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Thank you so much. Um, hi everyone. So nice to see you. Uh, great crowd and we really appreciate you making time for this because I know there's a lot of other things you could be doing as part of this festival. I just really want to thank Endeavor for bringing us back to Athens. It's such a pleasure to be here. It's such an phenomenal team. uh their passion for the tech community here is so uh apparent and uh I think you know I'm of Greek ancestry so I think it's just incredible what's been happening here over the last decade or so but especially in the last few years it really feels like there's momentum and uh it's really you know very exciting to watch so thank you for letting us be a
part of it and to witness it um I guess we'll just kind of dive into things if I can find my panelists here Nico Go Andreas Ben. Um so we're gonna have a talk here to kick things off um about just sort of like the state of VC and some of the trends these guys are watching because I think that uh there's so much happening right now. We're sitting. Oh, we could stand. But I think we're sitting better sitting. Okay. So guys, let's start with guess the news which is the SpaceX IPO. Um big offering coming. Open AAI could be right behind it or maybe anthropic if they beat OpenAI to the market. We haven't seen an offering like this uh of this scale. We might see three. I'm wondering what you think the impacts are going to
be on the startup market. And Ben, maybe we'll start with you and work our way back to me. It's a uh it's an exciting time, right? These are, you know, these are pretty phenomenal companies, the three you're referring to. And I think SpaceX is a pretty unique asset in, you know, in the entire kind of backlog of kind of potential public companies. And so, um, you know, I think that these companies are maybe a kind of a next bellweather for where market sentiment is going to go, but they are quite unique. And so, you know, I don't necessarily think they are necessarily representative of where the next 50 or so, you know, large scale software
companies will go. That said, you know, I think with each one of these, you know, scale, um, liquidity events, I think these are always, you know, great for the, you know, the entire market and all the early stage investors, all the employees that have been in those companies. Um, and, you know, as part of ecosystem flywheels, these companies are just, you know, these events are fantastic about generating wealth and returns that can then go back into the next generation of companies. And I think you know when you see a project as ambitious as SpaceX the people who were you know working there building that the people who were investing in that early you know are the right you have the
right level of ambition in what they want to do and what they want to pack that it's going to be great to see you know what those people go on to do next. So I think you know for me that's one of the most exciting things. Andreas I know you have a point of view here. Yeah sure. I mean, we're at DFJ, we're one of the big investors. So, I personally could not be more interested in seeing this. I'm I'm I'm really glad that uh what originally was a vision of in a sense creating backup for the human species and having other options is actually after so many years continuing on that path. And that's the point I was going to make also about other iconic companies whether they be
the batch you mentioned now or the prior generations of such as Google. I remember how exciting Google the Google IPO and its kind of um ushering in uh a reopening at the time of a market that had been very pessimistic about tech in the early 2000s and how it was an enabling event that ushered in a whole new generation of entrepreneurs and I think the same thing is happening. The interesting part is that with every subsequent wave of such paradigm shifts, the scale changes. We're talking orders of magnitude of the scale changing. And that's to be expected because what business today in the information age is not a technology business. The percent of the GDP that's powered by technology is much
higher than it used to be back then. So I'm excited. I am wishing them well. As with everything else, there's going to be some corrections and some waning and waxing and all that, but durable value I think is being created here. Mo, um, first off, thank you for hosting us here. It's great to be my hometown. Uh, Kalucha. Um, yeah, I'm personally very excited for my co-founder at Verdict because he was the first ever investor in Nisphere, now known as Cursor. So, if Elon feels like he's on a good moment, right? because it's easy to negotiate with Illan it's harder to close with him within 30 days after SpaceX goes public maybe you know cursor will have some good news I'm very thrilled you know for
Michael and everyone involved in that and uh as both you know Andreas and Ben said um especially for anyone who is thinking about doing a startup oh my god you know like Elon Musk what a generational entrepreneur he's been and he's been pushing the boundaries even further about what is possible when you're getting started with a new tech idea. So for the next generation of companies, as Andreas mentioned, they could be going after much larger markets. Um, and immigrant founders, as we know, they are the ones who dream really big. They've nothing to lose and they can go the distance. And Elon Musk is an immigrant founders themselves. So for those of us who come from Greece or other smaller markets,
wow, you know, that's a great example. Absolutely. I am wondering what you think of the proposed the talk of it coming out at $1.75 trillion which seems like a lot. Um even one of the SpaceX investors Ross Gerber was saying that it's really maybe SpaceX is worth 500 billion and the extra trillion is the Alain factor. I wonder if you think there's truth to that. I'm just looking at all the you know uh poly market and other you know uh prediction markets and it looks like the 175 is being given pretty good odds or higher. I don't know. I don't have any access to non material privileged information but I would not be surprised if they get there. You know, I've also talked to um
secondary market investors who say, you know, the it's exciting, but it's um such a force and it's going to so sort of potentially soak up so much money from the public market that it could be a, you know, negative for companies that go out in its aftermath. Is that something that you agree with or have a thought about? had the recent conversation with uh I just read actually um the book at the beginning of infinity where he kind of makes a case about how optimism and progress and humans as explanatory machines at the end of the day there's no reason why you couldn't um continue progress forever. Where am I going with this? It's a little bit out of left field.
