E4: Sam Lessin on Why the Seed & “Factory System” Era of Venture is Dead

25:18There's always finance pitches, but the question is how, right? It's not going to look the same, right? It's not going to be, you know, it's not going to be LP. I mean, again, Silicon Valley is not dead. It's not going anywhere. People will still randomly build things and get super rich. Like, but it's going to be more, I think the key, the key model I have in my head is like, there's a lot of random walk in life. There will still be random walk in life. What's going to be gone is a little factory line that we can, that we try to like basically normalize and stabilize what is ultimately artisanal and crazy right and like that's just over right and so you know i don't know the nba's have to get out of silicon valley and go you know like you're gonna have to find weird shit again and like i you know it's it's the suits have to leave in some form or you got to go find places where the suits aren't to make any money yeah and you're you're an operator you're an investor what do you think about the studio model uh the atomics the production board it's again very salient question you're asking me this week because here's i'd say this historically you know there's the studio model of i'm an ex product leader somewhere and you know what's super fun is coming up with product ideas you know what's not fun is actually building the businesses so here's the idea i made some money i'm gonna and i have great ideas because i'm a fucking vp of product from facebook to be personal about it right so like i'm gonna come with all the ideas and i'm gonna start all the companies and i'm really good at incorporating things and making logos and then i'm going to find smart other people to actually do the hard work and i'll give them cents on the dollar for that because i'm taking my that doesn't fucking work every smart it's it's it's exactly what every product person wants they want it to work because it would be sweet if it did doesn't work so that doesn't that that you know that's not going to happen there's then the atomics of the world etc which i think have a slightly smarter business plan we're like we're not going to just call whatever the fuck we want with a pretty tight target of what we do and don't do and like the business the type and we can get really good at a specific type of business right that's kind of boring you know if you're the if you're a kid in a candy store you know who's made enough money that you're not worried about eating and you're just like i want to have fun and like i'm smart but i think it is a model that works better um those will continue to exist i think that there's a tight target and a tight range of companies you can build that way it's not the most interesting stuff to me but i think you I think people might get smarter about those over time.

27:37You'll see studios like that work. And then I think there's this alternative course, right? Which I'm really interested in, which is like, what happens if you're not trying to build Amazon, right? Like instead you're like, you're a business hippie, right? Like your target is money, right? And your target is like, you know, plowing profitability back in the morning. You're not trying to build a single thing, right? Like, is there a model there? I don't know. Like, again, it's kind of a timely conversation because I am very interested in it. Yeah. I've also been curious just in terms of the sort of mass inheritance or transfer of wealth that's going to be happening as boomers die out.

28:15And not just in terms of inheritance, but also their businesses. There's all these, you know, family-owned businesses that will pass over to people. Well, this is the TeamShares thing. Again, my one tip for you, right, is the company that I'm, again, that no one's heard of yet that I'm most proud of is this company TeamShares that I invested in a long time ago. Mike Brown is the founder. and this was their target from day one is like there's going to be all these small businesses people you know they're incredibly cheaply priced per unit of cash flow because people really want to want out of them they're not dead yet but like they want to move to florida how do we figure out how to build the berkshire hathaway in some way shape or form how do we deal employees in there's like all these interesting angles to that that i think is like very salient so yes like that is interesting the problem is like in the end of the day it's like you gotta have good operators who want to do these things right i think that's kind of the thing that that you got to figure out and like who's going to get excited about this i will say one interesting fact and this is you know talking team shares book for a second is what they will tell you and makes a ton of sense to me in because i want it to be true and i think it's true um but it's like there's a there's a great space ghost line which andrew cortina my good friend used to love quoting and i think he still does which is like i believe everything that man just said this is exactly what i want to believe right yeah and um what they say is like look the story is two generations ago all the smart kids wanted to go into banking consulting one generation ago but then they got shitty and like not cool then everyone was going big tech but now that's not cool and what people really want this new generation of smart young kids is to go like have meaning in a community and build like a something and like can we create opportunities for the smartest kids in that context i would love that to be true and i think it might be true right like people like fuck i don't want to go be a cog at amazon right i want to go like be the gm of something that matters in a community and then maybe i'll do five of them and like you know have like local meaning and sponsor the local baseball team and like i'm less interested in like playing global domination games um so i don't know you got to follow the talent too and if that that would be cool for it to be true and i do think there's tons of opportunities it seems that maybe people are interested in lower variance careers in the sense of, hey, either shoot for a moon or bust, and maybe they're willing to...

