Kent Lindstrom (00:07)
All right, welcome back. This is the Something about Your Podcast. I am Kent Lindstrom. I am your host. My guest today is Andy McLaughlin. How are you doing?
Andy McLouglin (00:14)
I am pretty good, thank you, Ken. Yeah, I can’t complain. It stopped raining, so life immediately seems better.
Kent Lindstrom (00:19)
Thank you so much for doing this. This is great. You’ve got a British accent, so I don’t even have to work very hard. You’re just going to sound smart. This is fantastic.
Andy McLouglin (00:25)
Why do you think I live in this country? It of like immediately gives me like 10 IQ points versus where I actually am.
Kent Lindstrom (00:31)
It’s great. You’re kind of one of my, you know, the Mandela effect thing where everybody thinks like everybody swears Nelson Mandela died in jail in the eighties, but he didn’t. He lived like into the 2000s. I swore I could swore I had you on my podcast before. was like, I must’ve had Andy. did that with Orrin Hoffman too. When I had him on, like, I just thought I had you on and I didn’t.
Andy McLouglin (00:52)
like some kind of COVID fever dream where you just imagined it.
Kent Lindstrom (00:55)
It
was something like that. But in any case, Andy is a venture capitalist, but don’t worry, it’s going to be interesting. He is a founder who started a company and went through that whole experience, invested as an angel very successfully, and now is the managing director of Uncork Capital, which started life as SoftTac. I’m going to start there for a second. We’ll get to you. But the founder of SoftTac is kind of a legend in Silicon Valley.
seed investing, right? It’s a guy named Jeff Clavier who’s French. And before, I’m just trying take people back to the time before everybody had a seed fund and you know, every person who worked at Facebook had one on the side. It wasn’t a really obvious idea for somebody to go out and invest in startups. And somehow Jeff figured this out, right?
Andy McLouglin (01:49)
Yeah, I I think when you kind of rewind back to that moment in time, you know, there were a handful, I’d say maybe 10 of these folks who kind of got termed super angels who were investing like angels, but often with small funds. I these days you would call them solo GPs or micro funds. But it was pretty novel back then because the kind of perceived wisdom was that
unless you have the capital to not only lead around but kind of be able to follow on, you are going to be irrelevant. I think what people like Jeff and Josh Kaufman and Chris from lowercase
Kent Lindstrom (02:35)
Chris Saka. Chris Saka. Chris Saka.
Andy McLouglin (02:39)
Chris, I’ll get, yeah, of course, yeah, brain fart. And Iden and Mike Mayfair and others, what they realized was there actually was a market for folks who would invest super early, scarily early, often as a combined unit. So back then seed investing was deeply collaborative. These five or 600K rounds would come together with people writing 100K checks each. And what that meant was like this crop of early investors
all got into great deals because they were all investing together. And of course, what happened was some of them, like Steve from Baseline, kind of made enough money that they quit. some kind of, you know, their things became real franchises. know, think Felices is probably a great example of that, where they went, know, Aiden went from being a super angel to being, you know, a manager of a very, very large set of funds and, you know, building a real kind of team around him.
But yeah, we’re kind of going way back into the history books here now, but there was a TechCrunch expose in probably, what, 2010, 2012 around the kind of potential price collusion, you know, these angels kind of working together. I don’t think anything ever came of it, but was just like, know, happier, simpler times in many ways.
Kent Lindstrom (04:00)
Yeah, it’s, it’s, it’s like, I kind of described as this magic, like this magical time where like, you know, if there was a deal, you kind of knew about it you were kind of one of five guys. don’t know. I kind of, look back as I, you know, building a fund now too. And it’s, you know, there’s not 10 guys. There’s like 10,000 guys. It’s kind of not the same. Jeff, mean, man, he took such interesting investments, but he, he’s told the story about how he, almost did the Uber thing that would have made
Andy McLouglin (04:16)
Exactly.
Kent Lindstrom (04:29)
that would have made that fun and missed it by like a day or I forget how he tells the story but.
Andy McLouglin (04:34)
Yeah, there’s a bunch. think some of them, you know, I think like every great investor, you’ve got to have a bunch of stuff you missed, right? For good reasons and bad reasons. And I think some of them, like Dropbox and Uber, and Airbnb, he has legitimately good reasons for having not gotten there. I think the one that still stings today, because I think he realizes that this was like a fuck up of epic proportions, was Twilio, where he and Jeff Lawson had known each other for a long time.
The round had coalesced, it was coming together. Jeff had a 250k allocation in it and it was being done at like a four and a half or five mil free money valuation, is, know, just laughably cheap in today’s market. But at the time Jeff’s like, I really don’t do anything over three, maybe three and a half. And Jeff wasn’t like, well, that’s great. But like, this is the deal. This is what everybody else is doing. And Jeff’s like, yeah, you know what? I’m out.
And so of course, know, for quibbling over what is ultimately a rounding error, you know, missing out on, what would have been something that could have returned that fund, you know, 10x plus over.
Kent Lindstrom (05:42)
Yeah, it’s a weird piece of venture math. Mark Andreessen talks about it where he’s like, look, the difference between expensive and not expensive, I don’t know, it’s a $10 million valuation versus $25 million, it’s two acts. It’s a big difference. But the difference between something not succeeding and succeeding, like Twilio, is like 5,000 acts. And so it’s really just being, kind of being in the thing.
and Uber is a funny one too. My partner, Jonathan was an active angel investor at the time and like was, had rented space to Travis. Like, you know, knew him very well and didn’t invest in that one. And if you look back, you kind of think, well, at the time it was a black car service, right? Which, you know, cool for Silicon Valley, but not for. That’s the big one. And even today, if a founder came to us with some crazy ideas, but I’m not going to be running this. I’m going to go on, you know, X and.
Andy McLouglin (06:28)
wasn’t even running it.
Kent Lindstrom (06:37)
look for a CEO, there’s no way you’d do it today.
