Kent Lindstrom 0:01
I started this podcast over 10 years ago. Since then, I’ve become a venture capitalist. You know the story eight bit capital. We do seed stage investing, pre seed it’s called now that’s putting money in at the very earliest stage of a company’s life
Kent Lindstrom 0:14
into software companies. So the logic there would tell you that I had the podcast before I became a venture capitalist, not a typical path. These days, for some reason, people who become venture capitalists have now decided they need podcasts. Not really sure why they became interesting all of a sudden, once they became a venture capitalist. But that’s not really why I do it the way we distinguish ourselves as venture capitalists, we invest in great founders building great companies. It’s kind of a gimmick, but I did it because I just meet, or want to meet, a number of people who are cool and interesting and have done incredible things or followed different paths. And I’ve had a little bit of a side obsession. You may have noticed with people who become venture capitalists outside of the normal route, we make fun of the normal route working at McKinsey or Bain after having gone to Stanford or Harvard, but people are just seem infinitely intrigued by how people become venture capitalists. Well, I’ve got another one of those stories for you today. My guest today is Lee Edwards. Lee is an engineer. Through and through, you’ll hear in this podcast, might even get a little technical for you at times, but he’s an engineer, very funny guy who has found his way into venture capital. Ladies and gentlemen, my conversation today with Lee Edwards, welcome back. You. All
Kent Lindstrom 1:46
right, welcome back. This is the something venture podcast. I am Kent Lindstrom. I am your host. My guest today, Lee Edwards, a general partner at VC. How are you doing, doing well. How about yourself? Good. Thank you so much for doing this. Thanks for having the name Lee Edwards, too. I find the toughest part of the whole podcast is saying the person’s name at the beginning. Like, is it Danielle Strachan or Strachan? Like you thought you knew, and then there you are. But I’ve had on Namde Okike, so I’m pretty good for sure. Yeah, very few people mispronounce my name, although it’s common enough that there are some slightly more famous Lee Edwards is out there. One of them is a biographer. Yeah, he has a few books which, yeah, yeah, my partner’s my partner, Jonathan Abrams. I think there’s like a sports guy or something that used to be more famous than him, but I don’t think it’s more famous than him anymore. The trick with your name is I almost superimposed it, like Ed Lee, like that kind of thing all the time. I thought about running for mayor of San Francisco under the name of Lee Edwards back when Ed Lee was mayor, because, especially with, like, the the Chinese
Kent Lindstrom 2:49
transliteration, or whatever, you could easily confuse which one was the first and which one was the last. And I think I would get some free votes. Do people do like, in ranked choice voting? Like, wouldn’t that be a good idea? Like, if you don’t want Ed Lee to win, Ed le, shouldn’t you get, like, a guy named Ed Li? Ed Lee, just get him on the ballot. It wouldn’t like enough people. I, I might be an expert. Oh, I’m an expert everything, as with VC, but I may be a political expert.
Lee Edwards 3:16
That could work. I’ll, yeah, we’ll let up. I’ll let the local politicians know you’ve got to hack for
Kent Lindstrom 3:22
them. Lee Edwards, partner at root VC, before that, he was an engineer at places like Teespring and I Robot and Pivotal Labs. I was actually part of a company that was a Pivotal Labs competitor called new context. Oh, of course, yeah. I think we viewed you as a competitor. I think we had a lot of folks that went from pivotal to new context, yeah, and then, I mean, the idea, well, we were, we thought we were a competitor, but, but you guys ended up buying us. Yeah, we were. I think we were very philosophical. I mean, technically competitors in the sense that, I’m sure we bid on the same stuff, but, but I don’t know that was a very special moment in time when I think there were a lot of people really buying into this philosophy, and we were all really invested in the ecosystem of, let’s build software better together. That was I felt, I felt like we were kind of on the same team fighting the old school waterfall methodology. Yeah, it was, it was a very philosophical thing you want. You actually explained what that is, like, the pivotal thing, like the 906 a it was just such a weird Oh yeah, I’m not technical, so I was fascinated by it, yeah, yeah, it’s really cool. So pivotal
Lee Edwards 4:29
at the time that I joined, which was, I guess, 2010
Lee Edwards 4:33
had been around about a decade at that point, little more, and so as a consultancy, and where they kind of ended up around that time
Lee Edwards 4:42
was really focusing on sort of how we build software. So pair programming, 24/7, so you’re and so you’re basically always hands on keyboard with someone else, the two of you at the same time
Lee Edwards 4:57
and I. Partly, partly because that is such an exhausting, like, highly productive but very exhausting way to work. We were strictly nine to six, like, please don’t show up before. If you show up before nine, you can have breakfast, but please go home at six and please take a full hour lunch. Yeah, 40 hours, I would say, 40 hours of full time pair programming is about as exhausting as you know, being working at a startup and working 50% longer than that, but not pair programming. Yeah, equal amount of exhaustion at the end of day. So it was, but then on top of that, we also did, sort of like the agile methodology, and I think you know, clients would hire us to basically come in, work with the engineers, teach them how we do things. And I think what I’ve come to appreciate over a period of time is that pivotal had a strong point of view, and we were very convinced that our way was was the best way. I think there are actually a lot of best ways, but I really appreciate that they’re very intentional about documenting how we work, kind of having the discipline to hire for people that want to work that way. I think that was part of the secret sauce. So now, as a VC like I work with one company, Zed, but they also come the founder also comes out of pivotal who works in a somewhat similar way to Pivotal, but I think most importantly, he’s really attracted people who share his philosophy and how to deliver software. And I to me, that’s the most important
Kent Lindstrom 6:33
thing. It’s it’s funny. So the pair programming thing is like two people, two people together, sit at a computer and work on a problem, and then if you see, kind of don’t get stuck, right? If one guy gets stuck or lose, like, then the other person catches up. And we were, I remember we had some pitch meeting in Asia somewhere, pitching it to some CEO, like, you know, here’s how it works, and here’s why you should hire us. And the guy said he might have been right. He’s like, Oh yeah, I get why this works. It’s because you can’t screw around, yeah, right? Like, you can’t just go check your Facebook page, or, you know, whatever, whatever it is, right? I think there’s
Lee Edwards 7:09
sort of two forms of that, yeah. One is the sort of Yeah, like that. Maybe that’s like, malicious slacking, or, like, you know, some like, negative connotation of like, doing something else. But the other thing is just focusing on the most important thing. Like, I actually feel like I actually feel like one of the most important kinds of focus that pairing brings you is is rabbit holding down the wrong problem. Like, like, I might say, like, oh, we noticed, you know, this little bit of technical debt as we’re coding, like, I want to fix that. And my peer would be like, All right, well, let’s time box that to like, two minutes, yeah, and then two minutes rolls around, like, Okay, two more minutes. Like, all right, two more minutes. And he’s like, then they’re like, Okay, all right, we spent four minutes like we’re done. You know, don’t whereas, if I were on my own, I might have spent the rest of the day on it, just because, you know, when you get focused, when something grabs you and you just can’t let go of it, you go down that hole. I think, I think that’s a totally natural thing, and lots of great engineers do that, but having someone to share the context with, super valuable and you would, oh, go ahead. Sorry. Oh, and who knows what this means in the AI era, right? I think a lot of people are viewing their coding assistant or coding agent as a co pilot, as a pair, yeah. And in my view, the tools haven’t quite lived up to the experience of pair programming, yeah. But they, I think they will. They absolutely
Kent Lindstrom 8:28
will, yeah, but you could never tell from this conversation that you’re an engineer. So how did, how does it start, like somewhere along the line, it’s not completely it’s not very common for a an engineer to become a venture capitalist. Not unheard of. You know, Mark andrees, obviously, is written some code. But how do you like? Where in your life do you decide, of all the things to do, I’m going to be an engineer, because you want you like, you went to school for it. You like, So, what was there? Like, a heath kit there? Or you reading science, science fiction, or, like, what? Where’s it really start?
