Kent (00:24)
All right, welcome back this is the Something Ventured Podcast. I am Kent Lindstrom. I am your host, my guest today, David Tisch How are you doing?
David (00:30)
I’m doing great. How about you, Kat?
Kent (00:32)
Good. Thanks so much for doing this. I got I got a little New York thing up here up here for ya.
David (00:35)
Thank you. Do you you swap that for
Kent (00:38)
No.
David (00:38)
your gu okay.
Kent (00:39)
I you’re I am far less clever. Far less clever than you might imagine.
David (00:43)
I
changed my bears around for whichever founder I’m talking about.
Kent (00:46)
that’s
that’s pretty nice. So David’s a VC, but but hang on. This is this is this is gonna be interesting. Bear with me for a second here. Yeah. Explain something about venture capital to you. If you if you go to the website of a venture capitalist and you see one or two famous companies on that website, those are the one or two famous companies, call it two famous companies, that that VC has ever invested in. There’s not like another
Famous company they just forgot to put on their website, right? And so if you go to most VC websites, we’re talking about seed VCs, you’ll see maybe one or two famous companies. And by the way, that’s great. Like in this business, again, seed investing, that’s more than most people have. If you see one or two companies, that’s pretty impressive. David has invested in ramp and plaid. That’s two companies, right? That’s pretty good. Except.
He also invested in ID.me, Boxy, Stripe, Base Ten, Airtable, Warby Parker, Clay, Zipline, and Wait for It, Cursor, which just got acquired for sixty six billion dollars, which there might be bigger acquisitions in tech. I don’t really know what they are. You’re having a pretty good career.
David (02:01)
Just just day by day. I think it probably just means I’m old.
Kent (02:06)
no, what do you like you’re like bulldurum with just play the play it one day and play it?
David (02:10)
Okay, it’s a I think I think venture capital, as you said, is a business of finding outliers. And I think in our approach to to what we do at Box Group, we we’re waking up every day trying to find people that are going to build companies that become great. It is not there’s no predictability in it. And I think that that’s the uniqueness of being an early stage or seed VC.
is you’re meeting people before any of these words matter, any of these names matter. and you’re getting to watch the the journey from the very beginning. And it’s a privilege to do it with the ones at work and become household names, but it’s equally a privilege to do it with the ones that are are trying hard and don’t work. It’s it’s the job. And I think it’s like one of the coolest jobs out there.
Kent (03:04)
How do you come to the job in the first place? I mean, you’re in New York, you’re you know, you’re Tish, that’s kind of an auspicious name in New York. It seems like you could be an investment banker or a hedge fund guy or private equity’s pretty hot right now, right? That’s that’s pretty good.
David (03:19)
you’re old too. So I I grew up, you’re you and I are are both old but different old. And I grew up watching the internet start. Yeah. and I fell in love with it as a kid. And I I think finding your way to a career on the internet in you know early two thousands is very different than doing it today. I think today, it’s taught in schools, you’re sort of taught about entrepreneurship, you’re taught about the startups, you’re
The word venture capital is known. There are podcasts, there are blogs, there’s access to this industry. if I go back to sort of 2000 five, six, seven, as I was finding my way here, this was a industry for rebels. It was not something that was accessible, it was not something that was known. you know, Fred Wilson was blogging, like Bradfeld was blogging. There was some early access to it, and learning, but it was
It the early days and been doing this for a long time.
Kent (04:20)
What do you make of that? There’s I’ve been trying to explain this to people. There’s a group of people you’re younger than me, but I think you might still have caught this thing, where you existed in a world before the internet. Like, hey, it’s summer. Like I would go, like, well, I guess I gotta get a pile of books to read and if I want to meet a girl, I’m gonna have to go to a party and drink some beer and meet a girl. Like and then so so when and part of why I’m doing what I do now
investing in amazing tech companies, is that when the internet came out, and we’re talking like beep beep blute modem stuff, it was cool. It was like this is just this is nuts. Like this did not exist. And now this exists and this is amazing. In contrast to somebody today’s maybe like, meh, yeah, I’ve had an iPad since I was two and the Wi Fi sucks. You know, I’m AirP
David (05:13)
I so so if you ask AI to explain this, it’s it’s pretty fascinating. There’s a generation, it’s called the exennials. It’s sort of in between Gen X and millennials. it’s 1978 to 1983. I’m born in 81. Zuckerberg for context is 83, so he’s right at the other at the end of this. And what it explains is our our childhood. We
This five year micro generation experienced the switch mainly from analog to digital. And we lived it. We lived it in the sense of I had a 14 at a 2400 baud modem. I like when it got to 144, it was like a miracle. I was on AOL, Prodigy, CompuServe. I saw the web start. You f you got to see these websites launch. So eBay was a core part of my childhood.
