways to be successful. You know, we became, for example, one of the largest coffee lenders in the country, oddly. So if you walk around New York and you see a bunch of Joe coffees, we probably open eight or ten of those locations.

1:11:34Erica Wenger: It's pretty good. It used to be my old stomping grounds in the West Village. Yeah.

1:11:37David Haber: And Danny Meyer came in after us. Oh, Danny Meyer. Bought a steak in the company. But credit to Jonathan Rubenstein and his sister Gabrielle who started that business. They bootstrapped it. And by the way, if you can bootstrap it, which basically means you're making more money than you're spending from your customers. even better you own you know as much of the business there are some companies that do require you know a big investment to build technology or a team or go capture market um but i think you kind of understand need to understand what game you're playing and i think in venture land we've seen a lot of examples of companies that raised a ton of venture that probably weren't venture businesses that could have been amazing outcomes um i think about one of our early customers in Tuft & Needle, for example, which is one of the early online mattress companies.

1:12:29David Haber: And there were a lot of examples of people who raised tons of venture capital. Some who went public and then...

1:12:35Erica Wenger: A lot were mattress companies. They were all mattresses. And then Tuft & Needle bootstrapped the business.

1:12:41David Haber: He lent them, I think,$500 ,000 when they had$7 million in revenue or something. I think they did like$740 ,000,$100 ,000. And they owned 100 % of the company when they sold.

1:12:51Erica Wenger: Also better for the founders a lot of the time, too. Unbelievable. The founders crushed it.

1:12:57David Haber: So you kind of need to know what game you're playing.

1:12:59Erica Wenger: I love that. It reminds me a little bit of like the one of N, N of one also conversation. Like, are you in a small pond? You know, big fish, small pond or small fish, big pond?

1:13:07David Haber: They were based in Phoenix. They're like, we don't care about the, you know, the coastal bullshit, you know, and they crushed it. It's amazing.

1:13:14Erica Wenger: I think there's going to be a lot of opportunities now with AI to back the like Phoenix founder. You know, they can do a lot. All right. The final question. Is AI overhyped or underhyped?

1:13:25David Haber: under hyped obviously i mean i really do think that we're very early as crazy as the market feels right now and uh i still think we were incredibly early in the dissemination of this technology into all of our lives and into work um and it just seems like the market for inference and basically intelligence is like unlimited and um i think things are going to get much crazier.

1:13:50Erica Wenger: The need for compute. Yeah.

1:13:53David Haber: I mean, it's a grind. Yeah. Yeah. So I'm very optimistic.

1:13:58Erica Wenger: Awesome. David, thank you for being here. This was super fun. Thanks so much for

1:14:01David Haber: having me.

1:14:01Erica Wenger: Appreciate it. Thanks so much for listening to the Trailblazers podcast. If you found this conversation valuable, please follow along on socials, share with a friend, leave a review, all the things. Most of all, please subscribe to our channel. It helps more Contrained builders find us and supports the work we're doing here. To learn more about what we're doing, you can visit trailblazerspod.com or my venture capital firm parkrangerscap.com or just follow along on socials at erica underscore wanger. Until next time, keep trailblazing.