30:31Which, again, I think culturally totally makes sense, right? We just went through this pandemic where everyone got completely randomized. People got randomly super rich and poor. They took all their stimmy money and put it into Bitcoin and NFTs, and some got randomly rich and some lost it all. We just live... And the future is, in general, far more random walkie, right? That's power law-y, outcome-y, random walkie. And so if you told me the generation of people that grew up online, they're just burnt out on that. And like, fuck, how about like I start a business that I'm proud of that like can make me a millionaire slowly and like I can control the destiny of and I feel like I'm not at the whim of, you know, God knows what.

31:11I totally emotionally get that. And I don't think the bad thing again, I think there's like real opportunities around that. Hey, we'll continue our interview in a moment after a word from our sponsors. let's talk about crypto because you you've done very well in the space and you've thought about a lot about the space for the past few years um and and acted in it what have we learned as an industry in terms of what's real or enduring or what's going to be real and enduring and what just didn't pan out the way people thought it might look crypto i'm still very bullish on crypto and very heavily invested in it and very much believe in the long run i mean i think part Part of it is just understanding that anything that's kind of frictionless finance is going to have boom and bust cycles because it's so easy to get so excited about it.

31:55And then there's nothing unlike, you know, systems that are more stabilized by outside forces. Like when it crashes, it crashes hard. So it's like kind of a so I completely understand the sugar high. And again, a bunch of stimmy money flowing into people looking for a thousand extra turns because, you know, your 600 bucks doesn't matter much. But like it is kind of a chip at the table. you might as well put it all on the long odds thing. Like, I think we understand how we got there, right? From a lot of this stuff. Look, I think the crypto story, the fundamental tech is super cool. The opportunity to say that we have markets right now and a system of doing, you know, finance, which supports a few thousand public companies in the world and like a tiny percentage of the world's assets.

32:32And that's stupid. We like liquid, the idea that tech brings liquidity and liquidity is valuable for more things and more financing options. And like what that means around DeFi, I think is like fundamentally correct. But I do think the reality is, is like this stuff can't all be on promise. Like people do need to connect it to the real world, right? And they do need, people need to see the real value kind of to get to the next plateau. So that's been my thing for a long time is like the tech of crypto is great. It's great infrastructure, but like it needs to be connected to like real world use cases people give a shit about.

33:05I think people have with the metaverse thing got like momentarily started believing weirdly that like the, And especially because of COVID, because it wasn't locked at home, they're like, oh, shit, like, is it going to be entirely parallel universe of actual value that's purely digital? No, that makes no fucking sense. Like, you can't, like, digital land makes no sense, right? Like, it's the whole point of it is that it's infinite and free, right? So, like, I don't know. I think you can't have fake scarcity. You have to have real scarcity. And, like, that exists in the real world. But we have to kind of connect the dots for crypto to have leverage on that and matter, right, as opposed to it being all fictitious.

33:39you know the way the way i framed it is we went through an era where people basically took maybe like if you think about defy as like a ferrari it was like a ferrari with no fuel in it as you were like oh shit this is a really it is really cool tech let's like just plug some nfts into it and it's like that'll be the fuel like no we actually need real fuel like let's put some real fucking assets on chain and like drive the thing but the problem is that's hard work right and like people wanted it now. So I don't know. Only way of saying I'm long-term, very bullish on crypto. I do think that like there is a ticking window around regulation and a bunch of other things where you have to demonstrate real value or it's just a really cool idea, right?

34:22Beyond Bitcoin. Bitcoin's in a separate class in my mind, but I don't know. I'm still around. I'm still excited. And I do think in the spectrum of things that are disruptive to the system versus enhance the system, crypto is really disruptive. right and that's exciting like if you want to like topple a bunch of financial giants um and really change the world like i'd actually argue like crypto is the internet of money broadly is like really interesting right so you think ai and vr are more likely to be enabling of incumbents whereas crypto might might create 100 billion dollar or trillion dollars i think that that's got to be i mean like crypto again like is like the answer is like when a big company looks at something like is this going to help us or hurt us crypto undeniably bad for the banking industry, right?

