Nabeel Hyatt, GP @ Spark Capital: To Win in AI, Investors Need to Change Their Approach | E1255

1. 0:00 – 0:50

   Intro

   1. NHNabeel Hyatt0:00

      The industry today is run basically by principals, associates, and junior GPs. A principal is not actually waiting for an exit, they just want a promotion, man. We are in the industrialization of startups playbook land where everybody's trying to churn out some piece of ridiculous arbitrage every week in order to get through the end of their incubator and raise their seed round. There is absolutely a belief that too much capital can mess up a company.

   2. HSHarry Stebbings0:24

      Ready to go? (upbeat music) Nabil, it is so-

   3. NHNabeel Hyatt0:38

      (laughs)

   4. HSHarry Stebbings0:38

      ... good to have you here, dude. I'm also excited because you said before we have quite different views, and that always makes for a great show. So thank you for letting me turn a coffee meeting into an interview.

   5. NHNabeel Hyatt0:48

      It's showbiz, man. Th- they- you're doing your job. I get it.

2. 0:50 – 4:17

   Adapting Investment Mindset for the Age of AI

   1. NHNabeel Hyatt0:50

      (laughs)

   2. HSHarry Stebbings0:50

      Dude, it is great to have you here. Now, I want to just dive right in. You said to me your single biggest concern right now, or sorry, something that you're thinking about is how we need to change our investing mindset in the new world of AI. I'm really concerned that actually the way that we've always invested, maybe more spreadsheet SaaS investing-

   3. NHNabeel Hyatt1:06

      Yeah.

   4. HSHarry Stebbings1:07

      ... is gonna make us dinosaurs if we don't move with the times. How do you think about this and the mindset shift that needs to happen in investing?

   5. NHNabeel Hyatt1:15

      Well, I think it's happening already, whether we like it or not, right? I, I, I think we can't really preach that a founder is supposed to adapt to a market and understand that the market is there. There's a thing called founder market fit, and there's also frankly a thing called VC market fit. And this market for AI is, is wildly different. I don't think anyone would argue it's not wildly different. And then the question is, in what way is it different? And, uh, we had a B2B SaaS, you know, amazing, wonderful bull run in 2000 and, uh, 21, and, and a little bit afterwards. And I think we got really good at like, um, uh, oh, uh, Gregg Trevorton uses this phrase that puzzles versus mysteries, which is just like, puzzles are this thing that you can like, you know, use that raw horsepower to solve. And mysteries are, you know, they're, you have to go on the journey. There's like fog of war and you cannot work it out ahead of time. And many, in many ways, like the B2B SaaS blow up of that era was all about like the industrialization of venture capital. It was all about figuring out all the puzzles needed to hire a hundred associates to do all of the work, to figure out exactly the right SaaS metrics, and then grind it all out. And no one has any idea what a model is even gonna do in a week. (laughs) So I don't know how that isn't a mystery. And so I think you have to build a firm with that set of talent.

   6. HSHarry Stebbings2:30

      Can we invest in mysteries alone? Puzzles, they're kind of doable but challenging. The mysteries, this is what I find so challenging, which is like the world was turned upside down by DeepSeek.

   7. NHNabeel Hyatt2:41

      Yeah. And it, something that'll happen again in three months. You know that.

   8. HSHarry Stebbings2:45

      I, I do, yeah.

   9. NHNabeel Hyatt2:45

      Yeah.

   10. HSHarry Stebbings2:45

       And so how do we think about adjusting to investing in a world of mysteries when we've been so used to puzzles?

   11. NHNabeel Hyatt2:51

       I... How long have you been doing this?

   12. HSHarry Stebbings2:54

       The show? 10 years.

   13. NHNabeel Hyatt2:56

       Yeah. So I, I've been a VC for a little bit over 10 years. So we're in the same generation in this sense of, of trying to think about unpacking this puzzle. I was a founder beforehand, and I would say the early stages of venture capital, the like real early stages of venture capital, if we think about the beginning of Sequoia and so on. Like, that was all mysteries, man. Like, that wasn't puzzles. I think the truth is, uh, it may sound incredibly old school, but it's going back to the way things were really done before. It is an artisanal business. There's a reason it's an artisanal business, and that's because-

   14. HSHarry Stebbings3:24

       But do you actually think so like if we look at your Ramp or your Brex or any of the kind of successful companies of kind of the last era, so to speak-

   15. NHNabeel Hyatt3:30

       Yeah.

   16. HSHarry Stebbings3:30

       ... uh, serial founder, tick, pedigree founder, tick, in a good big market, tick-

   17. NHNabeel Hyatt3:36

       Yeah.

   18. HSHarry Stebbings3:36

       ... knowable go-to market-

   19. NHNabeel Hyatt3:37

       Yeah.

   20. HSHarry Stebbings3:37

       ... knowable customer base-

   21. NHNabeel Hyatt3:39

       Totally.

   22. HSHarry Stebbings3:39

       This is completely different.

   23. NHNabeel Hyatt3:41

       Yeah, it is. So I, I am not saying that if you built an awesome strategy to dominate the world, and therefore you're probably regarded as like a tier one brand or whatever you were four years ago, you are probably dead without completely changing. And you were, that was exactly the right strategy for that era. You go tick down the box. We were kind of like in late stage capitalism for startups. Everything was red ocean. And so it was all about optimization and speed and like minor arbitrages. We are now in the, in a world where like you need rampant creativity inside of an org. You need like the, the, the, all of it is in the nuances. And so you need to build a firm that can kind

3. 4:17 – 10:00

   Adaptation of Venture Firms for Rapid Creativity & Innovation

   1. NHNabeel Hyatt4:17

      of like grok to that and can understand that.

   2. HSHarry Stebbings4:19

      Do you think many venture firms are adapting in the way that they need to?

   3. NHNabeel Hyatt4:22

      No. No, I, I, I think most... You know this cycle because the, the, the cycle in VC, uh, e- evolution is like horribly, horribly slow because it also loops back to LPs. They don't get to act on their own-

   4. HSHarry Stebbings4:34

      Sure.

   5. NHNabeel Hyatt4:34

      ... right? They don't get to just like make a decision tomorrow. They have to go back and raise another fund against a new mandate, which probably requires like, I don't know, maybe you turn over half the team, three quarters of the team. (laughs)

   6. HSHarry Stebbings4:43

      And by the way, what, what... By the way, what's doing what's right for the firm may actually lead to bad messaging to LPs because if you are managing a firm that needs to be very drastically reshaped for this new age, LPs find instability very disconcerting.

   7. NHNabeel Hyatt4:57

      Yes.

   8. HSHarry Stebbings4:57

      That is a red mark in your box.

   9. NHNabeel Hyatt4:58

      That's right.

   10. HSHarry Stebbings4:59

       And it may take three years to show that transition worked, by which point they will have churned because they would have gone, "Nabil, you changed your team entirely. You moved this, this, and this. Next fund though."

   11. NHNabeel Hyatt5:09

       LPs want stability at a time when there's rapid change. So it's the wrong market fit, and you have to ask if, who's the person making that decision at that firm? So if they were sitting on all the wonderful amazing B2B SaaS markups from four years ago, and so now they're the head honcho at that place, do you think they're really making this call?

   12. HSHarry Stebbings5:28

       So what should we be doing? You're, like, I learn from amazing guests like you on the show.

   13. NHNabeel Hyatt5:33

       Yeah.

   14. HSHarry Stebbings5:33

       I am building a firm. When we think about reshaping our firms to a new world of venture and startups-What needs to be done?

   15. NHNabeel Hyatt5:42

       I think you need to think like a founder. I think you need to be okay with a small team that makes subjective bets, and go think about the craft of what a founder needs today. Which is that, honestly, what do the f- what a founder needed four years ago was a lot of playbooks. You needed every single arbitrage-y simple way to make everything move a little bit faster. The conversations I have founders calling me about now, um, after a board meeting, before a board meeting, they are all unknowables. They are all trying to, like, figure out, um, "What is the new user experience that I should use when models go multimodal?" And, like, there are explorations, not that, not necessarily I have the answer for, they're not coming to me for answers. It's a sounding board, right? And they need a sounding board of board members that are actually, actually using their products and actually have a curiosity to use the rest of AI products and get more native, instead of just, you know, watching Twitter and looking at what gets markups.

   16. HSHarry Stebbings6:37

       In terms of the heuristics for how you define quality, a lot of traditional investments are made with, "Oh, they're at X million in error, and it's been 18 months to X million in error." That was a classic, like, 18 months to 10 million error.

   17. NHNabeel Hyatt6:49

       Yeah.

   18. HSHarry Stebbings6:49

       Gold standard.

   19. NHNabeel Hyatt6:50

       Yeah.

   20. HSHarry Stebbings6:51

       AI has just completely blown that out of the water, and we see multiple products hit 10 million error in a couple of months.

   21. NHNabeel Hyatt6:57

       Yes. That will probably be dead in two years.

   22. HSHarry Stebbings6:59

       That will probably be dead in two years.

   23. NHNabeel Hyatt7:01

       (laughs) . Also.

   24. HSHarry Stebbings7:02

       So how do we think about revenue as a heuristic for quality?

   25. NHNabeel Hyatt7:05

       Can I push back a little bit on even, c- or step up one level from even that?

   26. HSHarry Stebbings7:10

       Mm-hmm.

   27. NHNabeel Hyatt7:10

       I, I think why did these simple heuristics of revenue, you can pick one, you have to hit 10 million, um, you can pick another set of metrics or dashboards that turn green so that you can get your partnership to agree to let you go do the thing you really want to go do.

   28. HSHarry Stebbings7:24

       (laughs) .

