Kent Lindstrom (00:00)
I’m Kent Lindstrom, co-founder of 8Bit Capital, a Silicon Valley venture capital firm that invests in the software startups of the future. We focus on AI, cybersecurity, and fintech. I’m going to take you behind the scenes in Silicon Valley. This is the Something Ventured Podcast.
Kent Lindstrom (00:21)
All right, welcome back. This is the Something Ventured Podcast. I am Kent Lindstrom. I am your host. My guest today is Mark Seuster. How are you doing?
Mark Suster (00:27)
I’m doing great, Kent. Thank you for having me.
Kent Lindstrom (00:29)
Thank you so much for doing this. The ⁓ the AI told me definitively when I asked that your name is pronounced ⁓ Suster and it gave me a little pronunciation guide, S U big S U S S. And I thought to myself, that seems like kind of a shifty AI there. I’m gonna go check myself. So I know it’s Mark Seuster.
Mark Suster (00:48)
I appreciate you saying that you’re in rarefied error of people who get it right first time. ⁓ so much so that I was actually surprised. I was like, Wow, well done you. I usually tell people it’s like my mom’s name, which happens to be Sue, and she wants she owned a bakery, which is also true, and she likes to stir things. It’s Sue S.
Kent Lindstrom (01:07)
That’s so funny. We you know it’s funny, I I went on YouTube to find you know, hoping to find you say somebody saying, Hey, here’s you know Mark Mark Suster, he’s my guest today. I must have seen ten videos and people are so adept now at chopping up videos, so they start with these cold opens. So none of them had your damn name at the beginning.
Mark Suster (01:25)
Funny,
I and I never correct anybody, so you could never know for sure. I just over the years I learned most people get it wrong, so who cares?
Kent Lindstrom (01:33)
I think I found somewhere where you said it. In any case, Mark has been a founder, built a couple companies, sold those companies, which which seems pretty good, ⁓ but is now a venture capitalist ⁓ at Up Upfront Ventures, where which is in a couple of interesting things. It’s in Los Angeles. ⁓ he is behind the blog both sides of the table, the both sides I assume being a venture capitalist and a founder. is a driving force behind the Upfront Summit, which as venture summits go is probably
Probably one of the coolest ones or one of the most famous ones taking place does in LA. ⁓ I think one of the most interesting things about your background though you’re gonna I don’t know about this, but you went to UCSD.
Mark Suster (02:14)
I did. Nobody So did Elod Gill, by the way. So ⁓
Kent Lindstrom (02:18)
Man, you ruined my I was just gonna say nobody adventure goes to UCSD, but I guess too the best guys adventure went to UCS.
Mark Suster (02:24)
I mean, you may know this, but it has one of the top computer science programs in the country. it’s incredible on sciences. We’re one of the top medical ⁓ undergrads in the country. We’re very good on pre-med, on sciences, on AI. ⁓ so it’s a it’s a wonderful academic university. When I went there, which was eighty-six to ninety-one, ⁓ so I’ll let people do the math on whether I got out in four years or not.
When I went there, it was ⁓ a kind of a stress box. It you know, people don’t understand that UCSD is the same, you know, thing as Berkeley and UCLA. It’s part of the UC system, and they just immediately think San Diego State, which also is a good university, but UCSD highly academic. And when I went there, it had one of the top suicide rates in the country, just because it was a super grinding ⁓ kind of university. I was not that student.
Kent Lindstrom (03:21)
Yeah. Kinda d well, yeah, kinda like Cornell. Did you ⁓ did you mistakenly think it was a party school before you went there?
Mark Suster (03:28)
No, it was the opposite. ⁓ in fact, I just spoke to this lady last night. Her name is Christy Burton, ⁓ a longtime super close friend of mine from high school. And we went on a trip. We we knew we had to go to the UC system because back then it was $1,500 per year. It was, you know, state subsidized. My parents didn’t have a lot of money, ⁓ despite my father being a doctor and my mom being an entrepreneur. And ⁓ so I had to go to a UC system because they were cheap.
So I had my pick of which one to go to and I decided on UC Santa Barbara. And Christy and I in high school drove down to UC Santa Barbara and we just partied the entire weekend, including going to see Otis Day and the Knights who were playing at a fraternity party. I’d never been to a fraternity party. ⁓ and at the end of that weekend, I chose to go to UCSD without ever visiting it. And I never told Christy.
And she signed up for UCSD for the exact same reason. So we ended up in college together.
Kent Lindstrom (04:27)
That’s funny. So for those of you kind of around the world listening, U Sisti, User California, San Diego, is in a town c ⁓ it’s called La Jolla, California. Yeah. it used to be called UCLJ, actually, when they first but nobody knew where LJ was. And ⁓ you would think it it’s a half block from some of the most beautiful beaches in the world. You would think that would be a college town, it would be a beach town. It’s not. It’s an incredibly hard academic bio, I think, but it’s mostly this.
