Is the VC Model Broken? Jason Lemkin, Mike Maples, Eric Paley & Harry Stebbings Debate | E1062

1. 0:00 – 0:23

   Intro

   1. EPEric Paley0:00

      If you're coming into a company as a senior executive and you have a CEO who's bragging to you about how big their last round was in dollars and how big the post-money was, ask to see the financials and compare those financials to what they're claiming in the vanity of financings. When you see that massive disconnect, you're in a pretty tough place. That is a place that is probably not gonna play out the way you want it to. (instrumental music)

   2. HSHarry Stebbings0:22

      Tim,

2. 0:23 – 4:07

   Venture Capital Fundamentals

   1. HSHarry Stebbings0:23

      I am so excited for this. We were all just saying that if we have this conversation, there's no better group of people to have around the table. So I want to start, and I want to kick off with it's a new world of seed. And I've been speaking to a lot of LPs, particularly investing in seed funds. And when we look at 30 million posts for YC rounds, the- the simple question that I think is just important to start with, and anyone can take this baton, but is the classic seed model dead for the traditionalist, boutiquey seed fund given these pricing environments?

   2. MMMike Maples0:54

      Who wants to go first?

   3. EPEric Paley0:56

      I don't think it's dead. I think there is a very small class of companies that will price themselves in a way that a large group of investors won't find very palatable. Um, and some of the YC class will end up not getting those types of numbers and others will get investors they're not as excited about, and others will actually get the investors they want. But that's a subset. I will say the rest of the industry, um, as, at least as we see it more on the East Coast, although we do invest a lot on the West Coast, is sort of- sort of rationalizing back toward normal. I wouldn't say they got- they're all the way back at what we've seen, you know, in the 2015 ra- time ra- range. But, um, I think prices have come down. And I actually, all of that could sound lousy to the entrepreneur for a bunch of reasons, but I actually think being overpriced at seed is actually a bigger problem than most entrepreneurs realize, particularly as the market's adjusting, right? It's a very hard time to raise series A in general, and it's a harder time if you're already priced where somebody might want to price your series A. You kind of become uninteresting to investors. And I think this is a multi-round game, and you have to be very aware of that.

   4. HSHarry Stebbings2:00

      Do you think prices are coming down, Jason and Mike? Am I- am- am I seeing something different?

   5. MMMike Maples2:05

      I- I tend to resist, after doing this a while, I tend to resist making too many macro statements, right? Like, I kind of look at it like every startup is its own snowflake. Is the average valuation higher than what I've seen before relative to where they should be? Probably. But I still think that there are lots of ways to make money in seed. And I- and I actually think they're surprisingly similar to how they've always been, which is you have to be non-consensus and right, investing in an entrepreneur who's non-consensus and right. And you know, a lot of people say, "Well, that's changed. Look how big these exits are." But then when I look at those big exits, they all had low prices. Pinterest, Airbnb, uh, Dropbox, uh, Uber, Lyft, you know, Anne, Anne invested $750,000 at 5.5 post in Lyft. And I think the same will be true. I think, here's what people don't understand, in my opinion. When a seed round is priced at 20 posts, 30 posts, it's not non-consensus. It's priced to perfection, and it's priced in a way that everybody believes it's gonna succeed, that it's a hot deal. And that's bad for two reasons. It's bad for the investor, because even if the investor's right, they're probably not gonna make much money. And what Sam Leson said on your show a few weeks ago is exactly right. He's had billion dollar exits where he didn't make much money. Uh, but it's a problem for the entrepreneur too, because if everybody is chasing their deal and bidding up the price, they should be self-reflective about, "Do I really have a non-consensus idea, or do I have an idea that plays well with what's popular?" Which I haven't had as good luck with. So, you know, Coinbase, when it was funded by Garry Tan, it wasn't popular to fund a- a crypto exchange yet. And you know, ride sharing, we weren't sure if it was gonna be illegal or not. An air bed and breakfast is what it was called at the time. People were afraid you'd get murdered in somebody's house staying in one. And so a lot of these seed rounds that end up being really good, the fact that they're not popular is a feature and not a bug. And that's reflected in a rational price. And the more irrational the price gets,

3. 4:07 – 16:07

   Contrarian Views and Market Trends

   1. MMMike Maples4:07

      the more I think it's a lose-lose for everybody in the game, to be honest.

   2. JLJason Lemkin4:10

      Is there, though, you know, it's interesting, the- the- the non-consensus question. I wonder in 2023 with how big cloud is overall, consumer, B2B, whatever, are there any non-consensus categories? I get that crypto's a little bit out of... It's funny, when I started investing literally 10 years ago last week, right? I remember I was brought in by a meeting from a, you know, a top three venture firm saying, "Hey, we- we haven't done a lot of SaaS. (laughs) We want to get to know SaaS. We've only done HubSpot, and we really want to learn whether..." And there were like very few billion dollar plus exits, right? So actually, as crazy as it sounds, when I started being a SaaS entrepreneur, I only knew SaaS, but it was non-consensus. I'm wondering if anything, vertical SaaS, B2B, B2C, payments, fintech, you can rag on these things, they go up and down, but is, what's non-consensus today?

   3. MMMike Maples4:55

      And- and I don't know specifically to SaaS, but like, here's my view of that, is that if there is no non-consensus opportunity, there's no opportunity to be an active investor, right? That's what, you know, you could buy the index if you don't know anything the market doesn't know. The way you make money as investors and know something the market doesn't know. You don't make money by doing what everybody else does. You make money by doing something uniquely right that you do. And so, um, to me, that is the job description is to find those opportunities. Otherwise, I should just buy an index fund and call it a day. And so, like, I believe that there are such things, but I don't, I- I don't think that you can do it by chasing what's popular or sort of, I- I think it's like your mind has to be prepared in some way to- to receive the insight that an entrepreneur has when normally you wouldn't been present and awake enough to see it. My view is that the business exists because of inefficiencies, and that is the job of us as investors to find those inefficiencies.