   29. NHNabeel Hyatt7:24

       How did those things evolve? Because that's not how partnerships were 20 years ago. So why did that happen? That happened because you added people to the partnership. You have to look at the core of the org and then work downstream from that. What happens is if you take a room which used to have seven partners, and that room becomes 25 partners, or 30 partners, or 500 partners at, at, at a certain set of firms, like, w- what do you, what really happens? And I think the industry today is run basically by principals, associates, and junior GPs. And that incentive system is what we're all swimming in, which did not exist 20 years ago. And why does that matter? Because what does a principal want? Well, a principal is not actually waiting for an exit. They just want a promotion, man. Like, they just want to move up the ladder.

   30. HSHarry Stebbings8:11

       A promotion or a better job.
4. 10:00 – 12:53

   Heuristics for Evaluating the Explosion of Startups

   1. HSHarry Stebbings10:00

      do it. You mentioned that kind of principals and, um, uh, associates running firms totally agree. Is it not also just the explosion of startups that we actually have? Meaning we need simple heuristics to gauge yes or no, worth meeting, not worth meeting. There are so many companies, if you don't have a framework for, is it interesting enough, you're just gonna be meeting everyone.

   2. NHNabeel Hyatt10:19

      Yeah, but principals and associates don't even solve that problem, right? You have a, you have 100X increase in number of startups, and you added like nine principals. I'm sorry, you didn't cover the industry suddenly, unless you're doing pattern matching, right? And, and I think the more fundamental question is, can you pattern match in this market? I, I don't know that the Brita filter version of investing is the right way to evaluate, or at least I'm not executing the way that I want to do my job and the way that I think my partners should do their jobs together in that kind of like trying to get, win the coverage game.

   3. HSHarry Stebbings10:50

      What's the Brita filter of investing?

   4. NHNabeel Hyatt10:52

      You know, take all the founders, put them in the top, and then you hope you sift out, uh, a handful of the good ones at the bottom. And that's a very inbound, inbox-oriented view of the world. And if you do that, then your job is to tweet as much as humanly possible, market as much as humanly possible, bring everything into the top of the filter, and then do a really, really fast job filtering this incredible amount of inbound in order to be very, I would say, call it, like, transactional in nature. Get through the funnel as quickly as possible, say no as quickly as possible to move on to the next one.

   5. HSHarry Stebbings11:20

      When you reflect back on your prior portfolio in the last decade-

   6. NHNabeel Hyatt11:24

      Mm-hmm.

   7. HSHarry Stebbings11:24

      ... was that a pattern match-y approach that was successful? Have you had to change?

   8. NHNabeel Hyatt11:30

      No. I also think I was r- really badly shaped to be an investor in 2021 (laughs) .

   9. HSHarry Stebbings11:35

      (laughs) .

   10. NHNabeel Hyatt11:36

       I mean, I think we got lucky. Sp- Spark was started-... in the early Web 2.0 era, like right at that age, uh, in the same cohort as USV and Benchmark 2.0, that, the beginning of the Gurley era, and a handful of other firms that I think all treated mobile really well and did mobile really well, which felt similar. Y- y- you didn't know what the metrics were supposed to be. You had... It was a wide open crazy world, and you're like looking at something that was maybe a fart app in the morning and then, and then Uber in the afternoon. Like, it was an insane situation and I think our DNA was very fixed by that. Our values were set by that navigation. And I'll be the first to say that, like, I don't know that we navigated the B2B SaaS era four years ago, this kind of industrialization. We didn't do the things that a lot of our peer firms did. Like, we had been very successful, we could have very easily raised $5 billion. We could have very re- easily, you know, tripled or quadrupled the size of the team and we didn't do that. We stayed seven people, six people partnership. We all write checks, we all do work with our founders. We like the service work and so I- I would argue that made our job a lot harder four or five years ago (laughs) to be honest, and it makes it a lot easier now because we feel very well-shaped for- for this phase.

5. 12:53 – 18:07

   Venture's Shift from High Margin to Commoditized Industry

   1. NHNabeel Hyatt12:53

   2. HSHarry Stebbings12:53

      Do you agree with Doug Leone that we have seen the transition of venture from a high margin boutique in this, uh, kind of village community to a low margin commoditized industry?

   3. NHNabeel Hyatt13:03

      I... Who am I to disagree with (laughs) what Doug Leone says? I think he is executing the strategy of Sequoia, uh, as- as if that is true and still trying to keep the rest of it compact and true, right? He... They're- they're trying to execute a strategy where they're doing all the things, right?

   4. HSHarry Stebbings13:19

      I would argue, I would argue actually they're in the same vein as Spark actually, which is kind of sitting in the middle. Like that seed fund is 190 million.

   5. NHNabeel Hyatt13:25

      Yeah, that's what I was gonna say, yeah.

   6. HSHarry Stebbings13:26

      Their- their growth funds are like a billion and a half or two.

   7. NHNabeel Hyatt13:28

      Yeah.

   8. HSHarry Stebbings13:29

      Don't get me wrong, it's a huge amount of money combined, as is Spot by the way. (laughs)

   9. NHNabeel Hyatt13:33

      (laughs)

   10. HSHarry Stebbings13:33

       I'm not gonna let you just get away with that one. But- but, like, it's not the mega mega.

   11. NHNabeel Hyatt13:39

       That's right. That's right.

   12. HSHarry Stebbings13:40

       So I think they kind of sit in the middle. But do you agree that it's moved to this low margin commoditized industry?

   13. NHNabeel Hyatt13:46

       I think when we look back at this specific era right now, it will not feel that way.

   14. HSHarry Stebbings13:50

       Hmm. Why?

   15. NHNabeel Hyatt13:52

       Um, ag- for all of the reasons that we said right now, which is that if you believe that most of the firms are executing strategies that are not particularly effective to this market, that means you're actually only competing with the smaller segement- subsegment of people on any given deal.

   16. HSHarry Stebbings14:06

       One thing I find challenging is it is very difficult to win great companies when you are optimizing for performance and your competitor is optimizing for deployment.

   17. NHNabeel Hyatt14:16

       That's true.

   18. HSHarry Stebbings14:17

       And we've lost two deals in 24 months where literally they trebled the price and went to common stock.

   19. NHNabeel Hyatt14:25

       Yeah.

   20. HSHarry Stebbings14:25

       And I'm like to the founder, "You should take it. It's free money."

   21. NHNabeel Hyatt14:28

       Yeah. Yeah.

   22. HSHarry Stebbings14:29

       But that is a different game.

   23. NHNabeel Hyatt14:30

       That is a different game and, uh, we won't win all of those and we absolutely... I have that same list. I have a same list of- of FOMO deals that you wish you had done and then the price just got insane and got crazy and that's gonna happen.

   24. HSHarry Stebbings14:41

       Were your best deals all highly priced?

   25. NHNabeel Hyatt14:44

       Yes.

   26. HSHarry Stebbings14:46

       (laughs)

   27. NHNabeel Hyatt14:47

       (laughs) I'm not a value investor. I mean, you know like...

   28. HSHarry Stebbings14:48

       No, I get you but it's like, everyone often says, "Oh, the hottest deals don't turn out to be the best."

   29. NHNabeel Hyatt14:53

       Yeah.

   30. HSHarry Stebbings14:53

       Often is said. It's the ones where even though they- they weren't competitive at all actually and then they turn into something great.
6. 18:07 – 19:29

   Effective Coaching & Mentorship Within a Partnership

   1. NHNabeel Hyatt18:07

      with respect.

   2. HSHarry Stebbings18:07

      How do you approach coaching and mentorship within a partnership? How do you think about coaching in a partnership effectively?

   3. NHNabeel Hyatt18:15

      Yeah, it's really hard because people call this an apprenticeship business, but, uh y- yeah, I think in many ways, especially the way that Spark does our job, it's more of a process of self-actualization. If, if I was trying to be Bijan when I joined or trying to be Santo when I joined, I can't be the, like, mini-me version of that person.

   4. HSHarry Stebbings18:31

      So, uh, the single biggest mistake I made was I tried to be Fred Destin, my former partner-

   5. NHNabeel Hyatt18:35

      Oh, yeah, yeah, yeah.

   6. HSHarry Stebbings18:36

      ... for many years, and it's like, I'm just not Fred Destin. (laughs)

   7. NHNabeel Hyatt18:40

      Yeah.

   8. HSHarry Stebbings18:41

      And you've gotta be your best self.

   9. NHNabeel Hyatt18:43

      Yeah. And so I think the mentorship has to come from that phrasing. It's really the journey of trying to get to know another person and trying to figure out what their superpowers are. What are they, how are they gonna be the best partner to a founder? How are they gonna fall in love with a founder? 'Cause a lot of this really is falling in love and then pulling that out of them. If you're doing a good job with somebody then three months in, six months in, you're noticing th- things about them, their pattern of investing, their weaknesses, why do they, what are the bad deals they fall in love with all the time. Like, we call crap on each other all of the time. I, I would not want to do this alone because I actually think my partners know me better than I know myself, and, uh, they're like, we use a phrase internally, "Being your brother or sister's keeper." Like, we, we actually feel like the debate is not a political fight to try and get something approved. It's a room that's a search for truth.

7. 19:29 – 22:19

   Doubting Yourself as an Investor During the COVID Era

   1. NHNabeel Hyatt19:29

   2. HSHarry Stebbings19:29

      I totally agree with you. When did you doubt yourself most as an investor?

   3. NHNabeel Hyatt19:34

      COVID era.

   4. HSHarry Stebbings19:36

      Why?

   5. NHNabeel Hyatt19:37

      It's kind of the worst version of venture, uh, of what I really didn't want startups to become, which is everything was pushing to Zoom. Uh, you know, there's a reason we're doing this in person. I like making eye contact with people. I like connecting with people. It's the reason I like doing this. I like being of service with founders. But I can't be in service with founders and trying to do work with them if all we're doing is we're on Zoom for an hour, and then I'm supposed to write a term sheet eight months, eight hours later, which was that era. And, and so I, I generally, f- I thought about leaving this industry.

   6. HSHarry Stebbings20:03

      Did the quality of your investments go down, do you think?