You know, I was early user of just about everything that became big companies. Amazon would advertise on our like sports radio station for the biggest the the the advertisement was a bookstore the size of a football field. and that was Amazon. And and you fast forward to now and these are all ingrained in the sort of global society.
I think that history, that context of where we were to where we are now is a helpful framework for thinking about where things could go. But I think the more you try to assume the world goes back in any way, or that the patterns of each moment will repeat themselves, I think it’s a huge mistake. I think for me, you know, investing is an example. when I started
investing if you had said you know a business can get to a billion dollar valuation or a ten billion dollar valuation, these numbers were like unrealistic. And today in the public markets, the big tech companies are worth multiple trillion dollars. Yeah. These are companies that were worth, you know, multiple hundreds of billions. These these are significant multiples on the biggest companies in the world. And so I think the key to
sort of not losing sight of of what’s coming next is not living in the past. And so I think those are like the my partners didn’t have those same childhood experiences. My the founders were funding didn’t have those childhood experiences. So I can remember them fondly, but they’re pretty irrelevant.
Kent (07:56)
Yeah, I think people forget how small the internet like the that what the internet was like early on, there were like a couple hundred million people on it, which was huge, but it was a couple hundred million people. And like these companies would get a you as an investor, you’d invest in something and it would get acquired, you know, for two hundred and fifty million dollars. And it was an amazing like knockdown drag out outcome because there were two hundred and fifty million but now, you know, there’s four billion people.
And these companies actually generate cash flow in the tens of billions of dollars and are worth hundreds of billions of dollars, you just forget that the scale of the thing has just shifted so like kind of so dramatically.
David (08:34)
Totally. And it’s it’s global and it penetrates everything, right? And so what started as you know the internet is now a totally different it’s it’s like a horizontal part of the world. It imp impacts every industry, the software and the hardware component of what technology has created, modernizes industries rapidly, and then you layer on AI.
the the moment we’re in right now and it’s doing it faster, cheaper, and better than ever before. And so it it’s this compounding unlock of growth and opportunity that isn’t distributed equally, that isn’t accessible perfectly. but I think the magic sometimes is important to to appreciate, right? The like and and you alluded to like kids
sort of defaulting to assuming all like the idea of Wi-Fi is pretty magical. The idea of like base AI is magical. The idea of like accessible AI in your hand while traveling the world or Starlink. Like these are magical things. And I think, you know, the the dream is important to to remember. And when founders start something, they’re made up ideas. They’re they’re
Creations and I think watching those dreams come true is a you know, unique lens to see where the world’s going.
Kent (10:13)
I do think find it kind of amusing the number of venture capitalists who get access to AI and then use it to book hotels. Which which wasn’t, you know, I didn’t have that trouble booking hotels before, actually.
David (10:23)
The hotel things seem clickable.
Kent (10:26)
I’m pretty good at it online. What do you make of the sort of messiness of seed investing? Where you it’s unlike other stages, you know, I had Hunter and Sachan from Homebrew and they kind of talked about this where they were like, you know, we were pretty famous
beyond what we had achieved in terms of investments. Like five years in, like still we didn’t know it was gonna happen. Now it ended up they invested in Shield AI and SHIME and they did great. But it’s just such a messy path compared to, you know, investing in the series D of or N of SpaceX and taking your multiple.
David (11:05)
Yeah, I I think for me it’s important to remember that we’re lucky in that we have a portfolio and that we’re in very many ways a commodity. We’re providing capital and some version of service to the customer who is a founder who is living fully in their dream. And so you can abstract these stories of messiness, these timelines, these
you know, highlights, but inside of each of those stories is a human who is going through way more emotionally, physically, psychologically, than the investor. And the investor gets to come on podcasts and talk gloriously about the the great stories. But if it doesn’t work, that is normally someone’s who’s been very successful in their life, maybe never failed. That was their dream.
