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

Vince Hankes 0:00 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.

Jack Altman 0:18 Like years?

Vince Hankes 0:19 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]

Jack Altman 0:32 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.

Vince Hankes 0:49 Thanks for having me, Jack.

Jack Altman 0:50 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?

Vince Hankes 1:28 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.

Jack Altman 1:47 When you joined, did it feel small at the time, or at the time, were you like, "This is clearly-

Vince Hankes 1:51 It-

Jack Altman 1:51 ... becoming one of the platforms?"

Vince Hankes 1:52 It felt, it, it felt small-

Jack Altman 1:54 Mm.

Vince Hankes 1:54 - because I'd say I was coming from Tiger. We were investing in an almost $3 billion private fund.

Jack Altman 1:58 Yeah.

Vince Hankes 1:58 We had a $15 billion hedge fund, and so coming from that pool of capital to then a billion-dollar fund felt smaller.

Jack Altman 2:05 Yeah.

Vince Hankes 2:05 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-

Jack Altman 2:16 Yeah

Vince Hankes 2:17 ... 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-

Jack Altman 2:52 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.

Vince Hankes 2:56 Of course.

Jack Altman 2:56 Will Garrick.

Vince Hankes 2:57 Chris Paic.

Jack Altman 2:58 Chris Paic.

Vince Hankes 2:58 Jared Weinstein.

Jack Altman 2:59 Yep.

Vince Hankes 2:59 Lots of amazing people.

Jack Altman 3:00 Yep.

Vince Hankes 3:01 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-

Jack Altman 3:07 Mm

Vince Hankes 3:08 ... for a long time are people that self-selected into this environment that was different.

Jack Altman 3:12 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?

Vince Hankes 3:18 Uh, de- certainly. Like, today we think about it, now that we do have a brand-

Jack Altman 3:21 Right

Vince Hankes 3:21 ... people wanna work at Thrive.

Jack Altman 3:23 Yeah.

Vince Hankes 3:23 We think about recruiting as a lot of the people we want to come join the team are not necessarily the people that come inbound to us.

Jack Altman 3:29 Right.

Vince Hankes 3:29 We go seek them out, always be recruiting.

Jack Altman 3:31 Yeah, like, how do you get a contrarian-minded person now?

Vince Hankes 3:34 Exactly.

Jack Altman 3:34 Uh-

Vince Hankes 3:34 It's hard because we are more consensus now.

Jack Altman 3:36 Right.

Vince Hankes 3:37 So a lot of what we think about and look for are people that aren't looking necessarily to work at Thrive, but at the same time, we're trying to set up kind of... The most important thing about our team is how do we be the place that the most talented young people want to work?

Jack Altman 3:47 Yeah.

Vince Hankes 3:47 And if you don't maintain that, then obviously you can't attract those kinds of people.

Jack Altman 3:51 It's an interesting thing about, you know, becoming consensus s- sort of de facto as you scale like this-

Vince Hankes 3:57 Yeah

Jack Altman 3:57 ... when, like, I know, you know, I know basically the whole team there, and I think everybody doesn't prefer to be that way, but all, obviously are all pragmatists and acknowledge that there's sort of this, like, self-reinforcing reality when you become this big.

Vince Hankes 4:10 Yeah.

Jack Altman 4:10 So what is the sort of, like, internal struggle or thinking around this, like, you know, rooted in contrarian, doing our own thing, building something out of nothing, but, like, now you're kind of one of the top groups?

Vince Hankes 4:22 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.

Jack Altman 4:46 Yeah.

Vince Hankes 4:47 So in terms of, like, big, bold bets to proportional-

Jack Altman 4:49 Did you put 20 in?

Vince Hankes 4:50 Yeah, we put-

Jack Altman 4:50 You put half-

Vince Hankes 4:51 ... we put almost, we put almost $20 million into the company.

Jack Altman 4:52 Out of 40.

Vince Hankes 4:53 We had to raise a little bit on top because we couldn't put a 50% position in the fund.

Jack Altman 4:57 Yeah.

Vince Hankes 4:57 But, like, big, bold bets were a part of the firm since the beginning.

Jack Altman 5:01 Wow.

Vince Hankes 5:01 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.

Jack Altman 5:10 Mm.

Vince Hankes 5:10 And everyone's like, "Well, who's Thrive Capital?"

Jack Altman 5:12 Yeah.

Vince Hankes 5:12 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.

Jack Altman 5:30 Mm-hmm.

Vince Hankes 5:30 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-"

Jack Altman 6:21 Yeah.

Vince Hankes 6:21 -like, "Is this over?" Um, and if you were really grounded in the numbers, you were scared, or it looked like an unobvious deal.

Jack Altman 6:31 Mm.

Vince Hankes 6:31 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?

Jack Altman 6:43 A lot.

Vince Hankes 6:43 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.

Jack Altman 7:03 Mm.

Vince Hankes 7:03 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-

Jack Altman 7:21 Yeah

Vince Hankes 7:22 ... go, go. It's coming off of this post-COVID hangover.

Jack Altman 7:24 Yeah.

Vince Hankes 7:24 And everyone to us was basically saying, "It looks way less profitable than Idean."

Jack Altman 7:30 Yeah.

Vince Hankes 7:30 "It's not as good of a business anymore. Patrick and John, they're great, but are they really kind of the founders for the next era of the business?"

Jack Altman 7:36 It's interesting 'cause I think you get categorised for that investment as, like, consensus, compounding investment type of mindset.

Vince Hankes 7:43 To us, it's so visceral how [coughs] not consensus it seemed.

Jack Altman 7:47 Mm-hmm.

Vince Hankes 7:47 Um, uh, that... It was a really good form- like, formative moment for us in what it feels like to continue to double down at scale with independent conviction.

Jack Altman 7:57 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.

Vince Hankes 8:05 Yeah.

Jack Altman 8:06 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?

Vince Hankes 8:22 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-

Jack Altman 8:31 Yeah

Vince Hankes 8:31 ... 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-

Jack Altman 8:54 Yeah

Vince Hankes 8:54 ... 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.

Jack Altman 9:30 Mm.

Vince Hankes 9:31 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.

Jack Altman 9:39 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.

Vince Hankes 10:04 Mm-hmm.

Jack Altman 10:04 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"?

Vince Hankes 10:17 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-

Jack Altman 10:26 Yeah

Vince Hankes 10:27 ... it's scary.

Jack Altman 10:27 I mean, you've done it with Stripe, Databricks, OpenAI, and obviously-

Vince Hankes 10:31 SpaceX

Jack Altman 10:31 ... you guys have a lot of- SpaceX.