   7. NHNabeel Hyatt20:06

      I didn't write checks. The best thing I did during that era is while everything was being marked up like crazy and everybody was having gogo a couple of years, uh, I wrote the fewest checks I've ever written in my career. I think I wrote, like, two checks in a year and a half.

   8. HSHarry Stebbings20:19

      Do you think Spark's went down?

   9. NHNabeel Hyatt20:21

      I think our quality of investing went down on the early stage team and has since recovered. Our growth team navigated it quite well. Uh, I, I think they actually did an incredibly good job of, of processing things. And, and, and there's a reason we have a separate growth team and an early stage team is because I do think they're different sports, man. Like, they're, they're just different animals, and we do them in our Spark way, but they're different things.

   10. HSHarry Stebbings20:41

       Why, why do you say that? Because, like, you know, I have someone incredibly smart like you, and then I have someone incredibly smart like Kush-

   11. NHNabeel Hyatt20:47

       Yeah.

   12. HSHarry Stebbings20:47

       ... who tells me the opposite.

   13. NHNabeel Hyatt20:49

       (laughs)

   14. HSHarry Stebbings20:49

       Why do you think that they are very different and actually it requires different teams?

   15. NHNabeel Hyatt20:52

       I just watch what our growth team does, and they do their job incredibly well. We, we talk about deals all the time. We talk in an... Like, again, they're seven people. They're also a small team. And but they can be a little bit more hierarchical. They can have principals. They can have associates. They can do b- more diligence. You can look at the numbers. You can call 25 customers. Like, I'm not calling 25 customers. Most, most of the time I'm investing, there aren't 25 customers.

   16. HSHarry Stebbings21:14

       (laughs)

   17. NHNabeel Hyatt21:14

       And so it's a different process. It's a different muscle. I'm not saying I couldn't do it, but in a world where, as you said earlier, just doing the job simply at the highest possible level is incredibly hard, why would I try and play two sports? Like, you can. You can try and be Jordan and play basketball and baseball.

   18. HSHarry Stebbings21:33

       Some, some say that you actually become a better early stage investor especially with a late-stage mindset. You know what later stage (laughs) came back to this. You know what later stage wants.

   19. NHNabeel Hyatt21:42

       (laughs)

   20. HSHarry Stebbings21:42

       Um, but you're also closer to public markets. You have a closer understanding of what makes a fundamentally great business.

   21. NHNabeel Hyatt21:49

       Again, this is all amazing and wonderful pitches for 2021.

   22. HSHarry Stebbings21:53

       Mm-hmm.

   23. NHNabeel Hyatt21:54

       Like, who knows what the public markets are gonna like in AI in seven years? What are you doing? And so if you spend all your time trying to internalize what the public markets are thinking about this month, you are absolutely gonna make the wrong calls.

   24. HSHarry Stebbings22:04

       What do you think of these VC armchair investors who love macro?

   25. NHNabeel Hyatt22:08

       (laughs) Um, I just, you just gotta hope that the cycle comes back around for them in exactly seven to ten years when those companies want to go public. And if it does, they'll do great.

8. 22:19 – 25:23

   VC Service vs. Founders Who Don’t Need Help

   1. NHNabeel Hyatt22:19

   2. HSHarry Stebbings22:19

      You said service as a word quite a few times.

   3. NHNabeel Hyatt22:22

      Yeah.

   4. HSHarry Stebbings22:22

      Keith Rabois says on this show and very publicly, "The best founders don't need the help of a VC." Do you agree? And how do you think about that in conjunction with service?

   5. NHNabeel Hyatt22:32

      Look, I, I had a bunch of venture that I raised as a founder. I raised eight rounds of, eight rounds of venture capital as a founder, and I never had a horror story from a VC. I have nobody who was like terrible and horrible. I basically had mostly VCs that were fine. They're either they fall into the Keith Rabois camp. Like, they show up to board meetings. It's okay, fine, and I just kinda run my company. Um, I just imagine that in any other context of life, if I had somebody who was on my team, anyone else on my team, and they were fine, what would be the feedback?

   6. HSHarry Stebbings23:02

      Marriage. (laughs)

   7. NHNabeel Hyatt23:08

      (laughs)

   8. HSHarry Stebbings23:08

      Actually, it wouldn't be fine. It'd be disastrous.

   9. NHNabeel Hyatt23:12

      It's not fine. (laughs) It's not.

   10. HSHarry Stebbings23:12

       Disastrous. That'd be a good marriage. (laughs)

   11. NHNabeel Hyatt23:15

       If your executive assistant or your VP of engineering or your head of product was fine, so why are we accepting-

   12. HSHarry Stebbings23:21

       You'd be your man. (laughs)

   13. NHNabeel Hyatt23:25

       (laughs) Why are we accepting mediocrity at that level? Uh, I think what you want is people who are engaged, who look at the details, who are invested emotionally, who want you to win, and are doing the detail work to be able to not just give you armchair VC advice that they got from the one other board meeting they were in this week with the other hot company that they're in, because every single startup is a different journey. And so you, until you get under the covers of what's really going on inside of this org, like AKA how do these co-founders fight, what are the problems inside of the executive team, then you're gonna give different advice to somebody if you really understand them. And so it's worth understanding them. Uh, if you can't, if you go out and raise a f- um, look, I've had really tough rounds to raise both as a founder, like, and as a VC who's backed a seed company or a series A that's not working out well. So look, if you cannot find that amazing and wonderful VC that you think is gonna be deeply engaged and use your product, then go for the no-op VC. Go for the VC who'll at least do no harm.

   14. HSHarry Stebbings24:23

       Oh, yeah.

   15. NHNabeel Hyatt24:24

       Right?

   16. HSHarry Stebbings24:24

       High price, fuck off.

   17. NHNabeel Hyatt24:25

       ... fine, I get it. But where you flip that to being the goal, mediocrity is the goal, like, that's not the goal. Every time you have an ability to have an investor or an employee, or really anyone enter your orbit as a founder, your goal should be somebody who is going to be obsessed with you and think about your mission and try and help you. Otherwise, you shouldn't be engaging. And if you fail at it, fine.

   18. HSHarry Stebbings24:46

       Many second-time founders I meet say, "Listen, the thing I've learned about the first time is, what I want from my venture investor is good money, good terms, get out of the way."

   19. NHNabeel Hyatt24:55

       Sure, sure. And again, I just say they're setting their bar too low. Like, that's the bottom line. Like, they're settling for mediocrity because they're afraid of risk.

   20. HSHarry Stebbings25:03

       And that's why it's important you do more marketing. (laughs)

   21. NHNabeel Hyatt25:08

       (laughs)

   22. HSHarry Stebbings25:08

       There we go. I, I, I win this debate.

   23. NHNabeel Hyatt25:11

       (laughs)

   24. HSHarry Stebbings25:11

       U- um, can you do that at scale though? When you do, what, two checks a year?

   25. NHNabeel Hyatt25:14

       Two to four at the most, but yeah.

   26. HSHarry Stebbings25:16

       Yeah.

   27. NHNabeel Hyatt25:16

       Like two checks a year.

   28. HSHarry Stebbings25:17

       Can't, can't do many. You can't have high service and high volume.

   29. NHNabeel Hyatt25:20

       Absolutely not.

   30. HSHarry Stebbings25:21

       Mm-hmm.
9. 25:23 – 29:40

   What Happens When Nabeel Loses Faith in a Founder?

   1. NHNabeel Hyatt25:23

   2. HSHarry Stebbings25:23

      What do you do when you lose faith in the founders?

   3. NHNabeel Hyatt25:25

      Hopefully you have had many, many conversations before you get to that point. You know, when, when I say we're, uh, uh, when I use a word like service or falling in love with a founder or being dedicated or loyal, um, that doesn't not come with tough love. That doesn't not come... You use the, the, the marriage analogy, i- i- if you're just smiling all the way through marriage, you're not executing it right, right? Y- you need to have tough conversations. And so yeah, sometimes you're having a tough conversation that you feel like that person has lost their way.

   4. HSHarry Stebbings25:55

      When they've lost their way, what did you not see that you should've seen?

   5. NHNabeel Hyatt25:59

      It hasn't gone well. It hasn't gone well for mostly two reasons. The first is that they're conflict-avoidant, and I didn't pick up on it early enough. And, and it's very hard to pick up on early, because you're going through a period where ideally you love them, they love you. There's not that much conflict. Maybe until late term sheet or something like that, but like there's not that much conflict, and then you go through 25 conflicts in the first month of the company or three months of the company, and you realize that they're conflict avoidant. They're not facing the problems of that company, 'cause every company has a thousand problems obviously. That's the first one. You try to read for it but you can get it wrong. The second one is that every founder is like, um... This is one of those things that I did not have as a framework 10 years ago, but after you make like a bunch of mistakes and you look back on things, like they become more clear. Um, every founder you want to move really, really fast. We all talk about execution speed, you want to, so you can imagine somebody on the very, very far end of execution speed. We also want them to have taste and judgment, right? We also want them to be, especially in the world of AI, uh, only taste is gonna matter in the future 'cause execution is just gonna happen, right? So these two things are directly in conflict. If you are always the shoot-first-ask-questions-later person, you probably are not really deeply introspective about the choices that you're making. You're just shiny penny running after whatever happened on Twitter yesterday. And if you are deeply, deeply, deeply full of taste, you didn't ship anything. Like you just sat naval-gazing forever trying to find the perfect thing. And so I think the casting for a founder needs to match the opportunity of that startup. There, you have to have good taste, especially in this world, and you have to be very fast, but where you are on that spectrum is incredibly illuminating. You mentioned earlier, you were totally looking at a company that was like very, very competitive, end of 35, should I invest in this thing? It's like, well, that's an execution play. That person needs to be in the top .0005% on the planet of being able to execute because the roadmap ideally is probably pretty clear and even if it's not clear, some competitor's about to do it tomorrow-

   6. HSHarry Stebbings28:04

      Sure.