Lee Edwards 9:03
Yeah, I’ll give you, like, the real answer to this question. I give people like, varying degrees of truth when I answer this question, I’ll give you the real one. So, yeah, basically, you know, it’s not something I doing venture capital is not something I’d ever really thought of. I really always thought of myself as an engineer, and then kind of over time engineering leader, like, I really, as you can tell, I’m really interested in process and, like, sort of how, how software is built, how product is built. So that kind of led me in kind of the management direction. And then eventually, you know, as a CTO at a startup, you’re getting a little bit of exposure to the business, like being invited to the board meetings, things like that. That part was, was really interesting to me, but there was a moment, think it was after, yeah, so before I was at Teespring, actually, when our startup side tour was acquired by Groupon. A friend of mine, Darrell silver, who’s the founder of thankful, was connected to Bloomberg Beta and Bloomberg venture capital arm, and they, they were trying to find an engineer that they wanted to turn into a VC. And I was like, I’m not really interested in that. And Darrell was like, well, just go in and meet them. So I met, I think, Karen Klein first, and I really liked her. I really hit it off. From my perspective. I thought she was great. And then I met James, and I met Roy, and then Siobhan zillis was there at the time, and and I thought they were all great. And the the process went on for about three months or so, and eventually, I can’t believe I’m telling this on recording, but they Yeah, eventually, they eventually I got a no from them, and I was not even bought into this. Like, I just picked up some books on VC, and kind of was reading about it and learning about it. And when I walked into that first meeting, I knew nothing. I knew less than nothing. I didn’t know what a venture fund was. I think I remember asking, like, you know, what’s the difference between the firm and, like, the annual fund that they’re raising. Like, I just literally and I was really disappointed when I didn’t get it. I was like, why am I disappointed? And then, and so I started, I was just thinking about it a bit. And I had a lot of friends that were starting companies right around that time. I Angel invested in a few of them, and some of them turned out well. So these are actually friends from my college, from Olin College, skydio, which is now a unicorn autonomous drone company, and lever, which sold recently. It’s a hiring software platform, and a company that was sold to chime relatively early on. So I, I thought, this venture thing seems interesting, and maybe I’ll want to do it after I have a very successful career in engineering. And so I was about 30 at the time. I’m 41 now, and I thought, Okay, I’ll keep this in my back pocket. And like, maybe I’m not someone who’s ever really I don’t really think I want to retire, but I was like, but at some point engineering might be too hard for me, and then maybe I’ll do VC when I’m, like, my 60s or something. Wow, that was kind of my plan. And so I did those angel investments, and then reconnected with Bloomberg Beta a couple years later when I moved to San Francisco and they put me in their Scout Program, which I which I did. And so, yeah, built a portfolio there, and then as Teespring kind of got, like, speed run, the Teespring story, but the when it kind of got to the point where the team was being downsized, right in a much, much smaller engineering org, it, I had a friend that was like, Hey, if you want to Quit, I’ll I’ll back you. If you want to start a venture fund, we won’t be your first, you know, small lp. And I, yeah, I thought about it, and it felt like the right time. The engineering team got much smaller. We moved to a smaller office. I promoted someone to take over my role, and I basically just quit and had no income, and spent a year doing angel investments and looking for LPS, and I guess, another kind of exercise in failure that didn’t quite pan out exactly the way I wanted to. I got a few commitments. I got some really awesome people in my life who agreed to back me, but I was trying to start a five start a $5 million fund in a bit. I think it was 2018, or so. No one was using the term micro fund. And most people I talked to were like, that seems stupid. Like $5 million venture fund seems really dumb, like you should be doing 50 plus. And now it’s like, quite common to do that kind of thing. But I met sandana during that process, and I think they might have done a little bit behind the scenes connecting me and Avidan at root ventures. So root, at the time, it had been Kane and Avidan and fund one. They just brought on Chrissy, and she was just coming off of maternity leave. As I met root, and I found out that basically their thesis was the same as mine. Like, I want to back engineers. I want to stay very close to engineering. I want to keep practicing. I want to keep my hands dirty and and, you know, a lot of folks move from engineering to Vc, and they stop coding, and I’m still code. I’m never going to stop coding. It’s my hobby. It’s my favorite hobby. So, and Avidan is the same way with the embedded systems and tinkering and stuff that he does, Kane with his motorcycle, and we’re all kind of staying current. And I thought, Well, hey, my plan said for my little micro fund, I was going to maybe get to like a $50 million fund on, like fund three or something. Things went well and rude. Already had a $31 million fund in fund one, and then closed the $76 million fund for fund two. And I had three partners, and I was a terrible mechanical engineer when I was at iRobot, and Chrissy is an incredible electrical engineer, and Kent and I’ve been on. Pretty good, I guess. But I was like, This is great. I can be surrounded by mentors. I can really focus on the software side, and I can use my network to source things in robotics and hardware, but then kind of lean on the expertise of my partners who’ve sort of done more there than me on the hardware side. It just Yeah, and the things just kind of aligned. And I guess the last thing I would say, like, yeah, the real answer that I never tell people is I, at some point, like, my psychology, my ADHD, which comes out, the more you work with me, it’s, it’s, a it’s a liability in programming. Like, I think one of the, as I mentioned, like, I think one reason pair programming works super well for me was it was this really solid