They'd spent like a 50th of the capital. These compute multipliers โ there's something special under the hood technically. This is a massive market. These markets are never dominated by one player. Who's better positioned to be the number two player than Anthropic?
I think the foundation models, let's say specifically anthropic have such special models. This can be hard for somebody to just kind of say, I've used open source with my data. It's going to be functional and positive for some amount of what you're doing, but I just don't think it can be powerful enough to really displace it. Now, joining me in the hot seat today, we have someone I've known for 10 years, Matt Murphy, partner at Menllo. He's the guy that led the deal into anthropic, but then he follows it up with, check this out, investing in Lovable and then investing in Lagora. I mean, this man is just hitting banger after banger. Matt is on a tear right now, almost more than any other venture investor. And so, it was an incredible opportunity to sit down with Matt. He's a dear friend. And this is honestly two friends having a great discussion. Ready to go, [music] Matt. I cannot believe it, dude. It's been like 6 or 7 years since we did our last show, which worries me because I was like 23 and I just look back now and I go, Harry, you knew nothing, my dear friend. And Matt was so wise and is so wise. But thank you for joining me once again. It's so good to see you, man.
Like, it's great to be here. It's it's it's it's taken me seven years to earn my way back onto the show now that you've become so famous.
Oh my god, dude. Yeah. I mean that's super kind of you one but hell have you earned your way back like the last few years has just been ripper and I wanted to start with a a relatively obvious one which is anthropic I think it's the cornerstone of of Menllo and of the last few years for you investing can you actually just tell me how did it come to be how did you get introduced was it obvious how did the investment meetings go just just take me to it Yeah. Well, uh he'll be mad if I don't give him a call out, but um Anjen, you know, Mida, uh was the one who introduced me. So, An worked uh for me with me at uh at Kleiner Perkins when I was there as a young kind of associate, but he has he was so spiky at the time. So, he's always kind of just been in the flow. We were talking about AI and he said, "Hey, Matt, you got to meet Daario and Tom. This the one company, you know, said, "Let's do it." got on the phone with Daario and Tom the next day and I, you know, I personally was like, "All right, I'm in." And I'll give you the kind of like the the broader story, but there were part there was part of it that was really easy and part of it that was hard as you can imagine. So, you know, at the time you have like a $600 million venture fund. You kind of try to average 15 million into into a company and along comes a company that's like pre-revenue and, you know, uh and wants a $4 billion plus valuation. Too early for our growth vehicle. uh where does where does it kind of fit? But you know the easy part was okay OpenAI is absolutely ripping the chat GPD taking off but Daario was the creator of that within OpenAI as you know the reason why he left is because basically he's like open AAI is doing too many things this is the one this is the one big opportunity so you had that kind of like unique insight knowledge conviction around this opportunity you meet him and he's just like this amazing technical thinker researcher a lot of the best researchers want to work for someone like that because it kind of mirrors them. It's like that's that's the leader they they gravitate to. And then you know another easy part of it was they had um you know they had basically in it was pre-revenue pre-launch of the model but all the benchmarks you could see that they were kind of better or at the same level of performance as as chat GPT at the at the time and they'd spent like I don't know a 50th of the capital. So these compute multipliers you're like all right there's something special under the hood technically and my partner Tim Tully who was the CTO of Splunk great thankfully you know part of the team we've built out here I had Tim to kind of dive in with Tom right so that's all kind of like look this is a massive market this these markets are never dominated by one player there's going to be an alternative who's better positioned to be the number two player than than Anthropic the hard part was what I mentioned like you know wait why are we doing this it's like uh a $4 billion valuation of venture fund. That's not what we're going to what we should be doing, what our LP is going to say. But fortunately and great,
did Dario set the price? Did he come into meetings being like, "Hey, the round is 4 billion."
I don't remember exactly that part of it. Um but basically, you know, if if there was a mistake and and it's hard to look at this uh through the lens of having made any mistake, it's basically like, hey, look, the opportunity is there for you to lead. Um, but I'm like, well, you know, we can't really do this out of the growth vehicle in the venture fund. We can only do so much. So, we said, hey, we want, we're all in. We want to be part of the round. And I'm very grateful that I have a set of partners who were just like, look, let's just do this. Let's just get into this. This is one of the biggest waves. We've pivoted the firm to be all in AI. Let's jump on this thing and see what happens. And that led to everything from there. But if I had a partnership that was more rigid around, hey, that doesn't fit, then this never would have happened. and we would have never gotten to the point where we led the next round and all of that. Um, but anyway, so that's that's kind of the the the quick story of it. Very fertility.
How big how big a check did you write?
Uh, the first the the first check was a little over 10. Um, and then you know the so that was kind of the starter check because the average like I said you try to kind of in a venture fund kind of have this kind of narrow render of what you invest. But then the next round is when we did the 500 plus SPV. Let's just go back to that 10 10 at four. I would be sitting in your partnership going, "Well, let's just like outcome scenario plan this. If it's a $40 billion company or an $80 billion company, let's do 80. It's a 20x with dilution traditional say it's 50%, it's a 10x. We're going to turn the 10 into 100." Wow. Thanks for returning 12% of the fund, Matt.
Yeah. Yeah.