   7. NHNabeel Hyatt28:04

      ... and so you could see it and you can run faster than them and if you can aggregate everybody's innovation that's happening in industry across all 25 of your competitors, you will win. There's many other situations, especially for the deals that we do at Spark, which are often creating a new market that didn't exist before. We have to have incredible taste-

   8. HSHarry Stebbings28:19

      Well, look at like your, your, your Granolas of the world, respectfully, I'll put in the like incredible taste-

   9. NHNabeel Hyatt28:23

      Yes.

   10. HSHarry Stebbings28:24

       I'm sure he's great at execution too-

   11. NHNabeel Hyatt28:25

       Yeah.

   12. HSHarry Stebbings28:25

       ... but there's real taste.

   13. NHNabeel Hyatt28:27

       Uh, real taste. And, and I'd say Granola's a great example of a situation where everybody else competing in that market would have taken the execution angle, they would have built a me too product, slight arbitrage, looks like Fireflies or any of the other things, with like a little bit faster or maybe a chatbot in a slightly larger box or whatever it is, and they would try to run faster than their competitors. Uh, Chris, uh, you know, his product changed completely from the seed round, um, a- to the Series A which we led. Like complete reset. A- even though the internal metrics were okay and it was 'cause it didn't feel right to him. He could kind of like self-inspect and realize it wasn't working, and that takes real taste. But he's in a competitive market, to be clear, and he knows it. Like he's got to be pretty high on the execution path as well.

   14. HSHarry Stebbings29:12

       Oh my God, he's a, he's a whole combination of both actually otherwise.

   15. NHNabeel Hyatt29:15

       And that is where I think the best founders can manage and understand at any given moment what is the, what is the muscle that I'm using and how am I using it? I think the mistakes for founders is realizing that, one, I like got them wrong on one of these axes, you know, quite a lot or I casted correctly, like maybe you casted somebody who's very execution oriented with a good amount of taste and then the market flipped, something

10. 29:40 – 32:46

    Sustainability of Value in a Rapidly Changing World

    1. NHNabeel Hyatt29:40

       crazy happened.

    2. HSHarry Stebbings29:41

       Well, this is what I was gonna say, which is something crazy happens and the sustainability of value today seems to have completely eroded and what I mean by that is something crazy happens and OpenAI release a new model and it just completely kills Granola overnight. Or the data provider example that we have, I don't know if any of the large foundation models decided that actually that's a prime, easy market for them, they have all the... and overnight the data providing goes and it just goes rolled into their core products.

    3. NHNabeel Hyatt30:06

       Yup. So-

    4. HSHarry Stebbings30:07

       How do you think about sustainability of value in such a changing world?

    5. NHNabeel Hyatt30:10

       I think you have to find a founder who is continually innovating. Y- y- you can ask all the simple questions about barriers to entry and, and all the rest of it, and, and have some decent answers, but the truth is if you are not reinventing yourself every single-

    6. HSHarry Stebbings30:23

       But you've got no fucking idea. Deep Seat tells you that you've got no idea about barriers to entry.

    7. NHNabeel Hyatt30:26

       I, I, I'm, I'm saying you have to, you have to justify it to yourself to go to sleep at night and maybe have some base where it says, like, "For right now, this is what I think the barrier to entry is. This is how I think their next year is gonna be good." But some kind of compounding effect where we think no matter what happens after this year, it's eBay, they just launch a product and 40 years later the product looked basically exactly the same and it's just fine. Like, that, that, those ages are, are, are not right now. It might, it, those might metastasize inside of smaller vertical markets in AI in the next couple of years, but by and large it is a, it is a sea of speed and taste at the same time right now.

    8. HSHarry Stebbings31:00

       Do you give a shit about market size? You said about kind of the market creation angle there. How do you think about market size? It's such a simple heuristic for investors to fall back on.

    9. NHNabeel Hyatt31:09

       Uh, we don't talk about or look at market size at all. Unless it's sometimes there's a, you know, a confirmation that it's a small market. If the guy's starting an ice cream truck, then, like, it's probably not for us. But usually if you're creating it-

    10. HSHarry Stebbings31:22

        But with respect-

    11. NHNabeel Hyatt31:24

        Yeah, yeah.

    12. HSHarry Stebbings31:24

        ... I would still push back and say Crumble, one of the fastest growing businesses in America-

    13. NHNabeel Hyatt31:28

        (laughs)

    14. HSHarry Stebbings31:28

        ... which is the cookie business-

    15. NHNabeel Hyatt31:29

        Yeah.

    16. HSHarry Stebbings31:29

        ... that w- w- is looking like a venture-sized outcome at this point.

    17. NHNabeel Hyatt31:33

        Starbucks was also a venture-backed business. I didn't say they can't be good businesses. I said they're not spark businesses.

    18. HSHarry Stebbings31:39

        Hmm.

    19. NHNabeel Hyatt31:40

        We're not, again, w- we're not trying to canvass the entire world for every single possible thing that we can invest in. We're not trying to be the Brita filter (laughs) of venture capital firms that has to look at absolutely everything. I need to do a good deal a year. That's the job. It's not that hard. It's incredibly hard to execute, but it is a simple thing in its essence. And so if I try and win every single war across every single front, I will be average across the whole board. So we try to be good at what we're doing. We try to partner well with founders who want that product. We try to look for new market opportunities, which by the way in the world of AI is a, a, like, you can imagine why, like, like I'm a kid in a candy store right now. I'm like the most excited I've literally ever been in my entire career, including as a founder. Like, it's just an amazing opportunity. Um, and if you're asking what makes a new, what makes a new market opportunity, I think it's, you're looking for a new behavior. You're looking for a new behavior where when you try it, it just, like, sears into your brain. You can't stop thinking about it. That's, it sounds, again, sounds simple, but if you just do that, is this really a 10X better product? You just don't see that many of those. That simple thing,

11. 32:46 – 36:19

    Why Focus on Product When It’s the Most Transient Element?

    1. NHNabeel Hyatt32:46

       you just don't see very often at all.

    2. HSHarry Stebbings32:47

       You are such a product-centric investor. I spoke to, you know, Kyle at the bot company. I spoke to Andrew at Descript. I spoke to Ritu before. I really stalk the shit out of you.

    3. NHNabeel Hyatt32:56

       (laughs)

    4. HSHarry Stebbings32:56

       Um, very impressive. Um, but everyone was like, "His product-centricity makes him such a unique investor." And I thought it was just so interesting because product is the one transient element of investing. If you think about market, people, and product, it's the one thing that will really change. I mean, market can do, but often less so. People iterate around the same market. Why do you focus on the one that is so transient?

    5. NHNabeel Hyatt33:19

       So, you used market, people, and product as your three cores. So, I think if you just look at right now, market, uh, do we understand any of these markets? How fast are they all changing in the world of AI? They're all shifting like crazy and who knows which ones are gonna become commodity markets with absolutely no margin whatsoever anyway. So if it's a big market, maybe it was a big market two years ago and it's about to become a really small market, and the same thing in reverse. People is very interesting and I think there are firms that do a really good job at just making people bets. I think you have a instinct about people that just, you get over the line and you make your bet on people.

    6. HSHarry Stebbings33:53

       Thinking, yeah, my turning down of Chris at Granola in the pre-seed shows that, doesn't it?

    7. NHNabeel Hyatt33:57

       (laughs) You can't be-

    8. HSHarry Stebbings33:58

       Thanks, Nabil.

    9. NHNabeel Hyatt33:58

       You can't be 100% all of the time.

    10. HSHarry Stebbings34:00

        Yeah, or Alex at Deel.

    11. NHNabeel Hyatt34:02

        Yeah.

    12. HSHarry Stebbings34:02

        Yeah.

    13. NHNabeel Hyatt34:02

        Yeah.

    14. HSHarry Stebbings34:02

        Or Christina at Vanta.

    15. NHNabeel Hyatt34:04

        (laughs)

    16. HSHarry Stebbings34:05

        Yeah. Totally.

    17. NHNabeel Hyatt34:05

        I have, I have my fair share of issues too.

    18. HSHarry Stebbings34:06

        Yeah, I just managed to bring the real Bastiaan.

    19. NHNabeel Hyatt34:08

        (laughs)

    20. HSHarry Stebbings34:09

        Thanks. (laughs)

    21. NHNabeel Hyatt34:09

        And i- i- the, the... I don't think of product, like, do, am I the product master? I think of product as an instantiation of what the founder does. So, let me recast it a different way. How do we separate hucksters from good executors? 'Cause they're here pitching us as VCs. The way we separate hucksters who do a good pitch from people who are real executors is you look at the thing that comes out of their hands. You look at the thing that this Petri dish of humans has created in the world, and you try and evaluate and ask questions against that. So when, when you say, "I'm a product investor," I would push back slightly, in that I've never evaluated a company by, like, looking at the product, using the website, and being like, "Ooh, this person should have a $15 million check." I don't think that's right. You look at the product and you try and learn about the humans behind the product by evaluating the product. It's the questions that you ask somebody like Kyle, who, who started Cruise, is now doing Botko, and you ask him why he made the decisions he made in this thing that you are using, and that's where you can get a sense of who this person is and what they're gonna do from there.

    22. HSHarry Stebbings35:08

        I had an absolute fucking meltdown with the team the other day 'cause I have, like, a C... You're gonna hate this.

    23. NHNabeel Hyatt35:14

        (laughs)

    24. HSHarry Stebbings35:14

        But, like, you're gonna freaking hate this, but, like, a CEO template of how we analyze CEOs.

    25. NHNabeel Hyatt35:18

        Mm-hmm.

    26. HSHarry Stebbings35:18

        And they took that CEO template and put it on a CPO and asked the same things. And I'm like-

    27. NHNabeel Hyatt35:24

        Ah, yeah.

    28. HSHarry Stebbings35:24

        ... "That is criminal." Like, we changed the template entirely to what product decision are you most proud of? What would you most like to build, but you have constraints that mean you can't build it?

    29. NHNabeel Hyatt35:33

        Yeah.