focusing mechanism that really helped me be productive. But I was constantly fighting my own psychology, and then what I realized through angel investing full time was like, wow, the context switching here is crazy. I’m like, on a call, was on a call with like, a founder about, like, a fashion brand. Because when I was doing Angel I was, I was more broad, so like, talking about fashion brands, and then, like, you know, a developer tool and some software infrastructure robotics company, and then I’m, like, working with an existing portfolio company, and then I’m pitching an LP and like, and I was like, wow. Like, all the tools that I’ve built my whole life to basically be productive at being like, an unmedicated ADHD adult, all those tools that I’ve had to build up are actually helpful for me in VC, and I could actually, like, kind of turn my psychology into a superpower instead of a hindrance. And so the coding that I do now, it’s whatever I want, right? Like, I just, I get a random idea and I build something so it it, the focus isn’t so much required anymore. But I honestly, like, did I had that like moment? Remember it was, yeah, over Christmas, I was at my dad’s house and sitting on the back porch, and the thought just kind of occurred to me. And I was like, I should definitely pursue this. That realization happened right around the time I was leaving Teespring to start the micro fund. And I was like, you know, let’s just do it. It’s um, yeah.
Kent Lindstrom 17:22
So where did the engineering part originally come from? Did you read science fiction? Or did you, like, find a metal bar on the street and decide to build something? Or, like, what is?
Lee Edwards 17:35
Well, funny, yeah. Like, my the women on my mom’s side of the family have all been teachers, and the men have all been engineers or architects of different kinds. From a young age, my mom was always kind of like, I don’t know, definitely encouraging me in that direction, both in her capacity as so she’s, she just retired. She was a public school teacher for 20 plus years, and so I think it was her teacher instinct kind of encouraging me, and then also just Yeah, I never actually, my grandfather died before when my mom actually, when my mom was 19, her father passed away, and he ran a a civil engineering firm with his father. And I just always had these like artifacts, like, I still have this stuff. I have his like, I have like drawings of, like, boats that he was designing as a hobby, and all his little tools. I have this, like protractor and slide rule. And I don’t know, I guess that stuff was always interesting to me. But you know, when I showed an interest in computers, my mom, like my mom, my parents were divorced. My mom was kind of raising me, like on a public school teacher’s budget, yeah, and, but the budget was kind of unlimited when it came to education, like there was, like, there’s always a way, and, and we Yeah, she bought, she bought me a computer, or bought the family a computer, but I was programming Q basic on it and building little HTML websites and stuff, which are our website root.vc, has kind of an homage to the hand coded HTML embedded there as an Easter egg. What?
Kent Lindstrom 19:15
What was your first computer? What was that computer
Lee Edwards 19:20
that was a gateway. Well, we doesn’t matter
Kent Lindstrom 19:22
anymore. It used to be, like, people, oh, it was a Commodore 64 or is an apple two or something,
Lee Edwards 19:27
like the first one where I was really, where it was really something I got, like, my dad had a computer before that. It might have been like a Tandy or something, but I didn’t really get to use it. The first one I really got to use was a gateway, 2000 Yeah, when I was in fourth grade, and it came with Windows 3.1 and then we got the upgrade CD, and we upgraded it to Windows 95 and my mom let me do all the like. Every time there was something like that, she would have me call gateway support because she, like, trusted me enough to let me do it, but enough she’s like, call the gateway support line, and then the guy on the other end would always. Just be like, how old are you? And then you’d be, you’d be delighted. I would say gateway customer support. Like, my God. I mean, Apple’s pretty good, but gateway was so much better. Like, these guys were, like, so excited to teach a fourth grader how to install Windows 95 I don’t know where they found these guys. That’s
Kent Lindstrom 20:18
so funny. Like, early access to a computer just seems so important. Like, you know, the the Bill Gates thing, where sort of like, yeah, he’s a genius and all that stuff. But early on, my understanding is like he, he was at some school in Seattle, and like, his his mom. Here we go again. His mom was, was part of, maybe just making the story up. But his mom was like, they got like, a computer for the school, basically. And then they did a deal with somebody where they would get time on a mainframe, or something like that, and so. And then he and his friends would play around with this computer. But like in the whole world, like every high school in the country, nope, he was like, one of, like, very few people who had any kind of access to a computer. So if, like, every kid in the country had access to a, you know, terminal and a mainframe and processing time, there might have been a million Bill Gates at the time. But he was like, the guy basically,
Lee Edwards 21:17
totally, yeah, I buy that argument. I think it’s Yeah, I don’t know that that era was just so
Lee Edwards 21:26
it was just like, I like, it’s like, it’s hacker ethos. The thing I don’t know, like people, you’re just messing around, like, the early internet and, like, actually, my friend so high school friend, Michael Aiello, who’s now, like deep in the security world, cyber security world, he just a couple months ago, emailed me some q basic files that I had, like I remembered we did this, but I didn’t have any of these files we used to like, write these little q BASIC programs at home, put them on a floppy disk, bring them to School and swap them. And I made a Star Trek story game where you were the bridge crew, you were the captain, and you run into these little problems, and you’d have to ask the bridge crew for advice, yeah, and it was kind of like a choose your own adventure style thing. And yeah, we would also, sometimes in some of our really boring classes, we’d write q BASIC programs on paper, and then so we were, like, very cool. We, as you can imagine, we were like, very popular.