   4. EPEric Paley5:57

      We did an analysis recently of the top...What was the hottest theme in each of the last 20 years of venture capital investing? It's a very funny thing to look at, 'cause you're like, "Really? Why was group commerce so exciting?" It's hard to even get your head back into why 150 of these companies would have gotten funded. But what's really interesting as we did an analysis is we looked at, okay, then what was the most valuable company created that year in each of those years? Never, not in the last 20 years, has the most valuable company born in any single year, right, va- valuable as of now, been this... in the theme that was hot in that year. It has not happened. So o- my favorite on this one is in 2015, I believe it is, I'm just going off the top of my head here so if I'm a little off, I apologize, whe- when the company that inspired this year's hottest theme, OpenAI, with generative AI being the hottest theme of this year without question, 2015 it was founded, the hottest theme that year was direct-to-consumer commerce, which is almost unfundable right now. You know, if you were a Warby born today or a, a Way or a Casper or a... this would be a har- it is a incredibly difficult environment to raise money for that kind of company. But I think what Mike is saying is absolutely right, the most valuable company born in 2023 could very well be in direct-to-consumer commerce because that's not where anyone wants to play right now.

   5. HSHarry Stebbings7:18

      Can I ask you, what happens if the non-consensus actually doesn't align to the capital structure of funds today? And what I mean by that is when you look at energy, when you look at climate, when you look at a lot of infrastructure plays, they're incredibly capital-intensive. Bio in particular as well. They're incredibly different in terms of a capital requirement basis and they don't really align to the current capital providing that we have as seed funds. What happens if the non-consensus doesn't align to our capital structures?

   6. MMMike Maples7:46

      Yeah, but here I'd say that that's, that's where entrepreneurs come in. Like, entrepreneurs, right, they, they go after non-consensus opportunity that most people would be dissuaded from going after, but they use their skill and their ability to create these movements, they move people to a different future, and we exist as investors in seed to take those chances with those entrepreneurs before the rest of the market's ready to take those chances. Like, that's where we generate alpha, in my view.

   7. HSHarry Stebbings8:11

      Yeah, but can we, Mike? When it cost, you know-

   8. MMMike Maples8:13

      Of course we can.

   9. HSHarry Stebbings8:13

      ... I had the founder of Character.AI on the show and it cost $2 million to train a single model. They needed tens of millions of dollars to get off the ground. Is it even possible for traditional seed to play in that world where the capital crime is so much so early?

   10. MMMike Maples8:28

       Yeah, and I wish whoever funded that round all the luck in the world, but I don't see that as a non-consensus investment. I see that as a expensive, high-priced investment in- and hopefully it works, but you're not gonna make a thousand times your money on that deal. You're probably not gonna make 100 times your money even in the best of circumstances. And so, like, our job is hard but not complicated. We need to find companies early that have insights about the future that aren't obvious, that have entrepreneurs that can make those insights real, and then we need to have the, the presence of mind to see that before other investors upstream see that, and then make a bet with them, uh, and co-create the future with them to the extent of our ability. That always exists. The opportunity to find inefficiency always exists, but you have to not just accept the conventional rules as they're given, right? We have to be willing to find gaps in the market and inefficiencies and realize that is the job, right? The job isn't to get into the hot deal. The job is to get into the great deal that other people don't understand is great yet.

   11. EPEric Paley9:34

       But what's really tough about what Mike's saying, and I would say this to any friend of mine who's a new manager, is the short-term incentives do not align to becoming a very good long-term investor. Most VCs are interested in markups. They're interested in TVPI 'cause frankly it helps them raise more funds, bigger funds, or even just get to your next fund, which I understand for new managers is, of course, very important. And investing in the theme of the moment is the most likely thing to be able to upsell to another investor. So in some ways being the most consensus has very strong short-term benefit. Long-term, that doesn't pay, and you're not gonna have... It's why most VCs get paid on management fees. They don't get paid on, on ca- on, uh, carried interest because TVFPI- TVPI in that case doesn't actually translate to DPI. We're gonna have an era, many years now, where, where a lot of TVPI does not translate into DPI.

   12. MMMike Maples10:27

       Yeah. And Eric, as, as an investor that I respect a lot, what you said, that's the beauty of it, right? That's, that's... You know, it's like patience is a form of arbitrage, and, you know, the ability to play your game to seek, uh, inefficient markets while everybody else is regressing to the mean by chasing what's hot, that is the arb, right? The arb is to be patient and to play that game when everybody else is playing the popular game.

   13. EPEric Paley10:54

       I love that. Patience is an arbitrage.

   14. HSHarry Stebbings10:56

       You are poetic, Mike. I mean, God, I wish I had your lyricism. I feel like you could be writing songs. Uh, does that mean then that we're not investing in AI? I mean, I wrote my investor letter recently, I said, "The worst place to invest right now is AI at seed." Given what we've all just said, does that mean we're not investing in hot AI seed rounds?

   15. JLJason Lemkin11:15

       Well, I'll tell you, I'll add one thought, I'd be curious other folks thought. I think as a seed investor, you do have to be cognizant of the next round, whether the company is self-sufficient with one round or whether it'll need another. And I will say the theme of talking with a lot of B2B GPs over the last couple of months is basically no one will touch a deal that isn't AI, right? I had a discussion with Byron Deder on it recently. David Sacks did an opener with me. He said, "Of Kraft's 3.3 billion," they said, "80% is going into B2B AI." Now whatever, forget about whatever that means, we could debate it, but I think if you don't have an AI story, I worry, at least in my domain in B2B, you cannot raise an A, and maybe that's fine, right? May- maybe it's okay or you have to cobble together a seed extension, but I just think in today's world, a lot of A, and later, aren't touching anything without an AI story.

   16. EPEric Paley12:00

       So I, I have a little bit of a, uh, unconventional view on this which is, if you are able to show that your experiments are working, which is really the point of seed, and drive evidence towards your, you know, in, in demonstrating your thesis-There's a lot of money out there in the world. Um, you may not get the big markup, which is fine. I don't think that's the whole game or, or frankly, in many cases, it, it's actually counterproductive to the whole game. But you, you can find money. And so I think, yeah, it's gonna be harder. Uh, the venture industry needs a new bubble and, and we're, we're inflating one as, as fast as we possibly can-

   17. MMMike Maples12:35

       (laughs)

   18. EPEric Paley12:36

       ... because it serves a lot of people's short-term interest. I think the other side of it, just to be clear, I'm not speaking out generally against AI. I view AI as sort of just a- another progression of, of software, most of which is gonna be open source software. I think, you know, if we're having a conversation about like, "Is open source software gonna be in all of our companies going forward?" Of course it's been in all of our companies since we started our fund and it will continue to be in all of our companies. And so I, I think AI is gonna be part of it. So are, are we really just talking about companies that are totally 100% focused on innovation in AI or are we talking about companies that just have an AI narrative? We, we all know of many very huge companies that are trying to tell AI narratives. We were talking about one, uh, earlier today. And I think those are all kind of different things. But, but look, we're, we're in the, in the business of, at least for our fund, and Mike and I have talked about this a lot over many years, we're in the business of following entrepreneurs who help show us a map of where they're trying to go. Interesting ones will be interested in AI and, and we will, we will follow them there, but we're not, we're not thematically trying to chase AI because the market loves it right now. That, personally, I think that's, that's a bad short-term trade-off or, or trading off short term for the long term.