How [clears throat] did you escape that thinking and and get to
Well, well, first of all, I'm glad you weren't in my partner's meeting. Um, [laughter]
but um seriously, I mean, there there was there was that in the room and um and and at the same time, you know, I had, you know, a couple other partners and this is what you want. You want to have partners that debate things you listen to. But it's like, look, there's never going to be a perfect entry point into this market. If we wanted to be in this market, this was the way in. If we said, "Hey, look, this we're just kind of priced out. We can't be in foundation models or Neolabs of any kind." Then, okay, you you you sit on the sidelines. But we were like, we have to be in this market. We're building the firm around AI, and this is absolutely the best company. So, just don't overthink it and get in. And honestly, I think that's been really a hallmark of how we've operated. I I think other firms can be and not to throw any shade at anybody because I have such great respect, but you know, you kind of get into these situations where we have to own 15 or 20% ownership or we don't do this and don't do that. And I think the new Menllo that I'm part of has shown extreme flexibility to just do what makes sense. Let's get in this great company because once you're in, hey, if it takes off, there's plenty of opportunity to put more capital in. So, do we think that ownership today is less relevant than it ever used to be given outcome scenarios being so much larger than they ever used to be? By far. I mean, look, if you can get ownership, it's magical because, you know, just if you own a lot and the company's worth a lot, that's going to be great. But, you know, a there's a lot, you know, more capital coming in, so it's hard to even maintain that that kind of ownership. But we're in an outlier business right now, right? Like I I think for a long time, I mean, you know, I've been in the business for 25 years now. You know, you you were kind of saying like, "Hey, great outcomes are 300 million, 500 million, a billion." Like, so you're like, "Hey, you have to own 20% to get a to get a 100 million or or whatever." Like, no, that's not those those are like, and I know you talk about it a lot on your, you know, show with Rory and Jason, all that. That's that's not how the game is being played anymore. It's it's like you have to be in the big outliers to drive great returns and you're better off being in them at a very small percent than owning a large percent of a company that exits for 3 to 500. Those just aren't going to move the needle.
Is there a stage where price does matter for you?
Well, I mean, we don't, you know, we we we announced our our new funds, so we're not, you know, we're we're pretty full stack. We can take big concentrated positions. Fortunately, we've got LPs who like to co-invest with us, but you know, we don't have a 10 or$20 billion fund, nor do we aspire to have that. So, there's some quantum of capital that's like, hey, that that's for somebody else, the the the next next round. But I don't I don't know that it's as much of a valuation thing. I think it's more cuz I would rather, you know, to be in the most amazing company. I would rather be in than not.
Before we move to SPVS, new funds, you name it. I I do just have to ask in terms of like levels of dilution with the increased outcome scenarios and increased outcome sizes. Do you think we're just normalizing an entirely new level of dilution that's inherent within these companies or is that exclusively for the frontier model companies?
I think it's pretty rare as you know to find companies these days that don't end up raising a lot of capital that way outside of the the frontier company. Look anywhere in the AI stack even the application companies. I mean, there's there's part of it the companies are growing faster than ever. So, they want the the capital to, you know, really be able to play play offense. And there's also kind of a part of this dynamic in the market right now where there's this signaling effect that every x months or a year, you know, you raise capital that's, you know, employees [clears throat] want to hear that to keep up with the labs and, you know, some of the retention, you know, you you have to do more secondary. So, there's just the the landscape is just very very different than what I grew up with. and what I grew up with. You're forgetting I have been doing this for 11 years now, my friend. I I remember the day now.
I I know it's terrifying. Um can I ask you on the second round that you mentioned there where you're like, "Okay, we really sized up." How did you think about that one and how did that come to be?
I mean, like if there was a playbook that I would love to repeat, it was this. I mean, so we basically built a relationship, guided the company and said, "Look, we need to go allin." Menllo style, you know, our recruiting team, our uh, you know, our BD team, and just get close to the the founding team, see, build relationships, see how we can have value. And there's a lot of examples of that that we probably don't have time to go into, but we got to know them, and we got to see them operate, right? So, let's say that we the round closed in something like March, the model was launched in April. So you start at zero and then sometime you know through the year you know you'd see them adding 10 this month eight the next. So the the revenue started to build in parallel with that you had Amazon and Google come in both with the big investments as well as technical partnerships around Bedrock Vertex uh and then distribution relationships. So you're like okay let's let's take a look at from when we invested to now. Um they've got a capital partner, a distribution partner, a technical partner, two of the biggest in the world. They're alternative to OpenAI who's kind of tied to one cloud with Azer. So it's like, hey, this is the multicloud provider. And then you just saw this kind of revenue drum beat start. But the seinal event was uh we held our LP meeting in uh in November and we had an anthropic executive named Nero, who's kind of a a jack of all trades at a very valuable one at Anthropic come and present. and he blew everyone away like after the meeting our LPs were like this is crazy like this company is amazing even my partners were like this is so amazing that we're in this company it was just the description of like the power of the models and how it was impacting so many applications already human behavior all that um and we had had a bunch of inbound leading up to that so we literally came out of that meeting and said all right we've got to do this we've got to figure out a way to lead the round and two weeks later we signed a term sheet we you know aggregated all the kind of demand from RLPs and folks we knew and you know the rest is kind of history.
Are we in a new venture world of SPV usage? Um we do them for very late stage opportunities too. How do you think about that and when to go aggressive on the SPV strategy and when it moves out of fund strategy?
Yeah. I mean I think it's really like what what guard rails or kind of parameters have you set on your fund in terms of how much you want to put in in in a fund. So if you know you've got a billion dollar fund, you might say, "Hey, we only want $100 million max in a company. U but uh look, we we feel super we maybe we did 50 in the first round and we want to do 100 in the next round, so we can't put it all in the main vehicle. So let's do let's do an SPV." So I don't think you have to do it. Um, I think often times it's it's it's valuable to be able to do it because you can play offense if you need to write uh more capital uh to to win around and and obviously it can be helpful to a company that you come you come with more strength you know I mean there there's a side of it where you can say like well look it's it's kind of a you know extra economics at times to to to go outside your you know your fund mandate and and be more full stack and not let somebody else take it. I think for the most part for us it's it's just like let's kind of keep our fund size at a level that we think makes sense for the environment and if a if a amount of capital per company goes outside that then let's bring in our LPs.