Kent Lindstrom 22:31
I know the girls love that kind of stuff that, yeah, it is kind of interesting. Like, what do you make? Like, I’m just kind of curious. Get back to this VC thing. But when, when I like, early, when people came to computers, they would, well, really early. They would, like, build their computers, or they would kind of start from, like, machine language. They’d know, we get what a power on self test was like, the whole thing. And now we’re in a world where, when you come to a computer, you’re really abstracted from anything having to do with that, like, yes, and hard drives, and it was the last time anybody built their own computer. Yeah. I mean, every generation is like better the way we did it. But what do you what do you think? I mean, do you think there’s a generation of people who kind of discovered and built and just understood computers better than today, even though everything is much more powerful and visual and or, you know, all the way up to AI where, like, I’ve heard this every time, theoretically, I can code now. Yeah, we’ll see you.
Lee Edwards 23:35
I mean, you should give it a try. Some of these tools are incredible, yeah, but no, I think, I think you hit the nail on the head. I think there. I think both things are true. It’s kind of a paradox. Yeah, I think certainly it’s the case that, yeah, like, I think when people were plugging their graphics cards and sound cards into their PCs, I bet the analog, digital type electrical engineers were like, Oh my God, these, these morons are just like plugging things into PCI slots, they don’t even, they couldn’t even solve a Kerch law equation if it bit them in the ass or whatever. And then, like, and then I think, as people are, like, starting to write software, like, Oh, you’re getting so disconnected from the hardware, because the C compiler does it for you. And then now we’re getting these memory managed languages like, oh my god, the garbage collector just handles it. You don’t even have to know how to do a Malik. So I think there’s always this sort always this sort of, like, this, like, Boomer mentality about that. And I think one thing as a VC now that I’m kind of, yeah, I guess in technically, in my early 40s, like trying to figure out how to stay connected to that. Because I do think you see this in San Francisco. I’m sure you see it elsewhere too, but I bet you don’t see it anywhere quite like San Francisco. The young people playing with AI. They’re tinkering, they’re messing around, they’re doing stuff that has no purpose. They’re just enjoying it. Yeah, so we, we co host this event called you. Oh my god, it’s demos and chill demos and chill. And the rule is, you, you can’t bring something for work. You just bring some, like, weird thing you’re working on. So people are, like, putting language models and stuffed animals and stuff like that. And I really think that kind of curiosity is the is the thing you’re talking about with the Bill Gates stuff. And think about the power, the power that these AI tools have, like, what’s going to get unlocked there? I don’t think we really know. So I think on one hand, like, yeah, you’re using chatgpt, which means you don’t know how to solve an analog, digital circuit, you don’t know how to build a computer, you don’t know how to write assembly code, and you don’t know how to write C code, and, yeah, like, you know, and you don’t know how the linear algebra works, that makes the AI happen, unless you, unless you dig in and learn those things on purpose. You can do all those things. You can you can do cool things without knowing any of that. And actually, I think that’s kind of a good thing. Much respect for people that, you know, dig deeper. But yeah, I don’t know. I mean, I mean, I feel like that, yeah, the next Bill Gates is definitely doing things to their mind with AI right now that, like, yeah, that we can’t comprehend.
Kent Lindstrom 26:10
It’s funny too. It like, never changes. I heard Marc Andreessen speaking recently, and like, cool, is this guy? He think of all the companies he’s invested in, or what he’s done, and the thing that he was kind of obsessing on is some guy in New Zealand, you know what? This guy who, like, built an LLM for himself, and then he, like, had the LLM ingest, like, everything he’d ever done. He’s just tinkering everything he’d ever done. And then a whole bunch of like, crazy books and stuff like that. And then he his market. This is Mark Andreessen is like, you know what? Think about what he could do with his days. Focus on this guy. And so then this guy gives it a Twitter account, and it starts just posting kind of all kinds of crazy inappropriate stuff. And then one day, it sort of realizes that it’s being controlled by this guy in New Zealand, it kind of gets upset the Twitter thing. And so it just goes on and on and on. And then Mark Andreessen says, because I can, I invest in this, LLM, this twitter bot thing. And the twitter bot, turns out, thinks that VCs are terrible, because apparently the corpus of information about VCs that I trained on is not positive. And then so Mark Hendrickson donates money to it instead, you know, gives it a Bitcoin, because it can’t use a credit card, and it uses the Bitcoin. But I’m like, That’s hilarious. That is just pure, like, I don’t know what. I just find that so cool. Like, what that guy’s doing, I don’t know if it’s useful, but boy, would you bet on that guy,
Lee Edwards 27:41
right? Yeah, I think that’s the kind of thing that makes me feel like there’s, I think, like, AI is at once overhyped and under hyped. Because, I mean, who knows exactly, definitely, not a public markets guy at all. But yeah, like, where these revenue multiples are, and, like, who knows, is there like, a correction, and is the the labor productivity coming soon or next year, or, you know, we may enter another AI winter at some point, or, you know, at least relative to where we’re at now, some kind of correction. Not, I’m not saying that is going to happen, but if it does happen, I think it’s, I’m kind of fine with it, because I think the fundamentals are still underestimated. I think people are not really thinking about a lot of people are not really thinking about how deeply this really reflects all the other computing waves that we’ve had in terms of what the balance doing how they’re spending their time. Yeah, I think that that playful energy is something that, yeah, we as a firm, like, really try to hold on to, and now I’m so glad that we’re seeing it now in this new area
Kent Lindstrom 28:53
well, and the the winters are when it happens. Like, you know, my partner essentially invented, at eight bit capital essentially invented social networking at a period when the general Zeitgeist people forget social networking is created. Everything that could ever be invented on the internet has been invented. It’s over. Every venture capitalist was scrubbing internet off their the way everyone scrubbed web three off their website in the last couple months, and they’re now AI native. Yeah, of course, two months are AI native. Try
Lee Edwards 29:24
to pretend that like the web three and the AI are the same thing
Kent Lindstrom 29:28
somehow, yeah, yeah. I’m also, I’ll get a little skeptical on the AI native thing, because I’ll give it to you if you’re a young guy and you like, are crypto native, because maybe you did that. You know, during covid, no one else was doing it. There are really impressive people who’ve been working on AI for a long time, you know, like Dean Stanton or whoever they are, like, there are people who who’ve been working on this for a bit. So I also wonder now if there’s a bit of you know, when Mark Andreessen was doing things. Things or people. Back then, when people were building there wasn’t kind of like the the BS, Poser tourist set right, like nobody, like, faked like they were, oh, I’m super expert at, you know, building, you know, HTML. But now, every time we have one of these waves, I mean, San Francisco, five parties a night. You know, people start like, how do you sort of as a venture capitalist? Now, you know the guy who’s like, No, this guy’s a real nerd programmer who’s building a twitter bot that emulates his life, and some guy who’s good in a room, and, yeah, I’m an AI guy, and, you know, I’m gonna transform sales, or whatever it is.
