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Concentrating in Winners | Vince Hankes, Partner at Thrive Capital | Ep. 27

(If you enjoyed this, please like and subscribe!) Vince Hankes is a Partner at Thrive Capital where he’s worked on investments in OpenAI, SpaceX, Databricks, and Stripe among others. Vince invests across all stages and currently sits on the board of Airtable, Benchling, Console, Isomorphic, Lattice and Rogo. Prior to joining Thrive, Vince was an investor at Tiger Global. We covered: - Non-consensus investing - Writing billion dollar checks - Buying Carvana at the bottom - The value of compounding - What matters most to Thrive Timestamps: (0:00) Intro (0:50) The evolution of Thrive (4:22) Instagram, Github, and Stripe (7:57) Qualitative, then quantitative (9:39) Writing massive checks (16:48) Winning strategies in venture (25:58) Buying Carvana at the bottom (32:50) Managing conflicts (36:13) AI’s impact on the market (42:25) East meets West Coast investors (45:19) Vertical specific workspaces (49:53) Scale and timing of robotics (51:31) OpenAI vs everything else (55:59) What matters most for Thrive More on Vince: https://x.com/vhankes https://www.linkedin.com/in/vincent-hankes/ More on Jack: https://www.altcap.com/ https://x.com/jaltma https://linktr.ee/uncappedpod Email: friends@uncappedpod.com This episode is presented for informational purposes only and does not constitute investment advice or an offer to sell, or a solicitation of an offer to buy, any securities. The discussion herein similarly does not constitute a solicitation with respect to any Thrive fund or an offer of investment advisory services. Investments identified herein are discussed solely for illustrative purposes and there is no guarantee that current or future investments of Thrive will be similar in quality or kind.

Vince HankesguestJack Altmanhost
Oct 8, 202557mWatch on YouTube ↗

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  1. 0:00 – 0:50

    Intro

    1. VH

      There's a different way of thinking about concentration, which is when you write a billion dollars into a company, you have to have conviction. You can't be, like, on the fence about is this gonna work or not? You have to have almost dogmatic conviction it's gonna work. So how do you build up that level of conviction? The wind-up period to doing these investments is super long.

    2. JA

      Like years?

    3. VH

      It could be years. I mean, Stripe, we made our first investment almost 10 years before we made this big $2 billion investment. Or I invested in a company called Isomorphic at the beginning of this year. We spent 18 months getting to know them. [upbeat music]

    4. JA

      I'm very excited to be here today with Vince Hankes, who is a partner at Thrive Capital. He's, uh, worked on most of the major investments at Thrive, including OpenAI, SpaceX, Databricks, Stripe, a lot of, a lot of ones people have heard about. So, uh, very impressive run you've had there, and I appreciate you doing this with me.

    5. VH

      Thanks for having me, Jack.

  2. 0:50 – 4:22

    The evolution of Thrive

    1. JA

      All right, Vince, I wanna start with the evolution of Thrive. So the firm was founded in 2009 when you and I are not yet in, in, not yet out in the world. Um, and it was a $10 million fund. You fast-forward to today, it's a $5 billion fund. Thrive invested in Lattice in 2016. At the time, it was, like, 700, so it's been, it's been an incredible sort of rise. You joined in 2019. Feels like in the last few years, like a huge amount has happened that's been sort of, you know, skyrocketed into new echelons. So can you just kinda, like, give your overview of, like, what this journey has been, both while you were there and maybe even kinda like the broader history back?

    2. VH

      Yeah. I mean, it's been a really fun journey to be on. When I... So when I joined, we were, I was the 25th or 26th person. We had just raised a billion-dollar fund, which was really a early-stage fund of 400 million and a growth fund of 600 million, so still kind of small in today's dollars. And I think we were just starting to get into some of the bigger bets we were making.

    3. JA

      When you joined, did it feel small at the time, or at the time, were you like, "This is clearly-

    4. VH

      It-

    5. JA

      ... becoming one of the platforms?"

    6. VH

      It felt, it, it felt small-

    7. JA

      Mm.

    8. VH

      - because I'd say I was coming from Tiger. We were investing in an almost $3 billion private fund.

    9. JA

      Yeah.

    10. VH

      We had a $15 billion hedge fund, and so coming from that pool of capital to then a billion-dollar fund felt smaller.

    11. JA

      Yeah.

    12. VH

      And I think the biggest funds at that time were much bigger than we were, and so we weren't kind of in the position of we're always thinking about leading or doing the biggest, you know, checks into a round. We were just trying to really get into the great companies-

    13. JA

      Yeah

    14. VH

      ... which was different. But if you go back, like, part of the evolution that's so fun to think about is Josh was 26 when he started Thrive, which is crazy to think about. And so, like, a 26-year-old starting a venture fund, first of all, it's like, what does that mean? First is he didn't go to Silicon Valley and set it up. He did it in New York. You know, he was obviously from the New York area, so that makes sense, but it also kinda made you an outsider to the Valley. The people he recruited, it's not like, "Who wants to go work for a 26-year-old starting a venture fund in New York?" So, like, the people he recruited were his friends and kind of the, like, misfitty-type people that would go work for a 26-year-old. I mean, you know Miles, like, people like that, who were coming out of college and young. Um-

    15. JA

      It wasn't so... I mean, it turned out to be unbelievable picking of people, though, when you look... I mean, there was Will Garrick.

    16. VH

      Of course.

    17. JA

      Will Garrick.

    18. VH

      Chris Paic.

    19. JA

      Chris Paic.

    20. VH

      Jared Weinstein.