Mark Suster (04:51)
Academic
Kent Lindstrom (04:56)
biotech thing and and ⁓ engineering and such a very
Mark Suster (05:02)
So my wife went to Brown undergrad, and when we first visited La Jolla, and I showed her my campus and I showed her my dorms, I was ninth floor of Tyoga Hall, ocean view from my dorm. And she simply said one thing to me. She said, Why didn’t my parents tell me this existed?
Kent Lindstrom (05:13)
Yeah.
This is so funny. So man, Elod Gill, that what are the odds? I always I always joke with people on this podcast that every venture capitalist went to Harvard or Stanford, and then they always say they fell into venture. They have no idea how they did it. ⁓ Harvard, Stanford, and sometimes sometimes Princeton. I went to Northwestern and like nobody went to Northwest. There’s actually like over a hundred venture capitalists who went to Northwestern, but you see rarefied air. So ⁓ so you become a venture capitalist. What
How do kind of animate into that very different because most venture capitalists have not been founders? And this this is something I’ve kind of I’ve I’ve looked at for a while because I’m a founder turned venture capitalist. ⁓ there’s a lot of people in a category where they call themselves operators, which means they’ve they’ve worked somewhere and that’s great. but if you actually look at people, you know, Mark Andreessen did it, ⁓ who built companies and then became venture capitalists, it’s it’s a little more not unheard of, but a little more rare than you think.
How did you kind of make that that transition? I mean th they’re very different jobs.
Mark Suster (06:24)
Yeah. It’s funny you say so. ⁓ the world has changed a dramatic amount, Kent, as you know. I would start by saying my first job out of university was as a computer programmer. again, I was talking with Christy about this last night. She didn’t know this about me, but ⁓ from nineteen eighty-seven to nineteen ninety-one, I worked in a computer store in Sacramento, California. And I taught
⁓ programming in high school.
Kent Lindstrom (06:56)
What what computer?
Mark Suster (06:58)
Well, I mean, we had it the bit the big thing that I had was my parents got an IBM XT. And of course we had I also had ⁓ access to Apple IIEs and then Apple Mac. but my parents had an IBM XT. And the really big innovation of the IBM XT circa nineteen eighty five, eighty six, I don’t remember exactly which year it was, was that it had a 10 megabyte hard drive.
Kent Lindstrom (07:24)
Yeah. So you
Mark Suster (07:25)
You
no longer had to swap two floppies. ⁓ by the time I got to work in the computer store, I was able to afford my own to build my own computer ⁓ from a brand called Leading Edge. And it had 30 meg. And I just couldn’t believe I had 30 meg to play with. It was, you know, unbelievable. mostly what I did is I built in initially macros. I learned how to program in Lotus One Two Three, macro language.
Then my professor showed me actually if you did it in an independent language and you used a compiler that you could publish a program. So all throughout high school, then throughout college, three days a week, I worked in a computer store in college and had a programming job in college, despite studying economics and political science. So when I graduated, I was first a programmer. I did program programming in COBOL ⁓ on mainframes, and then ⁓ moved into database design DB two.
And then moved into an area that was not really important in the early 90s, which was middleware. And middleware was if if you had a client and a server, so a desktop and a mainframe, the middle of the transaction had to handle things like what happens if the connection goes down, what happens if the database goes down? What happens if we write a record into a database? But then the network goes down and the client never knows that we wrote the record.
So we built these layers called middleware. And it was around the time, I think a little bit later than that, Tibco became popularized. But all of my point being in the lead up to the internet, the internet itself, the network and the middle component became the most important thing. So that’s what led for me. I moved out to Europe. I lived in Europe for 11 years. The first of it, I was working with large telcos on launching internet offerings.
Starting in nineteen ninety five through nineteen ninety nine.
Kent Lindstrom (09:24)
Yeah. Do you think it th I try to explain to people these periods in time when things became cool, like and I wonder if we’ve c become I mean, it it is how it is, too abstracted from things. Like yeah, there was a time when if you had a ⁓ computer, you know, you might very well have just gotten out of soldering iron and put some parts together and learned how to do a power on self test and all that kind of stuff. And when the internet started you would you know, before mosaic, you’d kind of get on a modem and log into the
Minnesota Library or whatever the heck it was. And you know, today you you’ve got four billion, you know, whatever, the max RAM and you just talk to your computer and it does whatever. You’re so abstracted from what you know, what was actually happening.