They set out to do it and it didn’t work. And the actual toll of that, I think, gets erased in having a portfolio, in talking about the winners. so I think for us, it’s it’s incredibly important to stay aware of where your role is in a business that is investing in someone else’s business. Yeah. but
The timelines in early stage venture are incredibly unrealistic. When you tell someone in any other job that like your results or your feedback loop is five, 10, 15 years, that’s an irrational timeline. Most other businesses, like in finance, most financial businesses public, immediate. You know exactly when you go to bed at night, how much money you have. In
Private equity, there’s like a defined timeline to start stop that you are operating under. And then you go into late stage VC, again, really compressed timelines. And at early stage VC, it’s a totally unknown timeline. And in, you know, an operating company normally you have a job, you have a task, you have a project, it start to stop. When you are two people in a room trying to build a company from scratch, it’s just it’s it’s an infinite.
set of risk and opportunities that sit in front of you. Yeah.
Kent (13:33)
Yeah, it it’s interesting. You always have empathy for for the founders, which I don’t know how many venture capitalists actually have. But what do you where do you other than having that empathy, which goes a long way, where do you fall in the spectrum of kind of r writing yourself into the store like you’re really helpful to these guys? You’re like, hey, I’m just lucky they took my money and if they listen to me once every ten times
David (13:58)
I hope they don’t listen to me. If they need to listen to me, no, we’re the we’re the like extras in a story. I think if you do a cast at the end of a startup journey, the majority of investors, if not all of them, should just be like extras. the 30th employee you hire, the hundredth employee you hire, if you’re scaling, the thousandth, those people built and they make and they create and they’re part of your culture and they’re
inspiring others to join. They’re inspiring people to stay at your company. I don’t believe investors make or break companies. I don’t think they are like contributing factors to success. I think what they are are relationships for the founding team to rely on as the founding team wants to and as the investor is able to build trust and confidence in that founding team.
To be a phone call, to be somebody they reach out to. I think the more you inject yourself into a narrative or the more that you are trying to force opinions onto a company, the lower the probability of success.
Kent (15:13)
Why do you think it’s this is a weird thing in venture where people try to like you know, they invest in some company, it does great, and then they’re like, and yeah, and I was a big part of making it great, which is any other area of ma maybe private equity, but like if you like short the yen against the dollar and make a hundred million dollars, you go, I’m a genius. You don’t say, and I also called the Prime Minister of Japan and I told him to do this and it’s all because you’re like, I made a hundred million bucks, I’m a genius. It’s
David (15:38)
Because
it’s a passive job and there’s an ego that needs to be fulfilled. And the only way to become active and fulfill the ego is to inject yourself as a contributing factor in a story that isn’t yours. I I think it’s pretty simple. It goes to like the the nature of humans that have ambition and expectations and
I think there the other side of it, which is, you know, logical, is people have jobs at venture firms and they have to use their investments to get promoted, to succeed, to grow, to develop a brand, to develop power inside of their firms. And then in terms of attracting a a future founder, if you have attached yourself to the story of prior successes.
And you’re sort of known as the the person, the investor of that company. I think that helps attract the next set of founders. But I think when you believe that you are the reason that something succeeded, that probably crosses the line to like delusional or
Kent (16:55)
Well, it doesn’t back test very well either. If you think of like, I don’t know, did Travis Kalinick listen to anybody? Like Mark Zuckerberg structured his board such that you could not tell him what to do. Right? Like in fact, it might be a good sign when you know, when a founder is like, Yeah, no, thanks for the advice, but I’ve got this.
David (17:16)
Yeah, I think unsolicited advice from VCs is is probably the least valuable thing. now look, I think there’s a relationship to be built that if you’re able to build it and a founder wants to talk to you, they’re doing it because you’ve proven that their time is well s well used by talking to you. And I think that is like awesome. But I think to
sort of come in with the expectation. And there are probably to to be clear, there are probably five VCs out there, maybe 10, that like you should listen to. And that are outlier board members that have built something from the ground up or been part of enough. Like if Mark Andreessen is telling me what to do or giving me advice, I would pay a lot of attention. Yes. Now it doesn’t mean the entire firm and it doesn’t mean the random new partner that joined last week.
But I think at certain firms there are excellent either former operators or just luminary investors that have seen enough. I think Alfred at Sequoia is like worth listening to. I just don’t think it is the thirtieth best VC firm, the third partner there is equal to, you know, the top five percent of VCs in the country or top one percent.
Kent (18:35)
Yeah. Well that’s a great point. There’s two things that can happen. One one can be like, hey, I’ve I’ve I’ve seen so many things that I’m here to tell you that what you’re doing is here’s how it ends, like ninety-nine times out of a hundred. And then there’s also like I’m part of the pack and I went to the conference and everyone’s investing in physical AI. What’s our physical AI? You know, whatever whatever I mean, I’ve been on I’ve run companies where the board’s been like literally whatever conference they just went to.
we gotta get into you know, whatever this is or that is and it’s just a
David (19:06)
I don’t sit on boards, so it helps. Yeah.