   19. MMMike Maples13:49

       There's an investor I have a great deal of regard for, um, Howard Marks, um, from Oaktree Capital, and he has an idea that I think applies to any category of investing, including seed, which is you can't predict the future really. Nobody can. Lots of, some people think they can, but they can't. The, the future's gonna happen. It's a probability distribution. But what you can do is notice what people are doing in the present. Let me give an example. Right now, almost everybody I talk to says commercial real estate's gonna be hosed. Now, that may be true. Everybody seems to think it right now, right? And so, and, and, you know, the end of the world doesn't come that often, right? And so, like, maybe it will be hosed, but maybe not. If I was gonna try to make money in a field outside of my field, that would be, that would be the vein I would tap because I'd be like, "Everybody is too over-rotated to believing the same exact thing for it to be 100% that true." And so to me, venture's a lot like that too and that's why I think Eric's so right. The hot topic of the year is, is a way to qualify the over-rotation of the present. You can pay a high price and still make money, but your probability of making money in the future is lower because there's just fewer ways to make money. There's a lot more ways to make money if you buy something at a low price today that nobody wants. And so, you know, whenever people say, "There's no price too high," that's a bad sign. And when people say, "You couldn't give that away to me," that's a good sign, right? Because it means that there's something happening in the present where people are, um, it's become psychosocial, you know, in terms of, uh, how people are thinking about it. And I, and I think that that's having a firm grasp of the present is one of the, one of the best unlocks I've ever learned as an investor from Howard Marks. When I talk to my LPs, I'm, I'm trying to learn about what's going on, but part of what I'm trying to learn is, uh, what is the same thing they're all saying? Because that, that probably means that people are overly concerned about that thing. It doesn't mean it's not a concern, but it probably means that it's being overemphasized relative to other opportunities. So the, the thing that I'm-

   20. JLJason Lemkin15:58

       Eric, can I ask one question to you guys, to the three of you? Just curious. What do you... On a scale of one to ten for each three of you, just for venture, not, not for the world, for venture, how much of an

4. 16:07 – 29:41

   Product and Market Dynamics

   1. JLJason Lemkin16:07

      AI bubble are we in, if at all? One to ten, how much of a bubble?

   2. EPEric Paley16:10

      If you're describing bubble as the asset prices related to that general idea, I think we're in a very extreme bubble. I also wanna throw out there, and I think this is very relevant... Oh, yeah, I mean, I th- I think we're, we're not quite at NFT level, but we're, we're, we're probably at a, at an eight or nine. But one of the things I really wanna throw out there is there's another whole problem that we're, that I, we touch on but we're not hitting on enough that was very relevant in 2021 and is relevant in, in AI right now and every theme of every year, which is I'd love to see historically how many companies that ever got 50 to 100 times revenue at sub-10 million, uh, in valuation, at sub-10 million of revenue that really ever became a success, right? And probably true for 20 million in revenue. Maybe at 100 million in revenue it starts to become a little less of a problem for a bunch of reasons, but meaning a company that is, you know, in its adolescence in many ways in terms of its development getting extraordinary amounts of capital. Now, you should... We all should believe if capital is really an asset, uh, you would think that can't be a bad thing. And, and at, at a minimum, it really should be a positive, both in terms of selection bias. The companies that get access to that kind of valuation probably are the best companies, the best entrepreneurs. And the capital should be valuable. And I would say I have just seen this time and time again. When a company is materially overvalued, particularly at an earlier stage, but probably true forever, it all goes wrong for a whole bunch of reasons that we can get into the why, but it's another reason why being in the hot theme of the moment is actually detrimental. It's not just the over-rotation. I agree with that. I think that's absolutely right. But it's also that the easy access to money at a, uh, accelerated stage that the company is not ready for usually will destroy the company's value.

   3. MMMike Maples17:57

      It makes you stupid, right? You, it, it, it, it contributes to doing stupid things.

   4. EPEric Paley18:02

      I, I'm more charitable. Like, I don't actually think people are per se wasteful. I think there's extremely limited capacity...... for good decision-making, prioritization, and experimentation. It's like intellectual capacity. You can't just hire lots of people before you've built the platform that really is valuable to go figure that out, right? And so you just, you just can't help but lose focus. And the reason I'm charitable is there are very few companies that wouldn't want, if they could, to add five more engineers or f- or five more salespeople. Or you have so much constraint always that it, it's not, you know, it's not lavish parties in most cases, um, that people are throwing with the money, right? It's just that the, the, the lack of focus that comes with that, the m- amount of parallel processing things that aren't really working, the push to scale things that are kinda sorta working, but not really working, all of those things drive detrimental long-term value.

   5. MMMike Maples18:57

      So Eric, I, I, like a thousand percent agree. I had this conversation couple years back with Michael Seibel at YC. So I'd invested in his company back in the day, Justin.tv, and he asked me, "Have you ever worked with a company that got real product market fit and wasn't wildly successful?" And I was like, "Damn, that's a good question," right? And, and I was like, "Let me think about it. Let me think about it." I, I couldn't name a single example. R- regardless how well-run it was, regardless of, uh, like if they got real product market fit, I, I never had anything but massive success working with that team. So I asked Michael, "Can you name a single example? You've now seen thousands of companies at YC." The only one he could name was Zenefits and they broke the law. When I think about that, when I internalize that, and the point you just made, Eric, what I think people are doing is they're hiring ahead of product market fit. And to get product market fit, there's an advantage in being lean, and there's an advantage in having n-1 resources rather than n+1. Because, like, having too many resources lets you pursue losing ideas for too long. Having too few resources forces you to say, "Get product market fit, eliminate distractions." And you don't need that many people to do that. And so what I saw happening was, "I have the money, I might as well spend it. I could get these great engineers. I've known them. I know what they're capable of." And before you know it, you develop too much product footprint too f- soon, too opinionated, and now you're trying to sell your opinionated product that nobody wants. Whereas you would've been better off having a tiny team of super focused people in one room having product pulled out of them by customers, and you escalate your commitment as you escalate your certainty. That's what happened, right, in 2021 is what happening now in a lot of cases is people are hiring as if they already have product market fit before they have it.