Vince Hankes 10:32 Yeah.

Jack Altman 10:32 You guys have a lot of capital, but on a, as a percentage basis, you're very tied to these companies.

Vince Hankes 10:36 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.

Jack Altman 10:55 Mm-hmm.

Vince Hankes 10:56 And so what we're really trying to do with these big concentrated bets is find what are those great generational technology companies-

Jack Altman 11:02 Yeah

Vince Hankes 11:02 ... and then concentrate all of our capital into them.

Jack Altman 11:05 Would you rather try to pick out of $10 billion companies going to $100 rather than pick $1 billion companies going to $10?

Vince Hankes 11:10 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.

Jack Altman 12:01 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.

Vince Hankes 12:14 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.

Jack Altman 12:38 Yeah.

Vince Hankes 12:38 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-

Jack Altman 12:51 Yeah

Vince Hankes 12:51 ... and Facebook all benefit from that same scale.

Jack Altman 12:54 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?

Vince Hankes 13:04 I think just people don't appreciate the power of compounding.

Jack Altman 13:06 Mm.

Vince Hankes 13:07 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.

Jack Altman 13:29 Hmm.

Vince Hankes 13:29 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.

Jack Altman 13:55 Do you think that same thing ought to happen with new startups 15, 20 years out? In other words, like, is what you're saying, does it describe just that all of tech is gonna do really well, or is there some particular reason why right now investing in the big companies is better than investing in these small companies, some subset of which will compound forever, too?

Vince Hankes 14:15 I don't think this is summarizing tide lifts all boats. I think it's more of an expression of the nature of technology is there are benefits to scale. So, like, if you get to scale, you have more distribution, you can reach more customers, you can ship new products, you can kind of compound on yourself.

Jack Altman 14:31 Mm-hmm.

Vince Hankes 14:31 By the way, in the talent flywheel, you know, obviously a lot of these companies started with great talent, and they developed it. But now if you're a young person, where do you wanna go work? You wanna work at OpenAI or SpaceX.

Jack Altman 14:41 Which, by the way, wasn't true 10 years ago.

Vince Hankes 14:42 Yeah.

Jack Altman 14:42 Like, it didn't used to be that the OpenAI-sized companies 10 years ago were appealing in the same way that these are now.

Vince Hankes 14:48 Maybe, but the OpenAI-sized companies 10 years ago was Google.

Jack Altman 14:51 Yeah, no, but recruiting aga- but recruiting against Google as a startup was-

Vince Hankes 14:54 Was-

Jack Altman 14:55 ... was doable.

Vince Hankes 14:56 It was doable.

Jack Altman 14:56 Recruiting against OpenAI right now is very hard.

Vince Hankes 14:58 I think, in general, I think the market just got a lot more competitive in technology. So what I'd say is, I don't think this is a rising tide that lifts all boats. I think there are a select number of these companies that will benefit from the scale, and when they're very founder-driven, they will benefit as they get bigger, and we know with the power law that there are kind of ac- accumulated advantage to those companies. And so all we're trying to do is map our fund strategy to the power law, which is to be concentrated in these really phenomenal tech platforms. I think on the, like, you know, the whole asset class in general has matured. So, like, 15 years ago, how many companies raised $100 million in capital? Not that many. Now, I think, I think the numbers are something like over 500 companies a year raise at least $100 million in capital.

Jack Altman 15:35 That's crazy.

Vince Hankes 15:36 That's a lot.

Jack Altman 15:36 Yeah.

Vince Hankes 15:36 Like, how many companies do you know that you would put $100 million into?

Jack Altman 15:39 I don't know, but the 500 a year is a lot.

Vince Hankes 15:41 And so I just think about it as there's a lot more saturation in the game on the field for picking out the billion-dollar company. Like, that same, you know, because we were pulling for the same LP event, um, you know, the average growth check, so say a $100 million plus round, is a $150 million round at a billion- to $2 billion valuation-

Jack Altman 16:00 Yep

Vince Hankes 16:00 ... at 20 to 100 times revenue.

Jack Altman 16:02 Yep.

Vince Hankes 16:03 Okay, well, that doesn't... To me, that's not growth investing. That's kind of like large check venture investing, and you hope it works, but the likelihood is the vast majority will not work.

Jack Altman 16:11 And so your, in your view, the grow- the, the real growth investing starts at more like the 5 to $10 billion valuation rounds, and things have nine figures of revenue and-

Vince Hankes 16:19 Or, or said differently, I think about less quantitatively and more the real growth investing happens when you can actually wrap your head around something that's solidified, and then you can look at the data to substantiate it. And if you can ground yourself in the product and what's solidified and then substantiate it, okay, now we have a baseline that we can work from.

Jack Altman 16:35 Yep.

Vince Hankes 16:35 But if you're investing in a company that's been around for three years and has, you know, 50 million in revenue, that's g- I mean, it's amazing momentum, but as, and you know, building a company, you know, a lot of things can break from there.

Jack Altman 16:47 Yep.

Jack Altman 16:48 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?

Vince Hankes 17:06 [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.

Jack Altman 17:34 So what are you skeptical of now? Or, like, what's the hardest part in venture to play?

Vince Hankes 17:37 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.

Jack Altman 17:55 Mm.

Vince Hankes 17:55 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.

Jack Altman 18:02 But, like, As and Bs are rare.

Vince Hankes 18:04 No, but the ex- investing in Cursor, in some sense, should be the exception because that part of the market is so competitive.

Jack Altman 18:10 Yep.

Vince Hankes 18:10 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-

Jack Altman 18:34 Yeah

Vince Hankes 18:35 ... it's hard to have zeros.

Jack Altman 18:36 So-

Vince Hankes 18:36 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.

Jack Altman 18:46 Yeah.

Vince Hankes 18:47 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-

Jack Altman 19:04 Yeah

Vince Hankes 19:05 ... mid-stage companies, I think it's just hard.

Jack Altman 19:07 Yeah. How many people work at Thrive now?

Vince Hankes 19:09 Um, the whole firm's something like 75 people.

Jack Altman 19:11 Yeah.

Vince Hankes 19:11 But we're about eight investors.

Jack Altman 19:12 Eight investors, yeah.

Vince Hankes 19:13 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.

Jack Altman 19:20 Yeah.

Vince Hankes 19:20 Where do you rank?"

Jack Altman 19:21 Yeah.

Vince Hankes 19:21 And they look and say, "Wow, you guys have a lot of assets per investor."

Jack Altman 19:23 Yeah.

Vince Hankes 19:24 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-

Jack Altman 19:35 Companies

Vince Hankes 19:36 ... to companies-

Jack Altman 19:36 Yeah

Vince Hankes 19:37 ... we make 12 early stage investments a year, and we make a handful of growth bets a year.