    21. JA

      Yep.

    22. VH

      Lots of amazing people.

    23. JA

      Yep.

    24. VH

      But all those people did something that was unobvious at the time, and so kind of like when I think about the evolution, a big part of it is the people that have been around the journey-

    25. JA

      Mm

    26. VH

      ... for a long time are people that self-selected into this environment that was different.

    27. JA

      Do you think that actually selected for some- Do you think that selection itself was part of why the talent hit rate seemed so interesting?

    28. VH

      Uh, de- certainly. Like, today we think about it, now that we do have a brand-

    29. JA

      Right

    30. VH

      ... people wanna work at Thrive.

  3. 4:22 – 7:57

    Instagram, Github, and Stripe

    1. VH

      I, I think... I do, let's go back to the evolution, because I think it is in the... It's kind of been in the journey. Like, people don't know this, but 2012, we invested in Instagram. Okay, it was important for... Obviously, it got acquired by Facebook, so it's this big deal. More importantly, Josh had spent, I think, a couple years beforehand just trying to break in and get into this hot company by getting to know Kevin and Mike and the whole team. We got in. We got a $20 million allocation. We had a $40 million fund at the time.

    2. JA

      Yeah.

    3. VH

      So in terms of, like, big, bold bets to proportional-

    4. JA

      Did you put 20 in?

    5. VH

      Yeah, we put-

    6. JA

      You put half-

    7. VH

      ... we put almost, we put almost $20 million into the company.

    8. JA

      Out of 40.

    9. VH

      We had to raise a little bit on top because we couldn't put a 50% position in the fund.

    10. JA

      Yeah.

    11. VH

      But, like, big, bold bets were a part of the firm since the beginning.

    12. JA

      Wow.

    13. VH

      And obviously, it was also important for us because no one knew Thrive Capital, no one really knew Josh. But then it's like Instagram, this hot company, Benchmark, Sequoia, and Thrive Capital.

    14. JA

      Mm.

    15. VH

      And everyone's like, "Well, who's Thrive Capital?"

    16. JA

      Yeah.

    17. VH

      And so it kind of got us into the game. You fast-forward a few years, and we invested in GitHub. Okay, well, GitHub obviously was this kind of high-flying developer company. All of a sudden, we invested. Literally within months, the CEO stepped down. It kind of went from being consensus to consensus, like, in trouble as a company.

    18. JA

      Mm-hmm.

    19. VH

      Uh, Nabeel, who you know, one of our partners, went in and was interim CFO of GitHub for a period of time. We got to know the business really well, which is part of the whole pitch of us, is we deeply partner with you. We started to see the data, meet the people, build more conviction, such that we actually made... GitHub became one of the largest investments we ever made in the firm's history at that point in time, and we were able to buy all the shares because it was so non-consensus in the Valley. But part of being in New York, part of being an outsider, was, like, we weren't basing our conviction off of what was happening in kind of the echo chamber of the Valley. We were definitely outsiders to the Valley. And so take that even further, like Stripe, more recently, if you think about the evolution, obviously, the quantums have gone up.... but Stripe to me is kind of the evolution of this exact same confidence in making these big contrarian bets, where COVID happened, all these companies were high-flying. Obviously, then it all went down and numbers decelerated. Everyone thought, "Oh, shit-"

    20. JA

      Yeah.

    21. VH

      -like, "Is this over?" Um, and if you were really grounded in the numbers, you were scared, or it looked like an unobvious deal.

    22. JA

      Mm.

    23. VH

      But if you kind of take a step back and say, "Okay, well, Stripe, what, what does it lever to?" It's levered to the growth of payments online and e-commerce. And I said, "Jack, what do you think e-commerce penetration is gonna be in 10 years from now?

    24. JA

      A lot.

    25. VH

      A lot. A lot! Like, no one doubts that. You know, cream rises to the top line. Uh, it's a lot easier to predict the long term than it is the short term. But everyone in that moment, what are they trying to do? They're trying to predict what will Stripe be in two years from now. And so we went in, we spent all of our time with Patrick and John, we've known them for a long time. We spent time with product, all the things that you would think about, not just the numbers, and we decided to lean in.

    26. JA

      Mm.

    27. VH

      And then what was unique about that, and I think reinforcing to how we've evolved, is we put in almost $2 billion to the company, but they needed to raise five or six. So we had to then go help them raise the money. So a bunch of us went out and pitched to other investors why we had so much confidence to put that much money into Stripe. And this is now in early '23, and so the market environment was not-

    28. JA

      Yeah

    29. VH

      ... go, go. It's coming off of this post-COVID hangover.

    30. JA

      Yeah.

  4. 7:57 – 9:39

    Qualitative, then quantitative

    1. JA

      You sort of described also, like, an investing mindset that I would traditionally ascribe to, like, early-stage investing, but applied at su- like, growth plus stage.

    2. VH

      Yeah.

    3. JA

      Like, you're talking about the founders, you're talking about the product, you're talking about, like, the long term, and, like, not being too close to the numbers. Do you think that when you think about Thrive's great late-stage investments, it was more of a growth mindset or an early-stage mindset that led to those decisions?