   6. EPEric Paley20:43

      I agree with all of that, but I think just to be in the nuance is a little bit where I think it does get complicated is I've seen lots of companies with, let's call it seven out of 10 on product market fit become very successful companies. So you don't need perfect... You know, I, I don't know how good p- HubSpot's early product market fit was relative to the value they ended up creating in the market over time, but, and I think they're... I don't mean to pick on them. I think they've done a phenomenal job, but I think they were very good at go-to-market. There are companies that, you know, product market fit's a spectrum. You need adequate at a minimum to do reasonably well. And obviously if you nail it in the way that I think you and, and Michael were talking about, the product will just be ripped right out of you, right, and you're not, you're not gonna fail. But I think what's tricky is those five to seven or five to eight scale product market fits where something's working, it's working nicely, but you are reliant on really good go-to-market. And when that go-to-market is not that well tuned, but you're trying to live up to these extraordinary valuations, you just accelerate, whereas you should actually be slowing down and fixing it. And not only do you accelerate, capital always has dimi- diminishing return of performance. So when you accelerate, you don't even get the same mediocre performance you had acceleration, you have declining performance as you accelerate. And the question is, what do you do then? Well, you just double down because you have all this money and you're trying to live up to all these expectations, and you don't want to go to your board and say, "We're in trouble. I want to cut the company in half," right? And so th- this is where I would say 80% of the companies that get extraordinary financings end up living, in my opinion. And it's why most of them, we say besides product market fit, the biggest risk to a venture-backed company is bad capitalization. And we don't mean under-capitalization, we mean over-capitalization, and by the way, in many cases, just bad investors who think capital solves all problems, and we like to say capital has no insights. It has value, but it doesn't have insights. It doesn't solve your problems.

   7. HSHarry Stebbings22:36

      Mike, do you not think there are many companies that just don't have business model fit? They have product market fit, but not business model fit. It could be a WeWork of the world, but fundamentally the business model isn't as good as one thing's. Allbirds, the margins suck. (laughs) Like, there are businesses that have product market fit and customer demand, but the business isn't good.

   8. MMMike Maples22:54

      Yeah, so Harry, I hope I'm not being too parochial by, uh, using a US analogy here. Uh, I am very respectful of the Brits, but I'm, uh, you know how the people talk about, um, you could be a strict interpreter of the constitution or a loose interpreter? When it comes to product market fit, I'm pretty strict, right? So, like, my view is that product market fit answers a very important but profound question, which is, what can we uniquely do that people are desperate for? And what happens too often is product needs to be four out of 10 better for people to be desperate for it, but it's only two out of 10 better or one out of 10 better. Um, and so, like a lot of these companies that you're describing, I, I don't think they had business models that were good, but that's just an emergent property of the fact that they never answered the important question in the first place. When you say, "What can we uniquely do that people are desperate for?" that contains two things. One is, do we have an insight? That's the uniqueness. And then we have to navigate that insight to the desperate. What happens too often is we over-fund the company before we've d- identified the desperation. And so then what we do is we, we sell to semi-attractive customers rather than customers who said, "Uh, where have you been all my life?" I would rather, it's kind of a Thinking, Fast and Slow kind of thing, I would rather go slow to find the desperate, because once I've got 'em...I don't have to throw money at the problem of growth, I only have to syndicate the truth because I found people who truly are desperate for what I have, who value my advantage. And so to me, in the zero to one phase, that's what I like to say to founders, "What can we uniquely do that people are desperate for? Eliminate distractions." And if somebody wants to give us a bunch of money at a goofy price, I'm like, "Great, put it in a lock box, but let's not breathe our own fumes here." Right? We don't have product market fit yet, the job is still the same, but fortunately now we have time. We're not gonna run out of money, we're just gonna run out of iterations, but now we have time. But, like, let's not, let's not pretend we accomplished something that we didn't because, like, when you have product market fit, you know it, right? The feeling is visceral and palpable. Uh, and, and yes, I get that it's a continuum, but if you start to say real growth is the accelerated accumulation of attractive customers desperate for your advantage, it focuses the mind on who you spend your time with and what success looks like and what revenue chasing looks like that isn't valuable. And that's what I, like, the phenomenon Eric's describing, I think that the companies get in trouble because they get e- they get engaged in revenue chasing. They, they have to make some artificial number they promised to a VC in a spreadsheet and so they go get that revenue any way they can and they say yes to features that aren't additive to the strategy or they say yes to customers who aren't gonna stay with them over time and next thing you know, you have a leaky bucket and you have a screwed up sales model and your unit economics go down. And it's because your marginal next customer should be increasingly attractive if you're, if you're getting product market fit rather than what Eric described, which is the reverse. A lot of times they become marginally unattractive.

   9. EPEric Paley25:52

      But, but what Mike is saying is not something, in my opinion, that's very well understood among the people who are venture capitalists sitting on boards giving direction. I have so many of our entrepreneurs say to me when I, when I talk about the kind of patience Mike's talking about, they say to me, "Well, my other VCs are pushing me to go faster." And I always say, "Well, do they want you to learn faster or do they want you to burn faster?" Right? 'Cause it, it doesn't sound like-

   10. MMMike Maples26:16

       (laughs)

   11. EPEric Paley26:16

       ... they're that interested in what you're learning. They're just upset that the, the lockbox that you should have created, that w- we also encourage the founders to create in these moments, that you're not burning that down faster 'cause they think if you do, somehow you're gonna magically get them the markup they want and the glory they want and the story they want, right? But they're not actually interested really in the pivotal question, which is what are you really learning about what you can do for your customer? That's a real problem, right? Because you're sitting on boards, including Mike and I are sitting on boards with people who are saying the exact opposite thing from what we're saying and frankly, I think the advice is dangerous. And I'd go one step further, which is, it has become the conventional wisdom of the industry, which is go faster. What the hell does that mean? Does it mean learn faster or does it mean burn faster? Right? It means burn-

   12. HSHarry Stebbings27:05

       What about blitzscaling? Isn't that the solution to every problem, blitzscaling?

   13. EPEric Paley27:09

       Yeah.

   14. HSHarry Stebbings27:09

       I thought it was the answer.