Kent (19:08)
Yeah. Yeah, we w we don’t either.
David (19:10)
Well I just I don’t I don’t wanna I I don’t I don’t see in the best companies how that is a useful way to impact their success. I think you can do great work for on behalf of a founder from the outside. Yeah. So I prefer there.
Kent (19:30)
Yeah, I think that’s right. And at the seed stage, I w what do you gonna do? Fire the CEO? Like if you’re doing that, you’re you’re you’re screwed anyway. So what okay, so you so you’re you’re meeting people who are coming to you and saying, I’ve got I’m gonna change the world, which is what’s so great about this business because they’re ridiculous I know.
David (19:47)
Sometimes they do though. It’s so cool.
Kent (19:50)
It’s that’s Silicon Valley. Like you sit down with somebody who’s like, I’m gonna, you d da and then cure cancer and you’re like maybe you will as opposed
David (19:57)
And then and then it happens sometimes and it’s like what a what a magical like thing to watch and be be like slightly attached to. It’s like a incredible privilege.
Kent (20:11)
And when so when you’re sitting down when you’re what are you looking for? You see the founder, the the the thing hasn’t happened yet. It’s a person, they’ve got a vision. Okay, you’ve only got what you got in terms of information. What do you and your partners kinda go?
David (20:24)
We spend a lot of time on the why. Yeah. Like, why are you building this? Why are you the right person? Why is this interesting? Why can you do this? And like, why why does this matter in five, 10, 15 years? And I think when you start understanding the why, like the what is sort of obvious when you meet a company. They’re gonna explain to you what they’re doing.
They’re going to explain to you like what they’ve built and what they’re going to build. But that’s not a vision. And that’s not going to play something out in a complex world that feels like a very isolated set of facts. And to me, the why starts to attach the what into the world. And that is what we invest in. You’re not giving rewards out, you’re you’re investing. And the investment, as we
Talked about is a five, 10, 15 year outlook on the world. Yeah. And so you have to have a founder that can articulate where the world’s going and why they are capable of navigating all those moving variables and creating something that’s gonna be important in that complex system. And I think you learn a lot by asking, like, why you doing this? And
You can ask it in an open-ended way, such that you see, are they like gonna talk about the idea, the market, the product, or are they gonna talk about like the inner drive that forces them to take this risk in life and the experience they’ve had, whatever those those factors are. And I think that that is how we learn about people. And that’s what we invest in is people.
Kent (22:15)
Is there anything you can do to figure out or to div it so somebody told me once, I’ve kind of seen this in companies I built, that the company management task changes like every three acts. Like three three people sitting around a table, then there’s nine people, that’s a little different. Twenty seven, now you start to you know, a hundred people, now there’s an HR person, three hundred people, okay, you know. Is there anything you can do to take someone and go, I wonder if this person can manage one hundred people?
David (22:45)
We think about that a lot. because you have to sit in a room and sometimes it’s Zoom, sometimes it’s a conference room, and you’re like, are these two random people across from us capable of leading a hundred, a thousand people? Like you you imagine the all hands. Are they standing up there and inspiring everybody? Are they able to recruit amazing people to join them? That is a huge factor. It is
predicated on building something that’s working and a business, a product that’s working in order to get to that scale or raising enough money to get to that scale. But they have to like the biggest early sign to me is is like who have they brought around the the company? So who are the initial hires? You know, when we go to college campuses and meet students, you look for the student that is able to attract and recruit their smartest friends.
If you are starting a company as a freshman, sophomore, senior, recent grad, are you hiring to work for you your three smartest friends at a great school? Why not? Like are they not inspired by you? That’s an interesting thing. And you see at campus, cursor is a great example. They were able to attract a ton of the best students that they were in school with.
we founded we funded a company called Mock out of school as well, MIT. And Ethan, you know, pitched us and he’s like, I have 50 interns that are wanting to drop in want to drop out of school to do this with me. Yeah. That’s a good sign. When you get to a, you know, more senior person in their career starting a company. Are they putting the band back together? Are they bringing people from
You know, Palantir, are they bringing people from Anthropic, OpenAI, from Ramp, to work with them? If not, why? So are you not able to inspire the people that know you to join you? I think those are really early factors that you can look at to be like, is is this person a magnet for great talent?