Uh I think you can choose to see most things as optimistic or pessimistic and make very good arguments for both. when you're talking about sort of nonlinear and dependencies and all kinds of in my mind something like a SpaceX macro wise is going to end up bringing more people into the market than the short-term impact of soaking up some liquidity that happens to be around between the hedge funds that exist today and I think the same thing happened with the prior waves right if you think in the US and you're seeing this in Greece now consumer involvement in the markets in the last 30 years has gone from something that wasn't a thing to something people trade on their apps on a daily basis. I know these are small
numbers but they add up. Yeah, I think also this is, you know, it's such a one-of-a-one company and it's, you know, even in the even in this domain and you know, in terms of getting access to investment opportunities in space here because this has been such a kind of government and public sector domain for a long time in, you know, a lot of at least the delivery side of it to, you know, have opportunities as investors to kind of get financial access to it. I think that's going to just capture a kind of widespread of imagination and interest. I think you know anyone building a kind of broad and diversified portfolio if there's only you know if there's only one sort of good shot to get into it I think um you
know maybe mentally comes from a different allocation to a kind of longer tail allocation for the next 20 or 30 software businesses to go public at scale. Yeah absolutely no all the activity in the space sector is phenomenal. I mean the fact that there is a space sector now I think is a little bit mind-blowing. Um you know I also wanted to talk to you talking about sort of like investors and optimism. Um, we're seeing, you know, money flow everywhere like it feels like we've never seen before. We've got these massive publicly traded companies uh that are building infrastructure uh and spending, you know, enormous amounts of money. We've
got these like very richly backed venture uh backed companies uh that are building proprietary uh LLMs and enterprise software. Is this sort of massive influx of capital uh justified by future earnings or is it you know driven by FOMO or some combination? Nico, sure. Happy to get us started. Um look, sure. Today, if you're like an AI native founder, an AI native company, oh my god, you can live life on the fast lane. Are you a company in the American dynamism or global resilience um space? Same. you can leave life in the on the fast lane. If you're not in one of these two buckets, it's really tough out
there. And like I've been in ASV and in Silicon Valley not as long as Andreas has been uh but I've been for 17 years there. I'm saying you have more experience. uh and uh the last 17 years have never seen more group think uh than what we are seeing now where basically threearters of all the venture capital money raised from companies over the last year has gone into five companies and I've never seen also more of the money going into VC firms the last 12 months went into like five VC firms so today if you're in San Francisco you're 22 years old you are building something in AI, you check
your mailbox, your or your email inbox, there's going to be a seed term seat. Crazy. You're 19 years old. Oh my god, this means that you're really good. There might be a series A term seat. By the way, five years ago, I was one of five only VCs who were only investing in Gen Z founders. It was the polar opposite. Today, you're 40 years old. You're tenure professor at Stanford. You're not building something in AI. No one wants to meet you. Yeah. So as we know especially the experienced people on this panel this stuff you know rhymes a little bit and yes you know the AI companies today what
is the difference of be building a company today versus a year ago? Two founders with all these awesome AI code gen and other tools with one round of funding and two months of work that can make so much more progress than a year ago. You needed 10 people, two rounds of funding and one whole year of work output. This is changing how companies are getting started. This is changing how companies are going to capitalize themselves so they can go straight from preede to series B. I guess given that velocity though, I do wonder what your meetings look like. So you're investing at the seed stage with your new firm Verdict Capital. Ben, you're doing series A, I believe. And Andreas, you're looking for, I guess,
high conviction bets uh along the spectrum. What is the math like when you're sitting down with a founder now? How do you figure out where to price something when things are moving so quickly? Uh speaking for my partners, because I'm not making new investments on behalf of threshold, but seeing how tough it is because of what Nico was saying before to compete in a market that seems to be going in a sort of frenzy around certain kinds of ideas. uh for a fund that's only $350 million. We're not a platform fund, we will lose a lot of things on valuation, we will try to go earlier in certain cases, but I'll tell you at the end of the day, if you're in