35:05Like, there's no scenario where it's good for the banking industry. They basically have like a regulated monopoly that to print cash in like a bunch of ways. And crypto is like a totally different way about thinking about finance, which is very, very aggressively against how they operate, right? And like, that's really exciting. That means all the forces of the incumbents align against you, right? And there is regulatory capture, and there's a bunch of other stuff. So like, you get the war brewing, whereas like any tech company in the world looks at AI or LLMs and like thank you like that's awesome like let me immediately stick that on my products and they're gonna be better and make more money it's like everyone's like fuck yeah right the fact that all the big companies like fuck yeah is the reason it's not disruptive right um and and metaverse too it's like the thing about metaverse is just too expensive to play right like there's only like two or three companies in the world that can afford to even play in this space so again like any small company you can try to like be the minnow nipping around and try to make something happen.

36:01But it's just like the ante is too high. And so both of those are just extending innovations for big companies. They're not disruptive. Speaking of different models of finance, let's talk about investing in people. You've been a pioneer in the space of investing in people, both creators and entrepreneurs. The question I have in the creator space is, will the future of creator investing look more like record label investing or you know music investing i.e um 360 deals you know over the individuals kind of long term i think you guys do 30 years or will it look more like uh venture where it's it's less around the individual creator and more just around the entity that they create i really i believe you're doing a hybrid here's the basic thing you're the world gets more uncertain right let's start with that you don't know, you know, like some people are going to do the 0.1 % does fabulously well.

36:57Lots of other people don't do as well. It averages to a higher number, right, than it was. You know, net wealth generating, but not evenly, right, and not predictably. So if you're entering that environment of high unpredictability, there, you know, unless you know, debt is very hard, right? Just like start from first principles. Like, you're a nurse, you know you're going to earn, it's regulated, there's a union, like you kind of know what the path is, like use debt. That's a better strategy. It's going to be cheaper. You predict the future in a different way. It's a better structure for you.

37:30Equity, though, really aligns with discontinuous outcomes because the super winners pay for the losers financially. You can do things like, pay me back. You make a shitload. Don't worry if you don't make any money. There's a whole bunch of really interesting aspects to be just aligned with people rather than a debt structure. I think there's a way better model of financing people in the future. Especially, you know, again, like, you can argue the government does this, right? The government charges you 55 % taxes. And in theory, like, instead of prepaying you and giving you money up front, they say, well, we'll give you a pension down the line.

38:05But it is a similar model, right? In a certain perspective. I think the private version of that, we say, look, I can't bet. I have no idea how you're going to be successful specifically. But I can bet on you. I'll bet on your drive. I'll bet on your intelligence. I'll bet on your will to succeed. And if you don't win, just like a seed investment, that's fine. As long as I have a diversified enough basket of people in the right direction, my economics will work out and the winners pay for losers. So like, I think thematically, like that all makes sense. The nice part about creators, right, from my perspective, why we've been doing more and more creators is they can demonstrate up front, some commitments of the craft, right?

38:42They can have a user, there are numbers you can look at, right? They can demonstrate some early revenue traction and commitment, right? Right. Like, you know, the biggest problem with this stuff is adverse selection early on. Creators helps you with that. And like, you can think about it. The second I'd say is, you know, the historical model was you build a company that builds a product, which creates a brand and the brand could do more stuff. Creators build the brand first. Like, holy shit, your penetration, people's love of you in this vertical, huge, right? I'm not exactly sure which of the six things you're going to do to monetize that are actually going to work.

39:13But I bet one of them will, right? And I bet one of them you can ride. And so I think that's like a really interesting model where you're aligning kind of a person saying like, I'm willing to finance your experiments. I'm willing to finance you. I understand, you know, you kind of your niche. I'm not sure what you're thinking of it. So I think that works really well. You know, you look at like, the biggest creator in the world right now is Mr. Beast. I don't get his content. It's not for me. That's fine. But like, you know, everyone was all excited a year ago about his burger company. Dead, right?

39:41Like, you know, you do not want to invest in the burger company. Six months ago, a lot of people would have invested in the brand company. Terrible investment. Because it only works because he wanted to do it. And the second he's like, no, now I'm in the candy bar business. I don't want to be alone in any of his businesses. But I'm happy to say, Mr. Beast, or the person coming up in a specific vertical, I believe in you. I'm happy to offer you seed capital. Let's make it a type of thing where you become a billionaire because you get it right. Everyone wins. And if you don't, it's totally fine.