I think you’re also, you know, it matters again the archaeo archetype of the founder, but you have to imagine growth. So you can’t assume that the 18, 20-year-old founder is a static object. They’re going to have to mature into leading people way older than they, than they are, and people that are young and ambitious and
unmanageable and everything in between. And you know, when you meet a young person with bright eyes and big dreams, it it is going to take maturity along the way to figure out what style of leader they can become.
Kent (25:52)
You you mentioned it, so I’ll ask. I mean Cursor is a well, maybe not for you, but for most people once in a lifetime. Like what a hell of a journey. W what w I mean, what was that like at the beginning before you know, c if you can remember without you know
David (26:06)
Yeah, my partner Claire met Michael when he was probably a sophomore in college. she was at business school and they both were on a program called Dorm Room Fund Together as college or or student investors. and Claire identified Michael as one of those unique talents. And I think now that’s where it started is
before there was an idea, there was a person. and
Kent (26:40)
Because it was something else, right?
David (26:42)
well that that’s that’s even later. But when Michael started cursor, you know, A, it’s like two college friends, two high school friends, like this is the right version of chemistry. but Claire was able to vocalize how special it felt from the very beginning. And I think you know, we as a team at Box Group invest as a team and we don’t view it as
competitive environment internally. And I think that allows for everybody on our team to find great people, get excited by them, and figure out an opportunity how to work with them. And so, you know, it is a once-in-a-lifetime journey. You don’t see a company start, grow, work, and exit in such a short timeframe at such scale ever.
Right. I think I think on paper it’s like the biggest VC MA deal in history, which seemingly once in a lifetime. But I think again, like you look and this is a group of people that were able to attract their friends, unique talent, and build in a moment that was so competitive in a space that became like insanely competitive, where giants were just attacking.
from every angle and hold their own to such a great outcome for them that you just again feel privileged to have been part of that journey in in a very small way.
Kent (28:22)
Was there a particular point where it became clear that cursor was going to change the tr trajectory of at least that fund where you kinda went, okay, this is one of the big ones?
David (28:35)
Yeah, I think there’s like always moments of inflection. I think the challenge in company building, as you alluded to, is like the moment of inflection can either be driven by customer adoption, revenue, team growth and momentum and product iteration, or fundraising. Yeah. And the fundraising one is the worst one. Yeah. It is it is not actual progress. It is
permission to make progress. And so I think as a venture capitalist, a lot of the time you’re judging progress on fundraising, on valuation. And I think, you know, with Cursor, they’re, they were playing at the sun the entire time. There was an incredibly competitive environment. And so they were able to just keep going at such a high level of execution that
You know, you you sort of see it when you know it and you feel it and and you hope that it maintains itself. I think each success story looks different. I think when we look back at ramp and their ramp up to where they are today. And I think when you look at clay and plaid as a another example you brought up, each one of these stories looks and feels so different.
A lot of the times there are enormous bumps along the way, right? If you go back in history, like Facebook, Uber, Airbnb, there’s like five other luminary companies, they all did down rounds. No one remembers that. But but they all did down. There was a moment when it was ugly or uncomfortable or a struggle. And each one of them did a down financing.
And not every success story is just up and to the right with like a perfect curve. And I think you’re in a moment in AI where it feels a little bit like once it’s going, it’s going to keep going. And some might, but there will be bumps. And I think you have to appreciate that each story is going to look and feel different. And the moments of uncertainty and the moments of challenge are actually, you know, the the most important time for a company to push through and figure it out.
Kent (31:03)
Yeah. Yeah, there’s something going on with some of the AI numbers that just seems a little weird to me. I mean I get some get I get that some people are growing that fast. But there’s also some of these companies where they’re like you’re you just think like yeah, they’re a hundred million dollars and a few and you’re like I don’t like companies can’t buy software that as quickly as you say you ev even if your dad ran the company and they like i i it it’s not even clear how you could possibly do this.
David (31:30)
Know. I think I think everybody likes to make macro statements on venture or macro statements on startups or or technologies. I just think in every moment there have been good and bad companies, and some of the bad companies get big and then die. And again, at the end of that story is a founder that failed and has some very hard times ahead to like recover from that failure, but it it is not ever.
all ships rise with the tide. And like there will be bad companies and there will be implosions. And those implosions will be, you know, documentaries on Netflix. There’ll be stories in papers of how this imploded and was overvalued and didn’t work. But like those are distractions. Yeah. They erase the positive stories of actual growth, actual impact.
Actual adoption. And I think in this moment of AI, there is more revenue adoption of new new products than ever before. I think the part that is different is, you know, the the switching costs are very low. Yeah. And the motes are very thin. And a lot of the revenue is some version of trial revenue because companies are nervous.