Andy McLouglin (06:40)
Yeah, what’s interesting is I moved to the US in the middle of 2010, I think late May, early June. And I had a few other British friends that moved out here before me. So I kind of had a bit of a network and they’d been here for a year or two. They’d met interesting people. And me and a guy called Paul Carr, who you might remember, Paul was an active journalist at the time, was writing for TechCrunch and others. Paul and I decided to hold a…
a Fourth of July party at my new apartment building in Somer. And the joke was it was a very British Fourth of July party. So we called it a Dependent State Party. And it was a BYOB, which is bring you remember it, or kind of other newcomer to the city. And so we had a bunch of people there, including this guy I got talking to who was telling me he’d just moved to the city from Chicago with his wife. And he like crazy story, he had literally responded to a tweet.
about running a company. it’s like, and so now I’m the CEO of this thing called Uber cab. I’m like, that’s cool. What does it do? And it’s like, look, you can get a on my phone here, you can see that you can see a black car. I can tell it that I want to go from here to say, North Beach. I was like, all right, that’s interesting. Out of interest, how much would that cost me? He’s like, that’d be like 60 bucks. I’m like, that sounds stupid.
Kent Lindstrom (07:59)
Yeah, mean you’ve got it, know, it’s that thing right Facebook I don’t know college, you know, there’s not that many people in college It’s a market of four million people except you know, if the person can make the leap It’s kind of crazy and by the way, you know who did first round did that right? It’s a
Andy McLouglin (08:16)
They did. First
round put money in, founder collective put money in. I think it was reasonably small checks for both of them, but you know, when the business is ultimately IPO-ing at almost a hundred billion dollar valuation.
Kent Lindstrom (08:26)
Yeah. It’s crazy. You know who else put money? I had her on the podcast as Cyan Bannister was an early investor. It’s just one those crazy stories where she had a car service, like a regular car service that would take her to the airport. And the guy who in the car was like, Hey, do you know what Uber is? Cause he’s like, you know, I have this schedule where I pick someone up at 11 at the airport and 2pm at the end. I’ve gotten two hours in the middle, but there’s this thing called Uber cab or whatever.
Andy McLouglin (08:31)
Nice.
Kent Lindstrom (08:55)
And I’m making a ton of money because I, you know, in my downtime, I do two or three rides and she’s like, what? Like you’re making a living on something I’ve known. She went and met Travis and loved him and I think invested like a quarter million dollars.
Andy McLouglin (09:08)
And the
rest is history, now she’s a kachelina. She is.
Kent Lindstrom (09:12)
Like she says, if had a nickel for every time someone said I was wrong, she’s like, and I do. It’s pretty good. So how your entrepreneurial career was, that was in England, right? You founded a.
Andy McLouglin (09:24)
one of our. Yeah, yeah. we, my, my buddy, I got good Alistair Mitchell and I co-founded a company called Huddl in 2007. Huddl was a early kind of online collaboration player. So kind of like next gen SharePoint kind of, you know, these days you’ve got Box of course, but Google drive, Microsoft OneDrive, Dropbox are all kind of playing in this space. But back then it was still, it was still super nascent and you know,
What was kind of interesting was that in London in 2007, you could probably count on one hand the number of enterprise software startups there were. You could probably count on actually on two or three fingers.
And London had a very kind of active startup scene, but it was still very much focused on consumer, a lot of e-commerce, lots of gaming was coming from that part of the world, but there really wasn’t a ton of enterprise software. we went into it basically not knowing anything about what we were doing. The Lean Startup hadn’t been published, AWS.
had not launched. We were racking our own servers in London Docklands and doing capacity planning when we brought a customer on board in terms of what we would need in terms of new blades and firewalls, et cetera. We had to effectively write our own version of Stripe from scratch because nothing existed. And all of this of a-dates me and makes me sound like a terrible curmudgeon when I say to entrepreneurs these days that you have no idea how good you have it.
But we’d raised our series A in the UK. We did our series B with Matrix Partners out here. I moved out to the US in 2010 for what I thought was going to be a year or two. My plan had been, you know, come out here, recruit the team to lead the US office, go back and continue running products in London. And of course, you you blink and you’ve lived here for 16 years and you’re a citizen, you’re married, you’ve got kids and you’re now a VC and life is very different.
Kent Lindstrom (11:20)
Yeah, that’s pretty good. how did you decide? So huddle, like how does it end? mean, it acquired, goes public or?
Andy McLouglin (11:28)
So
we were applied by a private equity firm in 2016. The P firm then sold the asset onto a public company in, I think, 2018 or 2019. And the product is still alive today, which is interesting. It’s been kind of wrapped up a couple of times since then. But I actually think there are still people who I hired in the UK way back when who are still there and working on it, which is kind of interesting.
Kent Lindstrom (11:55)
It’s like that guy at Apple, you seen that guy? There’s like a guy who’s been there for like, he joined when he was like 17 or something. He’s been there forever. Probably did pretty well. And so you invest at the same time as you’re doing huddle or how did you become like get at all good at being a seed investor?
Andy McLouglin (12:02)
Yeah, I know exactly who you mean.
completely by accident. And I think that’s true of a lot of people who angel invested. I think some people are very, very thoughtful and very meaningful about how they go around it. Many of us though, it just kind of happened because you were chatting with somebody and they said that they were raising a bit of money. And what had happened was I’d been living here for probably six or seven months or so. I had this apartment in Somo where we ran the
Dependent State Party, had a spare room. A friend of mine from London, a German guy but had been living in the UK for many years, had moved out and he was dead set on doing a startup. The idea that he kind of talked to me about was something called, it was a social media curation platform. How could you bundle up a bunch of tweets and YouTube videos and
WordPress blogs and whatever else and kind of package and present that as a single entity. And I’m saying, I kind of think this idea stinks. Like I don’t think the world needs this, but you you’re awesome. And so the initial conversation started out with me kind of lending him some money so we could incorporate the business. Comes back to the apartment a couple of days later with a convertible note document. And he says, if you sign this, you’ll become an investor in my business, curated.by. Surprise, surprise, that thing didn’t work out, right?
Turns out did not need this thing. But after a couple of twists and turns, this business turned into Postmates. And so actually in the early years of the company, was still called Curated.by Inc. before it was legally renamed to Postmates. And that kind of just put me on the path where I realized I loved working with founders. At that point, were probably, my business was probably 100, 150, 200 people.