Mark Suster (10:09)
Well,
that I mean, that that’s why I love the initiatives like Raspberry Pi and ⁓ people building things again. When my kids were younger, I have a twenty-year-old and a twenty-three-year-old. When they were younger, I had them assemble computers, I had them play with Raspberry Pis to learn what CPU was, what a GPU was, what a motherboard is. Like I I I think being tangible really matters. But I’ll say this, like
When I graduated high school, and not to obsess about high school, but I’m gonna make a point about this. ⁓ I read a quote, you know, people list their senior quotes, and there was a guy named Bobby Arnsdorf, and he wrote, nonconformity is the highest evolutionary attainment of social animals. Having read that, my first thought was, what the fuck does that mean? You know, but the fact that it stood with me since 1980, he graduated.
I think two years before me, 1984. And I I misattributed it. I looked it up before ⁓ our call. I always said nonconformity is the highest form of social attainment. Maybe that’s what he wrote, because that’s always what stuck in my mind. I think being nonconformist is important and it’s important in venture. It’s important as a venture capitalist. It’s important as an entrepreneur. So if you’re funding what everybody else is talking about today.
Kent Lindstrom (11:07)
Yeah.
Mark Suster (11:33)
And you have a really easy time at cocktail parties, you probably miss the trend by three to five years. And the stuff that I’m talking about at cocktail parties bores people, I guess as usual, because I become really fascinated with the topics that interest me of where I think the world is going. And usually it’s not what anyone’s talking about. And that doesn’t mean I’m always right, but if I’m right, those become the kind of bigger outliers.
Kent Lindstrom (12:03)
Yeah, I’ve had ⁓ Hunter and Satya from Homebrew on ⁓ and they’ve been very successful of venture capitalists. And they ⁓ you know, forever they just invest like they were just investing like I in stuff. Like I you c they would describe it this way one week and that way the other week, and they invested in this this thing that we made fun of. I mean friendly but kind of made fun of, is this this drone company in San Diego a long time ago called Shield dot AI and we’re like what the h the hell what
drones and what the ha it was just we’re like these guys are just these guys are just having fun. Well, turns out now one of the hottest things
Mark Suster (12:41)
I know
exactly who they are. I I was introduced to them when they were raising their seed round. Yeah. And ⁓ I think it was founder collective that sent it to me. I was very interested in defense. we 25% of all of our investments are in space, hard tech, and national defense, and that’s actually increasing. So I was very interested in it at that time. The problem is their round moves so fast, and they raised it this quote unquote.
Crazy price. I think it was like thirty million dollar valuation and I couldn’t wrap my head around that. And of course they’re worth billions and billions now.
Kent Lindstrom (13:15)
Yeah. And so how do you contrast, you become a venture capitalist, how do you contrast that? The thing that I note about the job, and I want to talk a little bit more about that nonconformity too, but the ⁓ when you’re building a company, things are dynamic. You’re ⁓ missing payroll or you’re growing and now there’s nine people and now there’s thirty people and now there’s an HR department. When you’re a venture capitalist, the thing you do on day one
find companies, help companies and raise capital from from LPs is kind of the same thing you do on day four thousand. Did you f did you find that to be a a transition that would that well obviously it worked for you, you’ve been doing it for a while. Yeah.
Mark Suster (13:48)
Yeah.
I would say this. It it honestly, it was very hard. And so let me just say a couple things. ⁓ first of all, I ran ⁓ software companies for nine years. I found it liberating. I went from being a consultant where I either built systems, but oftentimes were advising CEOs on what to do.
To actually having to do something that has to work, that has to be completed. And I think there’s enormous pride that comes from building things and completing things. And I’ll I’ll come full circle on venture capital on that in a second. and I remember on my way into Venture Capital, I talked to a guy, James Courier. You may know him, founder of VenFX.
Kent Lindstrom (14:47)
worked with him at Ooga Labs with him and Stan Chadosi.
Mark Suster (14:50)
amazing. So I was about to be a VC. It was circa 2007. No, it was exactly 2007. I saw him at a party. And I said, you were the founder of Tickle. So you must have the entrepreneur gene. And yet you were at Battery Ventures as a VC, but you left. Like, what do I need to know about VC? And he said, I didn’t really like it. And I said, What do you mean? I thought it’s supposed to be the greatest job ever. He said, Look, as an entrepreneur,
My job is to see the possibility of all the things that could happen. I’m wired to want to experiment and try and create the future. And as a VC, 99% of your time is just saying no to people. Even good ideas, because you can’t fund everything. And so he said, I found it very de spiriting saying no to people all the time. So my my transition to venture capital was hard. And it was hard for the following reasons, one of which you mentioned. Number one,
Kent Lindstrom (15:33)
Yep.