    4. VH

      Um, I, I think the, the growth mindset, if you want to kind of call it that, which basically a, a shorthand way of saying it's very quantitative and numbers-driven-

    5. JA

      Yeah

    6. VH

      ... is important. But our whole ph- philosophy is we start with the qualitative, we develop a hypothesis, and then the hypothesis has to be confirmed by the quantitative. And it has to be in that order, because if you start with the numbers and you get so excited about the numbers, and then the numbers go down, you lose all your confidence. But if you start with the people and what they're doing, and the customers, and the product, and you build confidence, and then they miss a quarter or they miss two quarters, you don't react of like, "Oh, shit-

    7. JA

      Yeah

    8. VH

      ... you know, my returns are now going away." You try to unpack why and what happened. Is our assumption on the product wrong? And that's what should change our confidence almost. And so I think, like, what do I think my superpower is? It's I spent a lot of my career on the financial side, but now at Thrive, I spend a lot of it empathising with how do you build a company? What does it mean to hire an exec? How do you build a team? If you kind of intersect those two things, I think that's where our sweet spot is. You know, like, 'cause Databricks, Databricks we did a year ago. Why was that a great, you know, time to invest in the company? Well, a lot of people are like, "Oh, it's growing really fast. It's got the tailwinds of AI." But I think the most important point, it became clear that it was going from this single product company to a multi-product platform.

    9. JA

      Mm.

    10. VH

      And the value of the platform is much bigger than the value of the single product, and so inherently there's a mispricing because it's a lot harder to build a multi-product platform than it is a single product.

  5. 9:39 – 16:48

    Writing massive checks

    1. JA

      You talked about how, like, you know, the Instagram investment, whatever number it was, was a huge percentage of the fund. You've obviously made a lot of those, like, very bold bets early days, but recently, too, you've made bets that in, you know, s- uh, maybe not betting the firm, but are much more aggressive than most venture firms. I think one of the reasons people, you know, often talk about founder-led companies having an advantage is 'cause, like, people are willing to, like, risk it all many times.

    2. VH

      Mm-hmm.

    3. JA

      Do you feel like you all are still doing that because, you know, it's a founder-led firm, and you have those dynamics? Like, is it still... Is that the sentiment, or are you now in a place where you're like, "We can't risk the firm anymore"?

    4. VH

      Well, I think this is, you know, this is the mentality of why doing what we do is really easy to say but hard to do. Like, in reality, to put that much capital into a single company-

    5. JA

      Yeah

    6. VH

      ... it's scary.

    7. JA

      I mean, you've done it with Stripe, Databricks, OpenAI, and obviously-

    8. VH

      SpaceX

    9. JA

      ... you guys have a lot of- SpaceX.

    10. VH

      Yeah.

    11. JA

      You guys have a lot of capital, but on a, as a percentage basis, you're very tied to these companies.

    12. VH

      And we think about an ideal growth fund for us is 10 companies, and ideally, it's 10 companies. That's it. It's highly concentrated. And why? 'Cause if you believe the power law is true, there's, [knocks] you know, in some sense, it's easier to kind of catch a company that's really established going to $100 billion or $200 billion than it is to try to pick the breakout company from a pack of a few thousand.

    13. JA

      Mm-hmm.

    14. VH

      And so what we're really trying to do with these big concentrated bets is find what are those great generational technology companies-

    15. JA

      Yeah

    16. VH

      ... and then concentrate all of our capital into them.

    17. JA

      Would you rather try to pick out of $10 billion companies going to $100 rather than pick $1 billion companies going to $10?

    18. VH

      I think so. I did this, um... We had a thing with our LPs more recently, and so I cut some of the data because it's something that people talk about a lot, and it was basically: What's the number of trillion dollar companies, $100 billion companies, $10 billion companies over the last decade? And what you see is a decade ago, there were no trillion dollar companies. Zero. The biggest tech companies were $300 to $500 billion large. Fast-forward to today, there's 10, you know, I think that are around over a trillion. The top are three to four trillion. Okay, in 10 years from now, what will the biggest be? Probably bigger than that. I mean, all of the stuff that's benefiting AI technology means these companies will get bigger. But the kind of thing that's missed in this analysis is, there's been 75 companies in the last decade that have reached $100 billion or more in value. That's a lot of companies. There was only a few hundred in the $10 billion bucket. So if you think about it, picking the 75 out of a few hundred is much better odds than trying to pick, you know, the thousands of unicorns that will get to $10 billion.

    19. JA

      Yeah, I mean, this actually confirms kind of an intuition I think a lot of people have been thinking and saying, which is that, like, the winners are getting bigger than ever. Which basically what you're saying is, the number of $100 billion companies has grown much faster than the number of $10 billion companies.

    20. VH

      Yeah, or, like, think about it a dif- a different lens, a more product-centric lens. You know, Stripe, obviously they dominate in online payments.... but now we're talking about stable coins or AI in payments. Who's the, gonna be the company that wins or takes a lot of market share there? Is it gonna be Stripe or is it gonna be a startup? I hope a lot of startups have a shot on goal, 'cause that's the nature of what we believe in. But right now, guess who's really excited about it and investing a lot of money at it? It's Stripe.

    21. JA

      Yeah.

    22. VH

      And they have amazing founders, a great technology stack, great talent, and so I think what people underappreciate is these really well-positioned companies that are getting to scale, they benefit from the scale, just like Google and Microsoft and Amazon-

    23. JA

      Yeah

    24. VH

      ... and Facebook all benefit from that same scale.

    25. JA

      Why is that happening now different than it was happening 10 years ago? Like, why did these dynamics not exist in 2015 in the same, you know, magnitude?

    26. VH

      I think just people don't appreciate the power of compounding.

    27. JA

      Mm.

    28. VH

      You know, the internet, the iPhone came out 15 years ago, about, you know, a little bit more than that, and so mobile internet, the thing is it's not that old. And the great- everyone wants things to happen in a short period of time, but the reality is most of these companies are 10 or 15 years old. It's actually, um, if you looked at the... We, obviously I study a lot of these companies at scale. The vast majority of dollars of enterprise value that get created are in the second or third decade of a company.