the right companies, it tends to be a long game. It sort of doesn't matter as long as you have enough where you can get some ownership that can be meaningful. So that's the thing. We were series A investors in Tesla and I remember at the time they raised that 100 million series A which was a crazy number and we're like there's no way we can justify this on the fundamentals but then it's like this company has a chance of being an iconic company how can we be in and at the time we were thinking maybe they'll they'll do a down run which they never did by the way but at least a growth. So my what's my point? My point is I think there will be as it's always happened in the past a correction that will push some capital
back out of the market because there's no way the promise and the optimism is still significantly ahead of the shortterm to medium-term ability to show results. But if you ask me about the long term, I don't think we're being overoptimistic on a macro and long-term scale. The problem is that should not be mistaken for oh and the next 19year-old person that sends me an email is that guy. So that's going to have some issues in the short term. I think the you know I echo this point around you've got to you know when we're looking at these companies you know the market's pricing them you know the best founders have no shortage of options for capital. You've got to
think about what's a meaningful amount of ownership for your t you know your fund and your proposition and see if you can kind of get to that. And I think that's the times when we walk away is when we really just, you know, we can't get enough of a business. And that number's come down a lot over time. But I think the other interesting thing for us is we are, you know, we're a $500 billion venture fund, right? We're playing looking at the same opportunities as people investing from a five or a 10 or 15 billion fund. And so the, you know, the incremental value of a dollar to us versus them is very different. And so, you know, we can, you
know, we can be looking at the same price, but they can, you know, they can write a check that's 15 times as big for the same kind of, you know, relative value of a dollar. um you know it means that the round sizes get inflated and go up you know go up and up justified by the high valuations um you know and so that's the interesting dynamic I think in early stage right now is you've got so many different people with so many different kinds of capital and like cost of capital playing in it um that I think that starts to kind of distort valuations round sizes and you know makes it difficult for kind of offers to kind of stack up like for like.
Yes. So in our case we do first money investing which is basically instead of friends and family instead of angels and we lead rounds and um we are investing in freaks. Those are the individuals that's like professional sports um few people break all the records make all the money. So uh those are the unique individuals that one day goes by they learn mature make the progress that takes the average smart founder a whole week. Um, and uh, the vast majority of the ones we founded so far, they're working on a market that doesn't have a name yet. And as a result, like we invest predominantly NASF, New York, and Israel. We've done six, we've made six investments so far. The most expensive
is at 20 million post, three at five million post, one at six million post. And it's like, whoa, you know, who are those people? Do you have like adverse, you know, selection? Because in my previous role, as you know, running a large team, I hadn't seen such valuations in years. But just because they're working in new categories that don't have a name yet, the folks like me at the other, you know, larger asset managers, they cannot tell the team go and find companies in that market because that market doesn't exist yet. So, you need to know what you're looking for. Well, oh go I was going to ask for you does that look like you know the kind of the trope of just find the founders and the people you believe in or are you also looking for you know categories
that don't have names but where you kind of also believe in the potential in that category. It's actually both, you know, like both finding the freak and then also like doing something that is in a space that there's no one else yet because by the time something is consensious at seed stage or preed stage is too late. Like for me to say I'm going to invest in the next team that's going to do something incredible in VIP coding. Not only I'm investing in two folks that are going to out compete cla cursor all those folks but also I think in that category I believe in that category being relevant five to seven years from today. I'd rather go buy some lottery tickets.