   15. EPEric Paley27:10

       I think blitzscaling is this beautiful, beautiful idea of exactly what Mike said applied wrong in all, almost every context, right? Which is-

   16. HSHarry Stebbings27:18

       Lean startup and the blitzscaling are all applied wrong, right? (laughs)

   17. EPEric Paley27:22

       Right. You have true, true product market fit. Okay, that's a magical moment. I do believe Uber had that, right? For... And we can talk about it, right? And what I saw, you know, luckily being part of that, that journey, you know, as, as a customer, as a investor, it was incredibly competitive, obviously lots of mistakes were made, but the product market fit was extraordinary. And by the way, first mover did matter, network effects did matter, and, you know, there was this incredible blitzscaling burden and ex- and opportunity to go everywhere at once, right? Which by the way has a lot of challenges, too. But it makes sense in that context. The question is how many founders get themselves into that context?

   18. MMMike Maples28:03

       Right. Y- y- you have s- you have some scenarios where the product market fit is so strong and so obvious that the market will be satisfied. Like when, when I was involved with, and Ann was involved with Lyft, right? While Eric was involved with Uber, like Travis is gonna raise a ton of money and go to every city in the country and every city in the world and you're sitting here as Lyft, do you need to raise a lot of money? You betcha. Right? Like the, the option to not raise a lot of money and be capital efficient is not available to you if you're... unless you're in a state of denial. Or like with Okta, you know, we had product market fit, Microsoft was gonna come in with our identity solution, the market was going to be satisfied. So the question is who's gonna satisfy it? And if you don't go fast enough to penetrate the market at an accelerated pace, you'll just get out muscled by the incumbents or by the person who's willing to do that. But the problem is, I agree with Eric, we got to a place in the industry where people thought blitzscaling was the answer every time. It's, it's really not. It's an edge case for a very rare condition where it's clear that the, that the market is pulling th- these features out of the market massively quickly and somebody has to fulfill that demand the first.

   19. HSHarry Stebbings29:14

       Can I ask a really unfair question? Um, which is, so many times on the show people say, "Oh, we think it's a market that's big enough for multiple venture sized outcomes." And that can very often be the case, but the actual outcomes vary extraordinarily in size. Respectfully, Uber and Lyft are very differently priced today. How important do we think market dominance is when we think about enterprise value investing today and how that leads

5. 29:41 – 41:52

   Investment Strategies and Perspectives

   1. HSHarry Stebbings29:41

      our thinking when investing?

   2. EPEric Paley29:42

      So thi- this is sort of counter industry, but I'm not a, a macro markets investor. I think later stage investors, maybe it makes a lot of sense, so I, I don't want to dismiss the importance of it. I just think in venture, we all want to feel like we're smarter than we are. Like you're gonna do this really sophisticated market analysis... By the way, there is no market analysis on Uber and Lyft. I don't say there was none 'cause clearly the world went the way it did, but I don't think anyone who is good at market analysis-... could have predicted how that played out. And I'll, I'll tell you another story. You know, with Trade Desk, one of the reasons, one of the reasons we didn't raise a lot of money was we were the last ones in and people just thought it was played already in the, in the programmatic advertising market. But one of the reasons we didn't raise that money is Jeff always wanted optionality to sell the company for a couple hundred million dollars-

   3. MMMike Maples30:26

      (laughs)

   4. EPEric Paley30:26

      ... because he wasn't convinced he could build a big enough company, by the way, now was up to $400 million.

   5. MMMike Maples30:31

      That's a good story. (laughs)

   6. EPEric Paley30:32

      Right. But he really didn't know and he wasn't sure, and he didn't want to have all this capital stack that he had to satisfy that would screw up the value. And so, I think the truth is like, a lot of the very best things we've invested in, there were so many reasons you could argue the market wasn't that interesting. And I think the markets that are the biggest, if you really want to do market analysis, they're unbelievably crowded. So then you get into, like, "Well, how much of that market can somebody really take?" So, we get into this sort of a little bit of a threshold question of, like, is there a market? Like, do we believe there could be a market that is of any meaningful size? And then we stop and say, "The rest of it, we don't know." We can just sit around trying to feel really smart about this. It's back to Mike's, like, you know, can you predict the future? I think a lot of VCs want to believe we're in the future predicting business. I'm not in the future predicting business. I'm in the following people who have very, very clear points of view about how they want to solve a customer problem business. And when they explain that to me, there's, like, this magical experience I have of, "Wow, they've really thought deeply about this" and they might be right and they might be wrong, but they're doing a lot of things that make me think they're going to get this right, and I want to go join them in this journey. And I don't spend a lot of time going, "Well, is it only a $3 billion market or is it a $200 billion market?" I, I think that's a very dangerous model that makes you th- you know, talk your way out of... Like, what would you say was the market for Pinterest? You could either say it was all of e-commerce in the world, maybe, or, you know, it's like a, a digital collection, um, you know, website. Like, what... I don't know. Does it even have a market? I think that's... And we were not investors. You know, would have been great to be investors, but, um, I, I think it'd be easy to talk yourself out of that company, uh, just on that basis.

   7. MMMike Maples32:17

      Yeah. And it, and it relates, I think, to the prices people are paying in seed right now. So, like, a, a, a variation of what Eric's saying is, some of these markets are so big, any price is justified in the seed, and I just, I just don't think that's true. Like, not even close. And so, I think even back to some of the ones that have worked, if you, if you pay five and a half post for Lyft, or, like, what, what did you guys do Uber at? Like, similar price, right?

   8. EPEric Paley32:43

      Yeah. It was actually, if I remember correctly, it was at about five and a half post as well.

   9. MMMike Maples32:46

      Right. (laughs)

   10. EPEric Paley32:46

       It was four pre. About a million now.

   11. MMMike Maples32:48

       Okay. Okay, so, like, let's just stick with that.

   12. JLJason Lemkin32:49

       The old days of venture, 2020 VC. (laughs)

   13. MMMike Maples32:52

       So, so Ann, so Ann bought th- 13.6% of Lyft for $750,000, right?

   14. JLJason Lemkin32:57

       Yeah.