Kent Lindstrom (13:47)
Yeah
Andy McLouglin (14:07)
It was becoming relatively mechanical, especially in my role. yeah, just getting to spend time with these awesome people who were super early and helping them go from zero to one became the favorite part of my day. And I remember with Basti, he said to me, if this thing doesn’t work out, I will repay you the 10K that you lent me because you helped me get started. As it turned out, it worked out fine.
I think the initial convertible note that we signed was on a 1 million or $1.5 million cap. He raised 100k from people like me and Naval. I think Scion might have come into that round as well. And I think that delivered a 300, 350x in the end, even with all the dilution along the way, which is why I think even with the crazy times we’re living right now, where valuations are going crazy and premium assets are worth it.
Kent Lindstrom (14:53)
It’s amazing.
Andy McLouglin (15:04)
the back of my mind there’s always this like entry valuation matters. Entry valuation absolutely matters when it comes to multiples.
Kent Lindstrom (15:08)
Yeah.
Yeah, and you can think by the way, that’s such a hard investment to make somebody who was might have been the Sequoia guys who were talking about passing on cursor were they which now is a code like a AI coding thing that’s worth like maybe 60 billion dollars or something like that today. And like their first round was at five or six million dollar post money valuation or something that I think it was the Sequoia guys that said, yeah, we really liked them. But whatever idea they had at the time, they hated. Yeah. And it’s the same thing where you’re like, I don’t know about this curation thing. And then
It’s just one pivot from that black car to that thing and you’re like kicking yourself for the next 20 years.
Andy McLouglin (15:47)
Oh, totally. I mean, I think Hunter Wark has a great saying about this, which is, you know, investing in people you love building companies you don’t hate. Now, maybe the Sequoia guys hated what the cursor team were building so much. They said no, but, know, at those kinds of valuations, I feel like you can take a flyer and I think especially doing it as an angel, you know, you’re an LP of one, the only person you’ve got to answer to if you screw up is yourself. And so you can afford to make those bets. And so I ultimately, you know, invested into probably 35 or 36 companies, mainly
European entrepreneurs who moving out here. That was kind of the edge and the advantage I had. I’d been living here for a year or two, three at that point, I could help them with lawyers, I could help them with VCs, I could help them with getting set up in the city. Because there weren’t that many Brits and Europeans who were out here and actively angel investing at the time. And that meant I was one of the first checks into Intercom, I was the very first check into Pipe Drive, that was a $1.5 billion acquisition by
by Vista back in 2021, the first million to come, and a bunch of others that could still do something. I think naivete and access and a lot of good fortune meant that I turned that kind of initial bit of cash that I’d basically done as secondary for my own business. I was living by myself in this cheap apartment in Soren, so I didn’t have much to spend it on. I ultimately kind of 15 or 16xed that.
Kent Lindstrom (17:13)
That’s pretty good. That’s the whole career right there. The, um, it’s funny. seems, you know, people coming over from Europe, it seems like every European company we invest in, um, the founder comes here. We just invested in the woman in Paris, strangely, not the first woman in Paris we’ve invested in, but, um, but she promptly moved here to start her company. Is there any percentage in not moving here? If you’re a European company, is it just too much to start something there?
Andy McLouglin (17:41)
I think it depends on how far along they are when you meet them. And I think it also depends on what they’re trying to build. I mean, a pretty common pattern that we’re seeing now is kind of what I think of as being the Israeli model is you’ll keep engineering research, whatever, back in the home country because you have access to talent. It’s significantly cheaper than here. know, people stick around for longer. It’s a little bit less mercenary. But then the CEO comes out here to build the go to market function because this is where the
the expertise is in that area. So, you we’ve got European founders who are, you know, 100 % kind of picking up and, you know, building the business here. Zendesk is a great example of a business that did that route well, really, really early. But we’re also seeing a lot of companies who are keeping, you know, core research, you know, they’re taking people out of deep mind, you know, there’s researchers coming out of great universities in the UK.
and keeping that team there, which is much more the kind of the whiz Israeli model for how you build businesses. And I think this just goes like, there’s no one magic recipe that works for everybody. It’s kind of what’s the right thing for your team and the technology you’re building and the market that you’re serving.
Kent Lindstrom (18:52)
Well, until you get lucky and then you make up a story, right? yeah. Everybody, like every VC has got this whole thing and then they invest, they’re the first investor in something that goes huge. And then there’s a whole story about how they knew it all along. Of course.
Andy McLouglin (19:06)
Of course. mean, that same investor that was also the one who will post on X the day that like a company has a huge outcome, their past email. Yeah, well, come on, come on. Don’t make this about you.
Kent Lindstrom (19:18)
Exactly. At what point do you think to yourself, I could do this full time and professionally.
Andy McLouglin (19:25)
So I’d gotten to know Charles Hudson socially kind of when I first moved here. Charles ultimately became a good friend, remains a good friend now. And he would, doing his job well, take me out for beers. I was a poor entrepreneur and he would take me out for beers and pizza and talk about the stuff that I was investing in and what I was seeing. And I would then introduce the founders to him. I think it was a combination of that plus the fact that Jeff had invested in
Postmates about a year and half after I first invested. I was kind of in their their orbits And you know we as we raised our series D at huddle You know my mind kind of turned to like it’s gonna get into this mode now, which I’m just not really enjoying I’m a big believer in Kind of you know knowing what your strengths are and kind of what you love I don’t know if you remember in the Matrix movie when he’s at the Oracle’s house. There’s a
a cross-stitch thing above the door that says in Latin, know thyself. And I think that, know, knowing yourself and knowing kind of, you know, what you want to do and what you’re great at is one of the most powerful things anybody can do. Because if you can find yourself working at the intersection of what you love and what you’re good at, that’s when the magic happens. You know, that’s when, you know, it doesn’t feel like work anymore. That’s when you’re still kind of at the kitchen table at like 11 PM with your wife saying, are you going to finish anytime soon? You’re like, not yet. One more thing. This happened last night.
Kent Lindstrom (20:51)
All right. It’s kind of, go ahead.