Can I ask you along the way how do you think about when is the right time to take money off the table? It's tough because in this environment obviously the markups are happening so quickly and you know you're like well relative to when we invested this multiple is amazing but it's complicated right like I I think a if you're a believer I think more than ever we're in an environment where your outliers your winners will compound and drive fund returns so those are certainly not the ones you want to sell from. Now, you know, [clears throat] you can argue you might have some LPs, some, you know, if it's an older fund, some dynamics like that where you want to give uh liquidity, but that would be like maybe you take 10 20% off the table. But for the most part, uh if we're in a winner, we want to run, we want it to run, we want to put in more capital. Um, and then at some point, you know, you feel like the company's maturing or maybe maybe they're waiting a super long time to go public and you'd like to say take some, you know, chips off the table, but it's not it's not something we spend a lot of time on. We spend more time obviously on hopefully making great investments and then being a great partner to those companies as they scale in all ways, including capital. Can I ask you when was the most nervous time along the last 18 months for you as an anthropic shareholder? It looks it's amazing today. It's a great state of play today. Um when were you like
Yeah, I mean I I'd say like well maybe I'll go back even I'll expand your your window to 24 months. Like you know when we did the SPV it wasn't Anthropic wasn't a household name yet. like we saw everything going on and like how amazing this company was, but from the outside it wasn't quite as obvious. So, you know, even to get, you know, the whole syndicate that we pulled together and uh I had to give my friend Ravi and Byron a call to bring them into the round as well, which all worked out. Um, but it wasn't um it was just that was very nerve-wracking because Menllo had never done an SPV before.
This was your first SPV?
It just happened to be over 500 million. So you can imagine like what I never and by the way it gives me great empathy for uh entrepreneurs which I have anyway because I understand how hard this is but like being on the front lines having to be the person kind of you know capital raising talking to these investors getting you know an occasional turndown um having to answer second and third order questions sometimes annoying no offense to anybody um that's tough man that's really tough so that was that was my most nerve-wracking but at the same time coming out the other side of it. The most exhilarating and obviously the uh all that all that work was uh very worth it. Um I'll run through a couple other deep the deepseek moment you know that was like oh my god what's happening now you can't even remember that. Uh then there was the then there was the DAO the DAO moment and uh you know it's just like this environment is so dynamic right like everything's moving so quickly that there's just like a new challenge and opportunity uh both crisis and opportunity seemingly every 6 months or so. It's a weird thing, you know, Mark Andre says, you know, often ventures about, you know, the VC firm lending their brand to legitimize the company and then there's a strange moment when the company and founder lend their brand to legitimize the VC firm and it's that weird transition of power between them. When there were like the SPV stuff and then like you know Dario constraining, was that a nerve-wracking time? I imagine like Dario cranking the whip on SPVS and who can move what. I'd slightly [ __ ] myself if I'm honest, Matt.
Oh, you [snorts] you mean you mean the thing that came out recently around people doing SPVS, not my
Yeah, because that was that was fully supported in partnership with the company. Just to be clear, we partnered extremely well. It was great. Um, I think the problem is, you know, it's secondary markets, SPVS, they've just become too annoying and aggravating in the market to to founders and someone else is basically like, I don't want you marketing my stock, my I want to be I want to be the one who's figuring out who's in the cap table, who's an investor. And you know, I think that um there were a lot of people, you know, claiming they had access who would kind of round up uh people to invest in their SPB and then they would try to go get access. There's just a lot of bad actors out there. And and so I think it needed a bit of a, you know, a salvo across the bow to just kind of be like, "Hey, um settle down everybody because if you're not directly in our, you know, uh in partnership with us, uh you shouldn't believe this is real."
Oh my god, dude. I saw like SPVS for SpaceX on Instagram reels and at that point I knew that it was a heated market. I always normally say when your taxi driver we call them cababies. When your cab driver in London starts talking about the price of Bitcoin, you know it's time to sell. Um
Foundation models โ specifically Anthropic โ have such special, performant, intelligent models. This can be hard for somebody to just kind of say "I've used open source with my data." It's going to be functional and positive for some amount of what you're doing, but I just don't think it can be powerful enough to really displace it.
Anthropic has been incredible for for Menllo and for you and it's been a massive brand builder in AI positioning you as one of the leading firms. Another that you've done is lovable. You know, we've spoken about it at length. you know, off scene, uh, off show, you did the round at 6.2.
Mhm.
Can I ask when you do a check like like that in this specific case, what do you like underwrite lovable to? How do you think about what it can be?
Yeah. Well, I mean, you know, that was another wild story where you see a company go from zero to something like 300 million in a year. I think we intercepted them around. Well, we we we we kind of got tried to get in when they were around 30 30 of error, but we the round we did was around 150. So, I mean, look, you're kind of looking at like this is a phenomenon. So, there's there's numbers and then there's the market and then there's the founder, right? So, the numbers were just like ripping and you're like, "All right, so this company is going to go from 0 to 300 in a year." Even if you assume it decelerates to whatever, you know, a 3x growth rate, that's 300 to a billion. And I'm talking about when we first made the investment. And then you know you compound out from there and you're like how I mean never just certainly in the first uh let's say 23 years of my venture career you never saw anything like that. Now there's a few more examples but clearly this was an outlier even amongst outliers. I think the thing that we also really gravitated to here aside from like you know Anton he's very visionary. He's kind of like the he's kind of the voice of the of the category. I think he's got some very unique and distinctive plans about why you know this kind of 99% of people as he likes to call it everybody who was never a coder and programmer but every get making everyone become creators. So you had like this massive vision we felt like an iconic uh entrepreneur and then like crazy numbers that you could you know you could do whatever model you wanted and you're like look if this thing keeps compounding and this is really the company that we believe this will be one of the most valuable companies of all time. So, you know,
mar dem do margins matter anymore?
They do a lot and and you know what we're we're in this kind of like tricky period as investors where right now a lot of great companies have uh low margins and you know let's say like 20 to 30% margins and you know they've all they they all probably have a path to get to 60 or 70. Well, [clears throat] you know, a lot of companies just because the cost of comput and inference, it's harder to say you're going to be an 80 90% gross margin company anymore. But, you know, uh great companies are, you know, 60 70% gross margin. But, you know, the path to get there is like, hey, I'm going to do some optimizations. uh you know I don't I'm not completely tied to you know uh to to to inference around you know my cost structure and I'm probably going to do something complimentary to the to the leading labs with my own data and build a model that kind of gets my gross margin up. You're intercepting a lot of these hyperrowth companies with margins that are atypical for what we usually invest in and you're trying to figure out which ones actually have a credible plan to get to a great margin structure. And for what it's worth, I think Lovable is one of those.