That they’re gonna miss something. And so they will try before they buy. And even if they buy, it’s still some version of try. And I think that is pretty natural in in the sense of like you’re only as good as the product you’re selling. And that’s a healthy environment to like keep pressure on being great. And I
I don’t I don’t find it weird. I just I don’t think making big conclusions about industries or moments or technologies appreciates the actual nuance that goes on in these micro industries, these micro moments that are actually the defining part of the story.
Kent (33:53)
Yeah, it puts me in mind of the the original internet where you know, it was like there were spectacular failures. I mean, you know, sockpuppetpets dot com was a spectacular failure. But
David (34:06)
Timing matters, execution matters, like it you know, for the pets.com failure, you have an Amazon on the other side. They’re in the same business, they were selling different products and one worked and one didn’t. And so it wasn’t the moment that killed pets.com. Yeah. It was pets.com. And I think in 21, in the froth and coming out of the froth, you saw or in crypto, you saw good companies and bad companies, right?
I think NFTs are a silly example to talk about, but there are a couple of the NFT projects that have maintained value and continue to succeed. The challenge is it’s not a hundred percent. And in some moments, it’s two percent. But that’s sort of the natural outcome of great versus not great, is two percent or some version of that. And so I think even in the heyday of NFTs, you had a chorus of people saying,
only by the blue chips. Like understand what the blue chip projects are and what are not the blue chips. And in the end of the day, when sort of value gets wiped out across the board, the blue chips have remained blue chips.
Kent (35:14)
Yeah, exactly. So you’re in you’re in New York. Is that just where you live or you just where I live is is it the New York tech scene y y is it you’re there because of the ecosystem or how
David (35:27)
I live here. This is my home. I don’t know. I you you look, I think there’s people that are able to live in places or required to live in places for their job. And then there are people that live where they are going to be at their best because that’s where they live. And I think I am a New Yorker and will continue to be. we don’t view geography as an interesting characteristic of a company.
I think the world is obviously shifted to San Francisco being the center of the universe for this moment. I think there was a moment in you know twenty-one, twenty-two when New York felt like everybody was fleeing to come here. but I don’t I don’t think like other than New York, San Francisco and maybe Boston, those three cities you can build enough.
Quality scaled talent to see a company through with almost no apology for or excuse for location. I think every other city in the country, there can be one, two, three companies built. There can’t be a hundred. Yeah. And so, and Austin might be growing in terms of the amount of companies the talent pool can support, but
You know, don’t think you can say I’m gonna build in Atlanta and just get a automatic pass for it. But I do think you can build a big company in Atlanta if you understand the talent pool there, how to win almost the entire momentum of a city to get the best talent or bring talent into a city. I think you can do the same in
A variety of other cities. ID.me has done a great job building talent in Washington DC, which you alluded to before. I think there are great companies that have been built in Chicago. I just don’t think it’s hundreds of
Kent (37:31)
Yeah, that’s right. Chicago always seems to be trying to get it going. It just never seems to quite work.
David (37:36)
It’s a d it it’s just the depth of talent in this moment for what is required is really centered in the Bay Area. And then New York has enough talent to support a lot of companies here to significant scale. But I think it’s not to compete head to head or try to compare and contrast these two ecosystems. But I think every other ecosystem
is obviously less deep. I think Boston’s this quirky one where a lot of great companies will start in Boston and then move. but I think there’s sort of unique academic talent that continues to be be taught and attracted to Boston.
Kent (38:20)
And what about international? Like Israel seems to have a pretty strong you know
David (38:25)
I think as a seed investor where we sit, if if a Israeli based company is raising a seed round not in Israel, it’s like a red flag to me. there’s such great
Kent (38:37)
Yeah.
David (38:38)
Yeah, there’s such great early investors in Israel that are so tight into these talent pool networks that if something escapes, I just assume that like we’re getting the adverse selection. I think what we have
really enjoyed is finding Israeli founders that are in America already and starting the company when they’re here and whether they’re here for school or whether they’re here because it’s their second or third company. I think that ecosystem is super attractive.
Kent (39:09)
Yeah. Yeah, we’ve we’ve done a few cybersecurity things and the store like the just the the how the people met in the in the military and technology and wha how the why they know the technology because they’re a war I they’re just some of the stories are just kind of incredible.