Andy McLouglin (20:54)
Yeah, I was going to say the what I realized was that my heart wasn’t in the building of the business anymore. That was much more than my co-founders thought. I loved the I love this, you know, working with founders, I love helping them out. I love finding deals and, you know, doing you’re doing the work on it. and Charles for a little while had been kind of in my ears, like, have you thought about doing this as a full time job? And I was like, well, I’ve got a lot that I need to do at work. And then at some point, it’s like, you know, I could step away at this point and it wouldn’t
it wouldn’t be the worst thing in the world. I remember chatting with Ross Simmons, who was one of the co-founders of Yelp, and he had this great phrase about it, where when he stepped away, he realized that he was throwing these beautifully made, highly polished spanners into the machine. And I kind of felt like the same thing. I was doing great work, but I was kind of getting in the way. Now, I’m not sure ultimately how true that was. I think when a founder steps away, it does leave a big hole, because you realize there’s a bunch of stuff that you know, that you have this
know, crazy kind of muscle memory and organisational knowledge that is kind of hard to fill. But ultimately, you know, I, you you need to kind of find the people that can excel in the particular roles that you were doing. And, know, you may need to hire three or four people, but they will individually be better than you were. And so I said to Charles, like, you know, I’m kind of ready to have that conversation now. So I went and had lunch with Jeff one day and I, know, he was looking, I know he was talking to a bunch of people. And I guess it was interesting after him, I went back the next month and then the next month after that, and then two weeks after that, and then every week. And
know, we were kind of dating, I wasn’t sure what I was going to do next. And he, I guess he talked to a bunch of the founders I’d invested in and, you know, my VCs and other people. And he’s like, and he calls me one day, he’s like, I’d like you to come and come and work with us. I’d like you to be the I think he called it a sas guy at at soft tech VC, which was the name of the fund back then. And that was, I think we talked in early, maybe actually late 2014.
And was like, well, that’s amazing. Obviously, I need to talk to my board about this, consider me extremely interested. And I’d had this grand plan. I’d been kind of going at this full time, from consulting into starting this business, not paying myself very much, like no vacations for what felt like forever. And I’d had this grand plan that all the stuff that I’d never had time to do, learn to scuba dive, walk Machu Picchu.
you know, all the all the cool things that you get jealous when your friends with real jobs can do, go and do those. And of course, what happened was the board said, that’s great, Andy, we’re happy for you. You know, we think we’re totally okay with you stepping away. But we need you to do these things. And Clavier is like, well, that’s, that’s great, Andy, but I need you to start ASAP, because we’ve got like a bunch of stuff in pipeline. And so this kind of grand plan I had for six months of adventure and healing and time got compressed and compressed and compressed into the point where I finished at huddle on
Friday, April the 3rd of 2015. And I started at Soft Tech on Monday, April the 6th. And I had the flu at the time as well.
Kent Lindstrom (23:53)
You’ll get to that grand plan later. One day. Another 16 years. It’s funny you say that about the, like kind of what you’re good at or you mean the point of the company that you’re good at. Somebody said, and it stuck with me, this idea that the company changes every three acts. Meaning like there’s three people and that’s something. You’re sitting in your garage and then there’s nine people and that’s…
little something else. Okay. 27 people. You probably, maybe not everybody’s reporting to you anymore. You know, okay. I’m not really good at math, but whatever. A hundred people. Um, okay. Now there’s an HR person and a lawyer like that kind of stuck with me. And I feel at least for me, like you get to that hundred 300 person thing, it’s just a difference.
Andy McLouglin (24:39)
It is. think some people really excel at that. It’s just not for me. I remember when I joined, somebody had said to me, if that genuinely is you, then venture is actually an amazing job, because it’s one of the few jobs where you can be deeply successful without having to manage a bunch of people. You can still be kind of an IC.
Kent Lindstrom (24:43)
man.
Andy McLouglin (25:03)
you maybe you get that as being like a distinguished engineer at Google. Maybe you get that by being kind of a distinguished science scientist, open AI now. But, you know, if you don’t want to manage people, but like make money, venture is still a really good way to do it. If you do it.
Kent Lindstrom (25:15)
Yeah, and I think the flip side is it’s the same job all the time. When you’re in a company, it’s one thing there’s three people and then there’s 100 people and you’re growing and your revenue that used to be two million is now 200 million. In venture, kind of, day one, you raise money from LPs and you meet founders and you help them out and day 1,000, you raise money from LPs.
Andy McLouglin (25:36)
Yeah, I mean, it certainly kind of is a bit of a sausage factory where, know, stuff is just going through and, um, you know, you are doing the inspection and, know, putting the ingredients in and hoping that it gets well cooked on the way out and it doesn’t explode. do think though that, you know, I’ve been able to scratch my, my kind of entrepreneurial edge because I do get asked, you know, would you ever go back to operating? And, know, when I see the, founders that we work with who are just like supremely awesome operating, well, I’m not, I’m not like that. I’m not as good as them, but I think what I am good at is, um,
kind of like insane context switching and being able to do a bunch of stuff at any one time. the entrepreneurial itch is there. And I think now, having been able to take over the management of the firm and working with Jeff, but kind of really building it into kind of what I want Uncork to be in terms of the types of deals that we’re doing, the people that we’re hiring, the shape of the firm going forward, because it’s not.
We have no ambitions for how to be the size of Andreessen Horowitz, but when I joined we were four or five people and I think very soon we’re going to be 16 or 17. And that’s kind of cool. We’re building a real thing here.
Kent Lindstrom (26:45)
And how do you think, how do you contrast that, or maybe you’ve just answered this, is, you know, Charles Hudson went a direction of, I’m gonna start my own thing. I’m gonna raise money, I’m gonna, you know, clean sheet of paper and have my own idea about how to invest. Whereas you joined something that was working pretty well and you made it work better and bigger. Like, how do you contrast those things? Like, why didn’t you go start your own thing?
Andy McLouglin (27:08)
Totally. mean,
and this is something that, know, Jeff actually asked me this exact question, you know, when, as we were kind of sitting down for lunch one day, he’s like, mate, why, why don’t you go and do your own thing? You could probably go and raise 20 or $30 million, you know, be, you know, do the thing where you’re helping European founders come over here and kind of, and raise money. And my honest answer was that, you know, I’d fallen into entrepreneurship by, by accident and we screwed up a bunch of stuff along the way. you know, laughable mistakes now in retrospect. And, know, I, I feel like I,
had the potential to be really good at this, but I would only be really good if I got to learn from somebody who had made those mistakes themselves. Charles had been in the world of venture for many years. He’d been at Inktel and SoftX, so he’d seen it, right? He’d built that mental model. I didn’t want to go and do my own thing and kind of fuck up in the same way as I screwed up a bunch of the stuff that I did as an entrepreneur.