Jack Altman 19:42 Right.

Vince Hankes 19:42 That's 18-ish, round numbers-

Jack Altman 19:43 Yeah

Vince Hankes 19:44 ... on eight people.

Jack Altman 19:45 Yeah.

Vince Hankes 19:45 So we're roughly two, maybe three investments a year, a person.

Jack Altman 19:48 You just put a lot of zeros when you send the check.

Vince Hankes 19:50 Yeah, exactly. [laughing]

Jack Altman 19:50 That's a good way to do it.

Vince Hankes 19:52 But, but, but seriously, but that, that- the- if you... Okay, then just on the same benchmark, like, who else does two investments a partner a year?

Jack Altman 19:57 I mean, there are firms that do that, but yeah.

Vince Hankes 19:59 But, but it's very different, I think, in the philosophy relative to a lot of the other growth funds that we compete with.

Jack Altman 20:03 So actually, when I was asking, you know, the number of people that work there, I was thinking of it this way, 'cause I was thinking of, let's say, 10 concentrated positions.

Vince Hankes 20:09 Mm-hmm.

Jack Altman 20:09 You know, 12... You know, eight investors, whatever. How- that- I guess the net of that is most of the time, you're, you're making new investments rarely.

Vince Hankes 20:18 Yeah.

Jack Altman 20:19 So, like, what does that look like for you? Like, how- what's your mentality, given the, I guess, really the infrequency of decisions?

Vince Hankes 20:26 I mean, we turn over a lot of rocks. I spend a lot of time looking, evaluating, trying to get to know people. Like, it... You know, 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.

Jack Altman 20:52 Like years?

Vince Hankes 20:52 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. But how did that journey work? We were partnering deeply with OpenAI. We were thinking about, what are the other domains where it might not be kind of on the path to AGI for the core labs? Life science was one of them. I got in touch with Isomorphic almost just for learning, just to meet people in the industry, and that kicked off e- 18 months, almost two years, of getting to know the company, which then kind of cracked the door open to investment. And so if you looked at my calendar, my calendar looks like meeting a bunch of early-stage companies, and then a lot of irons in the fire on new, new initiatives. And then obviously, I spend a lot of time with our portfolio and internal and so forth.

Jack Altman 21:35 Is it likely that the next large investment you'll make, you already know that company well?

Vince Hankes 21:41 Yes.

Jack Altman 21:41 Like, are you basically working out of a relatively confined list, and you're definitely gonna invest off that list?

Vince Hankes 21:46 Yes. Yeah. I think what people underappreciate about the motion to do this is how much work it takes to go create the opportunity.

Jack Altman 21:55 Mm.

Vince Hankes 21:55 Like, you know, we started in New York, scrappy, having to go get the opportunity. I think a lot of the way ventures have been built is you go to Sand Hill Road-

Jack Altman 22:05 Yeah

Vince Hankes 22:05 ... you receive the pitch. "We need to raise money." "Oh, I have money. Let me do diligence for a month," and that's how it works.

Jack Altman 22:09 Mm-hmm.

Vince Hankes 22:10 That model, to me, is not competitive anymore. W- you know, we are going... If you look at Stripe or Databricks, we are going to the company. We are saying, "This is all we know about you. It's a lot, outside in, inside out. We are willing to make an investment, but we want to kind of engage with you on these handful of things," and then we go do it.

Jack Altman 22:26 Yeah.

Vince Hankes 22:27 That's a very different motion, and by the way, there's no process. Like, we don't wait for a process. We kind of have to wait for our point in time, and sometimes things aren't clear, and so we don't do anything. But in that moment, what am I doing? I'm spending time learning about it, um, learning about what happens with product, customers, people. You get to know people that join the team. You get to know more of the team. So, like, a lot of times investors only spend time with the CEO. The CEO is one person in the company, you know? [chuckles] Do they spend time with the head of engineering, the head of product, with the sales leaders, with people lower than that? You know, you, you really learn how clear the flow of information is in a company by meeting a lot of people on the team. Are people on the same... singing from the same song sheet?

Jack Altman 23:03 Yep.

Vince Hankes 23:04 Do they understand the decision-making framework? You know, the best, the best companies, it's super simple, and it just ripples down, and everybody knows how to act.

Jack Altman 23:12 One of the challenges for a lot of groups, though, is if they can't- if they're not capable of writing a billion dollar check, these late-stage companies aren't gonna give them the right to go spend that kind of time.

Vince Hankes 23:21 Mm-hmm.

Jack Altman 23:21 Because there's a small list that can... You know, the kind of- the rounds you're talking about, you know, Databricks round, a Stripe round, an OpenAI round, like, you just can't price those rounds, so you don't even get the right to spend that kind of time otherwise. So I guess part of your argument basically here is, like, the scale drives a lot of the competitive advantage.

Vince Hankes 23:39 Yeah, I want to play in a game on the field that's less competitive, and I don't know, how many firms do you know that can write a billion dollar check into a company?

Jack Altman 23:45 Three, four? I don't know.

Vince Hankes 23:46 It's not that many. So I'm competing with a handful, two handfuls of people, versus if you're trying to write $100 million checks into the growth stage or $10 million checks, you're competing with at least an order of magnitude or two orders of magnitude more firms.

Jack Altman 23:57 A hundred.

Vince Hankes 23:58 It just... Yeah, I, uh, maybe that won't last forever, and people will get, you know, capable of doing what we're doing, but today it's a more advantage game in the field, 'cause there's just not that many people that can compete.

Jack Altman 24:08 What's interesting is I think there are a lot of firms in sort of, like, the size rung below, call it $1 to $3 billion firms, who I've spoken with, who I think see what you're doing, what Founders Fund's doing, maybe Green Oaks.

Vince Hankes 24:23 Uh-huh.

Jack Altman 24:23 I don't know what the number of firms would be, but- [sniffs] ... and want to, but I think it's actually very hard still, even if you're close to it. Do you know what the thing is that you think, you know, like, what's the dominant thing it takes if you're a leader of a one or two billion dollar firm to get to this? Like, what is that- what is the thing preventing more people from doing this?

Vince Hankes 24:45 It's a question we think about. I do think while some of this seems easy to kind of s- you know, articulate as a strategy, as you, it kind- we talked through our journey, part of it has been a long build-up to get to the level of confidence to do that. Because it's unnatural for a single partner to want to make that big of a bet, because it feels like career risk every time you do it, right? And so just in general, building a culture that rewards this, I think, is not something you can do overnight. Which kind of goes to the, like, why is it hard for firms to do? There's politics.