The margin structure of Lovable will be changed greatly with the utilization of open source, which is obviously much cheaper. Um, that goes against one of the other investments being anthropic. Do do you see them as like hedges against each other? Do you worry about the progression of open source given how much can be done now with open source? I'm intrigued how you think about that.
Yeah, I mean first of all I think like uh Anthropic is a fantastic partner to lovable and vice versa. Um but like this market is so big. So there's really two dimensions that one you know uh people some people worry about lovable and anthropic tripping over each other. I think love anthropic always comes at things a little more like the technical user and lovable comes at it more from the the lay user and sure there's probably some overlap in the middle but I think there's plenty of big space uh for each one to do extremely well and you know look cursor was about as in the crosshairs of anthropic as possible and they I think they still had a pretty darn darn good outcome. Um, but the whole open source topic, look, it's it's like any market when you you start off in a certain way and it's just like, look, I want to get something running. I I want to get it out there and and uh just prove I've got, you know, a cool product. And so, you just default to the simplest thing. Over time, you do more optimizations, right? And so, I'm also on the board of Open Router, a company that you all talk about quite a bit, and I love hearing you guys mention them. And and you know that's that's kind of like this the north star there is like hey you ought to have some intelligent layer that intercepts an API call from any application and basically says what's the best model for me like across whatever efficiency frontier I'm trying to optimize for is it is it price is it reasoning uh or is it performance you know latency things like that and at scale like that's the kind of stuff you need uh as a company to manage and optimize your business and so wave one of AI is like let's just Let's just get it going. Wave two is like let's get a lot more sophisticated about what we use and when and how.
If you're getting sophisticated about what you use when, and how, cost optimization comes into it. So, I I do just wonder like if open source can do 96% of enterprise workflows, does that not dramatically reduce the time of frontier model companies? And maybe we're so early that it's still $10 trillion for a TAM, but like maybe anthropic and open AI solve cancer and climate change and your email tagging is done by open source. Is that how you think? No, I I think um I think the foundation models [clears throat] especially well let's say specifically anthropic um have such special models uh performant intelligent models this can be hard for somebody to just kind of say I've used open source with my data it's going to be functional and positive for some amount of what you're doing but I just don't think it can be powerful enough to really you know displace it. So I'm I'm in my mindset generally would be like you're going to use multiple models. Let's say if you're someone pick a pick a pick a company that maybe you use 50% anthropic and 50% open source in your own model. I don't think it goes to that you know well you were talking more cost but I don't think it goes to that 96% because what's happening is companies see this like yes I can get lower cost but if I use anthropic it actually increases my customer retention. I I generate more revenue. I I get users to engage with the platform more. And that is what the data is suggesting now with a lot of application companies, but there's certain API calls that just don't need that level of functionality. And frankly, it's it's good for everybody. It keeps um Anthropic on their toes to keep innovating. Most innovative company around. So, they'll keep innovating, not not stay still. And and then and then startups innovate in their own way with open source. Do you think the costs have to come down for AI? Sam Orman said very clearly that they are doing cheaper and cheaper uh kind of tokens and and reducing the cost significantly. Does AI have to get significantly cheaper and will we see this cost curve come down massively? Well, I mean, I think it's like like any product, you know, the you can argue that the cheaper it is, the more it kind of opens up the market because it's uh you know, you you can you can do more for less and that all you know that that those economic curves always spark um activity. But, you know, I mean, look, even within the anthropic family, right, like you you've got Sonnet, you've got Opus, you've got uh Fable. So I mean part even the LA even anthropic itself is innovating around you know hey it's not one sizefits-all. So I think you know you're going to have the combination of something like that a family of models from anthropic and then a set of open source models and things that you train with your own data and you're going to look across that whole tapestry and say hey I'm using 50% this 30% that 20% this and that's those are the kind of optimizations that happen at scale and that's the stage of market that I think we're just entering into which makes it a lot more fascinating frankly because there's going to be so many kind of second and third order companies that that spike and take off versus you know the whole market being concentrated.
I'm incredibly naive and so I I don't understand something which is like we see um obviously opening I have reportedly Anthropic working with Samsung to create their own chips. Sam um Deepseeker creating their own chips. Uh Meta creating their own chips. Do you have to be full stack today do you think? And is that why we're seeing everyone move into the chip layer? Well, I think I think it goes back to, you know, what I said about, you know, optimizations. I mean, you know, uh, Google with their TPUs a long a long time ago, Amazon with their traniums. I mean, just at some scale, you look at your bill and you're like, I'm paying somebody way too much, you know, and and you say, well, I'm willing to pay that for some part of, you know, my COGS because that's just so much better and different and I can't compete with that. But maybe there's some other types of activities they're doing that I can really leverage my own technology and bring my cost structure down. And you know, I mean, uh, the chip business is hard. Good luck waiting into that, right? You know, it's um, it takes a special team, especially if you're going to compete with Jensen and a lot of other uh, options out there right now. But, you know, these companies are smart and they're looking at like, hey, look, there's some ve very specific thing that we do in our model that if we had a chip that just behaved like this from a uh, you know, I don't know, from a memory cache, whatever, like it would make us so much better. And I'm sure for some percentage of the workload, whether it's in training or inference, that could be a big deal. So, that's probably worth the swing. Um, you know, if you're if you're a hundred billion dollar revenue company,
when we think about kind of full stack versus not being full stack, you know, I've had the founders of Nebius on the show. I just had Lynn from Fireworks on the show today and and Nebia said they were moving into the open router business and would actively take it. Um and then I asked Lynn this morning, is there value in it and she was like no. [laughter]
Now in the routing business.