Mark Suster (15:48)
I was used to having pressure on myself every month to ship and hit metrics and show progress and then go to board meetings and explain what we did and how our results were and were we achieving what we said we were and were we gonna run out of money and was I hiring people, was I winning new accounts? And then you go to a world where like you measure success on a seven to ten year timeframe. Like you really have no idea if you’re good at it or you’re doing well.
Kent Lindstrom (16:10)
Okay.
Mark Suster (16:15)
months come and go. And you’re like, okay, is my metric how many meetings I took? Is it how many checks I wrote? Is it like, what is my metric? And so I found that hard. I found it hard saying no to people all the time. ⁓ I created a solution for that, which is I set up ⁓ back then when Y Combinator was new, like ⁓ you know, it it w it wasn’t like the power of the universe. I set up a version of that in Los Angeles called Launchpad LA. Yep. And the reason I did it is.
I could give small amount of money to 20 people, show up at the office three days a week. I wasn’t necessarily gonna fund all of those companies. So I just got to come in and help 20 founders, you know? Yeah. And that was very fulfilling, not having people pitch you, not having to say no all the time. So there are parts of venture capital ⁓ that are a grind. But I I’ll finish on this, Kent, is to say.
I I I wrote a post years and years ago to say you’d have to be a pretty big fucking baby to complain about being a venture capitalist, despite all the challenges and stresses, because we are paid to hear the smartest people that we can get access to tell us what they think the future looks like. And if we’re excited by it, we can spend as much time as we want with them, provided that they feel we’re valuable. And they’ll tell us more and more about it.
Share their data, share their views, share what they’re working on. And if we’re not inspired in a first meeting, we never have to see the person again. So like, how can you complain about having the greatest job that exists?
Kent Lindstrom (17:47)
Well, people managed to do it. ⁓ I was I was I was in a meeting with a venture capitalist and a founder and this this VC who you you will you will intuit had not ever built a company said to the founder something along the lines of Well, you only have one company to worry about, but I have thirty implying that his job was tougher than the
Mark Suster (18:08)
Well, you know, so so yeah, so another thing that I was fond of saying, and and there there’s actually some truth to what he says, which is this when you’re a founder, you have a crisis every twelve to eighteen months because you’re either running out of money or something major happened or you’re worried about losing, you know, the support or whatever. So let’s call it every twelve to eighteen months. When you’re a partner at a venture capital fund, and let’s say you have 10 companies that you’re on the board of, eight companies you’re on the board of, you have a crisis about once a month.
maybe once every other month because someone is always in crisis mode. I run a venture capital fund. We have 140 plus companies. I have a crisis every week. It doesn’t matter if it’s good, bad, or otherwise, you have to become adept at crisis management. But I described Kent a roller coaster.
And the roller coaster imagine like these really high highs and really low lows. And that is what it’s like being an entrepreneur. Like when you’re on top and everything’s going well, there’s no feeling like that in the world. And that’s why I loved being a founder. ⁓ but when it’s, you know, when when your servers go down, and I don’t know, let’s say it’s ⁓ Christmas break and you’re with your family or Thanksgiving, you’re supposed to be in Hawaii, and instead
you cancel your trip to figure out how to get your servers back up so your clients stop complaining. ⁓ every crisis is yours really, really deeply. And the stress that that entails is quite big. And with venture, although you have the crisis more frequently, like the amplitude is much smaller. And so the highs aren’t as high, the lows aren’t as low. And you know, I might help on that weekend, like if I know you’re in crisis mode.
But I still get to turn off my phone for three hours and have Thanksgiving dinner with my family and know that I can check later at night and you’ve been working on it for the last four hours.
Kent Lindstrom (19:54)
Yeah. That’s a that’s a great way to put it. The the the difference in the amplitude. And there’s look, there’s nothing better than being a founder when things are working. When you’re on top of the world and everybody wants to see you and the you wake up the servers are melting because people are dying to sign up.
Mark Suster (20:04)
Feeling like that.
I’ll
never forget the first company that that I was involved with that got sold for a really high price. I worked my ass off on that company, evenings, weekends. I got through a CEO transition, I helped deal with the lawsuit. Like I felt really part of the team, like the executive team, because it was a hard slug. ⁓
But I don’t know, when there’s the stage and there’s the people both collecting awards and collecting big paychecks, I should say. Yes. Like I’m I’m not on that stage and that’s okay. Like I understand my role in life. and and you know, like venture capital is a get rich slowly business.
Kent Lindstrom (20:43)
Yeah, you had a pretty good headline, a c this is coming into my memory bank, so if this is wrong, let me know. But a pretty good headline where you raised like a six hundred million dollar fund, but you paired it or or the whoever wrote it paired it with dis distribution LPs. So it was something like you ra you raised six hundred million dollars in capital and returned six hundred million dollars in capital to you to your LPs.