Jack Altman 25:15 Yeah.

Vince Hankes 25:15 Like, we have a founder-led firm, and you can debate, you know, there are pros to that and cons to that, but I think a lot of the pros are what enable us to do this, which is, at the end of the day, we have a super small team, we have clear direction-

Jack Altman 25:26 Mm-hmm

Vince Hankes 25:27 ... and we can go make these decisive, big, bold bets.

Jack Altman 25:29 Yeah.

Vince Hankes 25:30 If you're at a firm that's governed by a handful of people, and one partner wants to do it, or even one partner in the handle doesn't want to do it-

Jack Altman 25:37 Yeah

Vince Hankes 25:37 ... what happens? Especially if it's viewed as firm reputational risk.

Jack Altman 25:41 Yeah.

Vince Hankes 25:42 "Oh, you raised a billion dollars from this company. What happens if it doesn't work? Is it going to tank the firm?" Well, now all of a sudden, you have bureaucracy that creeps into decision-making, and I think it's hard to compete partially just because most firms have that kind of setup. They don't have kind of a singular small team that makes

Vince Hankes 25:58 decisions.

Jack Altman 25:58 This is a good segue. I want to talk about Carvana-

Vince Hankes 26:00 Yeah [chuckles]

Jack Altman 26:01 ... 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.

Vince Hankes 26:26 Yeah.

Jack Altman 26:26 But, like, that seemed like a nail biter to me-

Vince Hankes 26:28 [chuckles]

Jack Altman 26:28 ... 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.

Vince Hankes 26:46 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-

Jack Altman 27:22 Yep

Vince Hankes 27:22 ... 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-

Jack Altman 28:47 Hmm

Vince Hankes 28:48 ... 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-

Jack Altman 29:03 Like, all the way.

Vince Hankes 29:04 Yeah.

Jack Altman 29:04 Like, ninety percent, right?

Vince Hankes 29:05 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-

Jack Altman 29:11 Yeah

Vince Hankes 29:11 ... like, when you do a, a, a contrarian investment in the private markets-

Jack Altman 29:15 Yeah

Vince Hankes 29:15 ... 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-

Jack Altman 29:22 Everyone knows every day.

Vince Hankes 29:23 Every day you wake up down five percent, down four percent, down five percent, and you have to answer the question, why?

Jack Altman 29:28 Yeah.

Vince Hankes 29:28 Which, if that happened in the private markets, no way you could-

Jack Altman 29:31 No one could do this job.

Vince Hankes 29:32 No. Yeah, everyone would sell their shares.

Jack Altman 29:33 Yeah.

Vince Hankes 29:34 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.

Jack Altman 30:05 Mm.

Vince Hankes 30:05 It's just like if you were operating, you know, a company, which you were, Lattice, you know, through that period of time, and you said, "Growth has gone down," yes, you want the company to keep growing, but during that moment in time, the only thing that matters is getting kind of the trains on track and making sure you're rightsizing the company for what it is. So the lens we started evaluating Carvana through was that lens. They were making a tremendous amount of progress, and so by the end of that year, stock was down a lot.... but through the dimensions we were evaluating on them, do they have control on the levers of operating the company? The answer was kind of unequivocally yes, and they were making progress. Now, it wasn't fully where they thought they could get it, but it was making- this little trend line was very good, and so we ended up doubling the number of shares we bought in the company-

Jack Altman 30:42 At a very low price.

Vince Hankes 30:43 For a fraction of the price.

Jack Altman 30:44 Yep.

Vince Hankes 30:44 And so there's also this combination. I think it's less-

Jack Altman 30:47 Which by the way, that's a hard move to do. Like, you know, the knife has fallen all the way.

Vince Hankes 30:51 Psychologically-

Jack Altman 30:51 That, that was the moment that I was like, "This is crazy."

Vince Hankes 30:53 Yeah.

Jack Altman 30:54 Yeah.

Vince Hankes 30:54 Well, I think what you learn, even if something goes down 50%, it can still go down 90%. [chuckles]

Jack Altman 30:57 Yeah, and after it's gone down 90, five more is another halving.

Vince Hankes 31:00 Yeah.

Jack Altman 31:00 Yeah, it's tough.

Vince Hankes 31:01 Um, but I think, you know, what you realize is in private markets, people don't think about the concept of risk-reward that much, but in the public markets, everyone talks about it, and the Sharpe ratio is a thing, and you can measure it. And so what we were able to do is double our position size in shares for a fraction of the capital. And so the risk-adjusted bet we were making on the data points we had were actually very good. Um, and so we were kind of isolating what we were betting on, and in the fullness of time, obviously, it's really worked out. But I think it took having the ability, one, to operate in a culture-

Jack Altman 31:32 Mm

Vince Hankes 31:32 ... where people are used to making big, bold bets, and if you're not used to that, I would've got fired, or we definitely would've sold the shares.

Jack Altman 31:38 For sure.

Vince Hankes 31:39 Then you have to have a, an environment where people aren't just, like, nitpicking the numbers. 'Cause if all people are doing is nitpicking the numbers, we were gonna sell. But we have an environment that's very much grounded in the product, and people believe in the qu- product. I don't know if you've ever bought a car, a used car, but, like, used car dealers are literally the canonical example of what you don't want to be in sales. And so having a pure, transparent, online experience is the epitome of kind of what a quality product experience is in this industry, and so people believed in that at Thrive. The number of people that are like, "Oh, I bought a car on Carvana and were so excited about it," and sent it to our Slack channel, there were a lot. And so I think people believed in the product, and it enabled us to do this, and then in the fullness of time, obviously-

Jack Altman 32:15 And it's a good market. I remember at the bottom I was texting you every day, "There's cars everywhere I go." [laughing] It's a big town.

Vince Hankes 32:20 It's a big market, yeah.

Jack Altman 32:20 It's a big market.

Vince Hankes 32:21 There's cars everywhere.

Jack Altman 32:22 I just think it's amazing that you were... The, the buy at the bottom, I think, is what impressed me the most, and the ability, somewhat is you, but mostly I'm gonna give credit to the firm to allow you to do that. I think that is hard to have.

Vince Hankes 32:34 I think it's a firm thing. I mean, obviously, I, I-

Jack Altman 32:36 Yeah

Vince Hankes 32:36 ... going through it personally is-

Jack Altman 32:38 Yeah, you can give credit

Vince Hankes 32:38 ... is hard, but I do think the whole firm went through a lot. Our LPs asked about it a lot. Everyone paid a tax, um, for us doing this, and I think in the fullness of time-

Jack Altman 32:46 Yep

Vince Hankes 32:47 ... we've benefited from it, but in the moment, it's really hard.