Kent Lindstrom (27:53)
Yeah.
Yeah. So a couple of things about just kind of your musings on Silicon Valley. Oh, well, first of all, I want to ask you, you at some point did, I know if you’re still doing it, the Institute, this idea of the founders pledge, like once you make money, putting some money back into something or other, how’d you come to hit that path?
Andy McLouglin (28:15)
Yeah, I mean, it’s the kind of idea with the Founders Pledge. It happened actually at a conference following the web summit in New York, where I was in a room full of founders, many of whom were early stage like myself, many of whom were sitting on, you know, potentially huge amounts of money in the future, but it was all on paper. And I was chatting with Scott Harrison, who runs Charity Water. And we were talking about this notion of like, wouldn’t it be great if
people could kind of future earnings, future wealth to a charity or at least kind of a part of charities that they can feel good about. The charities kind of know that they’re being appreciated and at some point this will come good. Because you talk to a lot of people who are very early in their careers and they want to make a difference, there’s something that’s important to them that they want to help, they just don’t have the means to do it. And so this was…
this was kind of a way to systemize that. As it happened, there was a guy in London working with Brent Hoberman at Founders Forum who was having the exact same idea. And so, you know, by luck we got connected. His is David Goldberg. David was the CEO of the Founders Pledge for many years and actually just stepped back in the last six months or so. Charlotte Monaco was running it now. And you know, David, for him, this was his thing. You I had an idea, he had a similar idea. I had the network out here.
he had the drive and the smarts to go and do it. under his leadership, we turned this from basically him and I running around tech conferences with a piece of paper where he’d make people sign a pledge on my back to a team of like 20 or 30 or even 40 people now who were researching the highest leveraged charities in any space. They’re running a DAF system, you know, now.
hundreds and hundreds of pledges, in aggregate, billions and billions of dollars, many hundreds of millions which have already been deployed to charities. David very kindly allows me to call myself a co-founder of this, even though I haven’t really done all that much other than allow him to sign papers on my back and make a bunch of introductions in the early days. I sat on the board of trustees for many years as well.
Kent Lindstrom (30:28)
That’s great. All right, a little fun with Silicon Valley. The current, so if you were to believe VC Twitter, seed funds like yours are dead. They should no longer exist. And the logic goes, there’s these big funds that have raised enormous amounts of capital, true, can confirm. And these funds are so big that they are now doing all the good deals and putting so much money into the good deals that nobody like you could possibly compete.
that did I get that right
Andy McLouglin (31:03)
Why not? Why not? And I’m going to quote Mark Twain back at you, which is the rumors of my death are greatly exaggerated. Look, we’re living in a world today where these mega funds can effectively snap their fingers and raise billions of dollars from LPs that frankly don’t care about venture scale returns. If you’re raising $2 billion from the PIF and you ultimately give them back $3 billion, they’re going to be pretty happy with that.
you give your average LP 1.5X their money back and they’re going to be very unhappy. there’s been a bifurcation not only of the GP sizes and the fund size, but also kind of where the LPs are putting dollars. And more and more we’re hearing from kind of a lot of the traditional LPs that they are getting pretty disenfranchised with these mega funds because just the returns just don’t stack up for them.
If you can write a $2 billion check, then it’s great. But if you’re writing a $20 million check and you’re getting 30 back, not that exciting. And so what we’ve seen is that there’s definitely a flight to quality at both ends. think investing in GC or Andreessen now is the equivalent if you don’t get fired for buying IBM. But a lot of the more thoughtful and sophisticated LPs are looking
earlier in the stack for where they can still find alpha. The byproduct of kind of all this money sloshing around with the mega funds though is that we’re kind of living through this age of consensus investing where as soon as something appears to be obvious or consensus, they will come in and they will oftentimes just write an option check. They’re going to write a five or $6 million check to lead a $10 million seed round. And if it works, then great. And if it doesn’t, what does it matter? Because that’s a teeny tiny fraction of what they’re doing. I think there are a
a whole universe of founders that get starry-eyed about having one of these big name firms and that’s what they want and you know that’s completely fine. There’s also a lot of founders, often folks who have been through this before, who realise that you know the brand of the firm that most people would recognise is actually not often the best for founders at the early stages. You what they’re looking for is somebody who specialises there. And I think the other thing is you know our job is to
find businesses which we have conviction will become consensus but don’t appear obvious yet. Because like I said, as soon as something appears obvious, one of the big name brands is going to come in and do something that we just think is economically stupid. But it works for them. So it’s all about finding these unpolished diamonds where you, through knowing the founders or by having some kind of
insights into the space and prepare to make a gamble that you can take this thing that doesn’t appear all that exciting to the outside world today and within 18 to 24 months or less make it look like a consensus deal.
Kent Lindstrom (34:03)
Yeah. And that of course seems to be the joke to me is when everyone says, it’s right there in the first sentence, like they get all the good deals and it’s like, well, of course you don’t know what the good deal is. Like that’s the whole, that’s the whole point is that you invest in Travis when it’s a black car service or Mark Zuckerberg when it’s a college thing or, know, whatever the case may be. I also get the sense too, that the, the partners at those big firms, maybe not the associates, but the partners don’t really want to do seed investing.
They want you to bring something that’s ready to take their 20 to $50 million check.
Andy McLouglin (34:34)
Exactly. But I think what they also are very happy with is the junior investors to go and do those deals. So it gives them a chance to stay on top of them. I think to any founder, I’m talking my own book here, but working with somebody who does this full time, somebody who is a GP in a firm, somebody who is going to be around five years from now when things invariably don’t go to plan because these are startups, right? Shit’s really hard. Stuff goes wrong.
That versus taking money from a big name brand where you’re working with a junior investor, that probably isn’t going to be there in three years time. I mean, again, it depends on what the founder is optimizing for. And if they’re optimizing for that big brand upfront, then that’s great. Good luck to them. But if they’re not, then there’s a wealth of great firms that they can go and spend time with.