Lee Edwards 30:45
Yeah, totally. I mean, look, it’s a big to some extent, we don’t, I mean, do we have to worry? Maybe worry about this a little less than many firms, because I think we only invest in technical teams. So we’ve, we’ve, we’ve never backed a company that didn’t have a technical founder, and probably most of the companies we invest in are all technical founders. So not to say that you’re, you can’t have, you know, three people with engineering degrees and still be a charlatan, but I do think that the odds are much lower. So we’re, yeah, it tends to be, and, you know, it’s usually not necessarily, even people who come from an AI background, like a lot of times, they’re more interested in the problem space, like I mentioned Zed earlier. They Nathan has been working on text editors forever. He worked on GitHub, atom, and he was even, like, kind of playing around with editors when he was in school, and the fact that AI transformed the editor is totally, totally coincidental to his obsession with editors and whatever the latest editor technology is. So I wonder if a lot of people aren’t going to more fit that mold. I mean, maybe that’s maybe that’s at odds with the AI native thesis, or maybe not, but I wonder how many people I mean, it’s got to be the case that if you’re obsessed with a problem, and AI happens to be the tool that solves the problem, that’s the one to pick up. And the AI native thing might be like, you know, think about like in BI tools, for example, there were, there was kind of a wave of, like, bespoke BI tools, and then Tableau came around, and this is a revelation, because it like, works on Windows, and it’s like graphical and it’s like, super cool uses the current paradigm. And then a lot of all the BI tools that came after Tableau were sort of like cloud native, right? I think that, like the founders of those companies when they said, Let’s improve the BI tool, it was obvious that you would go, Oh, cloud. Like we work at a company. We want to share the data. I want to, like, save this query and save this chart and let other people manipulate it, and so and you’d see the same thing with hiring tools. Right lever was sort of the like a sort of cloud native web 2.0 like at the time that lever was founded, web 2.0 was not something you made fun of. It was like an actual thing, because Google Docs had just been created, right? So there was, like, no interactive Google Docs. Was sort of the first real one of the first real, like multi user interactive documents. And so lever doing that was like, wow, this is early to this trend. So, yeah, I mean, some tools, some categories, may be somewhat boring in the in the sense that they’re kind of solving the same problem, but the teams are just not quite a new team that comes in with a new tool set and understands it deeply and naturally solves problems with that tool set might build the next you know, large company in that space,
Kent Lindstrom 33:46
yeah, what are you missing with if you focus on technical founders, it seems like there’s any number of companies that have tell our founders this sometimes inferior products, like they don’t have the absolute best thing, but They’ve got a guy who’s really good at selling it. And, you know, maybe Salesforce is the best software, and maybe it’s got the best sales team. Like, do you, do you miss something there? Like, or do you find the technical founder that has the, you know, it’s Mark Andrew or Bill Gates. They got both of them.
Lee Edwards 34:18
It’s so funny. I had a very good friend of mine became an LP in our fund. I’m going to send him this podcast over here, this anecdote. But he, when he was, you know, having me do the pitch, and he, he said something along those he asked a similar question. I was like, look like, we’re focused on what we’re focused on. And like, you know, we’re not going to, like, find the next Airbnb. We’re going to find, you know, the next MongoDB or something, and and then, and he’s like, great. He’s like, I’m in but by the way, never tell an LP that you’re not going to find Airbnb. Okay, okay, that’s it’s hilarious. It’s true. And I’m kind. Admitting this in a second time by repeating it here, but, but I really do think in venture capital, you’re at the end of the day capital is a commodity to a to an entrepreneur, to a founder. And I think on some level, it’s like, what’s the cheapest capital I can get? And if that’s the case, like, how can you differentiate? How can you make sure that you’re getting good deal flow? I think it’s by kind of like, putting the flag out there and saying, like, you know, we’re focused exclusively on this kind of thing. And if we can be a lightning rod for a certain kind of founder, and we get all the best founders of this one thing, no matter how narrow, I think that’s how you win, rather than trying to sort of be the best at everything. If you’re a small fund, if you’re Andreessen Horowitz, or Sequoia or, you know, certainly, yeah, you can have lots of experts in lots of areas that make up that fund. But for a small fund like ours, I think we’re happy to sort of miss things that we miss a lot of great things, right? We just have to make sure that everything we’re in is great, and I think that are enough of the things that we’re in are great that that’s sort of the price you pay for having, like, a focused,
Kent Lindstrom 36:09
a narrow focus. And you’re also going to be in the next Airbnb, of course,
Lee Edwards 36:12
and we’ll be in the next Airbnb. Yeah, exactly, yeah. We’re going to be in every unicorn. But no, yeah. I mean, look, the fun math suggests. I don’t know. Anyway, it’s kind of a tangent.
Kent Lindstrom 36:26
But well, so we come to AI. And so you’ve seen, you know, different tech trends and worked in them. Technically. Where do you put AI? You know, every time something emerges, going back to the PC, like a lot of people say, well, the PC happened, and that’s why the you could do spreadsheets, which means you could do financial modeling in a way you couldn’t do before. And that’s what led to the m&a boom of the 80s, right? Or internet emerges and digital photography, and now you can have social networks and so forth and so on. Mobile was probably another one of those. So now we have aI seems like a pretty big deal. Like, what do you what do you think in terms of investing people changing the world? You know, starting companies are going to change the
Lee Edwards 37:10
world? Yeah, I’m sorry.
Kent Lindstrom 37:12
Like, where do you put, like, web three, you know, for for me, it was a lot of people coming in and telling us we were morons because we didn’t get why your mortgage needs to be on the blockchain, right? Lost, you know, kind of lost on me. Ai, does seem like it’s one of the big ones to me. So what’s your what’s your sense?