40:11This is what seed investing is. With a 19 year old Sam Lesson, let's say he grew up in 2040. Will he be raising money for company or for individuals? Who's going to be raising money for individuals versus their businesses? It's a great question. I think both are going to clearly exist, right? The people investing, I think, should be much broader than the company investing. Like right now, you know, I think I'm the only one meaningfully doing like people investing. There are people we talk about it people do hold codes but like we're you know we're they're tiny number of deals being done there and almost everything is investing in companies in the future if you told me like most investing was in people and then every once in a while i'm like oh fuck that specific business needs so much like there's an opportunity especially later stage should them should be investing sure right um so i think they'll both exist but i think i think that the people thing is far more broadly applicable right is what i basically say it goes back to like what does venture capital look like?

41:07Is it a factory or is it a more artisan thing? I think we're going back to it being a more artisan thing. Yeah. I see why if you're an investor, it makes sense to invest in the person. If you're a person though, and you have the optionality, you probably in many cases want to just have them invest in your businesses. Yeah. So I think historically that's been true. I think that's even true today in general, especially if you believe in the factory model. But here's the interesting thing about a near future you could imagine, which is let's pretend I'm directionally right. There really are not a bunch of IPO-able$5 billion companies you can cookie cutter out, right?

41:49There are a lot of profitable companies you can build, right? And you can wrap them in all sorts of different ways. What does that configuration look like? Right now, the financing for companies is, I think, very cheap, right? As it's currently set up. and it's also kind of structured in a way where everyone's like oh i'm gonna get liquidity from like some ipo in the next decade and i'm young and whatever but i think the world if it changes enough right or as it changes people recognize like oh shit like you know you'd much rather as a person own a business that does 50 million in top line right with good margins versus be someone who owns 10 percent of something doing 10 times as much and is illiquid and stuck in some nether region.

42:34Like, you use so much of a better life to own a$50 million top-line company that you have flexibility over and control. They're like, it's not really clear to me that that's the way the world will continue to work, right? And like, everyone's going to be shooting for these like rare slots at IPOs effectively. And I think there's so many businesses that like are so good. They're just not quote-unquote venture scale. And so how the financing for that all bakes out and what you're financing and why, like, I mean, I'm thinking about this even now. It's like these whole companies, it's like, i don't know it's a really interesting question and it's not a foregone it is totally a foregone conclusion to me right now there's someone's like hey 10 of your series seed at the current price and whatever setup for this many millions of dollars versus you there's good arguments that if you can do it finance the company not the person but i'm not sure that's where we'll be in 10 years and i'm actually not sure that's healthy yeah that's really interesting we've been talking a lot about how the venture landscape will change do you see um lp landscape significantly and changing in terms of how they allocate capital or think about the asset class look it it will right is the answer i think like you know right now the lp landscape has changed everyone's like because everyone's just pumped the brakes for a second is my general sense there are always exceptions but like you know it's like really simple it's like they just have less money coming back to them so like we're gonna invest less of it and they're overweight ventures they're gonna try to like it's not rocket science what's happening now you know i think the question is is there like a meaningful change or like and i i don't know i think the answer is is is there should be but i don't know the time scale on those types of things right and like how many more years we have of people you know there's the funds and what makes sense for the funds then you know lp is just like anything else they have a whole infrastructure behind them of humans that have jobs and goals right and so like if you're on the venture team at some lp and you have a mandate you know what when your factory stops or your mandate changes versus when the machine factories, like these things are all like, you know, kind of pieces that have to wind down or wind up together, right?

44:33Like, no LP currently has anyone dedicated to the question of, you know, how do we invest in people? I can promise you that, right? You know, one of the big barriers to actually building a bunch of what we're doing beyond kind of some of the early experimentation and kind of we need to convince people out of some pocket, this is a good idea. And it's harder when no one's got the mandate right so like how lps will shift they will but the time scales and how it happens i think we'll see like is it fair to say that if there's a massive incumbent um in a certain space like you're kind of you're less bullish like you're not you're not doing a ton of consumer social these days are you for example or like well who is i mean like look someone's gonna do something interesting in consumer social again but the companies in the space are pretty well operated right like it's you know you see flash in the pans right like you know what was be real or whatever i was gonna say clubhouse but a different kind of flash in the pan again i go back to this question is like is the future there will be many more social products built is the configuration going to be another thing at the scale of what exists today anytime soon or on the side is there going to be like a bunch of like micro brews right and like those micro brews can be by the way great businesses to own like will there be a bunch of micro brew social apps that do 50 million, have a niche, can we have a community?