I think the point is you need even as an investor you need to have a differentiated strategy. We were talking before about how new sort of paradigms go after completely new uh and establish new industries. This also holds for investors and in some ways having a fund that has the energy of a new platform that is not burdened with billions of dollars allows you to go and look for those kinds of opportunities that would be very hard to justify when people are judging you by you know um aum and let's say tonnage that you're moving. Right. Yeah. No, it's a that's a great point and I sort of, you know, think it's exciting that you've got a blank slate to deal with. I did want to talk just a
second about, you know, you've kind of like only half-kittingly talked about, you know, consensus investing and investing in teenagers and 22 year olds being sort of less interesting than 19-year-olds. I don't know if that's happening here in Athens. I would be interested to know, but it's not a joke. Um, I had just spent time on the phone with a uh senior whose book is uh sort of rising up the bestseller charts right now, Theo Baker. He just graduated from Stanford and wrote a book called How to Rule the World. And it is really about this uh sort of relationship between Silicon Valley and Stanford, this esteemed institution where these VCs are by his telling descending on these uh freshmen uh like basically in
their first semester at the school and trying to pick the winners from the entrepreneurs which I think is fascinating. And Andreas, I'm interested in knowing what your perspective is because I know that for years, maybe still continuing. You teach a sort of a a fellows program at Stanford. So you've you're on the ground there and I'm wondering if you've seen an evolution. So my partner Heidi Royen started the threshold venture fellows. Used to be DFj venture fellows at Stanford and we've been supporting it ever since. So every year we have specifically master students in engineering, but usually with people that want to start companies, we have 12 of them. We have about 150 applications for 12 spots. So it's highly selective. I've been a
mentor now for the entire 10 11 years the program has been going. Some of these people have started, you may know them, George Cula, people who've started real companies, right? That have been u mentees of ours. Um I think especially at times of disruption, I felt the same when I joined DFJ in 1999. At times of disruption when you don't the world seems to be changing in some fundamental way it especially favors lack of experience. In that sense experience if anything can steer you the wrong way sometimes. By the way that doesn't mean that has changed forever. We just happen to be going through a phase and who knows how it's going to last where things have not settled down
yet and new ideas and this fertile ground for new ideas and therefore new and typically I don't want to be agist here but typically younger entrepreneurs we used to say that hey the perfect founder back then in the 2000s was like 28 years old you're over 28 oh it's gonna be tough so I don't believe in overgeneralizing but I think there's a reason why we're going through this period right Now, yes, the exact same thing was happening when I landed as a grad student at Stanford in 2009. So, remember because Stanford happens to be a four seasons resort that offers academic courses. It's really lovely. I encourage all of you to visit. Um there were days back then because the iPhone was two years old, the uh app store was
one year old that there were more VCs on campus than students. And actually, one of them, you know, stumbled upon me and convinced me to become a VC. God bless him, Chris Farmer from Signal Fire. you all know him and um yeah today is one of these singular moments again because uh as Andrea said we're living through disruption and there is that belief that AI native you know founders are the ones who are younger and they grew up playing engaging and creating a lot of awesome stuff with this new tooling I think if you know we think about this a lot I think if you try and generalize from just age I think you know and you think about what are the things that you're looking for at this point you know and you need to
succeed to build an AI company you need to have, you know, an extremely high level of intensity to move in, you know, move at the pace that the market's moving or move ahead of the pace that the market's moving. And so, you know, you need to be committing every, you know, every waking and breathing moment to thinking about the success of the business. I think, you know, it's easier for younger people to do that in general, but I think you can also find people at different points who, you know, are able to do that. I think you need the, you know, you need to be all in on AI as a founder and, you know, in your approach to building your business and the kind of you have the mental dexterity and the kind of the