    30. HSHarry Stebbings35:33

        What are you most embarrassed about building? And this is actually what... I don't actually care the specific answers.
12. 36:19 – 39:48

    How Many Companies Does Nabeel Meet a Week?

    1. NHNabeel Hyatt36:19

       the human is.

    2. HSHarry Stebbings36:19

       How many companies do you meet a week, honestly?

    3. NHNabeel Hyatt36:22

       Uh, (blows raspberry) I don't even know. 20, 30.

    4. HSHarry Stebbings36:25

       20 to 30 a week?

    5. NHNabeel Hyatt36:26

       Sometimes. Yeah, email. Email.

    6. HSHarry Stebbings36:28

       But like on a call?

    7. NHNabeel Hyatt36:29

       Oh, on a call, I don't do that many on a call. I probably do two a day.

    8. HSHarry Stebbings36:35

       Okay.

    9. NHNabeel Hyatt36:35

       One to two a day.

    10. HSHarry Stebbings36:36

        Okay, one to two a day. How long do you have?

    11. NHNabeel Hyatt36:38

        I think the one-hour call is the worst call anywhere 'cause it's like too long to get a real read and yet, you know, it's like, sorry, too short to get a real read and, and, and too long to get the kind of speed-dating version of the world. So a half an hour, I'm just trying to figure out whether I like the person at all and I wanna have a second call, right? And then I'd rather go from a half an hour to two hours.

    12. HSHarry Stebbings37:00

        Mm-hmm.

    13. NHNabeel Hyatt37:00

        So you do the first one and you're just trying to get a read. Is there a kismet? Is there a connection? Is there any chemistry here? Do you feel it? And then after that, it's like, "Yeah, we should just, let's just go for a walk, man. Let's go have a conversation. Let's go really talk about everything."

    14. HSHarry Stebbings37:11

        Will you ever invest if you haven't met them in person?

    15. NHNabeel Hyatt37:13

        If I've never met them in person? Probably not.

    16. HSHarry Stebbings37:17

        Mm-hmm.

    17. NHNabeel Hyatt37:18

        There's some world where you met them five years ago, you know them quite well. You know, uh, Chris from Granola is a prior Spark founder, and so I, I, he was one of the first people I met after I joined Spark, um, 'cause I was supposed to go sprinkle growth fairy dust on him in New York-

    18. HSHarry Stebbings37:33

        (laughs)

    19. NHNabeel Hyatt37:33

        ... and talk about growth marketing and growth hacking and all the rest of those metrics things that I don't really aspire to now. Um, and, and I, I, I said, you know, Discord, Jason I knew for seven years. We were founders together before, before investing in Discord, and also smartly passed twice on Discord before investing.

    20. HSHarry Stebbings37:49

        (laughs)

    21. NHNabeel Hyatt37:49

        So like, you know, it, it, like, a lot of long-term relationships and a lot of short relationships where you passed and then spent time. Cr- Cruise, back in the day with Kyle, I passed. We did a huge deep dive on why I thought his business wasn't gonna work. Uh, he disappeared for nine months and wouldn't return my emails, and then he comes back nine months later and he's like, "Yeah, this is like, we've re-pivoted. We've gone from trying to put, you know, aftermarket things on top of Audis, and we're now gonna build a full self-driving stack. I'm gonna show you a demo, you and like five other investors a demo 'cause I really liked our last conversation." And so you knew somebody for eight, nine months. You've thought how, of how they internalize information, and you really know them. Now, that can't always happen with every investor. Um, the last investment I did was a company called WordWhere, and that was a very, very fast, very, very competitive, they had term sheets for quite a bit higher, but, you know, I'm getting dinner with the founders, I'm going for walks with them in the morning. Like, I met with those guys six, seven times before we invested in the span of a week. You don't have time, but in the span of a week 'cause you care.

    22. HSHarry Stebbings38:50

        WordWhere, Granola, Descript, these are all pretty big valuations actually, and pretty hot rounds.

    23. NHNabeel Hyatt38:58

        They were.

    24. HSHarry Stebbings38:59

        How price sensitive are you?

    25. NHNabeel Hyatt39:01

        I'm not that price sensitive. I mean, there's always a number. We could go through the deals that we didn't do 'cause the price got away. There's always a price where it just doesn't make economic sense anymore. But if-

    26. HSHarry Stebbings39:12

        But like, we're looking at a series A now, and it's like we put down like 10 on 60 and the founder's like-

    27. NHNabeel Hyatt39:17

        (laughs)

    28. HSHarry Stebbings39:17

        ... "I want 100." And then the partner's like, "Well, we would do 80." And I'm like, "We do 80, but not 100?"

    29. NHNabeel Hyatt39:25

        I feel like for us, valuation is always a test on conviction. Like, if you liked it at 60 but don't like it at 65, like...

    30. HSHarry Stebbings39:34

        But 60 goes to 100 and that is different.
13. 39:48 – 42:37

    Regrets Over Turning Down Deals Due to Price

    1. NHNabeel Hyatt39:48

    2. HSHarry Stebbings39:48

       What did you turn down because of price that you most regret?

    3. NHNabeel Hyatt39:51

       Because we run a fund the way that we run, a small number of investors, you know, six investors with a $700 million fund is kind of broken in venture capital. (laughs)

    4. HSHarry Stebbings40:01

       (laughs)

    5. NHNabeel Hyatt40:02

       And, and so what it means is usually it's not about valuation. Usually, it's about check size. So i- in our model, if you really believe in the company and you want to have the ownership that you have, and you believe that they're at the right stage, then it's about whether you're gonna write a $5 million check, a $10 million check, a $15 million check, a $20 million check. And so sometimes y- you say valuation, but I root back to maybe that founder is raising a round and you don't think they're gonna spend $20 million very well, and it will mess up the company. There is absolutely a belief, uh, for me at least, that too much capital can mess up a company. And so sometimes it's not about valuation, although obviously it's algebra. These things are all related. It's about, uh, t- you know, a $25 million round here is probably gonna kill this company. And so if it was a $10 million round, I'd be in, and also we'd have the ownership properly and it'd be a good partnership, but I just d- I think this company will be different with this amount of capital into it. And so the company changes.

    6. HSHarry Stebbings41:00

       Which one stands out most?

    7. NHNabeel Hyatt41:02

       Mine is Figma. Uh, it was, it was quite a while ago now. Um, it was still pre-launch, so it was trying to write like a very large check pre-launch. And, uh, and, and I, and it's for me it's that because also there was just like a connection with Dylan. It's not just that it was a large valuation. It's that I think that that journey would've been really fruitful and interesting and an amazing way to spend five to 10 years of your life.

    8. HSHarry Stebbings41:28

       Before we do dig in on AI, I do just want you said there about kind of capital inefficiency within companies. One challenge and real concern that I have is, a lot of growth investors who have too much cash bluntly are going, "I'm willing to pay up because I believe it's gonna be a $5 billion company. Fine, I might not get a five x, but I'll get a three x, and I'm playing a deployment game."

    9. NHNabeel Hyatt41:47

       That's right.

    10. HSHarry Stebbings41:48

        But it's the wrong actual thinking because you're assuming that it's equiprobable and that putting a preemptive round in place will still lead to that five billion.

    11. NHNabeel Hyatt41:57

        Yeah, it won't. (laughs)

    12. HSHarry Stebbings41:58

        But me and you both know if I try and shove cash in before it's ready, I could destroy that potential five billion and make it a one billion.

    13. NHNabeel Hyatt42:05

        It's another good example of where we have a different world now than we had four years ago. That company will probably raise another 100 million, and then they might just die. In fact, they probably will die. Their probability of go, of dying eventually, it'll take a long time 'cause they got a lot of money, goes up. So then if that happens, if you feel like that company's raised too much capital, you can watch their hiring velocity, you can look at the quality of the people they're hiring, their execution speed. You can see it all teetering.... and then maybe invest in something else in the market, even though there's a lot of money in the market.

14. 42:37 – 44:23

    Secondary Market Activity & The Need for Liquidity

    1. NHNabeel Hyatt42:37

    2. HSHarry Stebbings42:37

       When you say, "No, don't ha- don't raise that round," do they listen?

    3. NHNabeel Hyatt42:40

       Never.

    4. HSHarry Stebbings42:41

       Do you s- engage in secondary markets actively? When we look ... No. Why not? With the huge influx of, like, private late-stage capital and the continuing delays of public markets, we need liquidity. At some point, you have to deliver cash to your investors. I do too. Do you, do you not think that becomes an ever more important part of our role?

    5. NHNabeel Hyatt43:01

       I, I, I'm not saying you never sell secondary. I'm not saying it never happens. It's just that I think the, again, the, the primary job of trying to figure out a little bit about the future, listen to those founders who have that little glimmer of the future, have a beginner's mind enough to be open to it, so that when somebody comes into you with some cockamamie idea that was way off-piece from how you thought the world was gonna work, that you're open to shifting to it. Like, that takes time, energy, research. It takes trying every product. It takes curiosity. Like, the question is, like, where are your hours coming in the day? And so, uh, sure, there's secondary that happens. Sure, there's later stage evaluation that happens. Sure, you can decide to figure out you wanna do growth. Sure, you could run, you know, a, a conference every month. Sure, there's... There's a thousand things you can do, but doing the simple thing, at the highest level, takes time and energy, and I don't even think I'm good at it yet. So I, I'm still just trying to get good at my first job before I do the second, third, and fifth job.

    6. HSHarry Stebbings43:59

       When we think about AI companies specifically, you said to me before, and I love this, there's three categories of AI startups.

    7. NHNabeel Hyatt44:05

       Yeah.

    8. HSHarry Stebbings44:05

       I love, like, the framework. (laughs)

    9. NHNabeel Hyatt44:08

       I know you do. (laughs)

    10. HSHarry Stebbings44:09

        So, (laughs) but we're not in the age of frameworks anymore, guys. Just remember that-

    11. NHNabeel Hyatt44:13

        (laughs)

    12. HSHarry Stebbings44:13

        Says the guy with three categories-

    13. NHNabeel Hyatt44:14

        (laughs)

    14. HSHarry Stebbings44:14

        ... of AI startups. Just saying. Um, uh, what is this-

    15. NHNabeel Hyatt44:18

        It's helpful to bucket things and have lenses.