45:51Absolutely. Now, the problem is going to be this capital stack question and how this configures. If you finance a micro brew, as though it's going to be Facebook, everyone is fucked, right? The investors are fucked because they priced it wrong, and they'll never make any money. The founders are fucked because they're going to be stuck for the next 20 years working on a thing, and they can't take any money out, right? So this is why the financing machine matters so much. On the flip side, if some dude builds or some woman builds the microbrew. They own the microbrew. Maybe they took a seed check along the way.

46:23And they're pumping out cash. And they have total latitude over what they do with that. And they can reinvest it. Is there a financing structure that makes sense for that? Absolutely. And then everyone's super happy. So I think it's all about what you're shooting for. Yeah. You had a post a while back about why venture is looking like PE or will look like PE. is that related to this concept? I don't even remember writing that, but yes. Like having not remembered what I actually wrote. Yeah, sure. I mean, that makes sense. Does it, you also wrote about how you're, you're dubious of the sort of the mantra of concentration that VCs and LPs talk about is, and it may be because this idea of, hey, the incumbents are so big and so consolidated that you really just have to make sure you're in them as opposed to, you know, being concentrated and maybe these fake unicorns.

47:12Is that the argument? Well, again, I'm not even remembering specifically what I wrote on that. I'd say like, it's a terrible idea to be concentrated in fake unicorns. Right. That's just a very, very bad idea. Right. And so, you know, like, if you're going to do the concentration chips and then you better fucking be right. If you're going to be an indexer like A16Z, then index. You know what I mean? Like, I think the biggest thing is just to be honest about your business plan and stick to it right from that perspective. totally and and they would they would not want to be called an indexer right they would say they are they're doing lots of investment but they they have the best brand they get better term they get to the best companies i guess the right well they really get worse terms because they're the people who high bid everything so sorry keep going i'll keep shitting on it they do i bid but there's certainly lots of great companies yeah totally they are and you know look again i'm not i i don't know their returns and i don't know what they'll be i know they've done well in crypto and you know in in like again i'm not i'm not i'm being silly a little bit in terms of shitting on them they're clearly good at what they do but like i think it's also hard to argue they're not indexing and they're very clearly willing to overpay right which i think has distorted the market i mean they're not to the disagree of um they the only one who overpay is clearly more than them is like the what's is masa right so there are people who overpay more but like they're known for overpaying one clear takeaway from this this sort of prediction of venture what it means for who will be good is it's less about people who are well networked and can get into everything.

48:40And it's really about people who have better judgment and can invest in things that no one else will invest in. And differently networked. I think the good news for people who want to see the fall of certain elements of Silicon Valley culture is the bro deal sharing, everyone gets a cut Silicon Valley circle jerk is not going to end up being very profitable. Right. And, you know, so for people who want to cheer for that, you know, congratulations, you're going to get your wish. Right. I think, right. In terms of like where returns come from and where value is created, you know, the syndication of, you know, of everyone playing in the club and being the cool kids club and that being the way to make money.

49:21And if you're in the cool kids club, you get to raise a fund and you get to just, you know, live off the fat of the land, I think that era is coming to a close. And again, I think that's good for capitalism. I think that's good for lots of things. It's good for everyone except for the people whose only real value was just being at the table and being in the club. And no one really likes those people anyway, so it's fine. Yeah, totally. And going back to our lower variance founders, it's interesting because right now in Silicon Valley, there's tended to be these two options, two binaries. You can either take all the risk and take a little salary, get high upside, and chances are your thing is going to fail and it's going to be hard to exit, et cetera.

50:04Or you can join a company that gets high salary but very low upside. And there isn't really an opportunity to get, hey, maybe like 20 % equity in something or somewhere around that plus like 300K salary or 200K, like get good salary and decent upside. and maybe in the future there will be some hybrid option that kind of lowers the upside but also gives some upside but lowers the downside as in a safer path. I mean, look, I just think there's so many businesses that you can now build if you kind of build the skill set and invest in yourself and fucking use chat GPT to code along with you, right?