Jack Altman 32:49 How

Jack Altman 32:50 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-

Vince Hankes 32:58 Yeah

Jack Altman 32:58 ... 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?

Vince Hankes 33:05 Yeah, we take this super seriously.

Jack Altman 33:07 '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?

Vince Hankes 33:12 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.

Jack Altman 33:18 Yeah.

Vince Hankes 33:19 And so they don't care about conflicts. And for us-

Jack Altman 33:20 Totally

Vince Hankes 33:21 ... 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.

Jack Altman 33:25 Right.

Vince Hankes 33:25 Just like a founder's all in on the company, we're gonna be all in on this investment.

Jack Altman 33:28 For sure. No, I'm just thinking it's one thing if you're... If it's OpenAI or SpaceX, it's one thing.

Vince Hankes 33:31 Yeah.

Jack Altman 33:32 And, you know, you can't go invest in Blue Origin, and that's-

Vince Hankes 33:33 Yeah

Jack Altman 33:34 ... 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?

Vince Hankes 33:47 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.

Jack Altman 34:04 Yeah.

Vince Hankes 34:05 Oh, it's in your, you know, anti-portfolio kind of thing.

Jack Altman 34:07 If you-

Vince Hankes 34:07 If you're in our shoes-

Jack Altman 34:08 Yeah

Vince Hankes 34:09 ... it's like, I can invest at the C, the A, the B, the C, the D, when it's public.

Jack Altman 34:13 Yeah.

Vince Hankes 34:13 Who knows when?

Jack Altman 34:14 Yeah.

Vince Hankes 34:14 Um, and so we have a much-

Jack Altman 34:15 You can take it private.

Vince Hankes 34:16 Exactly. We have... Well, but seriously, like this-

Jack Altman 34:17 No, I know.

Vince Hankes 34:18 But this happened, um, you- I mean, we're joking, but, like, this happened in this Thrive holding strategy that we announced. What is it? We ended up raising a billion dollars in a company. It's not a fund, it's a company, and why did we do that? People are like, "Oh, well, you're expanding strategies, and you're doing stuff." It was very organic. We started looking at accounting AI companies-

Jack Altman 34:39 Mm-hmm

Vince Hankes 34:39 ... and we were, you know, one of our partners is very good friends with this guy who's running this accounting rollout strategy, and so we started talking to them-

Jack Altman 34:45 Mm-hmm

Vince Hankes 34:46 ... about AI tools. Why? Because we're just looking at early-stage AI companies. You know, we started partnering more with them. We thought their thing was interesting. We wrote a growth investment into that company. The technology started working. Our conviction went up, and we all of a sudden said, "Okay, well, wait a second. What's the best way to play accounting in AI? Is it to invest in a software company early?"

Jack Altman 35:07 Or be the accounting firm?

Vince Hankes 35:08 Or be the accounting firm. Uh, because we're taking this kind of scrutinizing lens from all sides of the equation, we decided that's the right way to do it. And so also the right way to do it is not in our fund structure, because these assets need a lot of time, and you have to do different things than you do in a typical growth fund, and so we raised a dedicated pool of capital, um, towards that strategy. But the genesis of it is very much looking full-stack at a company-

Jack Altman 35:30 Yeah

Vince Hankes 35:30 ... which I think is very different. By the way, there's eight hundred million dollars of venture investing going into the software tools for accounting.

Jack Altman 35:36 Really?

Vince Hankes 35:37 And so, yeah, so we're riding the R&D dollars of the entire industry as the service provider.

Jack Altman 35:41 Hmm.

Vince Hankes 35:42 And accounting is sticky. Are you gonna change your accounting provider because they have 10% lower price?

Jack Altman 35:45 No.

Vince Hankes 35:46 Probably not. Now, the risk is, going back to the competitive stuff, if these startups are so successful that they radically change the cost curve, that you can take your business and go to ChatGPT and do your accounting for 10% of the cost, maybe you'll change. So one risk in our discussion of this is, if the change is so radical, should we be doing it now, or should we be waiting?

Jack Altman 36:04 Yeah.

Vince Hankes 36:05 And I think our assessment of accounting is, it was not going to be as radical as it could be, and therefore, you actually want to be the service provider because you'll capture the value.

Jack Altman 36:12 Yeah.

Jack Altman 36:13 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?

Vince Hankes 36:39 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.

Jack Altman 36:55 Yeah, of course.

Vince Hankes 36:55 If, if you're United Airlines, and-

Jack Altman 36:57 Yeah, you don't ever wanna talk to somebody.

Vince Hankes 36:59 But I can call a number and get an instant-

Jack Altman 37:01 Of course

Vince Hankes 37:01 ... response from an AI?

Jack Altman 37:02 And I don't have to wait ever.

Vince Hankes 37:03 That's amazing.

Jack Altman 37:03 Yeah, of course.

Vince Hankes 37:04 And so in some functions like that, I think it'll probably shift towards software.

Jack Altman 37:07 Yep.

Vince Hankes 37:08 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.

Jack Altman 37:13 Yeah.

Vince Hankes 37:13 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.

Jack Altman 37:27 Probably not.

Vince Hankes 37:27 But are we gonna make 'em 10 times as productive, so there's 10 times more creative content?

Jack Altman 37:31 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.

Vince Hankes 37:36 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.

Jack Altman 37:44 Yeah.

Vince Hankes 37:45 And then you also increase the output of the people that are really good at it.

Jack Altman 37:47 Yeah.

Vince Hankes 37:48 I don't think you really... It maybe eliminates people on the margin-

Jack Altman 37:50 Yeah

Vince Hankes 37:50 ... that you don't need, but I just- I think the vast majority has made people a lot more efficient with their time.

Jack Altman 37:55 So you basically, so far you've listed, you know, you- obviously, we all believe in, like, not search, but like, you know, chat.

Vince Hankes 38:01 Mm-hmm.

Jack Altman 38:02 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?"

Vince Hankes 38:11 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.

Jack Altman 38:18 Hmm.

Vince Hankes 38:18 Like, drug development should radically change.

Jack Altman 38:21 On what dimension do you think it will, will change?

Vince Hankes 38:23 Well, the reason we invest- this, this company, Isomorphic, started inside of Google. Demis Hassabis, who runs Gemini, this is his kinda second project, uh, or company, and he won a Nobel Prize for the work he did on protein structure prediction.

Jack Altman 38:38 Hmm.

Vince Hankes 38:38 And so that has now morphed into this company. And the entire objective, well, the mission of the company is to cure all disease, which is a pretty big mission.