   15. MMMike Maples32:58

       Now, let's say that you paid 20 post. You'd have to invest 2.7 million to get the same amount. Let's say 30 post. You'd have to invest over four million to get the same amount. Now, how big is your fund? How many deals can you do? And if you can only do a fifth as many deals, then you're taking 5X the risk in terms of just the probability of getting N equals more than one outliers, right? Because, like, seed funds are, like, crazy, ridiculously risky, right? And so, you need enough shots on goal so that if you have some skill, you can get some outlier results. But if, if at a given level of ownership, you're required to invest 5X more, you either have to have five times bigger fund, which means you have a five times bigger hurdle, or you have to do a fifth as many investments, which, you know, now your, your risk is ratcheted. So-

   16. JLJason Lemkin33:49

       That's been my model. And I realized what, what took me a while to figure out, that means a- as a seed investor, and I tried to do late seed, okay? And there is a difference. Half of mine, at least half have to be winner, real winners. At least half. That's the insane... To make that, I'll do the 30 post, right? The 20 post, I'll do it, but I have to believe there that with a relatively high degree of certainty, it will, it will be successful.

   17. MMMike Maples34:11

       That's right. It has to have been de-risked, right?

   18. JLJason Lemkin34:11

       Right? And it's crazy. Half have to win.

   19. MMMike Maples34:13

       Yeah.

   20. JLJason Lemkin34:13

       Half have to win-

   21. MMMike Maples34:14

       That's right.

   22. JLJason Lemkin34:14

       ... as a seed investor. Half.

   23. MMMike Maples34:15

       Which, which means it has to have been de-risked, right? Somewhat.

   24. JLJason Lemkin34:19

       Yeah.

   25. MMMike Maples34:19

       Uh, you know?

   26. JLJason Lemkin34:19

       Some- somehow.

   27. MMMike Maples34:20

       And, and so, like, I look at it like, price and risk don't just have a relationship. They, like, they have an almost direct relationship at seed. Like, the higher price you pay, the more risk you're tolerating by paying that high price, and the more risk takeout you should expect to justify that high price. But that's not what's happening here. You know, you see companies with, like, two L- LOIs raising at 30 post. You may make money on that one deal-

   28. JLJason Lemkin34:47

       That's the problem. That's the problem, right? But-

   29. MMMike Maples34:48

       You may make money on that one deal, but if you do a portfolio of those deals, that's a recipe for getting creamed.

   30. EPEric Paley34:54

       I want to run a hypothetical for you for just a moment on Lyft, Mike, and, and I'm not intimate in the story, but to me, if Zimride had raised $6 million at a 30 post day one, and it was Zimride, right? It was a pretty big pivot that happened, and they were burning, you know, just run the math, the typical venture math of, you know, divide by 18, $6 million, or divide by 24. So, they're burning $300, $400,000 a month and they're running out of money and they say, "You know what? We're realizing that we'd rather be in ride sharing. We don't really think this carpool thing is the right a-" I mean, it was a different kind of carpooling thing, but is the right approach. "Let's go raise more money." Even today, would they find a market l- for, for capital? Like, for a company burning $300,000, $400,000, $500,000 a month in the middle of a pivot with a 30 million post? My instinct is like, no. Some of the reason why you can get capital in that moment is because there's room for investors to give you another shot because your burn rate's low. Your, um, they can still come in at a reasonable price without trying to recap a c- I mean, recapping companies that are not clearly worth anything yet, it's not a business anyone's in. Right? There, there aren't investors. I mean, maybe insiders a little bit, but there aren't investors running around looking for opportunities to recap zero revenue companies.
6. 41:52 – 1:03:21

   Realities and Challenges in Venture Capital

   1. EPEric Paley41:52

      risk for the next round. I don't think f- I think founders have lost all perspective on the risk they're taking in the next round. Venture has been so gamified the last five years, and everyone's to blame. Uh, everyone's to blame that, uh, I just don't see... Uh, raise 150, 200, it's just a ga- Even to the best founders, it's a number. I don't see... Literally the smartest people I have worked with n- lost all... It's just a num- it's just a number.

   2. MMMike Maples42:15

      It's-

   3. EPEric Paley42:15

      It's just a number.

   4. MMMike Maples42:16

      ... it's unsolvable, I think. You know, uh, I remember when I was a founder and I was raising money, people say, "Don't raise at a high price that, you know, these people are giving you, because if things don't go well, uh, you're in, you're gonna be in bad shape." Well, you're like, "I'm gonna be the one that wins. That's why I'm doing this. If I didn't think I was gonna win, I wouldn't do this startup."

   5. JLJason Lemkin42:32

      (laughs)

   6. MMMike Maples42:32

      And so, it's impossible to get into a head space that says, "Well, you know, this may not work out. Customers may not want what I'm selling." You have to believe even when you don't believe when you're a founder. And so I just think it's... Uh, I, I think it's hard to get somebody in the head space of quantifying risk like it's an investment thesis. I think they either think they're gonna succeed or not succeed.

   7. EPEric Paley42:53

      But I actually think what I've seen is for investors that a founder wants to work with, they will actually accept, "You know what? I don't need to optimize. I'd rather work with this investor. I think it's a better, uh, opportunity for me than, let's say, some party round of investors or some investor that gave them a very high-priced term sheet, but they're not excited to work with." When I was graduating from my co- from college, my, my mom would talk to me about all these other kids that she knew around my age getting amazing jobs at Morgan Stanley or Goldman Sachs. And what she meant is-

   8. MMMike Maples43:25

      (laughs)

   9. EPEric Paley43:25

      ... these are good brands, and they're high salaries. And I was like, "I don't know why you think that's an amazing job. Like, what makes it an am- help me understand, 'cause maybe I'll go pursue it if you help me explain... if you can explain to me. Why is that an amazing job?" But I think it's a lot of the same logic, right? People who self-select to realizing that those brands and those jobs are not what they're really looking for, even though the salary might be higher, pretty quickly realize, like, this is not the optimization equation that I'm chasing after. Now, that doesn't mean there are lots of people I try to explain that to and they don't wanna hear it. I, I totally agree with you. But there are a lot of founders who really do get that it's not the optimization they're most interested in. Doesn't mean they ignore it completely.

   10. MMMike Maples44:09

       Yeah, I agree, I agree with that. Uh, but I guess the distinction I would make is that it's less about do they believe they might not raise in the next round. It's more just like, "Hey, I, I wanna work with Eric, so I, I value the advantage of working with Eric. I'm willing to take a little bit more dilution or lower price for that privilege," right? Because that's, "I wanna work with who I wanna work with."

   11. EPEric Paley44:29

       I just think of it as a different optimization. And getting out of this motion that the, the only optimization that matters is the price of your round and the dollars. The other thing that's interesting is, and I was debating this with a we-

   12. JLJason Lemkin44:39

       I think it's 20%. I think a great founder will take a 20 per- will take a 20% lower or delta term sheet to work with a high, someone they really wanna work with. Beyond 20, I think it may be mythical.