David (39:25)
talent
pool is incredible and we’ve we’ve been you know able to fund great companies in Europe and I think again it’s you have to know if you’re not if you’re not native into that geography and that network, you have to understand why you’re seeing a deal. And that is to us a really important lens of when we evaluate a company is like
Are we seeing someone else’s leftovers? Are we seeing something because we got lucky? and really understanding that. and so a lot of the time founders geographically outside of our like entrenched networks come through people in network. And that is the right way to see something in a network that you don’t have a ton of access to.
Kent (40:13)
Well it’s funny the stories you’ve told of your successes seem to involve you and your partners knowing the founder. Not another GP called me up and said, Hey do you want to hop on this deal?
David (40:23)
I’ve I’m waiting for people to do charity for us. That would be great. no one ever calls. like I’m waiting for Sequoia to be like, we got the next one. You guys, you guys gotta get some piece of this. I just don’t think that’s how it works. And I don’t think at the early stage anybody really knows what’s good. And I don’t think anybody wakes up and says, How do I like do great for someone else? I think that’s like a weird expectation.
I think we’re collaborative. We work greatly with a ton of firms out there. We share things we’re excited about. They share things they’re excited about. But I think to view it as a sort of charity or transactional exchange is silly. There are introductions from other VCs that we’ve, you know, really benefited from in terms of being able to find a great company through that channel.
But I think when you expect that to be a main source of discovery, you’re like giving up on the groundwork that the business takes.
Kent (41:29)
It is funny that unlike I would argue other parts of the venture stack, but certainly other areas of finance, that seed investing is actually collaboration works pretty well. unlike in many other
David (41:42)
area. Yeah, I think I think the word collaboration is is like a big vehicle that can mean a lot of things. I think there’s still an enormous amount of competitive
behavior at the earliest stage. And if you are fighting for access to the best founders and the best companies, there are really sharp elbows everywhere you look and you have to figure out how to navigate in a world that again, I don’t think people wake up to try to do your favors. Right.
Kent (42:18)
Aren’t you assuming everybody knows who the best founders are though? Like
David (42:21)
I mean that is that is a fair I I think there is a
There’s there’s this combination of so I think if you go back in time, the answer to that’s no. and that there was proprietary access, deal flow, networks, relationships that were operating on the fringes everywhere. I think there’s a greater efficiency today in the ecosystem. The best firms are more accessible and they’re more agile. And if a founder wants to get in front of those great firms and meet
luminary partners, they’re actually able to dramatically easier than I really think COVID had a huge impact on it than pre-COVID. and so I do think that running a competitive process at the early stage for a founder that wants to is available today way more than in the past. And I think all firms are orienting towards finding talent before there’s a company. And that inevitably makes
Accessing deals more competitive. It doesn’t mean there won’t be diamonds in the rough. It doesn’t mean that sort of there’s a perfect efficiency in the market or some version of that. But I do think to ignore the competitive part of early stage is cutting, you know, the head off a dragon and assuming everything else is where the value is.
Kent (43:49)
Yeah. Well let me wrap up on this a little bit. You you’re arguably, because of Curse are one of the best AI investors of all time, frankly. What do you make of where we are? I mean, I th it seems that we agree that AI is one of the big ones, you know, like the internet or mobile. It’s not a Yeah, this is gonna be, you know, dead in two years. Will
David (44:09)
Or we’ll all be dead in two years.
Kent (44:12)
we you know it’s funny, I’ve asked, you know, including Richard Socher, like everyone I’ve had for the last couple years, I’ve I’ve asked them, will we have to blow up the data centers?
Which is referring to kind of the old sci fi thing that they start going crazy and the only thing you can do is go bomb the data centers to shut them down. And then lately that’s taken on a completely different meaning where people actually don’t like the data centers themselves. What what do you make of that whole like it’s gonna kill us, the data centers destroying the
David (44:39)
Smart
enough. I’m not smart enough to have a real opinion there.
I think technology is a force of good. I think it’s always been a force of good. I think it has enabled access to free and cheap things that are enablers for mobility and enablers for opportunity in you know net enormously positive ways. I think that comes with risk and challenges and not equal distribution. But if you look at, you know, YouTube today.
Anybody can teach themselves anything for free. Like what a magical unlock of human intelligence. If you look at, you know, accessing and communicating to people, whether that’s email, whether that’s, you know, X or or other versions of it. I just think like the internet and technology is a force of good. I think we’re in a complicated moment. I think we’re early in this moment. you know, you hear investors talk about or
technologists talk about a post-AGI world. I just don’t know exactly what that means. But I think my job is to find people who do and invest in people who are thinking far ahead and into the future. I think technology tends to move very quickly, then have a slowdown and then work or ramp up or increase. And I think the fascinating part of this moment is it’s just moving really quick.