Kent Lindstrom (35:22)
And the very tactical problem that a lot of founders seem to understand and explain is if somebody does that, if a big firm with a great name, famous huge firm, multi-billion dollar firm puts two million dollars into your thing, you don’t really matter to them at that point. But when you go to raise your next round, the question that you’re gonna get is, they’re gonna lead this round, right? And if they don’t, for whatever reason.
you’re good, you’re bad, they just don’t feel like it on that day, then you have a problem.
Andy McLouglin (35:53)
Yeah, yeah, yeah. I mean, I think it can work well when, you know, say, I’m just going to pick on some random names here. Andreessen does your seed round and the company is absolutely ripping. And then Sequoia comes in and does the series A. No one’s going to ask why Andreessen didn’t do the series A. I think it’s when, you know, things are going okay, but not great. And Andreessen don’t step up to do the A, you know, then it just leads to a bunch of difficult questions. You know, you just look like, risk not looking like bruised fruits.
Kent Lindstrom (36:20)
Yeah. So what do you make of Silicon Valley? This is little fun with Silicon Valley. What do you make of Silicon Valley in the past few years? Everybody, it’s just been fun to watch and I’m on the sidelines just watching, but a bunch of venture guys suddenly getting, sort of political and starting to yell at each other and seeming to have a lot of fun. Like Mark Andreessen and David Sacks and there’s Sean McGuire over at Sequoia or they, they’re just rich guys having fun. Cause
nothing affects them or what, like it just seems like a vibe shift in last few years.
Andy McLouglin (36:55)
I mean, look, it makes for it makes a great entertainment for the rest of us. So good. I don’t know how active any of these people are in terms of New Deal’s anymore. So, you know, they’ve got to fill their time in some way. I do think that there was for a moment in time a sense that, you know, by being active like this, especially if you had a particular political view.
it could get you closer to the government that could kind of lead to good things. think David Sacks has played that pretty well. But, you know, I think for, you know, for the vast majority of us, you know, where, you know, we’re not wealthy enough to stop working and, know, and just pontificate on, on Twitter, you know, it’s just kind of noise in the background.
Kent Lindstrom (37:39)
That’s
true. I think there is, and maybe you don’t agree, but I do think there’s more a practical version of it, which is somebody like Gary Tan, who’s, as I put words in his mouth, is looking around and saying, hey, there’s things that are happening in politics that could hurt us, like hurt the ecosystem that we’re trying to build. Like asset taxes coming to Silicon Valley, such that people like Larry or Sergey, David Sachs, or
you know, founders thinking of coming to Silicon Valley, don’t do it.
Andy McLouglin (38:12)
Yeah, I I think that, you know, that is absolutely a worthwhile concern and something that, you know, people should be worried about. I mean, this is kind of the really kind of for many years, the role of the NBCA to be in Washington lobbying on behalf of the industry. But I think it’s also great that people who have a megaphone and who have, you know, people listening to them are speaking up about about this stuff. know, the Silicon Valley kind of happened through an accident, right, an accident of time and proximity and talents and
a couple of other things. it’s very, very hard to replicate. it is kind of amusing to me that politicians will basically do unnatural things in order to unwind that for no good reason, other than to tax the wealthy. And I’m a big believer. Wealthy people should be taxed, but not to the point where they end up leaving the state and the state is ultimately poorer.
Kent Lindstrom (39:04)
Yeah, yeah, I did a whole podcast on this recently. I researched it. It turns out that the wealthy people, they may not be paying enough tax and you argue about that, but they are paying a lot of tax. And it turns out that the top 1 % in California pay like 40 % and the top 10 % pays 70%. So even though it’s a low proportion and know, Warren Buffett says, well, I have a lower tax rate than my executive assistant.
You know, if Larry’s living in California, his stocks are paying dividends. When SpaceX goes public, he’s recording that on his tax return and, paying the taxes on that. And so just the scale of their wealth is such that even the smaller pieces of taxes that fall off of it are huge. And when these guys leave, I mean, nothing’s happened yet. And these guys are in Florida and Texas. It’s kind of a crazy… When I was working in Silicon Valley 15 years ago, I didn’t even know who my district supervisor was.
like in Sanford, like it just even occurred to me, like these guys are just making the toilets flush and the electricity and I don’t know what they do, it’s fine. And now you’re at a point where you’ve got pretty serious Silicon Valley people saying, you know, this may be a thing that destroys Silicon Valley, which is…
Andy McLouglin (40:15)
And I think when you zoom in even further, you’ve got people looking at what’s going on in San Francisco. think the city was in real trouble for a really long time. Things were not good. I think a lot of us who stayed, myself and you, self included, feel good about our decision. A lot of people left. A lot of them have then quite quietly come back. But a big part of why things are working now is, obviously, again, luck and timing. AI happened here.
and now everybody feels like they need to be here, but that’s kind of coupled with a change in administration, especially on the board of supervisors, where you now have a bunch of people who are pro-business and pro-safety and pro-housing, and, you know, versus, you know, kind of wanting to keep San Francisco in this kind of rose-tinted kind of fake version of kind of what it was when they first moved here 25 years ago. I mean, it blows my mind that the progressives, and this is such a hilarious name, that the progressives…
We’ve gone all the way around the political spectrum where they’ve basically become extremely conservative about house building and other things.
Kent Lindstrom (41:15)
It’s crazy. recently recently went to see a show at the castro theater So there’s a beautiful theater in san francisco in the castro district, which is a famous for you know The gay rights movement sort of came out beautiful theater, but it was shut down in disrepair The seats were these terrible old seats and somebody came in to redo it and our board of supervisors fought it fought renovating an empty theater for reasons It’s beautiful like I want
Andy McLouglin (41:44)
It’s incredible.
We went to see Sam Smith there during his residency and it’s unreal. It’s like small, it’s intimate, the sound system is unbelievable, it’s beautiful inside. And it just makes no sense that people would push back on something like that. And I’m sure they had reasons that they thought were good and valid, but again, like there’s no progress with these progressives.
Kent Lindstrom (42:05)
Yeah. Well, I think maybe what’s happened in Silicon Valley and putting aside the kind of, know, Keith Rubey, know, David Sacks stuff, but I think people in Silicon Valley were just kind of doing their thing and the politicians were taking the money and like going to the meeting on Tuesday afternoon at two and putting together a plan to do some thing that if you, anybody told you what they were doing, you’d be like, wait, that’s insane, but you just weren’t paying attention.
