David Frankel, MP @Founder Collective: Investing Lessons from Seeding Coupang, Pillpack & Suno|E1214

I would say reserves and how to do the reserve thing is actually one of the most challenging aspects of venture. I still think of, like, pro rata as, like, the original sin against entrepreneurs. You own your own destiny by minding your monthly burn. I think that DPI could be dead. LPs are looking at this asset class right now, I think, and going, "Where is the DPI?" Those guys were just like a casino. One call to John or Tiger, like 20 on 80, no problem.

Ready to go? David, I am so excited for this, man. We were literally just saying how much more special it is to do it in person. So thank you so much for joining me in person.

Harry, it's so awesome to be here. I love being here with you in person in London.

Dude, I wanna start on, um, one of my biggest, most pressing concerns actually right now, which is we are seeing these massive seed rounds, like 6 to $10 million. How can traditional seed funds, 50 to 100 million seed funds, play-

Yeah.

... in this new world?

I mean, I think you still can, right? I, you know, I'm gonna appeal to the inner, you know, uh, McKinsey consultant in you. I know it exists. But, you know, if you think of right/wrong, consensus/non-consensus, look, you don't have to only do kind of right non-consensus, but that's where you do do well. And there's lots of ways of still being non-consensual, I think. So, you know, if you think of non-consensus, y- uh, founders, so, uh, you know, people who come from less traditional backgrounds, people who come from secondary schools, right, that, like, mainstream's not gonna back. That still very much exists. Frankly, founders who've had, who failed, right, who haven't done well and, uh, and, like, you know, the mainstream's kind of like, "Mm, wouldn't touch that." There's still founders who've been orphaned. So founders who come back and go, "You know, I took money from one of those large funds." They went through the distance. They had to feel the pain, right? They say, "I took money from that, one of those large funds, and man, like, I got orphaned," right? Uh, "They, they left me." They come back. So, you know, non-consensus founders. Non-consensus market still, right? And I think this is where b- it's everyone says, "You gotta be right in non-consensus." But I often think, "Well, what do you mean by non-consensus?" So you've got, you know, if you were really early in new markets, 2009, the best bet, like everybody was, like, chasing, I don't know, nanotech, right? Bitcoin had to have been the greatest investment in 2000. 2015, Ethereum. I know everybody is, whatever is chasing DTC, right? Like that's where the whole market's going, you go Ethereum. So new markets non-consensus, you can still do very w- you-

Mm-hmm.

And then old markets non-consensus. Harry, do you know one of the best portfolio companies in m- that I'm on the board of right now? Smalls. It's cat food. Dude, it's cat food. Nobody likes cats. Like dogs get all the love. DTC is dead. Nobody will touch DTC. We tried to raise money for this business, Smalls, right? Doing 50 million ARR. Try to raise money in December. Nobody would look at us. Nobody would look at us 'cause people hate cats, full stop, right? Cats get no love. And everybody then looks at like, you know, this didn't work, farmer's market, whatever, it didn't work in dogs, right? So you can be in old markets, right? You can still be non-consensus.