Right. And there are like lulls. Those lulls are like a month or three months. Those lulls are not, you know, three years for for some change. and like I think you’re in the early days of appreciating what economic, societal, and productivity impact AI will have on the world. And I have to be an optimist. I’m an early stage investor. I have to
imagine a positive future. And I think the founders we’re seeing today at you know all different angles, they’re imagining, you know, robotics, you know human computer interfaces that are totally different, brain interfaces, imagining solving diseases that are impossible. so I think you you are betting on
this combination of the technology advancing and solutions sort of meeting it along the way. And I think I will hope for the best.
Kent (47:18)
Well, I also think the thing probably hasn’t happened yet. Like the the amazing like like the fact that everybody’s you know, Hey, I got Claude to book me a hotel. It’s like well I’m We’ll
David (47:28)
Well
will I think AI will lead to bad things. I think you know, there have been many instances where technology early or or at the beginning stages of learning how to create and balance safety have led to bad things. I think nuclear is a great example of that. and whether that’s Chernobyl or Three Mile Island or you know, using atomic bombs, there’s a bad set of
Of things that can happen with technology. I think the hope is that society, which is a big thing to bet on today, and technology together can counterbalance the misuse or you know bad moments along the way. And so history
Kent (48:20)
Well I’m
David (48:20)
hop history hopefully repeats itself in that
Kent (48:23)
And as you say, and again, I’m a I’m obviously an optimist, or this would be a terrible job to have, but the like anybody in the world can just with an AI say, I want to learn physics, I want to learn assume the role of the greatest professor at Harvard and teach me. And I want Newton to teach me this, and I want Einstein to teach me this, and anyone in the world can do that.
David (48:46)
It’s it’s the internet is the most enabling technology. You have to use it in a productive way. It also has great games to waste your entire day and great reels and feeds and distractions. So you get that too. And I appreciate that. But like you can make a choice to like learn at a level and in a way that has never been possible before and and totally inaccessible. and start a business and
You know, monetize those things. There’s there’s just a distribution of opportunity. It is it takes like again execution and and performance, but it is it’s out there. And so when I go back in time and you think about the early days of the internet and where we are today, I just think it’s the the most magical you know force that we’re we’re privileged to live through.
this distribution of tech to an iPhone and to your pocket and maybe to your glasses and maybe to your ears and eventually to your brain that unlock positive things and definitely have consequences. But I think you’re in a moment of opportunity and creation.
Kent (50:06)
What what a time to be investing. Exactly. Wha what are you is there anything I mean, you’ve accomplished so much. What what are you looking forward to now? Like what are you excited about?
David (50:15)
Tomorrow.
Whatever whatever the the founder that we’re lucky enough to meet and energizes you. I think our job is the same today as it was sixteen years ago. We wake up every day and try to find people who are gonna do something great. And I think the second you lose sight of that being the the thing you signed up for, you’re probably done. But we are you know
focused on tomorrow and whatever’s next.
Kent (50:49)
Incredible. So how do people thanks so much for doing this by the way? It’s
David (50:52)
Thank you for having me.
Kent (50:53)
it’s so cool and and like I just I kinda laugh at the cur the cursor thing is just such a ridiculous like outcome. Like good good for you. By the way, does that screw up the rest of your fun like does the rest of it not matter in that fund or how does that work?
David (51:07)
I think I think the way that I’ve always viewed our business is on these long timelines. And I think Cursor is such a magical anomaly from a timeline perspective. And in that fund specifically, you know, there are 10 other companies that we’re super excited about that are growing in, you know, a realistic time frame. and some are are emerged and some are emerging.
And I think this is a people business. So no, I I like get excited by again, like what’s next. I have like just such an enormous appreciation for what Michael and Amon and their entire team have created and built and you know where that ended up. And so it’s not to in any way minimize that journey. I just think, you know, there are
Another set of founders that we are thrilled to have been lucky enough to have met and be part of their journey that are you know hopefully gonna continue to compound the things that they’ve created and become great products that a ton of people use. And I don’t try to live in the past. I try to live in in the future. And I think that’s the nature of the job.
Kent (52:33)
So how do people
David (52:35)
Thank you very much.
Kent (52:36)
how do people find you? Like what if they
David (52:38)
David at boxgroup dot com. Pretty easy. We’re we’re we’re accessible. Thanks so much for having me. Really appreciate it.
Kent (52:44)
Thanks, this has been the Something Venture Podcast. Talk to you next time.