50:41And like you can make millions of dollars a year, right? Reasonably quickly and then grow in interesting directions, right? And like, I think that's like the thing that I'm most, I mean, again, I'll tell a fun story, which is like, I'm seeing soon a friend from a long time ago, Greg Gallant, right? And Greg started a thing where this is like now in 2010, not even eight, nine, that era, like in Dumbo in Brooklyn, when no one was there. You know, I had a startup, it was VC backed. And in that office, Birchbox started, which was kind of invented, you know, subscription box commerce. So they said that was a space and like they were super buzzy Visha bath.

51:18Greg Galant was there with one person in the corner building something called Muckrack. Took no venture capital. Who do you think has made more money than anyone in that office? By a mile, right? Greg Galant, right? Not even like it's a wild how successful that thing has been because he kind of slowly and methodically built a thing that he was passionate about that no one else thought was that cool. Right. And yeah, I'm pretty sure it's public. But like putting out there, like I think they did their first financing with a PE shop, late stage PE shop right now to get some liquidity. And like I, the level of success that Greg has had is like fucking mind blowing.

51:51Right. And like, I just think that like, I'm so psyched to see more Greg Galantz of the world. Right. And not venture flame outs and not things get overfunded and like things that are just like great businesses that you can build. So when you talk like, what's that? Like, I think it's going to be hard to find the, oh, it's 20 % and 300K. But if you told me like, are there a lot of businesses you can found where by year two, three, you can make a few hundred K? and have the equity and have the upside? Absolutely. And I think you're seeing those in the creator space. I think you're seeing those in the software space.

52:23And I'd encourage a lot of founders that are out there. Like, you know, the historical story was if you do something like that, that's a micro brew, you're somehow giving up the option value over being bigger. I think that's a load of shit, right? Like I actually think that actually demonstrating profitability, being comfortable, building methodically is exactly the right thing to do. And like the era of let's just plow money into Uber and Lyft because it's some sort of zero sum race, right? Like that, those are the opportunities that I think are all fake, right? Yeah. Going back to the 20%, you know, 300k, I think that option is for VCs who want to incubate companies because VCs are always looking for special economics.

53:01And it feels like you can't get it in accelerators anymore. Like even YC's terms aren't as good as they used to be. It's basically just seed or, you know, like seed pricing. and so I think people are going to look to incubate stuff to get more and more special economics and they're going to try to find people for whom you know they'll let the VC firm take those basically I think there'll be more atomic like structures. Yeah I just think there's a huge adverse selection problem in general with that right and like again there are exceptions and like there are people who've made it work and I think atomic is a particularly interesting interest because I think my sense is it does work and it's a very narrow band of companies they build like they're not just like going out with anything.

53:39Like they kind of have a model they're following. And so I think that will happen. But again, I think that, you know, the problem historically has been that smart people don't need some VC to take a bunch of economics, right, to tell them an idea when they have to do all the hard work, right. And like, I think that'll continue to be the case, right, is, you know, you know, is that I just don't, I think you will get people to do that deal. But it will not be the best people that makes sense um the five minutes remaining will end on some fun uh fun topics why are the kardashians a fluke uh and what does that say about the the future of media i mean the story i have in my head is something like this which is like go back many many years pre-internet you had people magazine right you know what's much more entertaining than people magazine is your friends right like sweet and you know what's more entertaining than your friends is professional friends.

54:34And like, that's what the Kardashians are is like they're professional friends, right? They're way more entertaining and pretty and whatever else than your actual friends. They do weirder shit, right? And the question is, is like AI slash what I'll call like TikTok America's funniest home videos. That's actually funnier than the Kardashians, right? And so like, if you think about the algorithm and like where you're going with AI, like I just, I think that the relevance of people like these, that the influence, that type of influencer was purely entertainment based as opposed to like affinity or trust based in like some sort of vertical way.

55:06Like I think that kind of the mass entertaining people will go away over time, right? And be replaced with kind of more specific. I mean, influencers absolutely are going to continue to exist, but they'll exist because people trust them as brands, because they know something people don't know, not just because they're entertaining, because goddamn America's Funniest Home Videos on TikTok and Instagram Reels is just so entertaining. if you just want, you know, to like be entertained and nothing else. Totally. Speaking of media more broadly, where do you think is your most substantive disagreement with someone like Balaji about sort of the history or state of, or the kind of the mental model of thinking about media?