And then all of a sudden it just got so bad in San Francisco that people are like, we gotta pay attention, like we’re paying for all this stuff and all these things are happening, we just have no voice in it and we’re being vilified for it. Like we’re literally not doing anything but giving you money and like we’re being vilified for it so if we’re gonna be vilified maybe we should just get in there and make something happen.
Andy McLouglin (42:53)
Yeah, I mean, I put a lot of credit here kind of at the door of GrowSF. I’m sure you’re familiar with them. This is basically a couple of former tech guys about slashing in with Gary Tan’s co-founder at Posterous. And they cared about the city. They understood kind of where the issues were. And they’re like, we can fix a lot of this through information. Let people know actually what’s going on. Give them the information to make rational choices at election time.
You know, everybody in the city gets a big thick book with election materials. Nobody reads it other than my wife because she’s crazy. But I don’t think anybody else in the city reads the thing because it’s absolutely massive and super dense and not very interesting. And even when you read it, you still don’t really get kind of what people stand for. so they
Kent Lindstrom (43:39)
because
everything’s called like, know, money for a better tomorrow. Yeah, right.
Andy McLouglin (43:46)
Which
is probably actually an anti-housing lobby or something.
Kent Lindstrom (43:50)
Right, or it’s a water bond. It’s crazy. let’s just get a couple final things here. Is there sort of a, I don’t want to say mafia, but like a British crew in Silicon Valley? There’s sort of a, there’s certainly a Canadian thing here. Is there a British?
Andy McLouglin (44:09)
Absolutely. Yeah, when I first moved here, there were a bunch of Brits here. mean, there’s always been thousands and thousands of Brits across the Bay Area, know, from down in Sunnyvale all the way up to Marin. But there was no real organization. And so a group of us back probably about 10 years ago decided to start something called GBX, kind of like based on the Canadian C100, a network of people who were here.
because we all want to get to know each other. all live here for reasons and we love it here, but having a connection to the old country is great as well. But more importantly, providing a landing pad for the people who are moving out. And in the early days, was me, Pete Flint, who’s now at NFX, Michael Burch, who was the owner of Bebo that now owns the battery.
We had my co-founder Alastair Mitchell, his wife Kate was our exec director. She was running the thing. Julian Green, who’s kind of Google X, just a lot of like really awesome people. it was just an idea at that point. Today, five or 600 members, most of them here, a bunch in the UK though, events all throughout the year. And we’ve really been able to kind of systemize this landing pad for founders who are coming out to give them access to
network of new friends but also kind of the connectivity that we’ve all built from having been here for so many years.
Kent Lindstrom (45:38)
Your guy Harry Steppings over there has done pretty well.
Andy McLouglin (45:41)
Yeah, mean, you know, and think Harry has, you know, he’s now, you know, one of the voices in, in Europe. I mean, I don’t think he spends a lot of time out here. But, know, people won’t, you if you invest in a company, people will take it seriously.
Kent Lindstrom (45:55)
Yeah, that’s a crazy story. Kind of an N of one too. it seems like every, mean, I’ve been doing this for a while and I do it cause it entertains me, but everybody seems to have a podcast and that seems like the only one that, because you have a guy like David Sacks, right? And was already, his podcast is great and it’s really cool, but he was already famous and people knew who Shamath was. Kind of final couple of things. How do you feel, you know, if you kind of saw the emergence of the internet, the emergence of mobile, what do you,
What do you think about investing in a world where AI has sort of entered the stage as you’re investing in seed stage companies?
Andy McLouglin (46:32)
Yeah, I I think at this point, everything that we’re looking at is an AI company. Now I think you can then kind of go a little bit deeper and go, okay, so what is an AI company? Is it AI infrastructure? Is it built AI native? Are they running the business using AI? I think it’s kind of all on the table. I also think that, you know, in a handful of years, nobody’s going to be talking about AI companies. They’re just going to be businesses. Like no one talks about, you know, I’m a cloud-based software company. It’s just a given.
I think part of it is, we live in this echo chamber where VCs are so focused and fixated on kind of what the next big thing is. You could have a perfectly good business, but if it doesn’t feel AI native, nobody’s gonna be interested. So every founder feels like they need to have an AI story, even if it’s been shoehorned in a little bit. But that said, the front end models, Claude, OpenAI,
they have just fundamentally changed the way that everything is being done. I think, again, kind of on the echo chamber piece, you know, we’re all living this firsthand and we’re kind of surrounded by it. You go and talk to somebody who’s running a manufacturing company in the Midwest, they’ve heard about AI, maybe they’re using Microsoft Co-Pilot, something kind of super crappy like that, but it hasn’t touched them yet. you know, we really are, you know, even though it feels like people might be late to the game now,
We are in the earliest of early innings when it comes to…
Kent Lindstrom (48:01)
You’re totally right. And it totally happens too with like, mobile comes along, right? And everyone’s doing check-ins on Foursquare and that’s kind of cool. But then the imagination kicks in and somebody like Travis or Travis and his partner, however that works said, no, no, no, here’s what you do with a mobile phone. You can identify where somebody is and you can pay a driver and that’s what it is. And I bet in AI we haven’t even seen that yet.
Somebody goes no here’s the guy’s gonna walk in your office in the next six months or that woman’s gonna walk in your office But here’s what you do with AI you’re gonna go Okay, that sounds crazy. Yeah
Andy McLouglin (48:36)
I
mean, the way I think about it is we’re kind of living in the era right now of when, I think we’re at the back end of this, but kind of still in this kind of first innings where if you remember when the app store first launched and everybody could build an app, anybody that had a traditional piece of software was trying to jam every single piece of functionality into the mobile app. you know, and it just, the ergonomics just didn’t work. It wasn’t built for that. It feels like we’ve seen a little bit of that right now where everything feels like it has to have AI.
all over it. And what we will figure out over the next year or two is kind of where are the ergonomics that you need it or you don’t. I did see an interesting country opinion on X either this morning or last night about SASpocalypse and is that actually massively overstated. And their argument was that with vibe coding and the ability for anybody to create software, these systems of record actually become even more important because
when you’ve got a hundred systems touching them, you can’t just rip them out and kind of go from one thing to the other.