Jack Altman 38:44 That's a good mission.

Vince Hankes 38:44 Um, it's kind of... It's, it's one of the only companies in our portfolio that I think about as having the potential size as OpenAI. I mean, I think it is truly that big. If you, if you have-

Jack Altman 38:52 Yeah, of course, if you could do that, it's just, it's huge.

Vince Hankes 38:54 It's trillions of dollars.

Jack Altman 38:55 Yeah.

Vince Hankes 38:56 And then when you go spend time with them and what they're working on, you know, the objective is we're gonna take an entire wet lab of experimentation and simulate it computationally.

Jack Altman 39:04 Mm-hmm.

Vince Hankes 39:05 Well, if you do that, you flip the entire model of how drug development works on its head. Rather than having this kind of waterfall-like thing-

Jack Altman 39:12 You just do it all on a computer.

Vince Hankes 39:13 Yeah.

Jack Altman 39:13 Yeah.

Vince Hankes 39:13 But now the speed of iteration's different, the scale which you can run compute at is different, and so-

Jack Altman 39:18 What needs to be true for that to happen? Like, what needs to be different in the future for that to work?

Vince Hankes 39:23 A lot of things, which is why this is such an interesting problem to work on as a company. Obviously, there's the AI part of it today, which is, how do you take all of this process and embody it in a model with the right data and results and stuff, so you can, at the end of a, at the end of a computational run, get a good drug? That's a very hard problem. But even once you do that, then you have to run it through trials, because today it's regulated.

Jack Altman 39:43 Yeah.

Vince Hankes 39:43 So you can't just come and put drugs into people's bodies in the US without-

Jack Altman 39:46 Which is gonna take the same amount of time.

Vince Hankes 39:48 Yeah, and so what's, what's another problem we're working on?

Jack Altman 39:50 Regulation.

Vince Hankes 39:51 How do you work alongside regulators to change the way the FDA thinks about it? Because the, the top of funnel might go up a lot. Um, that's another thing. How do you, how do you find people with disease?

Jack Altman 40:03 Yeah.

Vince Hankes 40:04 How do you look for the right biomarkers? We can use AI for that, though.

Jack Altman 40:06 Hmm.

Vince Hankes 40:07 Um, and by the way, there's a huge, there's a huge kind of upswing of startups that are working... Daniel Ek's company. Like, let's go scan your body, take your blood, do it in a high-class experience. That stuff will become more important as you get better drug development, because you're gonna need better biomarkers to target the right people with the right diseases. You know, so this time from identification to cure is extremely compressed. You know, that to me is, um, an area that it feels far away in sci- like, sci-fi when we talk about it this way.

Jack Altman 40:34 Yeah.

Vince Hankes 40:34 But when you go spend time with these companies, the, the rate of progress-

Jack Altman 40:37 Hmm

Vince Hankes 40:37 ... feels very early, you know, OpenAI-

Jack Altman 40:40 Yeah

Vince Hankes 40:40 ... oriented.

Jack Altman 40:41 How about, um, like codegen? And actually, maybe, maybe one of the things I'm curious about is, like, can you talk about, like, the stack from a Cursor subscription down to the metal?

Vince Hankes 40:51 Yeah, yeah.

Jack Altman 40:52 And, like, how the, you know, 20 bucks, you know, moves?

Vince Hankes 40:56 I, I mean, codegen's so fascinating because it's one of these areas where there's been extremely high return on marginal intelligence, to use a fancy word. Um-

Jack Altman 41:04 I like that.

Vince Hankes 41:05 Uh, you know, that's just... I'm, and I'm paraphrasing that from one of our, uh, brilliant young people who works on the team, Mohit. Um, but because that's the case, you want the frontier stuff, and so all of it goes to the frontier models, or most of it. And so what you have is, you have this dynamic where the coding companies, which are doing a great job, I think Cursor's doing amazing-

Jack Altman 41:23 Amazing

Vince Hankes 41:23 ... and amazing people.

Jack Altman 41:25 Yeah.

Vince Hankes 41:25 But their subscription, you know, they pay a big chunk of it to a model provider, and then that model provider, you know-

Jack Altman 41:31 Pays a chunk

Vince Hankes 41:32 ... pays a chunk to someone running the compute.

Jack Altman 41:34 Yeah.

Vince Hankes 41:34 You know, in Anthropic's case, they're run on Amazon and Google, right? And then that provider pays money to build the data centers, and ultimately, the biggest toll taker there is NVIDIA.

Jack Altman 41:43 Yeah.

Vince Hankes 41:43 And so if you trace this ecosystem, you know, and you look at the dollars of profit, today, I think Stan Druckenmiller said this, 120% of the profit in AI is from NVIDIA. [chuckles]

Jack Altman 41:52 [chuckles]

Vince Hankes 41:53 Which implicitly means that, you know, they are-

Jack Altman 41:55 That's good.

Vince Hankes 41:56 You know, most companies are losing money, and they are the only ones making money.

Jack Altman 41:58 Yeah.

Vince Hankes 41:59 And so, you know, codegen's this, in this fascinating state where these companies are growing really fast, there's lots of promise and potential, but the economic equation is very much unknown.

Jack Altman 42:09 Yeah.

Vince Hankes 42:09 Um, and I, I think they will figure it out, and I think there will be big, big winners that come out of it.

Jack Altman 42:13 Yeah.

Vince Hankes 42:14 But p- today what you have is a lot of dollars that are getting handed around-

Jack Altman 42:17 Yeah

Vince Hankes 42:17 ... and there's less discretion on who should get valued appropriately, and really, everyone is getting valued at a high multiple on those same dollars.

Jack Altman 42:25 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-

Vince Hankes 42:33 Mm

Jack Altman 42:33 ... 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-

Vince Hankes 42:42 Mm

Jack Altman 42:42 ... 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?

Vince Hankes 43:01 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.

Jack Altman 43:12 [chuckles]

Vince Hankes 43:12 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-

Jack Altman 43:24 Mm-hmm.

Vince Hankes 43:25 ... 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-

Jack Altman 43:33 Yeah

Vince Hankes 43:34 ... 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-

Jack Altman 43:53 Mm

Vince Hankes 43:53 ... 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.

Jack Altman 44:05 Yeah.

Vince Hankes 44:06 And so you live in these periods of time where the economic equation can be s- distorted because there's a lot of funding-

Jack Altman 44:10 Yeah

Vince Hankes 44:10 ... 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-

Jack Altman 44:21 Yeah

Vince Hankes 44:21 ... the economic equation goes out the window because everyone's competing for a theoretically big prize.

Jack Altman 44:25 Totally.

Vince Hankes 44:26 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.