   13. EPEric Paley44:52

       Yeah. You know, I think, I think it is a lot. The, the other thing I was gonna, I was gonna share on this, I was, I was talking to another investor founder from the West Coast this past week who's saying, "Look, the advantage of a lot of money at really high prices is that's where the talent wants to go," right? And I think that's been true, but it's actually started to become a little less true, 'cause I think there's a lot of talent who realizes, "Boy, that's a big capital stack for a company at that... at, at, at the, at your phase." "Wait, you onl- really, you only have $5 million, and you're bragging about your 300 million, um, post-money valuation and the 60 million in capital you just raised? God, like, I, I'm not sure that's the best place for me to be." So I think this, some of this stuff is starting to shift a little bit, largely 'cause so many of these unicorns are gonna be, you know, un- unhorned or whatever the right term is, unwinged, unhorned.

   14. JLJason Lemkin45:39

       I think it's true for the seasoned folks, right? The folks that have been around for a while, that have some scar tissue. I'll tell you, I've interviewed 10 or 15 up-and-coming first-time head of sales recently, okay? All out of decacorns and unicorns with good outcomes. Every single kid wanted to join, uh, whatever, a, a, a heptacorn or penta- pentadecacorn. There was no one, no kid, and I, I put kid in quotes, it could be any age, but raring to go the first time, they all want, they all wanna go work at the hot, the hot startup, right? I just think it's the more mature folks that, that maybe view it differently.

   15. MMMike Maples46:10

       And, and by the way, this is, I think, another facet of what Eric was describing earlier, the problem of raising too much money at too high prices. It, it totally distracts you from the real question. Are we getting product market fit? Like, if somebody's saying, "I can't hire a bunch of high-priced prestigious people into my company unless I raise crazy amounts of money at crazy prices," you're answering the wrong question. If you have product market fit, you're gonna be able to hire at will from the best people all the time. But, like, if you don't have product market fit, you, you have a first-order question that you haven't answered, and that's what the purpose of the round should be and that's who you should partner with, not based on nonsensical status-seeking silliness.

   16. JLJason Lemkin46:48

       I mean, listen, we all, we're sophisticated folks. If you're new to the industry, you're looking for s- everyone has to look for signals. As a new hire, as a first-time, you've gotta look for signals. Listen, we can mock a unicorn round or a decacorn round, but gee, I only get one job at a time, right? It's not like I get to make 20 or 30 bets as a first-time head of sales. I've gotta look for signals, right? So I do think these signals matter because they're not, they're not, they're not the, they don't have the luxuries the four people here have, right?

   17. EPEric Paley47:11

       Well, I think this, this argues in favor, to some degree, of what you're saying, but at least I'll throw it out there as advice. If you're coming into a company as a senior executive, okay? Uh, and your, you have a CEO who's bragging to you about how big their last round was in dollars and how big the post-money was, ask to see the financials. And compare those financials to what they're claiming in the vanity met- in the me- vanity of financings. When you see that massive disconnect where you're like, "Wait, that's crazy. Like, this company hasn't done much yet," you're in a pretty tough place, right? Like, that is a place that is probably not gonna play out the way you want it to.

   18. JLJason Lemkin47:48

       I can't tell you how many VPs I interview all the time, from my own portfolio companies, like ethical founders, and I ask them, "Well, what do you, what do you think of the metrics?" They don't know them.

   19. HSHarry Stebbings47:56

       My question, seriously, there, there's a huge amount of these unicorns with these, uh, r- kind of ridiculous valuations and a million in ARR. What happens to them? I mean, there's, there's, there's literally 1,000, I'm sure. Close to 1,000. So what will happen to unicorns that are doing okay, but they're never gonna get back to that last round price? I had over 1,000X ARR in my first fund. 500K ARR, 750 million pre by one of the best growth funds. What happens to these hundreds and hundreds of unicorns that aren't there?

   20. JLJason Lemkin48:27

       Harry, that's the beauty to, to it being in the last fund-

   21. HSHarry Stebbings48:30

       (laughs)

   22. JLJason Lemkin48:32

       You, you don't have... Every venture, everyone in venture gets one duo. Du- uh, one, two... This is what I was taught when I entered. You get one, you get one mulligan fund. This is what I was taught, you get one mulligan fund. Maybe that's not true today, but I think there's gonna be a lot of mulligan funds out there. (laughs)

   23. HSHarry Stebbings48:45

       Okay. But then, but that's actually also a really interesting point, which is, Mike, you said that you like to speak to your LPs and hear the commonalities with what they're saying. I speak to mine, and they all say when they look at their venture books, "I got no idea where to place them." If you guys were to answer that to LPs, where should we, how should we think about the book values of the last vintage? Is this just a load of mulligans?

   24. EPEric Paley49:07

       It's really interesting, one of our LPs was sharing with us that, um, despite the market being up the last two quarters, in December, the end of the year quarter and the financials they got in April from most funds was the first time they really saw the, the venture valuations dramatically fall. And his thesis was, it's not like we all started grading our own homework better, it's just that we really actually had to show stuff to auditors. And because we had to do that, it changed things.

   25. HSHarry Stebbings49:35

       (laughs)

   26. EPEric Paley49:35

       And, and the funny thing about that is I don't actually think the auditors really do that much on valuation, in my opinion, besides just make sure you're following your own rules. Right? But I think some of it is the 18-month safe harbor that was nonsense all along that everyone has used, um, all of a sudden that's starting to expire for a lot of-

   27. HSHarry Stebbings49:52

       Yeah.

   28. EPEric Paley49:52

       ... funds and companies. But I think the answer to your question, Harry, is a little bit of a depressing one. One of three things are gonna happen to those companies, right? They're either gonna take the extraordinary amount of cash they got, cut their burn rates down, and figure out how to build real companies. And by the way, many of those will still never raise money ever again, but they'll build real companies and find real exits. They're gonna find a kick save somewhere because they might have something kinda working and there's someone out there who's willing to buy it, but it's gonna be for catastrophically low price relative to the valuation. Or they're just gonna go under because it takes them so long to realize that this extraordinary amount of money they raised is actually a liability, not an asset, and they're just gonna keep going because they're gonna think they can fake it till they make it, and nobody is ever going to fund them again. If you're recapping a $100 million revenue company at a billion-dollar valuation but it, it really should be recapped, um, people will do that work. But if you're recapping a $3 million run rate revenue company with a billion-dollar valuation, there aren't a lot of people who are willing to do that work.