Yeah. Why do you think there is? What what am I missing? Well, I don't like first of all what Open Router has is like they've just got this ground swell of organic activity with developers who come to them because they they trust them. They know it's a great inference marketplace. They love their intelligence. Like I don't think a ton of developers flock to Nbius. Like if I'm a developer, I don't wake up and be like, "Hey, uh, you know, so they're they're kind of in the wrong part of the conversation." But if you're on Nbius and they're your underlying provider and they provide routing, okay, fine, you know, but if you're if you're a company that's that's building and thinking about multiple cloud platforms and you want to kind of even obfiscate that, then you know, [clears throat] Open Router is a great solution.
How big is the routing business going to be, do you think? Like how big could Open Rooter be? Is that is that a $50 billion business?
Um, I mean, their trajectory is insane. I mean, I, you know, I forget what they've publicly announced. Um, so I better not say anything, but like this, this company, uh, wildly profitable. Um, and you know, uh, at at a scale that would probably shock most people before this whole open-source model, alternative model, model optimism, optimization market really takes off. I feel like we're just on the cusp of it. And this company is already a beast. So I have uh massive and very high hopes.
We mentioned lovable earlier. Um
in terms of like other application layer companies that you you are in and are very meaningful. Another that we have together is Lorra. Love Max. Think the world of him. What an absolute beast. Uh remind me what what round did you do for Lori? You did the the round that just happened, you know, about uh 6 months ago.
Okay. And what size chat did you do?
Uh it was like uh it was kind of sub 50, but in that range.
Okay. And so you're like, great, let's get a foothold in here and we can put more in with time and partner more closely with this business.
Exactly.
Everyone tells me, and again, you can be like, Harry, for goodness sake, it's like Friday morning. I wanted a chilled interview. You can put me back down. But everyone tells me, "Oh, Anthropic is the real threat." And I'm like, "Are you kidding me? This is like a heavy GTM business focused on building relationships with lawyers, doing legal deployments with G I mean, this is completely different." How do you answer that statement when everyone's like, "Well, anthropic legal is going to beat them."
Yeah. Well, first of all, Max Max is special, as you know. part of my diligence was watching uh you know your your interview with him but he he's he's just an execution machine and uh just a lovely person to be with. I think you know there's always for a while here we're in this period of for a long time it felt cleaner like hey there's a model and there's an API and then there's application companies and and obviously that's kind of gotten blurriier and blurriier and there's a period a couple months ago it's like SAS apocalypse you know everything's going away and I think some of a lot of that has kind of faded and now we're kind of sorting out like okay well which which applications really deserve to live and why and I think you know not speaking for anthropic but my my view is they're kind of Like look, if the model just kind of does something and your application isn't distinctive enough, the workflow, the value you've built on top of it, and the model takes that market away, well then it probably wasn't that, you know, defensible anyway. I think in the case of Max and Lora, you know, they have lawyers and FDES getting in there and understanding these these workflows. Um, it's kind of like crosses organizational boundaries. is like I think it's very hard for a model just to come in and be like oh you know there's multiple constituents here because you've got corporate lawyers uh law firms and when you're on a case you've got a client you know multiple law firms so it's it's just an it's not quite an N squared problem but it's complicated and you need workflows that understand that you need context even within the own law firm so I think there's just a lot of I know there's a lot of value to to build and create on top of all that and um love the way they're executing Does the Gora have to succeed outside of legal for it to justify the valuations that it will want to raise at you? You see Harvey talk about moving into compliance and tax and du and I candidly I think Lorra will too but it's cuz they if you want to raise it 10 billion cool but like there's a price at which you know you need more than just legal.
Yeah. Yeah. I mean I look Max I I guess maybe he hasn't been as public about it but absolutely that's part of the strategy. You know when we got to know each other and we were thinking about the round and justifying not only the current round and hopefully you know participation in the future round and working with the company. The vision is much bigger than that. It's not have to. It's just it's just you know you've built this base platform that happens to be really really good at understanding complicated you know service uh you know uh sophisticated service teams you know legal tax um you know accounting all this why wouldn't you expand into that and then there's probably another leg of the stool out there yet that we haven't even seen uh that we'll be talking about maybe next time I'm on
Every LP wants a San Francisco specific seed fund only under 100 million. And I think this would be the worst performing category of venture in this vintage โ if you're a $50 million seed fund writing $2 million checks, you're too big to be friendly and too small to lead.
Can I ask I think series A is the worst place to be today and in my partner's always hate me for this cuz all series A founders like great we won't go and see them. [laughter] Uh but it's the worst place to be. You have like 1 to 3 million in revenue and you're a 200x at 2 to 400 million with little PMF. Do you agree that right now insertion point wise series A is the hardest and that's why we're seeing everyone flock to growth and preede and and how do you think about that having seen so many cycles?
Yeah, I mean it's tough. I mean, you nailed it, but I mean, what we're doing is a barbell strategy right now, right? So, it's like, hey, when when when is a certain company in a category establish themselves as a leader because, you know, in that kind of 1 to three, you may not even know who the competitors are yet, right? And you're going to pay as if they're going to be the winner because that's just the way the valuations are in that kind of let's say 1 to 10 range. So, we've moved our, you know, we have a fund called inflection fund and we always called it early growth. The real early growth to us meant like 3 to 10 million of ARR. The reality is like for the good companies that window used to last like a year year and a half. Now it lasts like a week or in the case of Max and Lora that's what they do in a day. So uh you know like it's just that that was a hard strategy to keep pursuing. So that's kind of like the menlo inflection classic kind of investment. But really, it's been more to these outliers where they've completely, you know, broken out somewhere above 10 or and that's kind of like market specific where you feel like um they've been anointed the the winner or you believe they will be. But to your specific question around series A, that that's the other side of the barbell. And so what we've done is gone, you know, much earlier. So spending more time, we've have a specific seed strategy where three partners can, you know, write up to an $8 million check like on the spot. That used to that number used to be three. So we've kind of expanded the aperture and the flexibility for the team to move quickly. But the the hard part in a right now is that Cday the time between those two things has really compressed. And if you really look at like the the data points between those two rounds, it's like, okay, so they kind of built more of the product. uh they kind of have like five PC's or maybe they had five PC's and now they have a million of error and you're like I know anybody can do that not anybody I don't want to oversimplify it but it's not really that much of a signal and yet the valuation goes from 50 to you know to 200 or something like that so that's so that's the hard part so we we've really moved earlier um you know kind of the the pre I wouldn't say preede but more like that that that seed motion has become much more prominent for us get in early especially you know too a lot of these technical projects. We have a very specific strategy around Neolabs, too. We're in about seven of them. Um, but we're not going in with like 200 million. We're going in where we can get ownership early or be part of something that we think ultimately could be a winner and and and and pile in. So, we've we've adapted to the environment with a bunch of strategies that allows us to pursue this barbell uh on the later stage and getting even earlier on the seed stage. But I think one of the worst performing groups in terms of venture in this vintage will actually be the small boutique seed funds, which is what every single LP that you speak to today, Matt, wants. Every LP, this is the funniest thing. Every LP wants San Francisco specific seed fund only under 100 million. And I think this would be the worst performing category of venture in this vintage because firms like you and Founders Fund and Benchmark and Sequoia and Excel and you list goes on and on are so effective with a very good seed product
that if you're a $50 million seed fund and you're writing $2 million checks,
dude, I'm too I'm too big to be friendly and I'm too small to lead. Yeah.