    29. JA

      Hmm.

    30. VH

      And so if you think about all of the great companies we talk about now, Stripe, Airbnb, Doordash, Uber, these companies were all built out of the mobile era. We're now getting into the second decade of their lifetime, and that's where we know historically, if you look at Shopify or Salesforce or Tesla, the second and third decades were far more lucrative in value creation than the first decade. Well, now all these companies are coming of age to the second decade, and I think you will realize that scale is really powerful, and it just took time for them to blossom.

  6. 16:48 – 25:58

    Winning strategies in venture

    1. JA

      Given this backdrop, what do you feel like are the winning strategies in venture, like, now? Obviously, there's this... I don't know how you'd categorize what Thrive does, but, like, large check, concentrated investing, and, like, breakout winners. Are there other strategies other than Thrive that you're very bullish on now?

    2. VH

      [sighs] I mean, I'm obviously most bullish on the strategy we're executing on. Um, I think there will always be a place for very focused early-stage investing, because at the end of the day, where else can you go put in $10, $20 million into a company and get a billion out? And the reality is, if you're good at finding people early, and you can help them build companies, and you can get a large chunk of their company, you'll be able to drive great returns. I personally think that's got a lot harder because of how competitive it is, but there will al- there will always be a market for that.

    3. JA

      So what are you skeptical of now? Or, like, what's the hardest part in venture to play?

    4. VH

      I'm skeptical... I mean, I think we have bar- we really barbell our strategy. We're either early with companies, and we work alongside, we roll up our sleeves, we own a de- decent chunk of the company, or we invest when it's kind of becoming a clear platform company. We do do stuff in the middle, like, we call it breakout companies.

    5. JA

      Mm.

    6. VH

      Like, we invested in Cursor. It's obviously a phenomenal team. There's so much momentum. It's kind of got the zeitgeist in this AI moment of coding.

    7. JA

      But, like, As and Bs are rare.

    8. VH

      No, but the ex- investing in Cursor, in some sense, should be the exception because that part of the market is so competitive.

    9. JA

      Yep.

    10. VH

      There's so much capital chasing these $500 to $2 billion companies, that really a lot of them don't even have product market fit, but we're capitalizing them like they are a company with product market fit and growth. And so I think that, to me, is where I'm-... least optimistic, not because I don't think there's gonna be winners, there will be winners, but risk of capital loss matters there. If you're investing $10 million checks or $5 million checks, you can afford to have zeros. If you're investing $100 million checks-

    11. JA

      Yeah

    12. VH

      ... it's hard to have zeros.

    13. JA

      So-

    14. VH

      And if you look at the, if you look at the composition of a lot of these growth funds that are two, three, $4 billion big, they have 30, 40, 50 investments in a growth fund, which means the average check in that fund is $70 to $100 million.

    15. JA

      Yeah.

    16. VH

      But why is it- why do we get to that point in time? Well, because as these funds got bigger in scale, they hired more partners. But it, it's like the law of people. If you have more partners, you do more deals. If you do more deals, you're less concentrated. It's that, it's that simple of an equation, and if you're not very concentrated and you have a bunch of $100 million checks into-

    17. JA

      Yeah

    18. VH

      ... mid-stage companies, I think it's just hard.

    19. JA

      Yeah. How many people work at Thrive now?

    20. VH

      Um, the whole firm's something like 75 people.

    21. JA

      Yeah.

    22. VH

      But we're about eight investors.

    23. JA

      Eight investors, yeah.

    24. VH

      So this is a good example. Like, RLPs take our assets and they divide it by investors, and they say, "Okay, put you on a benchmark.

    25. JA

      Yeah.

    26. VH

      Where do you rank?"

    27. JA

      Yeah.

    28. VH

      And they look and say, "Wow, you guys have a lot of assets per investor."

    29. JA

      Yeah.

    30. VH

      I'm like, "That's the wrong way to look at us." You should look at... 'Cause we don't, we don't think about it as, oh, each dollar requires more work. It's basically the investment decision. Each company is a commitment. So if you just flip the numerator of that equation from dollars-

  7. 25:58 – 32:50

    Buying Carvana at the bottom

    1. VH

      decisions.

    2. JA

      This is a good segue. I want to talk about Carvana-

    3. VH

      Yeah [chuckles]

    4. JA

      ... which was, I thought, one of the most interesting and in the long, you know, in the full arc, it was extremely impressive to me, where basically, you made an investment in Carvana. I think it was public when you initially did it, but you obviously knew the company for a long time. But you make this investment, it goes down, like, a lot, and you buy more, you hold, [chuckles] and it ends up doing great. You distribute shares, you know, and you crushed it.

    5. VH

      Yeah.

    6. JA

      But, like, that seemed like a nail biter to me-

    7. VH

      [chuckles]

    8. JA

      ... because you're, you know, it was a lot of capital. It was a public company, and, you know, you're Thrive, you're not public, you know, for the most part. Obviously, you do it, but, um, I was just like... And you know, and you were, you know, you know, partially proven, but also earlier in your career when you did it, and it worked. So just, like, talk me through that whole thing.