55:46He's more dubious and sort of the state of like journalist class, the media class versus the tech class and thinks that there's like - Oh yeah, he's very pro tech class, anti-journalist class. Yeah. I've been like, look, I'm married to with journalists, I see how the sausage is made all day long and like kind of how they bring their, you know, bring truth to power in a lot of ways. You know, I understand why a bunch of tech people, a lot of them are very sensitive, like don't like, you know, to be questioned. And like, you know, like we can kind of go down the whole like tech media thing. But look, I think journalists play a super important role.

56:18And, you know, and there are all sorts of fucked up incentives in journalism, especially clickbaity journalism. I'm not saying I support that. But like, you know, We do need people who are paid specifically to deliver truth, even when that truth is extremely inconvenient to people who build very positive narratives of themselves and changing the world. Totally. Agreed. Twitter. Do you think Twitter could have been a hundred billion dollar company or if you had taken it over last year with the intent of making it as big as possible? What might you have done? not last year i mean i think twitter you know the line is twitter is a it was a clown car driven into a gold mine that somehow drove back out of the gold mine right like the um you know so like there was a moment it's a suit i really enjoy twitter i find it very entertaining as i i'm sure you do totally and like marginally business useful like it's not like you know people are like twitter is no value it's like no actually like i have fun with twitter but i don't get zero value from it business-wise.

57:19And so you're like, well, you know, but how do you monetize it and build a big platform out of that? Really hard to say, right? You know, I think Threads is interesting. Again, you know, I think they'll get there eventually on engagement. There's clearly demand. Text is a great medium. We can go down it. But like the problem is, is it's really hard medium to monetize, right? And like there are things that are like, again, this goes to a great example. If Twitter was owned by the Twitter founders and like hadn't raised fuck tons of money and then tried to go public and then convinced a guy to buy it for way too much money.

57:49Could you make tons of money on Twitter and have a really interesting purview in the world? Absolutely. The problem is that the financing structures and the appetite for what it could be, I think really fucked up what it otherwise would have been. And like, look, Twitter is not a company that needed that much money, right? Like it really didn't. Like it's fucking text on the internet. And like it threw up a beautiful time. But like I'd actually argue what the real problem with Twitter is like, they raised too much money. They wasted too much money. they went public people had expectations were out of line you know there would there was a much healthier way to do this right effectively that i think would have been better and by the way if twitter was a company that was tightly held by like a few people who founded it and was making a billion dollars in profit a year like doing what they were doing pre-musk or whatever yeah those guys are fucking psyched that's a great life the problem is is like when expectations get out or not reality and by the way when the markets cash everyone out with those expectations and then kind of leave the bag to the workers.

58:46We're like, oh, fuck, like all the people who have the equity took the money. And now like, you know, a generation ago, and now like we've got to like figure out like we can, you know, how to pay people to keep the lights on, right? I think it's like a really interesting and problematic situation. Well said. You've been interested in social capital. Do you think we'll figure out a way to represent social capital on the internet or to make it pretty, really legible? Or does it just not want to be legible? I mean, this has been the problem I'm probably most obsessed with in my career back to like my father, you know, funded six degrees, which is like the original Facebook, you know, patent, you know, for bidirectional friend graph.

59:23So like, it's a fascinating question. I mean, social capital is clearly real, right? There's no question about it. You know, my test for this always be I'm curious to use air, but like, like a devil came to you and said, All right, give me all of your social capital, meaning give get rid of your identity or all your money. What do you give up? I would give up my money. absolutely me too and like i've done okay like i have some money right and like it's because my reputation that means my reputation or my identity is i think clearly worth as much as whatever is in my bank account right and like that's you know not it's so like it's a huge amount of value in the world but it's very challenging because it's pair wise right it's not there's no number you know whatever it was cloud is not a thing right um you know and it's very finicky in terms of how you denominated i think there is a conversion rate to it but it's a shitty conversion rate to financial capital is not worth it for anyone.

1:00:12Right. Like, you know, and so I mean, social capital clearly exists. It's clearly valuable. Messenger products, WhatsApp, you know, the ability to background check people and say, who is this person or figure out who their friends are friends are and who they trust and blah, blah, blah. It's all very real. But I don't think you're going to see like a number for it. Right. As much as you're just going to see like a liquidity of social experiences increasing. Right. You know, over time. Yeah. Well, last question will be a big question or broader question. I asked you on a podcast seven years ago, if you were to give a TED talk, what would it be on?