Jack Altman 44:38 Yeah.

Vince Hankes 44:38 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.

Jack Altman 44:52 Yeah.

Vince Hankes 44:53 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.

Jack Altman 45:18 Yeah.

Jack Altman 45:19 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.

Vince Hankes 45:30 Yeah.

Jack Altman 45:30 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?

Vince Hankes 45:49 [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.

Jack Altman 46:00 You think that should come last?

Vince Hankes 46:02 Well, if you looked at the last generation of software as a proxy, you start with the big horizontal categories-

Jack Altman 46:08 Mm-hmm

Vince Hankes 46:08 ... 'cause they're massive.

Jack Altman 46:09 Yeah.

Vince Hankes 46:09 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.

Jack Altman 46:17 Yeah.

Vince Hankes 46:17 Okay, you go to AI, and who are some of the early adopters of the technology? Lawyers [chuckles] -

Jack Altman 46:23 It is surprising

Vince Hankes 46:23 ... and doctors.

Jack Altman 46:24 Yeah.

Vince Hankes 46:25 And they're just- they're categories that you would not put in the early adopters of technology. Developers, makes sense.

Jack Altman 46:29 Yes.

Vince Hankes 46:30 But lawyers and doctors?

Jack Altman 46:31 Surprising.

Vince Hankes 46:31 It's surprising.

Jack Altman 46:32 Yeah.

Vince Hankes 46:32 So I think from that perspective, there is something interesting to study, which is, like, why are these the folks that are adopting early?

Jack Altman 46:39 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?

Vince Hankes 46:42 I do think that plays into it. Like, most companies in general don't wanna lose out-

Jack Altman 46:46 Yeah

Vince Hankes 46:46 ... on the internet.

Jack Altman 46:47 Yeah.

Vince Hankes 46:47 Like you saw that with crypto.

Jack Altman 46:48 Yeah.

Vince Hankes 46:48 How many companies got on the crypto bandwagon-

Jack Altman 46:50 Yeah

Vince Hankes 46:50 ... because they just lost on the internet, and they, like, don't wanna lose in crypto?

Jack Altman 46:53 Yeah.

Vince Hankes 46:53 So even if it doesn't make sense, they're doing it.

Jack Altman 46:54 I mean, the other thing is, a lot of these law firms, as just, like, to take one example, like, they spend all day with startups. Like, they understand the tech.

Vince Hankes 47:01 Yeah.

Jack Altman 47:01 You know, they know it, and so I think-

Vince Hankes 47:02 Well, and, and law as a modality is highly tech-based.

Jack Altman 47:06 Yeah, it works very well for LLMs.

Vince Hankes 47:07 And the, and the models are very good at that, and so it makes sense. Or doctors, you know, a lot of it is kind of evidence-driven or publication-driven or diagnosis-driven, which you can ingest that in modalities that are good with LLM. So you could argue a difference out of this, which is the reason those are early adopters-

Jack Altman 47:20 It's product

Vince Hankes 47:21 ... is product.

Jack Altman 47:21 Yeah.

Vince Hankes 47:21 But I just think it's ironic in the fullness of time that investors are so focused on it-

Jack Altman 47:24 Yeah, definitely

Vince Hankes 47:24 ... so early, 'cause it doesn't seem like the biggest markets to go after. But therein, therein lies the kind of opportunity, which is we are excited about some of them. We invested in Rogo, in financial services. You know, I think the amount of competition in these markets early doesn't ki- it breaks the heuristics of success historically. Like, the old equation of success in a vertical market was, you get a lot of market share. Why? Because as people professionalize on you, you take a lot of market share. Like, how many competitors are there to Adobe Photoshop-

Jack Altman 47:51 Right

Vince Hankes 47:51 ... or AutoCAD?

Jack Altman 47:52 Yeah.

Vince Hankes 47:53 There aren't.

Jack Altman 47:53 Yeah.

Vince Hankes 47:53 Right? And so how many competitors are there gonna be in legal chatbots? Today, there's a lot.

Jack Altman 47:59 Many dozens.

Vince Hankes 47:59 And so now there's a couple of companies that have broken out of the pack and exist, but over time, you would hope that it consolidates to a small few.

Jack Altman 48:05 Yeah.

Vince Hankes 48:05 And so, um-

Jack Altman 48:07 I mean, in general, we're in a moment in time where there's probably more competitors than at least I've ever seen in a lot of these categories, and I think it's because, you know, in that quadrant of, like, looks good and is good, like, a lot of things, like, look good and might also be good.

Vince Hankes 48:21 Yeah.

Jack Altman 48:21 And so you have a lot of people flocking there. There's capital markets are back on.

Vince Hankes 48:24 Yeah. So, anyways, to answer your question, I think we're selectively excited. Like, why do we think Rogo was really interesting? It starts with the person. I mean, you know Gabe, I think he's 12 out of 10, and so we have to get excited about that. The category has properties I think are interesting. Like, I personally believe that exposing data businesses via the chatbot-

Jack Altman 48:43 Yeah

Vince Hankes 48:43 ... is actually more interesting of a thing to look for than to look for, like, big labor markets.

Jack Altman 48:48 Yeah.

Vince Hankes 48:48 And so I've been spending time, how do you find data assets that you can now expose that way? Because the models are amazingly good at structuring and looking at and searching across big data.

Jack Altman 48:57 What else would that include?

Vince Hankes 48:58 ... you could, you know, I would love to find one in real estate.

Jack Altman 49:00 Yeah.

Vince Hankes 49:00 CoStar is this amazing, you know, almost monopoly [chuckles] like data asset. You know, is there someone who can go after that?

Jack Altman 49:06 Mm.

Vince Hankes 49:07 Um, you know, I think there are other categories, too, you know, that we could talk about. But in, in finance with Rogo, what's so fascinating is there's a couple million seats that people can go sell to.

Jack Altman 49:17 Yeah.

Vince Hankes 49:17 And so if you're competing against ChatGPT, is ChatGPT gonna prioritize integrating-

Jack Altman 49:22 No, it's, like, perfect. There's not that many-

Vince Hankes 49:23 Public market research and-

Jack Altman 49:24 Well, I guess the flip is they're willing to pay a lot, and they have a lot of money. Like, and Bloomberg got really big.

Vince Hankes 49:28 Of course.

Jack Altman 49:29 Yeah.

Vince Hankes 49:29 But the thing is then, if you're ChatGPT, you can't sell them ChatGPT off the shelf-

Jack Altman 49:32 Yeah

Vince Hankes 49:32 ... you have to build a custom ChatGPT.

Jack Altman 49:33 Better just go get a billion users. Yeah.