    9. VH

      I mean, I think in a lot of ways, this embodies who we are as a firm. Uh, you know, the journey of Carvana, um, wasn't just random. Like, I think some people say, "Oh, you guys saw the public markets go down, and you went and moved on a company." It's like, just like [chuckles] that's not how... You know, we're not just looking to go do random things. I first got to know Carvana when I was at Tiger. One of my closest friends was the guy who was looking at it, spending a lot of time with it, so I got to know it then. When I joined Thrive, it was on a list of things, but it kind of traded to a price in public markets where it didn't maybe make sense. And then the post-COVID kind of tech cycle happened, and it was one of the names that went down, like, fifty percent-

    10. JA

      Yep

    11. VH

      ... in six months. And so that kind of, ears went up. What are the opportunities? Well, the public markets were moving faster than the private markets, and so one of the things that's nice about our model is, okay, I can write a seed stage investment or these big late stage, or I can go to the public markets. Well, the public markets move faster than private markets in terms of pricing, and so we went and spent time on it. But, like, going back to the Stripe analogy, a lot of people looking at the company were kind of grounded in, "Okay, well, the numbers are turning. There's a cycle." If you just looked at the product and the team, who I've gotten to know for a while, it was very clear that companies invested billions of dollars in infrastructure to build out this logistics network that makes it a great company. So it's not just an online listing for cars, it's a logistics company, which is its core advantage. The team, you know, is kind of an amazing story. If you look at the LinkedIn profiles of the people of Carvana, they're people that have been there their entire career, and they've tried to hire Amazon execs and have them come in, and it hasn't really worked, and they've kind of found this way to self-develop talent that's super unique. And so a lot of the things we got excited about were that, and as it gets to scale, the business gets better as it gets bigger. More inventory you have, more people that convert. More people that convert, the better your economics are. The better economics, the more you invest in that whole flywheel, and it spins and spins and spins. And so we made an investment, thinking, like, this is one of these could-be generational giant companies. I think we first bought shares, it was, like, a ten or twelve billion dollar company. Um, and then the used car cycle turned. They actually did an acquisition financed entirely by debt-

    12. JA

      Hmm

    13. VH

      ... um, which was, you know, we don't deal a lot with leverage in the private markets, and so there was definitely learnings, um, from that. And the combination of that and a cycle and burning money per car sold meant that the business kind of completely unwound in a short period of time. I mean, the stock went down-

    14. JA

      Like, all the way.

    15. VH

      Yeah.

    16. JA

      Like, ninety percent, right?

    17. VH

      Ninety-plus percent. [chuckles] Um, so obviously, that's not a fun journey to ride down, and particularly because when you watch it get marked every day-

    18. JA

      Yeah

    19. VH

      ... like, when you do a, a, a contrarian investment in the private markets-

    20. JA

      Yeah

    21. VH

      ... your friends might give you, you know, some crap about it or grief about it, or, like, people you talk to are LPs. But when you're investing in a public stock and it goes wrong-

    22. JA

      Everyone knows every day.

    23. VH

      Every day you wake up down five percent, down four percent, down five percent, and you have to answer the question, why?

    24. JA

      Yeah.

    25. VH

      Which, if that happened in the private markets, no way you could-

    26. JA

      No one could do this job.

    27. VH

      No. Yeah, everyone would sell their shares.

    28. JA

      Yeah.

    29. VH

      Um, but you know, where this, where-- I think we really, uh, had an advantage mindset, is this was the same period of time that we were working with private companies, and what were we doing in private companies? We were going through the, you know, get fit era of private companies. Everyone hired way too much in COVID and now needed to restructure their companies or let go of people and rightsize the P&L. And so that's what Ernie and Carvana did. They basically said, "We can't focus on growth anymore. We have to do a whole one-eighty shift to focus on profitability." So the whole lens you have to look through the company has changed.

    30. JA

      Mm.

  8. 32:50 – 36:13

    Managing conflicts

    1. JA

      important is, like, managing conflicts, like, for Thrive? Basically, like, you know, you've got to invest in such... You're, you're doing so few with such a large fund-

    2. VH

      Yeah

    3. JA

      ... that you've got to be investing in, like, big winners with most of your capital. If you pick something earlier, you conflict it out. Like, how do you manage that?

    4. VH

      Yeah, we take this super seriously.

    5. JA

      'Cause, like, if you do a Series A in a company, you can't go do a Series D or E or F in something else, right?

    6. VH

      It's part of the calculus. But if you look at the market today, a lot of investors, it's just buy the index across the companies that are working.

    7. JA

      Yeah.

    8. VH

      And so they don't care about conflicts. And for us-

    9. JA

      Totally

    10. VH

      ... because we're not doing a lot, we implicitly are making kind of a commitment to the companies that we are all in on your company.

    11. JA

      Right.

    12. VH

      Just like a founder's all in on the company, we're gonna be all in on this investment.

    13. JA

      For sure. No, I'm just thinking it's one thing if you're... If it's OpenAI or SpaceX, it's one thing.

    14. VH

      Yeah.

    15. JA

      And, you know, you can't go invest in Blue Origin, and that's-

    16. VH

      Yeah

    17. JA

      ... I feel sad for you for that, even though it's obviously a good company, but you're in SpaceX. But when you go and invest in the Series A of, you know, an ERP or a CRM or whatever, is that- is the category done for you at that point?

    18. VH

      It's not done, but this is, this is, this is the... When people talk about the advantages, we- I think about the advantages of full-stack investing, this is maybe in the disadvantages of it. You know, whereas if you're just an early-stage investor, you look at the C or the A, maybe the B, if you can't get it there, you never think about it again.

    19. JA

      Yeah.

    20. VH

      Oh, it's in your, you know, anti-portfolio kind of thing.

    21. JA

      If you-

    22. VH

      If you're in our shoes-

    23. JA

      Yeah

    24. VH

      ... it's like, I can invest at the C, the A, the B, the C, the D, when it's public.