Lee Edwards 37:32
Yeah, look, I think we, as a firm, we kind of, we looked into blockchain stuff a little bit. And, yeah, this is something where I tinkered around and played, played around a bit, made like a meta mask thing, and was getting lots like air air drops and moving tokens around, and built some little solidity scripts and stuff just to see, just to see if I thought it was real. And I guess I came away with, like, a few conclusions after playing around with it for not, not very long, to be clear, but it felt like the computer science is crazy, like I do remember reading the the original Satoshi paper is not very long. And if you have, like, I just have an undergrad degree in CS, so I don’t even you know, know that much, but it was enough, I could actually understand it. And was like, this is actually really cool. This is like, a very, very cool algorithm that’s not intuitive to solve, like, this particular kind of problem. And then now it turns out that kind of problem is potentially valuable in these, like financial applications, like that. That’s awesome like that. That feels like I can definitely understand how people got super excited about Bitcoin,
Kent Lindstrom 38:48
and Bitcoin has been a big success, totally.
Lee Edwards 38:51
And I think the Yeah, a lot of the other stuff, it felt to me like, well, first of all, again, this, like, selection bias problem, I think, to really, really get the top deals in web three, you’ve got to, like, really put yourself out there and, like, get into these ecosystems
Kent Lindstrom 39:11
and stuff. You got to be like, Chris Dixon, or,
Lee Edwards 39:13
yeah, oh, totally, they’ve done a great job, right? Yeah. Andreessen crypto has done a fantastic job, actually, while I was thinking about this. But Ariana Simpson, who’s there now, is a good friend of mine, and and I remember send, I remember I would send her stuff that I was like, deals I was getting. And she’s like, look, you’re not getting the cream of the crop. Yeah, appreciate the honesty. I should not be doing these deals if I’m getting negative selection bias. Because who’s going to send their crypto pitch to a VC that has nothing about crypto on their website, but on the original point, I think the I think a lot of the technology for building solidity scripts is kind of interesting, like the sort of derivative like dev tools of the. Crypto was appealing to me because I had actually, my intern at Pivotal went to go found chain link, which is kind of a big deal, yeah. And he was, I remember one day in our office, it was after I was at root, and chain link is already a thing. He kind of came in and he was like, Look, man, like the crypto world, the state of software engineering in the crypto world is insane. He’s like, you would not believe the kinds of stuff that, like, the engineers working on my team and like, working on the project are doing. It’s like, the Wild West, and, like, no one’s writing a test. There’s no such thing as code quality. There’s no such thing as, like, yeah, ci, CD, like, all these practices. It’s the Wild West. He’s like, if you know, if we’re going to be that’s like, kind of fine. And it’s cool. Like I said, the energy is always great for a new technology ecosystem, but then your pitch is, we’re going to underpin all of the global financial system. And I’m like, Well,
Lee Edwards 40:51
maybe you should write tests, and I think it’s certainly matured since then.
Lee Edwards 40:57
But yeah, I guess a lot of the folks at the time, I remember the point I was gonna make earlier. I remember a lot of folks at the time as we were looking at, like, how do we get into this ecosystem, how do we get into these telegram groups and stuff, and should we, you know, do this? I remember a lot of people tweeting like, this is almost like, like, tons of people tweeting. They’re like, the smartest people I know are getting into crypto. And I was like, and I asked our partnership, and I’m like, That is not true for us. Like, the smartest people I know were like, founding LLM companies, like Kane’s best friend David, founded adept and like and like, we knew people at Google Brain and like, I have a friend that, like, went to go had data science at Waymo and work on self driving cars. I’m like, No, these are actually like, I do know. I do know plenty of smart people getting into crypto, but like, it’s not even close to the case that all the smartest people I know. I’m like, does this say something about who these people know and how smart their friends are? I don’t know, but I guess that’d be like this, the snarky takeaway, but the like, more impactful takeaway for our fund was like, actually, there’s like, another huge Renaissance happening right now, which is, like, hard tech. I mean, people are, like, engineers I knew who were, like, working on social networking and CRM and things like, yeah, the friend who was at Waymo was previously at a social networking company and, like, as money became available for that stuff, and as lots of new technology, there was so much cool technology, like LIDAR becoming much, much cheaper. Ai finally converging, the GPUs getting more capable. Like, all that stuff was happening at the same time, and the smartest people we knew were like, Let’s start solving harder problems in engineering. And so that’s, I think, if anything, it was really just that. I mean, it’s four partners. And, you know, we all found this kind of renaissance in our in our own areas, right? Like even in cat we have multiple investments in ECAD and in electrical CAD and in mechanical CAD, where people are applying AI techniques to those disciplines, and those, those companies, are doing super well, and they sort of found that software engineering breakthrough at like, exactly the right moment.
Kent Lindstrom 43:09
Yeah, what do you know who Satoshi is? Oh, like, don’t people know who he do? People do people know who he is?
Lee Edwards 43:18
Like, I don’t know. Not why. I think I think I just outed my Anyone, anyone who listens to you and is really deep into crypto probably noticed the like, five or six like, shibboleths I broke to, like, demonstrate that I know nothing about crypto, right?
Kent Lindstrom 43:32
Yeah, I was really like, I went down one of those rabbit holes. Oh, well, AI was asking the AI, so it could have been true. They could have just been like, you know, you know, just screw with you, right? Because, yeah, I don’t know. Just screw with me. One told me I invented LinkedIn, which was great, but not true. I’d seen the whole thing where people like, well, you know, he uses one space after the period versus two, and it’s British spelling. And if you kind of put all that together, it’s like, obviously this one guy, I don’t know, it’s what a great feature that you’ve got, that that’s the story, you know.