That’s amazing. So on on the topic of geography is destiny, ⁓ you know, you’re the dominant you you’re the biggest LA VC, is that right? Los Angeles?
Mark Suster (21:13)
Well,
I don’t know how we measure big. Let’s say we’ve been around for 30 years. Yeah. So we’re certainly the longest venture capital fund in Los Angeles, the most tenured. ⁓ you know, I think in aggregate, we raise three point two, three point three billion dollars. ⁓ most of our funds are about three hundred million each. ⁓ and we deploy between forty to forty five percent of those dollars to Southern California, of which that’s overwhelmingly LA. We do some deals in Santa Barbara.
Orange County, San Diego, but overwhelmingly LA. So I just say we’re very prolific believers in the Los Angeles ecosystem. But I also have to point out to people like when I tell LPs that story, it’s funny that you have to explain math, but forty percent by definition is not the majority. So the majority of what we do is outside of LA. Yeah. We just believe that you have to have comparative advantage to be an investor. And you have to know something or somebody better than most people.
Not the only person who knows it, but I have to have some advantage. And I don’t have an advantage chasing the latest application layer AI company in Silicon Valley. And I know Elad basically says, you know, whatever, 91% of all AI ⁓ growth in equity value is the 10 by 10 ⁓ square box of San Francisco. Amazing. I’m thrilled. And that’s great, I think, for the world, for the United States and for those founders and BCs. But
I’m not gonna win those deals. Like, come on. So I’m focused on other things.
Kent Lindstrom (22:45)
Yeah. Well ⁓ Mark Andreessen has a you know, as he does, a super articulate explanation about why that might be that ninety one pr you that the schools and then you’ve got the capital and you’ve got the the risk attitude and then now you’ve got Facebook and the employ you know, all the big companies and the employees, and so that’s the chemistry that makes Silicon Valley. ⁓ now he’s contrasting that to places like Singapore and Dublin where they just put up an innovation center and, you know, hope for the best. What is the LA thing?
That you know, ’cause you would think it would be entertainment. You’d think like, you guys are great in the entertainment apps and that kind of thing.
Mark Suster (23:18)
I I appreciate the question and don’t be offended by the response because ⁓ that’s where everybody starts, they say entertainment, because that’s what people know about Los Angeles. ⁓ it actually is a very tiny industry. In fact, like the filmed entertainment industry is even smaller than the video game industry. So let’s just be clear. It’s not a huge industry and it’s not a huge part of LA. so if you think of LA, let’s first think trade, transportation, industrial manufacturing.
Forty three percent of every product that enters the United States enters through the port of Long Beach or LA. Yep. Forty three percent of every product that touches America.
Kent Lindstrom (23:58)
Well there’s literally literally a there’s a town there that’s literally called City of Industry.
Mark Suster (24:02)
Yes, there is city of industry. we have more ⁓ facilities for high ⁓ tech fabrication like manufacturing than anywhere else in the country. We graduate more engineers than anywhere else in the country. ⁓ we have the highest GDP per capita of any major city in of any big city in America. ⁓
Our overall population of extended Los Angeles is 19 million people relative to seven and a half in the Bay Area. We have different strengths and weaknesses. I’d say the two big strengths of LA right now are the hundred-year heritage of flight. You have, of course, flight was ⁓ first innovated in North Carolina, the Wright brothers. But when you look at Hughes aircraft, North of Grumman.
Kent Lindstrom (24:44)
Yeah.
Mark Suster (24:55)
You looked at Raytheon and all the in McDonnell Douglas and all the innovators in the aerospace industry in Los Angeles. And then you combine that with the fact that JPL, the Jet Propulsion Laboratory, and Caltech are in LA. So we were the innovators in both flight and in rocket propulsion. And so when Elon made a decision of where he wanted to put SpaceX, it wasn’t going to be the Bay Area. You didn’t have flight heritage.
So he put it in Los Angeles in the city of Hawthorne, which is just east of the airport. We now have 8,000 engineers that are rocket scientists, quite literally. And that really has created the next generation of great startups in LA. Forty percent of every venture capital dollar.
that goes into hard tech or aerospace national defense goes to Los Angeles, not to the Bay Area, to Los Angeles. So we know not to touch the stuff that San Francisco is going to dominate because of, let me just call it more broadly, the network effect. And the network effect is real, which is why, you know, the financial services industry so dominated in New York City, why auto was dominated historically by Detroit. but in Los Angeles, that’s really hard tech. And now you have had
Something like 300 spin outs from SpaceX that have raised in excess of 10 billion dollars in capital. And they’re creating the next generation. So whether that’s satellite manufacturing, companies like ⁓ Apex and K two and Impulse, ⁓ all of which worth several billion dollars, whether that’s trying to figure out how to do zero gravity pharmaceutical manufacturing like Varda. Yeah.