    16. HSHarry Stebbings44:20

        Totally. No, it very much is.

    17. NHNabeel Hyatt44:21

        Can we say lenses and not frameworks?

15. 44:23 – 50:53

    Three Categories of AI Startups & How to Approach Them

    1. NHNabeel Hyatt44:23

       Then I'm with you.

    2. HSHarry Stebbings44:23

       Le- lenses works well for me. But what is the three categories of AI startups, and how should we think about that?

    3. NHNabeel Hyatt44:29

       Uh, this actually is a framework that came in the mobile revolution for us at Spark, and then re-applied. So this is an, this is an old lens re-applied, uh, which is adaptation, evolution, and revolution. And, and there are versions of this that have existed as people have talked about AI generally, but for us, it ... Can I use the mobile analogy to kind of get you there?

    4. HSHarry Stebbings44:48

       Yeah.

    5. NHNabeel Hyatt44:48

       Like, so adaptation is the obvious, like, I'm gonna take the thing, and then I'm gonna make a copy of the thing for AI. And so in the mobile revolution, this was The New York Times makes nytimes.com-

    6. HSHarry Stebbings44:59

       Mm-hmm.

    7. NHNabeel Hyatt44:59

       ... uh, on mobile, and that's the product, right? And, and that's obviously a world where 2023 was kind of the big adaptation push, and that was when Adobe Firefly launches. It's when Spotify DJ launches. It's when Canva Create, I think it's called. It's when, like, you know, the big boys came to town with their AI products, and everybody had, like, a year to go think about what they were gonna do after the GPT era, and, like, ship their incumbent advantage stuff.

    8. HSHarry Stebbings45:23

       Mm-hmm.

    9. NHNabeel Hyatt45:24

       Like, that's all adaptation. Evolution, I think the easiest way to kind of separate it is, it's when there's a new workflow. It's once the behavior has changed slightly, and so the good example of this is, in the mobile era, is Instagram, where you're suddenly doing a different behavior than you used to, when you think about Flickr or prior photo websites. It's a new behavior that is native to that medium. Today, you'd think about things like, um ... This can be done by incumbents and by startups, by the way. Like, e- sometimes a really fast-moving startup will do it. Sometimes it's an incumbent. Granola is a good example of this, right? They are an evolved product. You are treating ... I don't know if you wanna call that an AI meeting notes software. I don't know if you wanna call it transcription software. I don't know why you'd call it just Apple Notes with AI in it, but it's a different behavior. It's a different way of using the product. I think Replit Agents, the way that they've rebuilt, another really good-

    10. HSHarry Stebbings46:19

        Mm-hmm.

    11. NHNabeel Hyatt46:19

        ... example of, like, evolving the medium, in a way. Um, Descript is another example. Like, you cannot take the incumbent UI and just slap Descript on. It is a rethinking of how you would do audio and video editing from scratch with AI in mind, right? So that's, that's evolution. And then the last one, revolution, uh, like, this is the canonical, like, I'm sure this gets talked about every week on your, on your podcast, but this is Uber, right? This is like ... It's an entirely new platform that would only exist because this technology exists.

    12. HSHarry Stebbings46:52

        Where do we have the most, and where do we have the least?

    13. NHNabeel Hyatt46:54

        You mean today in the market? Oh. I mean, we are in the industrialization of startups' playbook land, where everybody's trying to churn out some piece of ridiculous arbitrage every week in order to get through the end of their incubator and raise their seed round. So we mostly have evolved products that are not good enough, or we have adapted products with a coat of paint on top that says AI.

    14. HSHarry Stebbings47:19

        What do you find most interesting?

    15. NHNabeel Hyatt47:21

        When we invest, most of our largest exits at Spark over time, and most of my, the most satisfying work over time has been on the revolution and sometimes the evolution category. So we have no desire to invest in anything that's an adaptation. We're trying to lean towards the more disruptive, the higher risk. Um, knowing that that won't always work out, but at least it's a journey worth traveling.

    16. HSHarry Stebbings47:42

        When we think about value accrual in the new landscape ... Yeah, Kyle at the bot company said that, uh, bluntly, you've hedged this-

    17. NHNabeel Hyatt47:49

        (laughs)

    18. HSHarry Stebbings47:49

        ... and you have bets in foundation models and models.

    19. NHNabeel Hyatt47:52

        Yeah.

    20. HSHarry Stebbings47:52

        And then you also have bets in application layer.

    21. NHNabeel Hyatt47:54

        Yeah.

    22. HSHarry Stebbings47:55

        How do you think about where sustainable value accrues, and the GPT wrapper, "Oh, there's no value in application thin layer"?

    23. NHNabeel Hyatt48:03

        So I wouldn't call that hedging. I believe both could win. Uh, I, I, we were a, a very early investor-

    24. HSHarry Stebbings48:09

        Do you maintain that today with models?

    25. NHNabeel Hyatt48:11

        Absolutely. Yeah. I mean, we were early investor in Anthropic and very happy about the investment, and think there's a lot ahead for it and feel really, really positive about it. Absolutely. Yeah, and then on the other end-

    26. HSHarry Stebbings48:22

        Can you paint the bull case for me with Anthropic?

    27. NHNabeel Hyatt48:25

        Sure. The thing to understand about Anthropic and OpenAI ChatGPT, they're direct competitors, obviously, is to think about it in the terms of this adaptation, evolution, revolution framework. I'll just use this thing we just talked about a minute ago as a way to make this point. Uh-If you are trying to make the next best model and you're running out of data, then what do you need? You need to understand how people want to use your model. If you want to understand how people want to use your model, then you need a lot of people using your model. And so the fact that those two companies have a user interface which has both insights to how a user would use it, but also, frankly, data exhaust on how people are trying to navigate a model and get through it, gives you insight that no one in some academic lab somewhere just popping up a model is going to be able to advance as fast as you. You can make a faster algorithm, but you can't get new data and new data exhaust from consumers unless you're running that-

    28. HSHarry Stebbings49:22

        But the level of consumer data is probably 10X more for OpenAI than it is Anthropic?

    29. NHNabeel Hyatt49:28

        I didn't say it was the only competitive benefit. But for both of those companies... You said make the case for these. I think for both of those companies, I think that's a major, major case, right? They will have a user interface, they will have user data that will help them be smarter.

    30. HSHarry Stebbings49:42

        I'm, I'm sorry though, does everyone not? Like DeepSeek's sitting on number one and is getting more consumer data and more consumer insight than anyone else. I mean, Xi Jinping's having, you know, a, a data fast (laughs) . Um, but, but I mean, respectfully, there, there's so many that do... I mean You.com has a pretty good user interface. I wouldn't say it's that much worse than Claude, it's like, it's okay.
16. 50:53 – 54:03

    Does DeepSeek Change OpenAI and Anthropic's Strategy?

    1. NHNabeel Hyatt50:53

       need to be full stack.

    2. HSHarry Stebbings50:54

       Does DeepSeek change how OpenAI and Anthropic should operate? I just had Jonathan from Grok on the show and he said, "If I was Sam Altman, I would open source today. You will die if you don't open source."

    3. NHNabeel Hyatt51:04

       I don't know that DeepSeek changes that much for the way that I think about the future, strangely enough.

    4. HSHarry Stebbings51:10

       Hmm.

    5. NHNabeel Hyatt51:10

       And maybe that's an odd thing to say when everybody in the world is freaking out about DeepSeek this week. Um, I, I don't know that I ever really believed personally that the $100 billion or $500 billion or $1 trillion training was the only barrier to entry for making these models. And so like, it, it was... In fact, if we had believed that only capital was going to win, then we would not have invested in Anthropic 'cause you sh- you know, surely Sam was telling us and everybody else like, "We're gonna win the capital game. The capital game is the only way to win, and so there's no reason to build a competitor." So we didn't believe that back then, or else we wouldn't have invested in Anthropic. And so it's still true today.

    6. HSHarry Stebbings51:47

       And you think Anthropic wins then because of taste, product taste?

    7. NHNabeel Hyatt51:52

       I think Anthropic wins the same way that every, every company wins, which is that they are executing very fast with taste, they are listening to their customers and delivering what their customers want.

    8. HSHarry Stebbings52:03

       What do you think will be a bigger business, the API business or the consumer...

    9. NHNabeel Hyatt52:07

       Hmm. I, I, I think when you're at the front end of innovation, when you're moving really fast, I, I think you want to be vertical. I think you want to have as much connectivity layer between the model you're trying to build and the thing that the consumer is trying to wrestle with the world to make happen.

    10. HSHarry Stebbings52:24

        You said about data exhausts, and you said to me before about it, I just want to make sure I get the quote right. The data exhaust is more important than models.

    11. NHNabeel Hyatt52:32

        Yeah.

    12. HSHarry Stebbings52:32

        That being the consumer insights layer?

    13. NHNabeel Hyatt52:35

        Uh, well, I'll t- I'll give you an, an example. If you're Descript today, you don't just sit on this amazing and wonderful interface which kind of changed the market and, and, and reinvented what this was. You also sit on every single edit that every single person has done to try and go from a rough cut where somebody might, like me, comes on your podcast and says ridiculous things. And then, you know, cut that down to something that actually sounds like a wonderful production. That's internalizing the wisdom of experts. And I think one of the things that we're seeing right now in this world, OpenAI and lots of other companies are paying a bunch of PhDs to then like by hand go fig- you know, figure out PhD math equations so they can internalize the model. I think Web 2.0 was very much the kind of wisdom of crowds. And we're in an age where it's the wisdom of experts. We're not trying to get what the average output of every single human is. We're trying to get what really amazing people at whatever their field is, across every field in the world would do in this situation. And so if you are running a next gen product with AI deeply embedded, and you have the best users using that product, that will inform you to make better products for those users, and inform the models that you're building. This is about trying to build a top of market product and then trying to make decisions for... I mean, AI, the promise of AI is this thing, this little alien in your computer, is gonna help you be smart and as smart as the best person who does this thing.