Lee Edwards 44:07
So, I mean, on the other hand, it’s like, I guess if you know, we put the fund into Bitcoin, it’d be at a huge multiple in liquid, but, um, but no, I It’s, I mean, I think, yeah, anyway, my other, like, random rant is, I think a lot of people one, really, one thing I’ve really grown to appreciate in the last few years in VC, so, and being on the board of my college, which I think I mentioned before we started taping, I’m on the board at Olin College, and I, right now, I’m Vice chairing the Investment Committee, and what the other side of venture capital is that you are a service provider for your LPs. They are hoping to grow their investment assets. And if you have really awesome LPs, you can feel really good about about that work. And usually. They have a strong point of view about if they’re sufficiently, you know, large, large, they have a strong point of view about how they want to invest their money, and if they wanted a certain amount of crypto exposure, that’s probably what they went for. I don’t know if they would have appreciated, oh, X percent of your fund. That was of your, you know, dev tools and robotics and hard tech exposure is now in crypto. Great. It’s, yeah, it’s when you’re running like a fund professionally, it does feel like something that you should think about,
Kent Lindstrom 45:33
yeah, yeah. It’s, I told you know, you talk to LPS like, Well, why shouldn’t I? It’s once while you wake up when you’re a venture capitalist, you’re like, this is kind of incredible in the sense that you can look at LP is like, why should I put my money in real estate? Right? They give me money every month. That’s kind of cool. And you’re like, That is very cool. And, you know, Facebook’s really cool, like, trillion dollars. But that’s not the asset class where you put 10, you know, something’s worth $10 million dollars and becomes worth a billion or a trillion. It’s just not like your real estate’s not going to become 500 times more valuable, right? And what we do, it could, not every time, but it could, and that’s just in terms of an asset class, you know, if you want to think of it that way, or in terms of something being pretty magical in the world. And there is kind of one place in the world. Now, I’m curious what you think about this. Like, there we kind of went through a phase of like, oh, it’s Miami, it’s Austin. And I remember James Currier said to me, I think on this podcast, you know, when something’s happening, like the painting revolution, or whatever, you want to be in Florence, right? You don’t want to be in Dublin for that revolution. And I think the idea now is it, maybe that’s the bay area or San Francisco is kind of, you know, if you’re serious about it, that’s where you go. In spite of how crazy this place is,
Lee Edwards 46:53
it clearly is. I mean, it’s, it’s, if you spend, you have to spend some time in San Francisco and some time in tech hubs that are not San Francisco, and then the difference becomes immediately obvious. And there are fantastic founders all over the world. I absolutely believe that, but the founders that are in San Francisco are like, tripping and falling into interesting conversations about AI, like it’s happening all the time and lots of other places I’m, you know, visiting. It’s, yeah, it feels like you’re talking about the AI conversation from six months ago. Yeah, in the best case, in some cases worse than that. So, yeah, I mean, I think it’s, you know, we’ll continue, we’ll continue to invest all over and we’ve done some recent investments that are, I think, amazing in other parts of the world and other parts of the country. But if you’re, I think, a early career founder looking to just hyper optimize every variable in the equation. It feels like going to San Francisco should be part of it. We definitely also have founders moving to SF, you know, after we invest in them.
Kent Lindstrom 48:13
Yeah, we’ve had, we’ve definitely had a few of those from Europe. It turns out, I don’t think Europe’s a really awesome place to build a company like
Lee Edwards 48:23
thing over there is serious and a little scary, but, but I also, I also think it’s just kind of the vibes to be honest, like, yeah, a lot of that’s it’s got, you got to be a little bit iconoclastic to be an AI entrepreneur. In Europe these days, the average person you run into when you mentioned AI, they’ll sort of say like, oh, that’s the thing that steals all the art, and they’re not excited about the possibility. They’re just interested in parroting and repeating the talking points from the government and the newspapers and and the the industries that are being disrupted. Well, too, some artists in San Francisco are pro AI, yeah, it’s certainly not all of them, but, but I think there’s going to be a lot of interesting creative, you know, non technical artistic things coming out of AI,
Kent Lindstrom 49:14
oh, yeah, for sure. Well, I would argue in San Francisco, the waymos are kind of like, so if you don’t live in San Francisco, I was in Chicago recently. You don’t know that, like, everyone here is hopping into and prefers the autonomous cars, which are Waymo, yep. The first five times you see it, you’re like, ooh, that’s really weird. And then you’re like, meh, there it is, yeah. And it just reminds you every day, like, yeah, AI stuff. When people, you know, not too long ago, people are like, Oh, it’s 10 years away. Yep, nope. Like, as soon as they got introduced, and as soon as, by the way, San Francisco tried to stop them, because we’re nuts. But fortunately, they got far enough along that I think it’s going to be hard to
Lee Edwards 49:54
I’m sure they’ll try very hard. They, yeah, if you follow me on the. On Twitter, then I’ve chronicled a lot of this drama. I added, like, kind of, you know, the when I was living in district five, we had Dean Preston as a supervisor, good lord DSA,
Kent Lindstrom 50:15
dude, I’m in district nine. We’ve got a socialist now.
Lee Edwards 50:18
Oh, you’re in d9 Yeah, you got Jackie, yeah, socialist, great. She blocked me on Twitter, so I can’t congratulations give her feedback in the way that I was giving Dean Preston feedback, as we should say. But yeah, no, his long list of problems he did. He did this crazy, weird astroturf him and Aaron Peskin against Waymo, which Mike Solana at pirate wires, did a really great deep dive into, into how that went down. But at the end of the day, it’s technology that saves lives, like this thing the government should the government should be interested in reducing traffic fatalities, or traffic you know, automobile violence, as the activists call it. The activists should be aligned with the technologists in this regard. And I found a few that are intellectually honest about it, but, but yeah, at the end of the day, like it won, and it was just like such an unbelievable, unmitigated loss for the the the NIMBYs and Luddites who wanted to get rid of the way mo they lost in the court of public opinion. They lost. They lost in the, you know, sort of policy government side, yeah, yeah. It basically boiled down to they wanted city level control. They were sort of saying, hey, the state CPUC and DMV shouldn’t be allowed to approve this stuff the city of San Francisco, yeah, the ability to review Waymo. You’re like, No, this is like, never going to work if every city council in the state of California had to approve Waymo for it to, like, drive through the territory, yeah, this would not work. And when they didn’t get their way, they started doing weird shit, like compromising the like, parking lot licenses of Waymo employees and stuff like that. Was super
Kent Lindstrom 52:19
weird. It’s just this is the nutty thing about San Francisco, is you have all this so much wealth and like dynamic, intelligent people. And then near us, there’s an old theater called the Castro theater that’s just been empty for years, and somebody was renovating it. They want to make it like a concert venue. Yep, the
Kent Lindstrom 52:42
city fought it, yep. Well, specifically
Kent Lindstrom 52:45
keep it closed. Yeah, there you go. And it was something to do with the seats. And by the way, if you’ve ever been to this theater, the seats are just horrible uncomfortable. They’re way too small. And you’re
Lee Edwards 52:55
just, I actually love the theater, and kind of, you’re right. It’s uncomfortable. It was kind of, it was kind of charmingly uncomfortable, but yeah,
Kent Lindstrom 53:01
anybody gives a crap and is gonna put money into something exactly, and that you’ve got a government that would fight that is like you just it’s just astonishing.