    25. JA

      Yeah.

    26. VH

      Who knows when?

    27. JA

      Yeah.

    28. VH

      Um, and so we have a much-

    29. JA

      You can take it private.

    30. VH

      Exactly. We have... Well, but seriously, like this-

  9. 36:13 – 42:25

    AI’s impact on the market

    1. JA

      In general, across sort of functions and verticals, do you more fall into the camp at, you know, the mo- you know, let's... Right now, September 2025, are you more in the camp that, like, most jobs are going to be completely overhauled, people are gonna have to find new stuff, AI's gonna do things end to end in legal, finance, healthcare, et cetera, et cetera, or are you like, "This is just, like, super sick software, and everything's gonna get more efficient?"... do you think about this question at all?

    2. VH

      We do. I'm probably more in the latter camp. Um, I just think we're also humans, and in a lot of places, you know, we want to deal with humans, not with software. There are some places where I actually think we'll prefer to deal with software, like customer support is a good example.

    3. JA

      Yeah, of course.

    4. VH

      If, if you're United Airlines, and-

    5. JA

      Yeah, you don't ever wanna talk to somebody.

    6. VH

      But I can call a number and get an instant-

    7. JA

      Of course

    8. VH

      ... response from an AI?

    9. JA

      And I don't have to wait ever.

    10. VH

      That's amazing.

    11. JA

      Yeah, of course.

    12. VH

      And so in some functions like that, I think it'll probably shift towards software.

    13. JA

      Yep.

    14. VH

      Now, by the way, there's gonna be abstractions of that, where rather than doing the actual job, you're gonna be managing a system.

    15. JA

      Yeah.

    16. VH

      And so those people will get kinda upgraded in what they're doing. But in certain things, like I don't- I think the value a lot of times is with the humans doing it, and so I think making them 10X more efficient is better. Like, cr- take creative. Are we gonna automate away all the creative people? Probably not.

    17. JA

      Probably not.

    18. VH

      But are we gonna make 'em 10 times as productive, so there's 10 times more creative content?

    19. JA

      I mean, I would guess there's a certain type of creative content that will get automated, and then there's a certain level of it that won't.

    20. VH

      I think of more as like, you lower the floor of entry, so now someone who wasn't talented enough could probably do it, so they can take their culture and lens and now do it.

    21. JA

      Yeah.

    22. VH

      And then you also increase the output of the people that are really good at it.

    23. JA

      Yeah.

    24. VH

      I don't think you really... It maybe eliminates people on the margin-

    25. JA

      Yeah

    26. VH

      ... that you don't need, but I just- I think the vast majority has made people a lot more efficient with their time.

    27. JA

      So you basically, so far you've listed, you know, you- obviously, we all believe in, like, not search, but like, you know, chat.

    28. VH

      Mm-hmm.

    29. JA

      We all believe in support. I think codegen, although we could talk about that a little bit more. Any other areas that you're, like, quite bullish on, that you're like, "This is, this is working now and is gonna, you know, go very far?"

    30. VH

      I think the, the thing I'm most bullish on that seems early and broadly the market hasn't acknowledged it yet, is life science.

  10. 42:25 – 45:19

    East meets West Coast investors

    1. JA

      To connect back to an earlier part of the discussion when we talked about, you know, Stripe and how you were obviously understanding the financials, but that came later-

    2. VH

      Mm

    3. JA

      ... and more, you were understanding, you know, the product, where the market might shape out, you know, those kinds of things. When you think about, let's just take that stack-

    4. VH

      Mm

    5. JA

      ... you know, and you're obviously an investor in both Cursor and OpenAI, and, you know, we talked about a bunch of others. Is it very important for you to think hard about where the money's gonna ultimately land, or are you more able to just think about, you know-... dynamics that have more to do with the product, the adoption, the customer, the founders, et cetera?

    6. VH

      I think the answer is both. Like, I think if you're too qualitative, you miss a lot of details that are important [chuckles] , and if you're too quantitative, you miss a lot of the details that are qualitative. So, like, you have to- this is, we call this East Coast meets West Coast venture.

    7. JA

      [chuckles]

    8. VH

      You know, we're East Coast, I'm surrounded by public investors and people that are very quantitative. West Coast, I think, is highly product and people-oriented, and so we try to sit at that intersection. The reason it's important is, you know, okay, if you're investing something at a billion dollars-

    9. JA

      Mm-hmm.

    10. VH

      ... um, it's a big price. But if it works, we need to believe you can get paid for the risk. So if you have an unknown economic equation and we're investing at those prices-

    11. JA

      Yeah

    12. VH

      ... we need to believe it's not a three or four X. We need to believe it's, like, a 10 or maybe 20 X. If you're investing in something at 50 billion, you know, okay, it's hard to put 20 X's on paper or 10 X's on paper. But, you know, that means that the confidence you have to have or the kind of band of outcomes, you have to have a tighter standard deviation on the variance of the outcome-

    13. JA

      Mm

    14. VH

      ... in those kind of more certain equations, versus if you're investing earlier in the curve, you just need to get paid for the upside. The challenge with that philosophy is, if a lot of people believe a lot of things can get big, a lot gets funded.

    15. JA

      Yeah.

    16. VH

      And so you live in these periods of time where the economic equation can be s- distorted because there's a lot of funding-

    17. JA

      Yeah

    18. VH

      ... in the environment. And Bill Gurley's talked, you know, at lengths at this. But, you know, you can do all you want on paper, but when you're living the strategy in the boardroom and all of your competitors are raising billions of dollars of capital-

    19. JA

      Yeah

    20. VH

      ... the economic equation goes out the window because everyone's competing for a theoretically big prize.