17. 54:03 – 57:39

    The Future of the Agent Economy and Replacing Labor

    1. NHNabeel Hyatt54:03

    2. HSHarry Stebbings54:03

       I just walked with Manny Medina from Outreach-

    3. NHNabeel Hyatt54:06

       Yeah.

    4. HSHarry Stebbings54:06

       ... and he's building essentially a Stripe for agents. Um, and he was talking to me about kind of the future of agents and he was saying, "Hey, the future is actually hyper-verticalized in what would have been non-interesting small markets. But because you're replacing labor, it's actually so much bigger than you could have ever thought." And so an example is that Happy Robot, this Andreessen company, which is brokers calling truckers to organize loads and transport. Before you're like, "That's not very interesting." But actually if you replace the broker, that's a multi-multi-billion dollar market.

    5. NHNabeel Hyatt54:37

       Yeah.

    6. HSHarry Stebbings54:37

       How do you think about the future of an a- agent economy in that respect? Are you excited by that? Do you spend time thinking about it?

    7. NHNabeel Hyatt54:44

       I spend a lot of time thinking about it. I think most of them...How do I put it? I think most of them f- fall into, if you just really think through the second order effects of it, fall into, kind of, like, near term arbitrage, which might just take that whole market to zero. Especially if you are meeting the market where it is today with the models of today. Like, y- y- you, you need to assume that you still have a second, third, and fourth act in your business, 'cause you're gonna need to keep innovating. Or else, how are you not gonna get lapped by 25 other competitors who are also gonna build call agents into your vertical market tomorrow? And so I think you do have to ask some of these questions. Sensibly, how hard is the job to be done? This is a direct contrast. If I'm, if I just took my 200K check and I just joined an incubator and I'm trying to show 10 over, 10% week over week growth so I can raise my seed round in three months, then I want something that the models can solve for tomorrow, right? And so I might go into a market that, I don't know, a little bit of transcription from AI, uh, it, like, solves it and we're kind of done. If that's really the extent of your innovation, you're probably gonna be awash with 50 other people who also joined all the other incubators and are also doing the exact same thing. And so your marginal benefit to the world is zero. If you are doing something at the very edge, I mean, I definitely... I'm constantly trying to advise founders and encourage founders to think about what the models might do in six months or nine months and start to chart there, because-

    8. HSHarry Stebbings56:15

       Is that a worthy exercise? And what I mean by that is, it's so unpredictable. Six to nine months of product roadmap prediction for model providers. Fuck.

    9. NHNabeel Hyatt56:24

       (laughs)

    10. HSHarry Stebbings56:24

        Good luck.

    11. NHNabeel Hyatt56:27

        I, I mean, I think you, you can try and figure out what it... Put it, I'll put it more simply.

    12. HSHarry Stebbings56:31

        But then who cares? 18 months, they decide to change. Deep Seat comes out, they get bit by that.

    13. NHNabeel Hyatt56:37

        Let me try a different wording. Pick a job that's hard.

    14. HSHarry Stebbings56:40

        Venture.

    15. NHNabeel Hyatt56:43

        (laughs)

    16. HSHarry Stebbings56:43

        Uh...

    17. NHNabeel Hyatt56:44

        No, I mean, if you're a startup-

    18. HSHarry Stebbings56:46

        Being a doctor.

    19. NHNabeel Hyatt56:47

        ... pick, pick a, pick a job or a decision that is not solved by today's AI perfectly. Pick a job that you think it will be worth trying to pursue for the next decade, because that's the nature of the startup. And so if you can solve it fully, which are the most satisfying things as a founder, I can satisfy this fully by the time I get to the end of my three-month incubation period in my little seed round, and I'll be done, then you probably are gonna get lapped. If you think the best you can get is an MVP that hallucinates constantly because this particular problem is incredibly hard, but people will pay a little bit and I'll get a little bit of traction, and if I do that, I can make a little bit more progress, and I, and I can imagine working on this project for the next 10 years and still innovating seven years from now. Okay, so now you're in a right path. And then, by the way, if the model takes an extra three months or more, or three months left to hit its, its level of fidelity, you'll be okay.

18. 57:39 – 1:00:20

    Biggest Loss

    1. NHNabeel Hyatt57:39

    2. HSHarry Stebbings57:39

       What's been your biggest loss, Nabil?

    3. NHNabeel Hyatt57:41

       Loss?

    4. HSHarry Stebbings57:42

       Yeah.

    5. NHNabeel Hyatt57:42

       I'd push back, man. I, I don't know that you should look at your losses. I mean, maybe if you felt like the decision that you made at the time, if you look back on it, and, like, you just were in a bad place when you made the choice and you should try to not be in the bad place the next time you make the choice, so you made the, you made the choice for the wrong reason. But, I don't know, we're in the business of the things that work.

    6. HSHarry Stebbings58:04

       I agree. And so you study your successes.

    7. NHNabeel Hyatt58:06

       Yeah. How, how did I find that founder? What were the signals that happened there? What are the lessons I can learn? What are the things, what are the types of founders that connect well with me and, and I connect well with them? What are the market dynamics at that time? What was the product like at that time? Um, I think those are things worth deeply investigating.

    8. HSHarry Stebbings58:23

       Are you incredibly bullish about the future of the US right now?

    9. NHNabeel Hyatt58:27

       I am incredibly bullish about the long term of the US right now. (laughs) I, I think you're in a market dynamic where-

    10. HSHarry Stebbings58:38

        I don't understand you Americans, respectfully.

    11. NHNabeel Hyatt58:40

        Why?

    12. HSHarry Stebbings58:40

        Because you-

    13. NHNabeel Hyatt58:41

        Too positive?

    14. HSHarry Stebbings58:42

        No, because a lot of you are like, "Oh, you know, Harris, Harris, Harris." Trump comes in, does a load of really efficient stuff. Markets go to the fucking moon and you're still like, "Eh."

    15. NHNabeel Hyatt58:52

        (laughs)

    16. HSHarry Stebbings58:52

        I'm like, you ungrateful, ungrateful champagne socialists.

    17. NHNabeel Hyatt58:58

        (laughs)

    18. HSHarry Stebbings58:58

        And we sit here with the Lego head chancellor-

    19. NHNabeel Hyatt59:01

        Uh-huh.

    20. HSHarry Stebbings59:01

        ... who does negative growth on us-

    21. NHNabeel Hyatt59:04

        Yeah.

    22. HSHarry Stebbings59:04

        ... and we're meant to just take it.

    23. NHNabeel Hyatt59:07

        I don't know that the president affects the economy in the US as much as you would think that any president affects the economy in the US.

    24. HSHarry Stebbings59:16

        I think you would normally be right, except Trump. The confidence that is instilled now in the US public markets, I think is unparalleled. And I think he's-

    25. NHNabeel Hyatt59:25

        But I'm not investing in the US public markets today. So when you ask me, how do I feel about America? Am I optimistic about America? And all the rest of that stuff, uh, my immediate, my pronation of thinking about the world is like, "Oh, well, what do I think about 10 years from now?" Like, that's my thinking. I'm a long, long, long, like, I don't get to do anything today. I get to invest today-

    26. HSHarry Stebbings59:43

        But I think-

    27. NHNabeel Hyatt59:43

        ... for something to seven to 10 years from now.

    28. HSHarry Stebbings59:44

        But I think a huge amount of people who wanna move their money to the US, wanna invest in the US, in data centers, in real estate, in you name it-

    29. NHNabeel Hyatt59:51

        Yeah.

    30. HSHarry Stebbings59:51

        ... because of the state of the economy.
19. 1:00:20 – 1:02:09

    Key Challenges Facing Europe Today

    1. NHNabeel Hyatt1:00:20

       anywhere in the world.

    2. HSHarry Stebbings1:00:21

       What do you think the challenge is that Europe faces then?

    3. NHNabeel Hyatt1:00:23

       I just don't... If I was a founder starting a company, my default state is dead. Things are really hard. It's hard to recruit, it's hard to raise money. All of it's hard, and you're pitching the rest of the world that you're dedicating your life to this thing and you're "all in," quote. And so if that's true and you're trying to risk mitigate all the things that are going to kill you, and it's the age of AI, I don't know why you're not in San Francisco. Like, just from a raw... Forget the opposite case. Can somebody succeed in London? Can somebody succeed in Berlin? Like, of course they can. But-... the real question is, like, wh- if, as a founder, why would you make that choice? And I, I just think you ... That, so that's the problem. The problem is that more of the people who are actually all in, not just telling you they're all in (laughs) , more of the people that are actually all in, who are actually trying to do everything on the planet to put themselves in the best case to win, and, and are willing to sacrifice for it, they're gonna wanna be at the dinner where they're learning about AI people. They're gonna wanna be able to recruit the best pe- All those people are in San Francisco right now. And so-

    4. HSHarry Stebbings1:01:28

       Yeah.

    5. NHNabeel Hyatt1:01:28

       ... why wouldn't you do it?

    6. HSHarry Stebbings1:01:28

       They are just b- kind of-

    7. NHNabeel Hyatt1:01:30

       Right?

    8. HSHarry Stebbings1:01:30

       I totally understand that, and, and kind of semi-agree. The main challenge that I push back on is like talent acquisition is so freaking hard there. Competition for talent is so high, salaries are so high, churn is so high. You guys are very, um, promiscuous-

    9. NHNabeel Hyatt1:01:44

       Yeah.

    10. HSHarry Stebbings1:01:44

        ... with your jobs.

    11. NHNabeel Hyatt1:01:45

        Yeah.