Lee Edwards 53:11
My favorite part of that was how it was like heterosexual supervisors from outside of the Castro that were trying to tell gay supervisor Raphael mandelman What to do, historic Castro theater, right? It’s kind of like, what? Why does it matter to you? They’re like, such committed NIMBYs. It is.
Kent Lindstrom 53:27
It is crazy. The Waymo thing has been great in that respect. Just watch, because I just thought it was not going to happen. You know, they were going to regulate it. Then there’s a whole thing where, like, anytime Waymo gets in an incident, like one, yeah, if you think about it, mathematically, it’s 90% safer than a human driver, but once in a while, it’s gonna drive by a school bus, and then that’s a front page story. No, I see that happen 12 times on my way to work by somebody, some Prius or whatever the hell they’re driving their Jeep wagon here. That doesn’t
Lee Edwards 53:59
make the news, but there was, yeah, at the height of that stuff, when they were kind of running their Luddite propaganda bullshit, they they, there was a story in one of these, one of these rags, SF, gate or mission Local or something, where they they put, they were listing the number of incidents which Waymo has to report every kind of incident or accident. So there were, they included the number was, like eight for the month or something, and like, one of those was a stop sign fell over and, like, fell on the Waymo and dented it reported as an incident. But there hadn’t, I mean, there have been shockingly few actual injuries.
Kent Lindstrom 54:44
Well, I’m surprised, because you would think it’s 90% it’s literally like 90% safer than a human. But that still means you get, you’re gonna get some something’s gonna happen. You think, man, God forbid one thing happens. Is it gonna be the worst suspending this and the whole thing. Or is it, I think the cat’s too far out of the bag, or the toothpaste too whatever, but for sure, the thing
Lee Edwards 55:07
with autonomy, and I remember talking about this a long time ago, so I had a professor, Gil Pratt, who was who worked on the DARPA Grand Challenge when he was professor at MIT, before Olin, and I remember him talking about how this was in 2008 he was looking or 2006 he was talking about how autonomous cars are going to have to be so much if they were safer than humans by 1% it wouldn’t fly like you as Soon as you hand the keys over to autonomy, people are going to react emotionally and demand sort of more, a higher level of safety from a computer than they would from a human right. So Waymo has done that. I mean, it’s like an order of magnitude safe. And, yeah. I mean, look that team, that team has been absolutely brilliant on the policy front as well as the technology side. My biggest concern is I would just love for there to be more. I want Waymo to have more competitors.
Kent Lindstrom 56:15
Yeah, well, Dukes is coming, apparently. Yeah, the I had a funny one, I’ll wrap up. I have one more thing for you. But the I had some of this weekend asked they were kind of from out of town, and they just done their first Waymo ride. They’re like, Yeah, but what about when it rains?
Lee Edwards 56:29
And I was like, well, then a human, whenever I’m like,
Kent Lindstrom 56:33
whatever human knows about rain, like, I don’t think people get like, you look left and right at a stop sign. Yeah. Waymos probably looked left, right, up, down, backwards and forwards. 7000 forwards 7000 times in that period. So yeah, whatever human can do with rain, I’m pretty sure the way most 10 times better.
Lee Edwards 56:50
So I grew up in Florida, where it rains almost every day, it seemed. And so people when I moved to Massachusetts, and I was like, Holy crap, people do not know how to drive in the rain here. And it’s true in Northern California. It was true in New York, in Florida. You’re just used to it. But the way, like, if you really think about it, like heavy rain in San Francisco, we just got some yesterday. It’s super rare. It happens, like, a few times a year. And the Waymo has seen it, you know, millions of times. I think that a human driver in the rain in San Francisco is atrocious and should be replaced?
Kent Lindstrom 57:22
Yeah, exactly. Well, let me ask you this AI. I’ve asked my guests this recently. I was just kind of having fun, and then a non zero number of guests, like, weren’t are we going to have to blow up the data centers? Like, is the AI gonna become a problem and we’re gonna pull the plug on a data center?
Lee Edwards 57:39
No, I don’t subscribe to this at all. Yeah, I
Lee Edwards 57:47
Oh, man, we’ve only got a minute before I have to run. So I don’t have I probably can’t quite dive into it, but the amount of hand waviness around this ai doomerism, I think is sort of the safety is an industrial complex. Yeah, it’s, I don’t know. It’s hard to take it seriously for me without sort of specific concerns. And I think the the world, the actual, real world of AI safety, like the things that the people who work on safety at open AI are doing, they’re working on real, particular present problems, solving them, people talking about hypotheticals in the future that typically don’t have the technical background to be able to make the predictions they’re making just is so uninteresting to me.
Kent Lindstrom 58:35
That’s good. You’re the first person who said definitively. No, by the way. Well, this is thank you so much for doing this. This is great. What? And congratulations. Tell people how they find their find you and your fund.
Lee Edwards 58:48
Oh yeah, yeah, our website is root.vc
Kent Lindstrom 58:52
it’s cool, by the way. It’s a, it’s a, like a command prompt interface. It’s, I don’t know, I thought it was kind
Lee Edwards 58:58
of fun. Yeah, we built that ourselves. It’s really funny. It says VC emailed me and said, what, what design firm did you use to make our website, your website me, and the codes open source so you can fork it if you want. And then, yeah, I’m on Twitter. A lot, probably too much. Taryn, k, T, E, R, R O, N, K, and yeah, yeah, thanks so much for having me. This is a lot of fun. Thanks
Kent Lindstrom 59:24
so for doing this. This is the something about your podcast. Lee Edwards is my guest. Talk to you next
Unknown Speaker 59:42
time you