adaptability to do that and to do that in a landscape where what that means is changing all the time. Um, but I think if you have those things then, you know, my perspective at least is that you can, you know, it's more important to find those attributes than to just look at the, you know, the age on the passport. So, so earlier this week, I did my first ever podcast in Greek with a group here called Hustle Hours. I'm sure I say a lot of stupid things because I've never talked about work, you know, in Greek. Uh, and those founders have started it in order to inspire Greek teenager kids as well as like young students to do stuff in tech. And at the end, they said to me, "What advice do you have for us because we're
very young." And I was like, "How old are you?" They said, "24." He's like, "Actually, you are not that young. I met the Merkore kids when they were 19 and look where they are now." Yeah, that's pretty rough. Nico, age is all relative, right? Um, well, I think it's also interesting, Andreas, what you said, which is that there's a shift here that just needs to settle out. Like, you think this is a temporary blip? Because honestly, I mean, I've been through so many cycles and I'm kind of confused right now. Is this a passing phase or is something fundamentally changing? I am wondering what your thoughts are on, you know, I feel like there's these conflict
conflicting views. One of which is that we're going to see, you know, two person startups creating, you know, throwing up serious money. That's the future. Lots of tiny startups. Um I think the other prevailing view is that there's going to be four or five companies uh at the end of all of this. So I'm just kind of curious what your respective thoughts are on those. So again I will relate it to the prior cycles right. So when I joined in 99 the first question was why won't Microsoft do this because this was a pre-cloud right so pre-cloud pre full web was oh you're doing software mic can't Microsoft do that what's your edge right and then it was the cloud era why won't Google or you know what Amazon do that right so for sure
there's going to be a settling down when it comes to some of the fundament I mean The big battles right now are being fought for the very fundamental models and for the companies that may end up being the engines that power ecosystems of others and become platforms. I think if history is a guide, it will have to settle down because if for no other reason it's inefficient to be trying new things and benchmarking new things for their downstream clients and partners. So it will settle down. But if you ask me again macro, does that mean that the market opportunity will get smaller? I don't think that's the answer. I think the answer is going to be like it happened in the SAS cycle and the cloud cycle and mobility and all that. That
with the emergence of new platforms, they letting another thousand flowers bloom. That wouldn't have been the typical ways that you would have thought of opportunities in the past. Now, I'm not sure, by the way, I know we haven't talked about that, but another thing I'd like to throw into the mix is I'm not sure what that means for the typical venture investing model, to be honest with you, because that's a model that's predicated on picking winners from relatively finite and relatively kind of inefficient markets when it comes to information access. Some of these things may indeed change. So, it's I'm watching it with fascination a little bit from the sidelines.
Well, I wonder about that, too. And I wonder you know, I guess on that front, I feel like culturally something's happening in Silicon Valley and I don't know if in like startup uh investing at large, but um there's a lot of uh sort promotionalism that I don't remember happening before. I mean, there's always been a sort of fake it till you make it mentality in tech. It feels to me like it's becoming more and more extreme. So, for example, at TechCrunch, we are pitched constantly by companies that want to talk about their uh annualized uh recurring revenue. Uh ARR, we're making this amount of money and um I don't really know. It feels a little bit like shenanigans to me at this point, but it feels like investors
are in on it. Um what do you think? I mean, I guess, you know, two parts. Is there sort of shady behavior being sort of, you know, implicitly sort of approved and are people focusing too much on ARR? Look, I think there's, you know, people are being relatively liberal in their kind of headline marketing with the way they define the A and the R of ARR. Um I think you know it's got quite complex because of you know new pricing models and you know token based billing and then people giving out free tokens and you know then billing you know counting the revenue of the free tokens being given back to them. So there's you know there's lots of um you know there's
lots of ways to express these things that have kind of been enabled by these new models. I think as an investor looking at a company you know our job is to cut through those things and make an investment decision based on you know the actual truths behind that. And I think, you know, I think as quickly as these kind of representation tweaks kind of come up, you learn to kind of cut through them and figure out what's actually going on. You know, that said, I think probably when founders are kind of pitching themselves to the press and want to tell the best story about their business, they are taking the liberty of using whatever kind of number um paints the business in what they believe to be