    21. JA

      Totally.

    22. VH

      And so I think right now what we have is a bunch of companies that are operating in that environment, and so we have to be grounded in where do we think conceptually the value will, will accrue. And, you know, if you look at Cursor, we think distribution matters.

    23. JA

      Yeah.

    24. VH

      And they have amazing distribution with lots of developers, lots of love, and people that use it every day. That's valuable, and an amazing team. With OpenAI, they've done a lot of the hard work on the model, but it's not just that. They have to scale all the infrastructure to do that. They have to run the inference really efficiently.

    25. JA

      Yeah.

    26. VH

      There's a lot of IP in that. There's only, you know... An- Anthropic and OpenAI are basically the two independent scaled model providers, and then they're competing against, you know, Google and Meta and Tesla. You know, they're, you know, big, big companies. Um, that's hard, and therein lies the value of what they're doing. And so, you know, even if you see- even if you can't know the end state of the financial equation, I think you have to try to telegraph it through what the kind of quality of the product and business model is.

    27. JA

      Yeah.

  11. 45:19 – 49:53

    Vertical specific workspaces

    1. JA

      Just to move through a couple of the other areas of AI, how do you feel about, like, uh, for lack of a better term, like, um, vertical specific, like, AI workspaces? So, like, you know, we're both investors in Rogo.

    2. VH

      Yeah.

    3. JA

      There's obviously in legal, there's, like, Lagora and Harvey. Um, you know, there's, there's a bunch for different verticals, and it's sort of, like, not the agent doing all the work, but, like, maybe, like, a bit more copilot-type work. Do you feel, uh, bullish on those type of companies? Is it vertical by vertical? Do you look at a lot of that?

    4. VH

      [exhales] We do spend a decent amount of time looking at it. It's kind of... I would say in the fullness of time, it's a little ironic that if we're one or two innings into a massive technology wave, that we're starting with vertical market software.

    5. JA

      You think that should come last?

    6. VH

      Well, if you looked at the last generation of software as a proxy, you start with the big horizontal categories-

    7. JA

      Mm-hmm

    8. VH

      ... 'cause they're massive.

    9. JA

      Yeah.

    10. VH

      And then you work your way up the kind of product pyramid, because, you know, it's much easier to build the big CRM than it is to build Vivo, which is specific for life sciences.

    11. JA

      Yeah.

    12. VH

      Okay, you go to AI, and who are some of the early adopters of the technology? Lawyers [chuckles] -

    13. JA

      It is surprising

    14. VH

      ... and doctors.

    15. JA

      Yeah.

    16. VH

      And they're just- they're categories that you would not put in the early adopters of technology. Developers, makes sense.

    17. JA

      Yes.

    18. VH

      But lawyers and doctors?

    19. JA

      Surprising.

    20. VH

      It's surprising.

    21. JA

      Yeah.

    22. VH

      So I think from that perspective, there is something interesting to study, which is, like, why are these the folks that are adopting early?

    23. JA

      Do you think it's 'cause they feel like they were a little slow last time around, and so they're a little more front foot this time?

    24. VH

      I do think that plays into it. Like, most companies in general don't wanna lose out-

    25. JA

      Yeah

    26. VH

      ... on the internet.

    27. JA

      Yeah.

    28. VH

      Like you saw that with crypto.

    29. JA

      Yeah.

    30. VH

      How many companies got on the crypto bandwagon-

  12. 49:53 – 51:31

    Scale and timing of robotics

    1. JA

      any other areas in general in, like, the application layers or, like, the startup side that you feel, like, particularly interested in with AI?

    2. VH

      I mean, robotics is the one that it's kind of... We didn't talk about, and it's probably next to life science, is the biggest opportunity. Like, I think the biggest market-

    3. JA

      It could be the biggest, just period.

    4. VH

      The biggest mark- today, you, you know, today, cars-

    5. JA

      Yeah

    6. VH

      ... are one of the biggest industries globally.

    7. JA

      Yeah.

    8. VH

      They might be the biggest industry globally. Um, which means robots for consumers-

    9. JA

      Yeah

    10. VH

      ... should be the biggest market.

    11. JA

      That's what you would think.

    12. VH

      Because the utility of a robot in your house doing things is way higher than a car.

    13. JA

      I mean, if everybody in the world had one robot, 10,000 each, doesn't even se- you know, it makes a lot of sense.

    14. VH

      Yeah, exactly. And so to me, that is the biggest market. The question, I think, right now is, you know, are we in 2015 self-driving, or are we on the precipice of cracking full-stack robots?

    15. JA

      Yeah.

    16. VH

      And I think that's what's the hard question to answer right now.

    17. JA

      Yeah.

    18. VH

      And I've heard arguments on both sides. I've heard arguments that we are not in self-driving. Actually, self-driving is a harder problem because if you make the wrong decision when you're going 60 miles an hour, you kill somebody. But if a robot, you know, doesn't put the apple in the right spot or it, you know, breaks a dish-

    19. JA

      Yeah

    20. VH

      ... everyone's gonna be okay.

    21. JA

      Yeah.

    22. VH

      Uh, and so the problem, while complex, because there's more degrees of freedom-

    23. JA

      Yeah

    24. VH

      ... there's more complexity in the environment, is actually, in some sense, easier because the risk of failure is lower.

    25. JA

      Right.