Whether that’s ⁓ people trying to innovate in getting access to ⁓ rare earth ⁓ or in this case, not earth minerals from asteroids, ⁓ an area that I think will be a big innovator in the future, ⁓ but we’ll see how far in the future. ⁓ whether you look at the standardization of telecommunications between satellite and earth, whether that’s RF communication or laser communication, all of this is happening in LA.
Now, what people also don’t talk about, I told you all the products coming in, 43%, were incredibly important to the United States in terms of trade, sea-based trade. ⁓ trading over water is one twelfth the cost of trading over land. Water’s everything. It’s a large part of the reason that the United States became more successful than anywhere else around the world. In the United States, we have 20,000 miles of navigable rivers.
⁓ most of it, you know, ⁓ you know, going from like Chicago area down to down to New Orleans. But like that heartland of American trade in the Midwest, that’s why we dominated after the Industrial Revolution. The closest around the world is 2,000 miles of navigable river. So we have all these inherent advantages. Now, so what comes next? This is the stuff that bores people at cocktail parties. But how are you gonna protect the world from
Drones that are going to be on the surface. So they’re called USVs, unmanned surface vehicles, or underground drones, UUVs, unmanned underwater vehicles. and that’s coming. Like you’re reading about Ukraine drones, you’re reading about the Shahed drones from Iran. Five years from now, you’re going to be reading about underwater drones. So we’re putting more dollars into investing what’s happening under the sea.
Because that is going to be the next major contested area. And we also are putting dollars into how do we automate maritime manufacturing, ship manufacturing. So right now, today, Korea and Japan have automated shipbuilding. And in the United States, 90% of all ships are still hand-welded. And we’re going to be at a great ⁓ disadvantage as a nation if we don’t figure that out. So we’re trying to put dollars into that kind of shape.
Kent Lindstrom (29:08)
Yeah. It’s incredible. I mean, the stuff we invest in is is is is cool. But you know, I’ve had David Anderman on who founded Stellar Ventures, which is all space. He was the he worked at Star Wars. He was a general counsel for Lucasfilm, Fake Space. Then he went to be the general counsel for Elon, Real Space, and now he he has a venture firm with his partner who is actually named Celeste and used to work at at NASA. But the space stuff, I mean the fact that you just throw out like mining space minerals and things like that, it’s it’s like a
Mark Suster (29:40)
It it’s it’s funny because it’s been popularized by Elon, but also by Eric Schmidt, who runs a space launch company called Relativity, also based here in LA. ⁓ which is this we have a need to generate more electricity globally, but the US has an acute problem. How are you going to generate more electricity? Of course, nuclear is one way. So we’re spending a lot of time now looking at nuclear being produced on ships.
Because it’s maybe more cost effective. You get around NIMBYism, you get around regulatory stuff. I’m told that the wires now that can run from a ship that could have a nuclear reactor on it to land ⁓ can run up to two gig now worth of ⁓ energy generation. ⁓ and then
Kent Lindstrom (30:33)
I was gonna say a lot of people don’t realize when they talk about how dangerous nuclear power is and you ask them how many people were killed at Three Mile Island, ⁓ of course the answer is zero. All the like most of the Navy ships are running on nuclear power. Power for f yeah.
Mark Suster (30:45)
They are and all of the
all of the submarines are as well. And this has been seventy-five years of it. It’s not new. Now, so another big innovation for you, Kent, that we’re starting to look at is passenger ships and cargo ships are not run on nuclear. They’re run on diesel. And so there’s a huge innovation wave that again, people will talk about five or ten years from now.
To bring nuclear to ship transportation, which I think is going to be really important. So one area of ⁓ power generation could be, we think, will be nuclear. ⁓ we see it both at sea, but also in space. There’s an amazing company in LA called Antares. And Antares is building small nuclear reactors for space. Why does that matter? Well, in space, how do you get power?
And so there’s a couple of things that are important. One is propulsion, ability to move things within space, and nuclear can play an important role in that. But two is if you have power on a satellite or on a vehicle in space, it means that the size of your solar panels, which is how they get power today, they have these big solar panels. If you can reduce the size of the solar panels required because you’ve got nuclear energy.
you actually can move the vehicles more swiftly through space and and you can achieve a lot more. So there’s a lot of innovation. A lot of it is happening in Los Angeles. ⁓ and then the second thing I was going to mention, so electricity generation, we’ve started talking about nuclear. there’s also ⁓ you know, geothermal. so there’s some spin outs from SpaceX focus on geothermal energy. I don’t know if that’ll be big, but I know that’s an area of
a lot of focus for ⁓ a sub segment of the startup community. But the thing that Elon’s been talking about, that the CEO of Google is talking about, that ⁓ Eric Schmidt is talking about, is moving energy into space. And there’s two ways to do it. One is these big massive solar panels where you have access to the sun, you know, virtually 24 hours, not quite, but virtually 24 hours. So you’re harvesting much longer than you harvest on Earth.