Do you agree or would you say I'm wrong?
Yeah. No, I mean look, I I think the biggest thing that's changed from the time, you know, my for my early days in the business, but for a long time is people used to have their swim lanes and now more and more everyone's full stack, including our part our good friends now at benchmark adding a adding a growth vehicle, right? Um, but it's and then everyone used to make this argument in the seed world like, "Oh, there's negative signaling if you let an institution in there." And I think that's kind of out the window as well because for the right companies like everybody's getting preempted and the rounds are bigger. Maybe we're back to, you know, more collaborative rounds cuz they're bigger. Everyone used to be like, "Well, I have to have the whole round." And now you see a lot more syndication. But this whole notion of swim lanes is gone, you know, and that's just the the times we're in. The syndication element is actually nicer. I find it's nicer to be able to be more collaborative. I like that a lot more.
I mean, believe me, for the first uh 1015 years of my career, every series A you led, you would bring in another kind of top tier firm alongside you. And the view was like, look, we're going to we're going to work more effectively together. We're going to be better helping this entrepreneur grow and scale. And then for 10 years, it became, no, no, everything has to be one investor. And some of that's obviously a function of of ownership, but uh I like the syndication part. Totally. When we talk about seed funds of that size being challenging, series A being a difficult insertion point today, and the barbell approach, the $3 billion fund size, we we talked about it in the show with Rory and Jason. Um, and we didn't really get it in the nicest way. You've got Anthropic, you've got Lovable, you got Lori, you got Openrooder, you got Fireworks, you got the list goes on and on and on of great companies. You could raise way more. Why did you raise three and is the future of venture not much bigger platforms like GC and Lightseed and all the big names we know so well? when you take on more capital like you there's implications of that in terms of how you run the firm culture how many people you have and we love to be a relatively small and mighty machine with you know roughly let's say 12 partners and a great set of you know principles associates things like that that make us better and stronger but like when you go full full stack and you have like five different teams you start doing sector like everybody's kind of out for a pass and sometimes I've seen this in other places where you feel like well I could do whatever I could do great things but but I can't really index on this small group of people. there's too many they if one group doesn't do as well then they kind of drag down you know how this this other group so it kind of leads to a bit of um less less feeling of like alignment uh agency collaboration together and that's what we've really wanted to to keep at Menllo and despite having two funds and kind of two IC's we have a very fluid uh amount of work across those two groups where partners from the venture fund can lead investments in our in our growth fund etc so it's really more like how do we want Menllo to be to meet the market? Um how do we want to run internally? How do we want to keep our team relatively small with great people and not feel like we're, you know, more more a company, but we still really are a firm.
Dude, I'm just a humble British podcaster. We don't talk about scale here, okay? We're we're just we're we're everyone's friend. [laughter] Um
your fund's not so tiny, my friend. Um but uh my question there actually is you know I know Josh and Thrive very well dear friend and he's always said to me that you know people have a lot more plasticity investing across the stage than than one thinks. Do you think people are like oh they're a growth investor or do you think people do have that plasticity to move across stage and a great seed investor can be a great growth ambassador? I think you I think you're best off if people pick a uh I'll use the word swim lane again meaning like hey you it's just hard to cover everything right especially in seed like how am I supposed to be wandering around you know Stanford labs meeting with researchers and also chasing the the 20 best growth potential investments in the world it's just it's just too much and I think the pattern recognition the the density of the work that you apply to a certain area makes you better. And so that's roughly how we've split our team is, you know, uh early stage team, outlier, you know, growth kind of companies and everybody really focused. But if something comes up that's a great fit for somebody across the fund vehicles, then fine, there's fluidity. But I really do feel like you're best off by being super super focused with, let's say, 80% of your time. totally understand that rationale. um even the more
but like even on that like think about sector wise too you know all of a sudden uh you know um uh processors G TPUs GPUs are hot right and then you've got defense tech it's hot and everybody's kind of rushing in you can't go in there and just kind of spearfish one investment that you run into and feel like you've got the expertise you need to understand that landscape you need to understand the entrepreneurs you need to understand the the buy side and if you haven't really worked in a semiconductor company before which I did that's where I started you know my my career at a startup before I joined Planner Perkins it's it's so hard um you know take can take two three years to get the right chip out you think you got a design win it evaporates very very hard
what about Arish and Steve Valo with Cerebrus I mean they directly did a spearfish on this one company
all well I've I've talked to Eric about this and by the way you know uh you had Bruce Dunlevy like one of you know epic semiconductor investor and he's like all my partners And maybe you even said this on your show, but like you know all his partners told him not to do it, but like I would, you know, every once in a while as a firm you can do something that's a little bit like there's something really special here. We might get a zero, but if this works, wow. And I'll that's, you know, I'll take you back to our investment in in Anthropic. Like same thing. It's like this doesn't really fit. This isn't what we normally do, but wow, if this works. I mean, got such a special founder in Daario and an amazing market. And if these guys become the two, and that was the goal at the time, this is going to be wildly um successful. Now, did we ever realize they were going to be the normal number one? That was like a little twinkle in the eye. Um but that's the upside you get by getting yourself in these companies.