    26. VH

      I've heard other arguments, though, that because the components are brittle and there's a lot of, you know, hardware that has to get built and also software that has, has to get built, that it's gonna take a long time. So I don't know, but that's, that's an area that we are super excited about. We're investing in physical intelligence, and, you know, Lockey and Carol and, um, those guys, I think it's an awesome company. Um, yeah, but it's early, and it's an area that we're definitely interested in looking for more.

  13. 51:31 – 55:59

    OpenAI vs everything else

    1. JA

      How do you decide, you know, putting an incremental $50 or $100 million into one of these companies versus just, "You know what? OpenAI is definitely working. We've got a great relationship. Let's just put more there." You could liken it to crypto or something, where like-

    2. VH

      Yeah

    3. JA

      ... you know, the right answer, looking back, might have just been, like, buy Bitcoin-

    4. VH

      Yeah

    5. JA

      ... all along the way.

    6. VH

      Yeah.

    7. JA

      Like, how have you thought about, you know, that sort of mashup?

    8. VH

      I do think there's some parallels in the buy Bitcoin. You know, the best thing to do is just go long Bitcoin, because at the end of the day, it is kind of the derivative, you know, value indication of everything. You know, meaning all these AI companies have to use models. OpenAI is the leading model. They're also the leading consumer product.

    9. JA

      Yeah, you could also just say, like, if you believe in crypto, you're sure Bitcoin's gonna... If it doesn't work, Bitcoin's not gonna work. You know, if it, if it works-

    10. VH

      Yeah

    11. JA

      ... Bitcoin will definitely-

    12. VH

      And this is, this is-

    13. JA

      Same kind of thing

    14. VH

      ... Being so close to OpenAI, I think this is one of the things that helps us in a lot of ways and sometimes can hurt us because we, uh, we kind of know maybe too much. But, you know, they are well-positioned to a lot of things. The investor community has basically now narrowed OpenAI and said, "Oh, ChatGPT is the next consumer chatbot globally, and that's how you should underwrite the company, and that's what it's gonna do." But, I mean, obviously, you know, Sam's super well [chuckles] You know, they, they... I think what he promotes is this kind of do a lot of small teams betting on new things and is a very entrepreneurial culture. And so I, I would be shocked if there are not lots of new products in OpenAI that are massively successful.

    15. JA

      Well, I mean, as we're talking about a lot of these other categories, it's like if they are, in fact, really big. I mean, this was one of the things historically with, like-

    16. VH

      Google

    17. JA

      ... Fang.

    18. VH

      Yeah.

    19. JA

      It was like, it's either not that big of a market and they won't compete, or it's a really big market and they'll compete. I think what turned out to be the case in a lot of things in the cloud cycle was they tried to compete, and they just didn't do a very good job at it, and they lost the market. You know, it seems like the companies today are much more, probably including Fang, have woken up. I just feel like the incumbents are much stronger than they used to be.

    20. VH

      I think the incumbents are super strong. And why? We've never had global distribution. There, there wasn't every user connected on the internet prior. You know, that's... A- you know, again, if you think in long- if you think in decades, not years, a lot of the capabilities right now are a couple decades old. You know, [chuckles] everyone didn't have access to the internet two decades ago-

    21. JA

      Yeah

    22. VH

      ... not even one decade ago.

    23. JA

      Yeah.

    24. VH

      You know, it's now you take today. And so over the next two decades, those companies are gonna be able to flex some of this distribution and technology they have in a way that, um, will be hard to compete with. And so I think the thing that we absolutely can't have happen is that new companies can't break into that era. Like, I think one of the things that, you know, is hard is right now everyone's basically ganging up on... You know, I, my mental model for you on how the competitive m- landscape looks like for OpenAI is-

    25. JA

      Mm-hmm

    26. VH

      ... OpenAI's in a corner-

    27. JA

      Mm-hmm

    28. VH

      ... and every big tech company has a bazooka pointing at them to try to take them down.

    29. JA

      Yeah.

    30. VH

      Because none of those big tech companies want a new big tech company.

  14. 55:59 – 57:34

    What matters most for Thrive

    1. JA

      Thinking about, like, what matters most for Thrive in the next, like, leg of the journey, and obviously, you know, if I know one thing about Thrive, like, you're not gonna stand still.

    2. VH

      Mm-hmm.

    3. JA

      Like, I've never known Thrive to do the same thing it did last year. What matters most, sort of either organizationally, brand-wise, capital-wise, investment-wise? Like, what needs to be true for you guys to, like, get to a place where you look back and in 2025, Thrive feels, like, somehow small?

    4. VH

      I mean, we talk about this a lot. What worked for the last decade is not gonna work for the next decade, and so you have to evolve, um, which I don't think is a given for most firms. Uh, I think the most important thing for us is we continue to be a place that attracts the most talented and ambitious young people. At the end of the day, a lot of what we do is new, disruptive, and you need the right combination of experience and naiveté. And, you know, as people get older and older in their careers, I hope I continue to, to learn, but you learn through young people. Um, and if we're not able to attract that kind of person to us, will we attract the right companies and founders? Will we attract the right investors? We have people now... You know, Thrive is a product. We are building Thrive as a company with our own products and technology, and so we attract those people that way, too, and it's gonna be how we attract new strategies to grow the firm. Um, and so I do think the single most important thing is we maintain that. Um, and then we also have a healthy dose of, you know, we've gotta change. Um, you evolve or die in this industry.

    5. JA

      Love it. Vince, this was super fun. Thanks for doing it.

    6. VH

      Thank you so much, Jack. [upbeat music]

Episode duration: 57:34

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