Kent Lindstrom (49:35)
I think people also forget too that code is code and businesses are businesses. just cause you can vibe code something on the weekend doesn’t mean that the Southern California healthcare system that’s regulated by HIPAA and has 5,000 nurses that need the thing to work and they need to call you 24 hours a day is gonna use your vibe coded thing. You tend to hear it more from people I think who maybe haven’t run businesses. One thing that’s kinda surprised me is people who are like…
If you get, I’ve met a few friends who are like anti-AI, which seems crazy. Like I was just traveling in Europe and you know, pull out the phone and shit, there’s eight things on the wine list. And nope, just take a picture and tells me what to get. Like I can’t figure out the thermostat. I don’t get it, but there’s a few people running around who are like, nah, I don’t like it. Which is weird that you didn’t really have that with mobile or the internet, I don’t think.
Andy McLouglin (50:27)
I
think there were plenty of people that refused to get a smartphone for a long time. There were plenty of people who refused to buy into the internet because they could get everything they needed from their daily newspaper. You wind all the way back to the Industrial Revolution, there were the people who smashed the mills and the looms because they felt like it was going to destroy humanity. So there’s nothing new there. the Luddites have appeared in every single technology cycle and will continue to in the future as well.
Kent Lindstrom (50:55)
Yeah, wait till they see Wemos.
Andy McLouglin (50:57)
What
are doing? I think it’s these people that are kind jumping on them and setting them on fire.
I think there is actually a real concern here and Waymo is probably like a particularly acute example of where this next technology cycle is going to be reducing the need for human labour. And right now, we still don’t have a good answer to this when the not just blue collar but white collar work, it could eat 50 % plus of what people are doing in the next few years and in the long term much, much more. What happens to those people?
Kent Lindstrom (51:31)
Yeah.
Andy McLouglin (51:32)
Yes, they
can be re-skilled. Yes, they can go into new jobs, but then what happens when that job gets automated?
Kent Lindstrom (51:38)
It’s true, find myself, well, I’ve always thought it was weird, I was an econ major, that unemployment numbers are like, you know, 4 % unemployment or 3%, like how is it that the number of jobs in the world is almost exactly the number of people? Like, why is it unemployment like 90 % or like 140%, like there’s twice as many jobs as we need to do. But I always find myself, I find myself quoting Mark Andreesen a lot I guess, but you know, there’s the idea that,
His thesis is the tech wipes out jobs but then creates that when jobs go up by a million, what really happened is we wiped out 10 million jobs and added 11 million. And the classic one is Uber, right? Like, we knocked that out. That just created all these jobs. So the Uber job that’s going away didn’t exist 15 years ago. So. Yeah. It seems like a problem we should solve when we actually have it, but.
Andy McLouglin (52:25)
Yeah
The
other alternative is we basically end up in a world that’s like WALL-E, the Disney movie where we’re grossly overweight and sitting in floating chairs eating liquid ice cupcakes and having robot service.
Kent Lindstrom (52:40)
I’m looking forward to it. Well, this has been great. What are you excited about? What are you looking forward to as you’re building this building Unquark?
Andy McLouglin (52:47)
I mean, getting some distributions back would be amazing. Yeah, we’ve got a bunch of things in play right now, which is and so you we’ve I think everybody that’s in venture, you know, more or less have been a few outliers, everybody’s kind of been waiting for the liquidity cycle to start again, it feels like we’re seeing, we’re seeing signs of that, which is exciting. I mean, for me, you know, being able to build the team, you know, hire people like Susan and trip and Amy, and kind of, you know, and allow them to do great work is like,
Kent Lindstrom (52:50)
We’re getting there.
Andy McLouglin (53:14)
exceptionally motivating and satisfying. You know, I think for me, my, you know, my biggest concern is always like, how do I stay relevant? How do I stay on top of, of what’s interesting? How do I ensure I’m seeing, you know, the best deals that I can? And so yeah, I mean, I, know, I think it’s just a constant challenge, like to just be as good as you can be at this.
Kent Lindstrom (53:40)
That’s pretty cool. So how do people find you and Unquark, a founder or somebody who’s just interested in what you’re thinking?
Andy McLouglin (53:46)
Yeah,
I mean, we are very, very open to getting cold pictures. There was this kind of old thing in Silicon Valley where you had to have the warm intro. And that’s great. You can get a warm intro. That’s really good. mean, it often shows kind of resourcefulness. But if you can’t, just drop us an email. My email address is not hard to guess. If you can’t guess it, then you probably shouldn’t be starting a company.
Kent Lindstrom (54:07)
Mark Andreessen says the version of that one too, where he’s like, yeah, he claims that the reason that you need a warm intro is he’s like, this is the first test. That’s all.
Andy McLouglin (54:17)
Yeah, I mean, and if you can get the woman show, that’s great. But you know, we, I remember getting a, an email out of the blue in the middle of 2018 from, um, from this kid. And he’s like, Hey, Andy, I’m 18 years old. My two co-founders of the same age, is our third company we’ve been working on together. We, uh, we’re building a next generation software development environment called Coda. Um, you know, we’ve saw your investment in launched our clean other dev tools. We think you’d be great. Here’s a video. Let us know if you’d want to chat. And I was like, this is a
Remarkably good cold email like hit just hit the nail on the head We you know why let that round with Redpoint a few months like probably a month and a half later That company just raised, you know, 90 million dollars in their latest round. So, know, they’re motoring
Kent Lindstrom (55:01)
Yeah, it’s incredible. I’ll wrap up. But Charles Hudson pointed out on this podcast, he’s like, you know, there’s people, yeah, if you went to Stanford and, you know, worked at Google, it’s pretty easy to get to a VC, but you could be a smart guy who went to like Tennessee state and you just don’t know any of a really good company. You don’t know people. And he pointed out that he was pretty open to getting those kinds of cold emails because he’s like, well, I understand why you can’t find me. You just, you’re in a different network. well, thanks so much for doing this.
Andy McLouglin (55:29)
My pleasure Ken.
Kent Lindstrom (55:30)
All right. This has been the Something about Your Podcast. Andy McLaughlin, my guest. Talk to you next time.