And then they use laser to beam the energy from space to Earth. So there’s companies doing just that. They’re not focused on anything but that. And then there’s a growing wave of people that say, why beam the energy here? Why not just leave the energy in space and put the data center in space and do all the processing in space and just transfer the data results back to Earth? So I don’t know which of these innovations are going to win. What makes me proud.
Is that overwhelmingly these are being driven in the United States by US capital, capital markets, by US entrepreneurism, and by a system that allows this kind of innovation. And I think it’s why the US is going to continue to dominate globally. I’ll just give you one quick book recommendation. I would I would ⁓ recommend everyone listening to go read Chip Wars. And Chip Wars is the history of the tech industry, kind of.
It’s talks about the evolution of the semiconductor industry and why Russia was not able to compete with the United States. And a lot of it came down to systems. They had as many smart people there as we did, like they were competing for the rocket race. But the thing about the United States is with the capital markets and entrepreneurism and democracy, you could try lots of ideas. Most of them fail.
But along comes Andy Grove and he figures out how to make Intel scale. It was dual-use technology. So originally the semiconductor industry was driven by how do you make precision bombs? ⁓ and whatever your viewers can think about bombs, like ⁓ they’re gonna be developed, and if they can be used as defensively as possible, as ethically as possible, I’d sure rather the United States have supremacy than China have supremacy or Russia have supremacy.
And the thing, the problem with Vietnam was we were dropping them indiscriminately and ki killing civilians. So the military went to Silicon Valley and said, could you make these things more precise so we could hit our target and not people? And ⁓ the Silicon Valley like leaders said, We will build that for you if we can do dual use and also create a commercial industry because we want to create microprocessors because we believe in the computing revolution. Now, what happened in Russia contrasts that.
Anyone who was challenging the orthodoxy of the leadership of the system, they didn’t find themselves with a company that went bankrupt raising capital for the next startup to test their idea. They ended up in Siberia. So if you read Chip Wars and then you read a book called Freedom Forge, which is how we took the industrial base to lead to victory in World War II, ⁓ you’ll get a much bigger appreciation for the
Importance of defense and manufacturing in the United States and where we’re going to head in the next 20 to 30 years. And you will be more confident in why the US system will beat China, because still in China, again, with 1.1 billion or 2 billion, whatever the real number is, ⁓ they have geniuses and a lot more of them than we do. But the system doesn’t allow the same kind of innovation that we have in the US.
And so you look at how many times they purge the senior members of the leadership in their military, never to be heard of again. And you’re they’re just not rewarded in the same way that our system rewards. So I always tell my kids, like, listen to whatever you want about socialism, but capitalism is what creates the prosperity, not just that the United States has, but that the world has.
Kent Lindstrom (36:41)
Yeah. Well let me let me wrap up on on ⁓ a thing or two. So how how is how is Los Angeles doing? It’s gone through a a bit in the last year or so. Is it a stable place for these companies to be
Mark Suster (36:54)
Yeah, I just I I don’t mean to sound like ⁓ I don’t know, let’s say Donald Trump, but I just think that we we collectively are surrounded by media bubbles that share narratives about what’s happening. If your media bubble tells you that every entrepreneur already moved to Miami, you you could easily fall prey to that if you’re surrounded on Twitter by people telling you that that’s happened and what a hellhole Los Angeles is.
And of course, none of these things are actually true. ⁓ and they’re a product of a media bubble that wants to tell us that. So let me tell you what’s happening in LA. I lived in Pacific Palisades. I’m no longer living in Pacific Palisades. Yeah, sorry. Half of my hill burned to the ground. So I saw firsthand how bad governance was in our city and inability to respond to a crisis in real time. And by the way, like what are we, 16 months later?
There’s no solution for if it happens again. There’s no great leadership coming to save us. ⁓ it will be done like I have a friend who lives somewhere where there were fires, like let’s say eight or 10 years before us, and they form their own fire department and everybody in their neighborhood takes turns. Like we there’s no one coming to save us, we’re coming to save ourselves. But Los Angeles has continued to attract more and more capital, particularly in this part of the ecosystem that I told you about. ⁓
continues to be the one place that anyone wanting to do hard tech in America wants to come because they want to be part of what’s happening in Torrance, what’s happening in Hawthorne, what’s happening in El Segundo. And it’s just attracting those kind of entrepreneurs. So the capital’s here, the people are here, people are optimistic. People have become very patriotic. It’s not something I’ve been used to in the venture ecosystem. But
People are building for a higher purpose. They want to do more domestic manufacturing. They understand that the world is deglobalizing and they want to be part of it. And so LA’s thriving. Now, I’m not saying we don’t have problems. we have problems with homelessness. We have problems with an inadequate government. We have problems because we’re attached to a state that is trying to scare off rich people and send them to Texas and Florida. So we have to fight back against some of those impulses, but it’s still, I I’ve lived all over the world.