Vince Hankes 49:35 And, and open at any scale. And so to me, um, that's the advantage that they can do. You know, if they have to compete with ChatGPT head-on at their own game, it's gonna be hard.

Jack Altman 49:43 Mm-hmm.

Vince Hankes 49:43 But if we can go compete on workflows and doing spreadsheets really well and public market research and exposing all of that data with great sources, that'll be an opportunity for us.

Jack Altman 49:52 Yeah. Are there

Jack Altman 49:53 any other areas in general in, like, the application layers or, like, the startup side that you feel, like, particularly interested in with AI?

Vince Hankes 50:00 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-

Jack Altman 50:08 It could be the biggest, just period.

Vince Hankes 50:09 The biggest mark- today, you, you know, today, cars-

Jack Altman 50:12 Yeah

Vince Hankes 50:12 ... are one of the biggest industries globally.

Jack Altman 50:14 Yeah.

Vince Hankes 50:14 They might be the biggest industry globally. Um, which means robots for consumers-

Jack Altman 50:19 Yeah

Vince Hankes 50:19 ... should be the biggest market.

Jack Altman 50:20 That's what you would think.

Vince Hankes 50:20 Because the utility of a robot in your house doing things is way higher than a car.

Jack Altman 50:24 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.

Vince Hankes 50:28 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?

Jack Altman 50:39 Yeah.

Vince Hankes 50:39 And I think that's what's the hard question to answer right now.

Jack Altman 50:42 Yeah.

Vince Hankes 50:42 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-

Jack Altman 50:58 Yeah

Vince Hankes 50:58 ... everyone's gonna be okay.

Jack Altman 50:59 Yeah.

Vince Hankes 51:00 Uh, and so the problem, while complex, because there's more degrees of freedom-

Jack Altman 51:03 Yeah

Vince Hankes 51:03 ... there's more complexity in the environment, is actually, in some sense, easier because the risk of failure is lower.

Jack Altman 51:08 Right.

Vince Hankes 51:09 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.

Jack Altman 51:31 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-

Vince Hankes 51:45 Yeah

Jack Altman 51:45 ... you know, the right answer, looking back, might have just been, like, buy Bitcoin-

Vince Hankes 51:48 Yeah

Jack Altman 51:48 ... all along the way.

Vince Hankes 51:49 Yeah.

Jack Altman 51:49 Like, how have you thought about, you know, that sort of mashup?

Vince Hankes 51:53 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.

Jack Altman 52:07 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-

Vince Hankes 52:13 Yeah

Jack Altman 52:13 ... Bitcoin will definitely-

Vince Hankes 52:13 And this is, this is-

Jack Altman 52:14 Same kind of thing

Vince Hankes 52:14 ... 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.

Jack Altman 52:53 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-

Vince Hankes 53:01 Google

Jack Altman 53:01 ... Fang.

Vince Hankes 53:02 Yeah.

Jack Altman 53:02 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.

Vince Hankes 53:22 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-

Jack Altman 53:42 Yeah

Vince Hankes 53:42 ... not even one decade ago.

Jack Altman 53:43 Yeah.

Vince Hankes 53:43 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-

Jack Altman 54:09 Mm-hmm

Vince Hankes 54:09 ... OpenAI's in a corner-

Jack Altman 54:10 Mm-hmm

Vince Hankes 54:11 ... and every big tech company has a bazooka pointing at them to try to take them down.

Jack Altman 54:15 Yeah.

Vince Hankes 54:16 Because none of those big tech companies want a new big tech company.

Jack Altman 54:19 Right.

Vince Hankes 54:19 Right? And so we should all want it to be a competitive, fair fight for a new company to break into Mag Seven.

Jack Altman 54:26 Yeah.

Vince Hankes 54:26 Because that's what our whole ecosystem lives and breathes off of.

Jack Altman 54:29 Yeah.

Vince Hankes 54:30 The flip side of this is, you know, th- as these big... Going back to this number of hundred billion dollar companies, as the big get bigger-

Jack Altman 54:36 Yeah

Vince Hankes 54:36 ... there are just self-reinforcing properties. Like Uber, they have a driver network. They have millions of consumers in their app in a, in a geography. Are they able and best off to do food delivery? You know, it turns out, yes. If you would've said, you know, five years into Uber's journey, was that their focus? Everyone would've said no.

Jack Altman 54:54 Yeah.

Vince Hankes 54:54 You know, and so now that market has largely kind of coalesced around DoorDash and Uber.

Jack Altman 54:58 Yeah.

Vince Hankes 54:58 So one company did do it-

Jack Altman 54:59 Yeah

Vince Hankes 54:59 ... without having the rideshare.

Jack Altman 55:00 Right.

Vince Hankes 55:01 But the rest of the market consolidated-

Jack Altman 55:02 Yeah

Vince Hankes 55:02 ... around a, basically an incumbent in a different area.

Jack Altman 55:04 Right.

Vince Hankes 55:05 I think you'll see the same thing in AI. And so-... this is where we have a hard time, which is I think a lot of our bias is this isn't a risk-adjusted better return than OpenAI.

Jack Altman 55:14 Yeah.

Vince Hankes 55:14 And therefore, if we're given a decision, we should do it.

Jack Altman 55:17 Yeah.

Vince Hankes 55:17 At the same time, you can't take- you can't not take risk because of that, and so-

Jack Altman 55:20 Yeah

Vince Hankes 55:20 ... we are investing in other companies.

Jack Altman 55:21 For sure. I mean, but it's also like, I think one of the things when I think about, like, Founders Fund and why they're so impressive to me is that they made that calculus for-

Vince Hankes 55:30 Mm-hmm

Jack Altman 55:30 ... you know, a decade into, like, SpaceX and others.

Vince Hankes 55:33 Yep. Different.

Jack Altman 55:33 And to continually have the discipline to say, "It'd be really fun to go make a new investment, but if I know these two things and I can just put more into something that I already own a lot of," I'm like, I find that very impressive.

Vince Hankes 55:46 I-

Jack Altman 55:46 Part- partially because the patience is brutal.

Vince Hankes 55:49 I think there's a firm that has kind of the most similar strategy. It's probably Founders Fund.

Jack Altman 55:54 Yeah.

Vince Hankes 55:55 I think they have very similar DNA of making big, bold bets in companies.

Jack Altman 55:59 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.

Vince Hankes 56:08 Mm-hmm.

Jack Altman 56:08 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?

Vince Hankes 56:25 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.

Jack Altman 57:27 Love it. Vince, this was super fun. Thanks for doing it.

Vince Hankes 57:29 Thank you so much, Jack. [upbeat music]