1:00:45At the time, you said the end of capitalism. Some people talk about hypercapitalism. I'm curious just to reflect on how you think about what that means going forward. What the end of capitalism means? I mean, I like capitalism. So I think the real question, and this might be a thing that Balaji and I would maybe agree on, although I have no idea, maybe you'll listen and tell me is like, I do worry that we're kind of that people don't realize how awesome capitalism is and how open and free it is as a relative system, where every dollar is the same. You know, the likely direction we're going with AI, and like, I think a bunch of other trends in the world right now is really like very futile.

1:01:28Right? We're like, you don't know who to trust, you kind of have your tight knit suit of friends, you're super resistant to outsiders, Like there's just like a bunch of that is like a very reasonable place. We're going even like stuff like, you know, people are talking about everyone's all upset about college admissions right now. I get it. There's no perfectly fair system. It's complicated. Here's the problem. You know, if you believe that college creates bonds of trust, right, and people have similar education, whatever, we have a fairly open system for that right now. If you're like, OK, college admissions, we're going to super manhandle who can get into what you know, it's going to happen.

1:02:02The elites are going to just retreat into the little enclaves. they're all going to know each other. They're all going to be super networked and be super resilient to the outside versus a system that's like semi open right now. So like, you know, capitalism is awesome. I hope it, I wish it well. I think there's a lot, you know, I think there's a lot of greatness to it, but I do worry that like a lot of the trends we're seeing around AI in particular trust, et cetera, really push us very far towards a feudal system versus like, you know, what we have today, which is very, very, uh, very bad yeah mark and jesus word for it i think was something like a polytheistic paganism we have all these different cults basically just believe having a radically different version of reality and kind of having their own economy i mean yeah you can live in you there's no question i mean but differently it's like it's um the cult of the world should continue to get more weird and extreme as people look to define niches where they can have unique value and meaning right like that's kind of the world you know it used to be you could be the best basketball player in town but now you go on instagram and see way better basketball players like you got to call this thing weirder right and like so i think there is this like incredible gravity away from mass culture and towards super niche weird shit um which will be interesting and challenging and i think does kind of you know put up some pretty serious barriers um between people in local communities, et cetera.

1:03:29We're just bad. Totally. To bring it full circle in terms of weird shit, you guys at Slow will continue to be backing things on the edges, whether it's creators or crypto or just new financial structures. Talk a little bit in closing about where Slow is today and where you expect to go in the future. We're a seed fund that has a growth piece to it. And And like everyone else, we've got tons of dry powder and we're not going to be doing a bunch of AI and we haven't been doing AI. And we're going to keep looking at the fringes of things that we really believe that other people are not interested in.

1:04:07And so, you know, for us, you know, it doesn't necessarily mean things you will never heard of. I mean, we talked earlier about a bunch of stuff around franchises and small business or whatever that I think is like dramatically underfunded and ignored. And so not to be aware of the secret sauce, but there is, you know, if you're doing stuff in that space, reach out. I think we are very interested in that. and there are other niches but I guess the question for me is like I mean I've said this I think to you and others at one point which is like I really really believe in pricing discipline like so you're asking me what's the future of slow the future of slow is me paying not very much money for a few million bucks right like at low valuations not because of any like stinginess but honestly because our view is like venture capital exists in a market if a thousand people are going to fund you, then the value, the value of money is very low.

1:04:55And like, we're trying to sell you expensive money. So we have to find places where expensive money has value, right? And like, you know, so if there's, you know, when you're like, shit, no one else is interested in this, but I'm sure this is right. I want to hear what the story is, right? And like, you know, we'd love to give you very expensive money, such that when you're right, and we're right, we all make a shit ton of money. I'm not interested in being a market participant at 40 posts on a thing that anyone would fund because like there's no fun in that. Yeah, totally. That's a great place to go full circle in conversation and wrap.

1:05:27Sam, yet another banger. Thanks so much for coming on the podcast. Always fun, Eric. Talk to you, man. Turpentine VC is a podcast from Turpentine, the network behind Moment of Zen and Econ 102. If you liked the episode, please leave a review in the Apple Store or rate us on Spotify.

1:05:47Thank you.