I’ve lived like abroad for 11 years. ⁓ I’ve lived all over the country. I lived in Miami. I’ve lived in multiple places. ⁓ it is the greatest. I also lived in the Bay Area, you know, and I grew up in Northern California. It is the greatest ⁓ big city that exists in America. It’s amongst the top five in the world. And this is from someone who also lived in Tokyo. I also lived in Rome. I also lived in Barcelona.
It’s a it’s in a tremendous city because we have education. We have ⁓ a strong group of innovators, we have more startup entrepreneurs in LA than anywhere else per capita in the country. Now we don’t build AI companies and we’re not building software companies, we’re building other things, but it is a town of innovators and very optimistic city.
Kent Lindstrom (40:09)
Yeah. That on that very positive note, we should wrap up. But I want to ask you one last thing, maybe. The the thing that you talk about, you know, California again, Mark Andreessen, who I find myself quoting a lot, is like I you know, it’s pretty hard to kill Silicon Valley, but you know, some of the things that we’re contemplating you could actually do it this time, he said. Do you think like the the the venture capital community has come alive politically? I I don’t mean left right stuff, I mean like, hey
we can’t become socialists ’cause that’s not how this system operates. I I feel like for my whole career they just weren’t involved in politics or they just gave money and that was that. And that’s just changed in the last few years where they’ve said
Mark Suster (40:48)
It it is changed. And I will say that ⁓ I count myself in the category of being slightly different, which is I studied politics undergrad, got heavily involved, lived around the world, have always been ⁓ somewhat active. ⁓ you know, I think and so I I’ve long had our portfolio companies working with what pejoratively might be called a lobbyist in DC. that maybe a better term, government relations. Yeah. But here’s the reality.
And I think Bill Gurley does a great job of talking about this like regulatory capture. What sounds good, like regulation to protect consumers, most regulation is funded by big business as a way to keep out competition. It’s just how the country works. And if you’re not part of the conversation in DC, first of all, you don’t even know what’s coming that can influence you.
And you don’t have a seat at the table to try and shape perspectives and opinion. And federal law will impact you. And so you’ve got you’ve got to be present at as you heard it hit a certain scale. Now it’s way more prevalent in Los Angeles, Kent, because we are building space and maritime and national defense. We are building RF communication companies that rely on the FCC like.
We have to be engaged in Los Angeles. So there’s this corridor between LA and Washington, D.C. that’s become quite prevalent. ⁓ and there are even government relations firms that are based in two locations. One that we work a lot with is called Invariant, run by Heather Podesta. And she understands how to work with startups, how to work with government, how to shape policy, how to understand policy. And frankly, you know, big businesses like Meta and Google and Amazon.
I don’t blame them, but they’re in DC trying to shape policy policy to benefit themselves.
Kent Lindstrom (42:49)
Yeah. Fantastic. All right, well this has been great. How do people find you or your firm? I mean it seem it seems kinda obvious, but wha how do they follow your thinking on things?
Mark Suster (42:59)
The the firm is called Upfront Ventures, UP F R O N T. ⁓ as you noted, we run the Upfront Summit. It’s invitation only. We run it at the end of Feb February. ⁓ if you think you should be at that event, you’re a venture capitalist or ⁓ let’s say an entrepreneur that’s raised enough capital to be present at something like that, you can always inbound to our team and they take everybody who wants to come and they try to create a ⁓
A fair way of choosing who should be represented there. ⁓ you know, we put out a lot of stuff on social, whether that’s Twitter, I’m at MSuster, ⁓ as you noted at the start, how to pronounce my name. and you know, our upfront VC puts out a regular newsletter. You can subscribe to that on our website. We put out a lot of our thought leadership there. We put out thought leadership on Instagram. ⁓ I used to brought blogs.
prolifically, I I still have the aspiration to go back to doing that. So my blog was called Both Sides of the Table. I have aspiration to do more of that. Maybe I’ll get started again. And now more, I just try to occasionally, I mostly say no to podcasts because you could do podcasts every day. But I try to say yes whenever I can and I’ve enjoyed this conversation. I appreciate you inviting me to be here.
Kent Lindstrom (44:17)
I appreciate your spending some time. ⁓ this has been the Something Mature Podcast, Mark Seuster, my guest. Talk to you next time.