   29. JLJason Lemkin50:55

       Life is too short.

   30. EPEric Paley50:55

       Right? It's just not work that people wanna do. Go ahead, Mike.
7. 1:03:21 – 1:22:11

   The IPO Landscape and Future Predictions

   1. HSHarry Stebbings1:03:21

      What will it be that will crack the IPO window open again?

   2. EPEric Paley1:03:24

      So I, I have a funny view on IPOs that I'm not, I'm not sure is, is, uh, very popular, but I, I think there's sort of this, first of all, this obsession with going public that is kind of unhealthy. Like, I, I think going public is not really what I think most people think it is. It's, it's certainly a liquidity event, potentially six months later or more for investors. It very rarely is for the founders or management in a meaningful way. So I think the question for the founder or the CEO or the management team in these situations is, do I see a very, very long road where I want to be building this business and I'm really excited about? Or at least, do I believe this business will thrive over a very, very long period of time? And if that, answer to that question is n- not necessarily and you want liquidity, it's a great company to sell. Don't go public, right? I think the SPAC craze was just a waste of everyone's energy and a bad idea, and I'm not saying there weren't any good SPACs, but generally speaking, it was a path generally, there were exceptions, but it was a path for companies that were not ready to be public companies to go public 'cause there were financial sponsors who made money taking them public, and there was glory, and then the next day they were a public company and they weren't really ready to be a public company. And by the way, being a public company, if you're not ready, is miserable. So I don't, I don't, you know, I understand why on a macro basis investors are very interested in where's the IPO window. I think if you're a strong company, you can go public in almost any period of time, as long as the market volatility is not insane like the great financial crisis. If you are a strong, if you're really ready, you probably can go out in almost any environment, right? Certainly gets easier when there are other people doing it and getting good results. The other thing is, who cares what the first day price is? Like, I just think it's like this obsession that's just kind of silly, right? And I think the reality is, if you're gonna go public, it's 'cause you think you're going to be able to build value over a very long period of time. Just 'cause the market isn't friendly in the first three months, who cares, right? Like, that should not be how these decisions are made. But again, this is all part of the short term thinking of, you know, the people who get to benefit in the short term instead of the long term thinking of the people who really are the ones building value, so it's sort of like the builders versus the transactors.

   3. HSHarry Stebbings1:05:34

      Okay, let me put this back on you then, Eric. Stripe could go public at, in the next six months. If it were to, it'd be priced at 15 to 20 if you were to mark it as a comparable to Adyen. If you had your long term view of it being a $200 billion company in 10 years, it probably should do that, actually. It probably should.

   4. EPEric Paley1:05:51

      Yeah, I, I think if they have a long view in the company, who cares what the price was in a moment of time? It's just another example of why over capitalization, overpricing causes so many problems. But if you're a Stripe investor who got in at 100 billion, right, I don't really understand very well why you would be upset about them going public at 20 billion.

   5. HSHarry Stebbings1:06:10

      (laughs)

   6. EPEric Paley1:06:10

      Either you believe... Well, hold on. E-

   7. HSHarry Stebbings1:06:13

      You're missing, I'm with you. I'm with you. (laughs)

   8. EPEric Paley1:06:14

      Hold on.

   9. JLJason Lemkin1:06:14

      I'm lost. (laughs)

   10. EPEric Paley1:06:15

       Might be upset 'cause it's embarrassing or 'cause you overpaid at the moment in time, but you're captive to that. That's a fact now. So the question really is do you believe the company's ever going to return for you or not? But if the company's ready to be a public company, then sure, like, you'd rather have access to liquidity when you want it than just have it be private forever, as if, like, private companies' valuations are not going up and down anyway. We just don't see it. We just pretend, just like the private companies are more volatile than public companies in truth, we, like, pretend they're not at all volatile and somehow their valuations are whatever happened in the last round some months ago. And I just, I just think it's silly and I think if you came in at 100 billion-So let it go public at 20 billion, either will become much more valuable in your return or you're gonna cut your loss at some point and accept the fact that it's never worth that. I- I'm not the one to say it will be or won't be. I- I- I probably ... It very well could be, but I don't understand this obsession of like, "Well, the day it goes public, somehow it has to be worth more than what I paid." W- I don't- I- it makes no sense.

   11. MMMike Maples1:07:20

       There- there's only one- there's only one window where I think you could argue being somewhat short term makes sense. In venture, you get these acceleration period windows, like, you know, um, late '99, early 2000, uh, you know, what we saw in 2020, '21- '21, where companies are valued in ways that are detached from their fundamentals. And I think a big part of success in venture, for better of for worse, is you have to have enough companies in flight at critical mass in those windows, number one. And then number two, you have to be smart enough to sell. As much as we loved Lyft and Okta, you know, in those years leading up into 2020, we're like, "Okay, we need to monetize these things," right? B- because there's a lot of excitement about tech stocks right now, and these prices are really high. And it doesn't happen very often. I- it may not happen again for another 10, 15 years. Uh, e- in the next 10 to 15 years, it's- c- companies, I think, are gonna be much more valued on fundamentals and what they're really worth. But there are these windows, usually they last about 18 months, where the- the difference between selling then versus not is massive on your returns.

   12. EPEric Paley1:08:30

       Those are great windows for selling companies.

   13. MMMike Maples1:08:32

       Right. Right.

   14. EPEric Paley1:08:32

       I actually think the- the IPO inflation of those periods really has long-term detrimental effects on them. It's very hard to work for a company that went public at 10 billion that today is worth one and a half billion.

   15. JLJason Lemkin1:08:44

       Very hard. That's right. Very hard. That's right.

   16. MMMike Maples1:08:46

       That's right.

   17. EPEric Paley1:08:46

       It's so destroying for the whole company.

   18. MMMike Maples1:08:48

       And so- and so- so the- yeah, so the best VCs in 2021 were not doing that many deals 'cause they were selling, right? And- and, like, that's- the- the people that impress me the most are those people, right? And I know a few. I'm not sure they want me to mention who they are, but like, there's a lot of people I knew who understood what was happening and- and were like, you know, "Right now, it's time to sell, not to buy." And they did it.

   19. JLJason Lemkin1:09:13

       A few.

   20. MMMike Maples1:09:13

       Yeah, a very few.

   21. JLJason Lemkin1:09:15

       (laughs) A few.

   22. MMMike Maples1:09:15

       But boy, did they ... But- but like-

Episode duration: 1:24:10