the best light. Um so I think you know is that fine from a marketing perspective? Probably fine. Is that fine from you know deciding which companies get capital or not? No. But I think for the most part sophisticated and thoughtful investors are able to kind of cut through that. Um well we mostly invest now before metrics before product before the company but I do have like a past portfolio and yeah sometimes the conversations are funny like I would get a call or like an email with a very high number of ARR. I was like I didn't remember that company doing so well. So I contact the founder and I was like what happened? You know why is it so great? I'm pleased. Oh yeah, it's like
365 times the number we made yesterday because one of our campaigns hit. I was like, can you please do it at a quarterly basis at least? So yeah, some of these, you know, terms have lost a meaning and yes, there is some bad behavior because whenever you have a lot of money that's chasing after some opportunities or specific themes to be invested, yes, some smart people maybe have some grifting mentality and they want to have some short-term, you know, gain. Um, however, you know, in venture capital can only lose your money once when you make a bad investment, but with the right one, you can make it 100x plus. And that's what we're focused on. So, if for whatever reason we have like
a bad apple, anyone on this panel, you write it off, you move on. Right. So, guys, we're almost out of time. I wanted to for the sake of the founders in the audience just talk to you a little bit about maybe white space that you see. Uh, sometimes it's hard for me to see what's left to do. um at least you know there's an AI version of everything but Nico you we were saying you know you were sort of specific that you're kind of looking for stuff that doesn't you know already exist or can't be categorized. I don't know if you want to flesh that out anymore but Ben and Andreas I'd also be interested in what you're looking for.
Sure I can take a stop. Um you remember when I got started in VC every single venture capital firm had at least half of the partners only doing consumer internet investing. Today maybe they have half a person. It's like crazy. They've left the field altogether. And if you think about it, one of the very best AI companies over the last you know like few years open AI they became huge because of tradu coming back which is a crazy statement. Uh and those founders have like just five you know investors that they can pitch to raise the first or second round. Um, so for example, in the US over the last several years, it's all been that like degen behavior, like you're a degenerate, you're like
gambling with your money. Um, we think that there is a new movement coming up that is going to lead people from degen to regen and it's going to help restore the American dream. And this is getting started now and some smart founders are capitalizing on that. So this could mean new consumer fintech ideas, for example. Uh, trying to take it up to more the not let's say the founder characteristics versus the particular industry or trend because those things will change over time. I think the proxy right now that we sort of half jokingly talk to in an aegist way, but the reality is that you need people. This feels to be like a time where you need to challenge norms because you have a change in enabling technology that
will frankly make a lot of the rule of thumb assumptions that people used to make obsolete. So, but this is a time and a space for that right now. more long-term things like resilience, things like dealing with failure, which by the way is hard to gauge in a market that's as hot as it is right now. That's always a problem, by the way. Uh you only see what people are truly made of if they have trouble. And if they're that young and it's the first time, they don't really know what that means. So trying to get proxies for that uh for us especially I've learned from my former partner from Tim Draper he all and his dad and Bill Draper they always focused on the individuals they wanted the origin myth they wanted the
motivation they wanted the aspirations and I think those things are if anything going to be even more important in the next wave um maybe one closing thought so I think you know for me you know it's been amazing to see the impact of AI on the digital world. You know most of the interactions so far have been you know workflow automation on digital process and things. I think you know the opportunity of AI interacting in the physical world is you know orders of magnitude larger than that because you know the physical world still shapes a large part of the economy. And so for me I think the bet on robotics in all its kind of forms not specifically the kind of the humanoid that does the backflip
or the you know something like that but I think that is the you know the huge space. Obviously, you know, hundreds of billions of dollars have already gone into this, but I think it's, you know, still one of the biggest wide open spaces over the next 10 years for the opportunity of, you know, AI to kind of touch more and more. Absolutely. And we'll be talking to Runway in a little bit about that. Um, guys, we're out of time. Thank you so much for joining us. Really pleasure to talk to you. Thank you everybody.