    12. HSHarry Stebbings1:01:45

        It's like, "Oh, well, you know, this isn't that hard anymore, I'm signing off to somewhere else that's way harder. Oh, well, Anthropik's new upround isn't as big as the, you know, X's, so we're moving..." Christ, you jump around.

    13. NHNabeel Hyatt1:01:56

        So what does that incentivize? That, that incentivizes a system where you have to keep innovating and you have to have speed.

    14. HSHarry Stebbings1:02:02

        Or you have to have synthetic growth.

    15. NHNabeel Hyatt1:02:04

        There's a downside to it. I agree. So you have to be smart enough to separate those two things.

20. 1:02:09 – 1:05:36

    How to Approach the Path to Raising for AI Startups

    1. NHNabeel Hyatt1:02:09

    2. HSHarry Stebbings1:02:09

       Final one before we do a quick fire. So much of our job is like you sit down with a founder after investing-

    3. NHNabeel Hyatt1:02:13

       Yeah.

    4. HSHarry Stebbings1:02:13

       ... and they're like, "What do I need to get to raise my A?" And you're like, "Well," and you kind of plot the path to A.

    5. NHNabeel Hyatt1:02:18

       I just had this conversation, yeah, yeah.

    6. HSHarry Stebbings1:02:20

       And, and then you kind of plot the path to A. It goes back to that ... I don't like that conversation. I understand it and I have it, but it goes back to the packaging-

    7. NHNabeel Hyatt1:02:28

       Yeah.

    8. HSHarry Stebbings1:02:29

       ... of just putting a ribbon on you and then passing you along. How do you feel about that conversation of, "What do I need to get an A?" And how do you approach it, or a B or whatever?

    9. NHNabeel Hyatt1:02:38

       Yeah, I, how do you get to the next round? I usually try and start from asking them a lot of questions about how they think about the future, and trying to separate them from the way a VC thinks about the future. 'Cause u- ultimately, like, m- us, we're listeners more than we are really tellers. Like, I get that part of this job is for us to be tweeting, for us to be on podcasts like this, and so on and so forth, but the future is invented by founders. And so the question is, what can you surprise an investor with in the next year that they weren't asking, versus the other way around?

    10. HSHarry Stebbings1:03:08

        A down round. (laughs)

    11. NHNabeel Hyatt1:03:09

        (laughs) Like, if you, if, if, i- that conversation has often led to situations like, "Well, everybody kind of expects us to do eight to 10 million in ARR." And it's like, "Oh, well, if everybody expects you to do eight to 10 million ARR, then I gotta tell you, they probably won't invest if you do it, because what they want is for you to exceed expectations. What they're trying to invest in is the best. If they think you've already got eight to 10 in the bag, then it's not gonna work. So I'm so glad we had this conversation. Now, what do you think would really surprise yourself about this business? If you woke up a year from now, what would you, what would shock you? What would make you feel amazing? Do you think you can storytell that to VCs? Can we, can we work on packaging that? Let's make ..." I, I, about 20% of the time, 25% of the time, the founders are down for it. After we invest, I immediately try and have a conversation and get a pitch deck together for the next round. Like, what would the next ... Just, just a glossary, just a table of contents. What would you want your next pitch to be?

    12. HSHarry Stebbings1:04:07

        From a data standpoint, unlike numbers, custom.

    13. NHNabeel Hyatt1:04:09

        Could be story, could be product, could be data, could be anything. It's storytelling, it's always storytelling, right? Let's get the story down. And, and I think people default back to numbers when they have no other story to tell. So let's start from the beginning. Tell the story about what you want to be able to tell the world in 18 months about this product that you're building, this company that you're building, and then we can figure out whether we think that that's actually, like, viable enough, or are you sandbagging?

    14. HSHarry Stebbings1:04:32

        I love that. I'm gonna take that. So, sorry, it's just a one-pager? It's like a memo?

    15. NHNabeel Hyatt1:04:35

        Yeah.

    16. HSHarry Stebbings1:04:35

        Okay. Um, final one, and final, I promise, before we do a quick fire. So, when we look at all the cohort of enterprise companies who've raised seeds and A's over the last three to five years, and they're brought up on the triple, triple, double, double style kind of pathway-

    17. NHNabeel Hyatt1:04:49

        Yeah.

    18. HSHarry Stebbings1:04:49

        ... and they're at eight to 20 million in ARR, what happens to them? Because new growth, well, growth ambassadors are going, "Pfff, doesn't fit my AI company growth cycles. Lovable is at 10 million so fast. X is, Bolt's at X so fast." Do they just, d-

    19. NHNabeel Hyatt1:05:05

        I don't, I, I don't have a smart answer here, man. I, I don't know.

    20. HSHarry Stebbings1:05:07

        You don't know?

    21. NHNabeel Hyatt1:05:08

        I don't know.

    22. HSHarry Stebbings1:05:10

        I don't either.

    23. NHNabeel Hyatt1:05:10

        (laughs) I don't know.

    24. HSHarry Stebbings1:05:12

        I'm worried.

    25. NHNabeel Hyatt1:05:13

        Yeah. Yeah.

    26. HSHarry Stebbings1:05:13

        Yeah.

    27. NHNabeel Hyatt1:05:13

        I can tell you that, that, that some of the founders that I've worked with that, that are stagnating and don't have that next chapter, like, they're doing the things that founders do.

    28. HSHarry Stebbings1:05:23

        It's not even they're stagnating, it's they're doubling, and that's not exciting-

    29. NHNabeel Hyatt1:05:26

        It's not enough.

    30. HSHarry Stebbings1:05:27

        ... enough now for VCs who are used to AI revenues, and they're like, "Ba-"
21. 1:05:36 – 1:08:54

    Quick-Fire Round

    1. HSHarry Stebbings1:05:36

       Listen, I wanna do a quick fire, my friend.

    2. NHNabeel Hyatt1:05:38

       I'm not ready for quick fire.

    3. HSHarry Stebbings1:05:38

       So I say a short statement.

    4. NHNabeel Hyatt1:05:39

       Yep.

    5. HSHarry Stebbings1:05:39

       You ready?

    6. NHNabeel Hyatt1:05:40

       I'm ready.

    7. HSHarry Stebbings1:05:40

       Okay, so what have you changed your mind on in the last 12 months?

    8. NHNabeel Hyatt1:05:44

       I don't think you should evaluate any company by the models that are underneath it, even model companies.

    9. HSHarry Stebbings1:05:50

       Gosh, Harvard Business School has just gone out of business. Um ... (laughs)

    10. NHNabeel Hyatt1:05:53

        (laughs)

    11. HSHarry Stebbings1:05:54

        What about ... I'm, I'm thrilled I can't work in Excel spreadsheets. Like, you know, Team's like, "Hi, if you do equals sum ..." I'm like, "Ooh, came up with a bracket." Um, what about the way that your parents brought you up? Did you do differently with your kids deliberately?

    12. NHNabeel Hyatt1:06:08

        I don't know that I did very much differently, because I think my parents did not understand me at all, and yet were incredibly open to me walking my path. You know, Harry? Like, I, I, my mother was a first-generation immigrant. Like, she just wanted me to be a doctor or a lawyer or whatever, except sh- unlike a lot of first-generation immigrant families, she never told me that, and I never even felt it. She could tell that I was gonna walk a weird path. She didn't even know what entrepreneurship was. She didn't know any of that stuff, and she just, like, just wanted me to find my place. So no, I, I'm more trying to mimic my parents than I am the opposite.

    13. HSHarry Stebbings1:06:46

        Are you hands-off as a parent?

    14. NHNabeel Hyatt1:06:48

        No, no. I'm pretty hands-on as a parent.

    15. HSHarry Stebbings1:06:50

        But you let them do what they want to do?

    16. NHNabeel Hyatt1:06:52

        Consigliere. I like the role of consigliere in the world. We can talk like crazy with a founder or my, my two sons about what they're going through, and then with earnest and, like, deep heartfelt-... like, coming from a real place, be like, "It's your decision at the end. It's okay. And I don't know what the truth is, so I'm not telling you what's right or wrong. You gotta walk your own path, but it doesn't mean we can't, like, exhaustively talk about it all."

    17. HSHarry Stebbings1:07:14

        I said the other day to my mother, "The best thing you ever did for me was fuck all, uh, when I, uh, (laughs) left university and I was a law scholar to do a podcast."

    18. NHNabeel Hyatt1:07:22

        Yeah.

    19. HSHarry Stebbings1:07:22

        Um, and, uh, to be fair, it's not fuck all, it's trusting in your child and their conviction enough.

    20. NHNabeel Hyatt1:07:27

        That's right. (laughs) Yeah. I mean, look, I had a moment where I came home after my sophomore year in college as a computer science major, which is you're like, "Oh, he probably can maybe get a job." I wasn't even sure then. And I was like, "I wanna leave, and I'm not even sure if I'm gonna go to university. I might just start another company, I don't know. I just, I can't, I can't do this." I ended up going to art school. Like, and my parents were completely supportive, like, like, could not have been more supportive.

    21. HSHarry Stebbings1:07:51

        Does being rich make you a better investor? I have a strong thesis that it does, because you no longer worry about downside, you no longer worry about your next fund, you no longer worry about protection. It's just like, "I think this could be great, Nabil sees the world differently." If I'm being super crass, "I've got X million in the bank, I'm good, but I, I'm ride or die, Nabil."

    22. NHNabeel Hyatt1:08:13

        I think the best thing about ... If, if I had any superpower joining venture, it was that I had no long-term desire to be in gen- venture. I was very happy to be in venture if it worked out, and I'm still very happy to go start a company. Like, I, I, I would be very happy as a founder as well, it's just not what I chose to do, and I really love this job deeply. But if it had not worked out, it was okay. And so I came in, in with a nothing to lose mentality, which allows you to sit on the front end of creative risk and being willing to take that extra risk, which of course, that's what this business is about. Versus this kind of protectionist, like, "I just wanna make sure I have my job. I just mainly wanna get to the f- next fund," which is where I think you make most of your mistakes.

Episode duration: 1:15:17