You're better off being in the big outliers at a very small percent than owning a large percent of a company that exits for 3 to 500 million. Those just aren't going to move the needle. That's not how the game is being played anymore.
Can I ask you just on geography? We've spoken about Lovable, we've spoken about Lorra, two companies based in obviously Sweden, and then you have Anthropic and you sitting on the West Coast. How do you think about the centrality of power with AI moving back to San Francisco? All the brightest minds, all the best researchers are there being the common theory with also a portfolio that's very global in terms of winners. Yeah, San Francisco was a weird place for a few years, you know, like all the cool kids wanted to be in New York and and San Francisco felt a little bit like a, you know, a ghost town, very concentrated in sass, not like that much interesting stuff going on. And I love seeing it have its mo have its mojo back, right? That's like when these waves come, the Bay Area usually leads. And so it's just giving so much more energy. And people who are like lifetime New Yorkers who would never think about leaving living in the Bay are now coming out here. I think more college grads are saying, "Yeah, New York's cool, but I got to get out there and be part of this AI thing." So, I think it's great for um the Bay Area. I think that the the concentration of that talent is what has always made the Bay special. you know, you just kind of you you're you're just constantly talking and meeting entrepreneurs and understanding how everyone's pushing themselves, not just like their work ethic, but more like technically what they're working on. Your context that you have by living in the Bay Area is probably like 10 or 100x if you're just some really great company somewhere else. now you know uh kudos to you and not you know just you personally but like you know what's going on in Europe right now like that whole um Deep Mind diaspora you know you mentioned a couple of companies like Loveable and Lorra that we're in and Ryan a couple more like that's that's new for us we would always be like oh we can't you go to Europe it's kind of a you know more of a cottage industry there and you know where does the you know talent really spike but the one thing I have always thought about Europe is if if you're an entrepreneur there, it it was harder. So there's kind of more grit to be a great entrepreneur in Europe than let's say in the Bay Area where you know it's uh it's not that it's not incredibly hard to get into YC and just be a founder. I think in Europe it's always been a lot harder. So if you have the grit to get off the ground in Europe to be a global company that says a lot about you. So I wouldn't say we're putting boots on the ground there, but we're spending a lot more time and uh definitely interested in doing more there. Totally agree with you, Anton at Lovable always says building in Europe's like, you know, hard mode. Um, can I ask you when you lose a deal, is there a commonality as to why you lose? The thing that's most often is that you were late to the party, right? Like, you know, you were not intentional enough that this was a company that you wanted to be tracking and building a relationship. So, you're coming in, you know, a couple weeks or a month before the round and somebody else has a year-long relationship. That's that's usually a death nail. Um, and then
the big the biggest death nail always for me is like when it's like, oh, I worked with them at my previous I worked with Matt on my previous company for seven years and I'm like, okay, [ __ ] I'm done. [laughter]
I think so. I mean and relationships mean so much in this business because it's it is like high trust matters so much and both like within a venture firm and with the companies we work with and so it's hard to establish that in some you know shotgun wedding some sprint. So we try to be very intentional about getting out ahead of things. You know, I'd say for the best companies, they're always going to be this like uh kind of jump ball and and it's incredibly important to know someone who's associated with the company uh who can kind of help um guide you in land the plane a little bit. And if you don't have that and another investor does like, hey, this person has worked with this board member for 10 years and they had a great experience in some big outcome, you know, it's it's it's more things like that. It's rarely just like straight up, you know, valuation stuff like that. Yes. valuation can be painful. Um, but for the right companies, you know, you do what it takes to be in.
The single biggest mistake for me is always actually focused around ownership. There have been several companies where we've had like 1% offered to us. Deal, 11 Labs, StarCloud, where we were like 1%, we can't be doing that. And now I look back and all of them would have returned, you [laughter] know, huge amounts of money.
That's the way I was trained and I learned that for most of my career. So it took me a lot to kind of shed that and you know that's a lot of
Do you think do you think that do do you think LPs understand that cuz LPs always like high ownership portfolio uh you know constrained portfolio sizes concentration benchmark? Do you think they get that the game has changed?
Well, I think they see the I think they see the results, right? So, like maybe not upfront, but we're pretty explicit with them that we kind of have like, hey, here's a here's a core position in a fund. And then here are what we call like tracker checks or starter checks or frankly even look like look at our anthology fund, right? Like that's over 50 companies somewhere between 100k and 1 million where you kind of get in a seed round and the companies that have graduated out of that have been open router, whisper, axiom math. So, you know, there's a couple things. one that gives us a bit of proprietary, you know, quote, deal flow. Um, but it gives you the opportunity to be in the cap table, get to know the entrepreneur, and then pounce when you see something's working. And I would say if you get even a wedge into a company, you're 10x more likely to be able to participate significantly in the next round or lead. And I think LPs get that or they are getting it.
I totally agree with you. And you do those checks so you can concentrate capital more with the progression of the company. I went viral on BC Brags, Matt, when you did our last show. I was very amanable and sweet and nice little kind of Harry Potter adventure. Now I'm quite binary and apparently a lot of people don't always like what I say. And VC Brags in particular took real uh problem with me because I said basically I turned down a company the other day because they were going from like 1 and a half to 5 to 15 and there's an opportunity cost of capital say that's very real and the growth expectations are just very different. In other words, triple triple double double. It's just not exciting enough anymore. And so I got chastised for this. Are you with me that fundamentally if I bring you a one to five and then a five to 15 again, it's great. I'm not belittling it, but that's just not the venture game today.
It's not. It's not. And it's hard to say and it's hard to change, you know, the context, the 20 plus years of context around what good and great was. But that's the reality. the environment has changed. And so if you look around and you're like, well, that used to be top 5% and now it looks more like top 50%. Well, you know, uh we're not trying to be in top 50%, right? So that's just the reality. I mean, it's not it's not it's not controllable by us as investors when we look around and see these companies doing zero to 100 in in a year. Never seen anything like it. And there's more examples of that than I can probably count right now.
What company are you not in that you would most like to be in? There are there are several um the one company that I've really admired and you know as the kind of like outlier entrepreneurs we in my history going back like you look at the companies that became great you know when I was early days of clients like you know uh Jeff Bezos and later on uh Daniel A and the Collison brothers and like somehow or another these amazing founders end up manifesting the company. I don't necessarily think it was that they chose the right market or I mean somewhat they did but it was really just the force of nature, the creativity, the vision, the execution, their ability to raise capital, hire the best talent, all that. So anyway, I think um an example of that in Europe just cuz it's close to home for you would be someone like Maddie at 11 Labs. Um very uh big respect um for him. So, you know, you know, I don't want to give everyone on the podcast my whole pipeline, but just because that's one you you know, well, I I'll throw that out there.
What was the most controversial deal inside Menllo that you remember?
The obvious answer is is is anthropic in some ways, but I'm I'm trying to think about and and by the way, there was two two controversial points around that. One was, you know, the first is like, is this really what a venture fund does? And the second was like, we've never done an SPV before. Are we really going to go down this path? um you know I mean I don't I can't really remember offh hand anything like that was that uh you know um profound and felt like wow we're kind of putting the the reputation of the firm especially the you know the the the bigger SPV uh on the line to to kind of pull this off and and and you know breaking breaking new ground. I think you know the great thing about our partners um we've got a very technical group. We're small enough to have high alignment. We respect each other a lot. It's easy to make, you know, we listen to each other, make good decisions. So, I don't find things that controversial. I don't really ascribe to this point of view where you need like a bunch of nos and there's one person who's a yes and that leads to an outlier. I know there are examples of that, but that's not really been my experience in the firms I've been part of or with our team.
Final one before we move into a quick fire. I I am not great at maths, but if I do like a little bit of a back of a napkin on on um anthropic and distributions, it'll distribute around $10 billion in carry. It's quite a lot of monopoly money, Matt. Um do [laughter] how
not in carry, right? Our position is is north of that, but that's not that you can do the math on what Carrie usually is. So it's not quite that on on Carrie but our death.
Okay. Okay to totally understand. Two to three
two. It's a very big number. How do you think about firm sustenance when there is such a big win? We have seen firms candidly struggle to maintain dominance when everyone makes so much money bluntly. How do you think about sustenance post such success? You know, I think Menllo has always had a challenger mentality since myself and Venkey came over a little over 10 years ago and kind of Sean Carolyn came back and and you know, Mark Seagull was the partner who was there who kind of put the band together and ever since that moment about 11 years ago, it's just been a grind, a fight, uh a a build, exhilarating to kind of get to this point. And I feel like everyone we've brought along has kind of felt Menllo move up that stack and be more and more successful. So I think what's driving us is what you would expect less about that monetary outcome. And holy [ __ ] we've put oursel in a place to be one of the hopefully leading firms in AI and how do we really compound and double down on that advantage. And that's the energy I feel every day certainly from myself and all my partners. And I I just can't see that going away. It's kind of like it's kind of like we arrived. We're here. what we what do we do with that? And you know, the money's great, but that's not what that's not why we did all this.
I think richer investors make better investors because you do not worry about downside mitigation, but you focus on upside optimization. How big can this be? What happens if this works? You're not worried about LPS not re-upping. You're not focused on risk mitigation. Do you agree with me in thinking that?
Of course I do. And I think it's it's it's at a firm level and it's in an at an individual level. And you know, there's been times in my career, you know, where you where you feel some some doubt either from yourself or those those around you and it it makes you dramatically worse, right? And so we try to do is have a high trust environment, build [snorts] people up, and everyone is going to fail in this business, right? It's just kind of recognizing that sooner and kind of landing the plane or doing the right thing. the worst thing in the world is to kind of hold on and just go to try to, you know, um act like the reality is not is not the reality. And often times you're doing a founder a favor by even helping them, you know, kind of kind of land the plane. So, um so yeah, I I I think it's an an important point and an important thing, you know, to to to manage in this business.
Totally get that, dude. I uh I would love to move into a quick fire round. I have uh pushed and prodded around many different areas. So I I appreciate the patience.
This is where the really uh offputting stuff comes or I'm ready.
Dude, you're born ready for this. What have you changed your mind on in the last 12 months? Oh, I mean certainly just um how big companies can be and how bold Menllo should be in in in pursuing those um that we need people who are you know freethinkers and willing to take those those kind of risks and that's more that's more true than ever like just how big a company can be.
Biggest miss and what was your lesson from it? the things that I would look back on at the time as a big biggest miss no longer feel that way. So that's like like I I'll give you one. You know, we were at the like the one inch line um winning plaid back in the day and I've I have the utmost respect for Zach and the company and what they've done. But the point in time I felt like when I lost that that that was like existential to you know my my career and ability to to win and and you know they're they're they're a great company. But I guess what that did is just more conditioned me around like you know um one loss doesn't define anyone. Now okay if you didn't win anthropic that would have been extra painful but the point is like you just got to keep keep going and finding that that you know next big one and if you if you focus on the right big trends like we did around AI and get out ahead of it that these cycles come along and um uh that's what I've been more focused on than worried about a loss. You can invest in one seed fund, one series A fund, and one growth fund. Which fund you invest in? And they can't be your own. All right. Seed fund. Um, you know, I'm I'm I'm less like plugged into the seed fund world for reasons that you and I have already discussed. I don't follow a lot of seed funds around. Um, but I I I've had a great relationship with Chad at SUSA for a long time. you know, Brook Buyers was a, you know, one of the quasi mentors to me when I was at Kleiner and we got to know each other and seeing him kind of grow and thrive and I I really appreciate his perspective on things. Uh, you know, I mean, Series A, um, you know, Benchmark, I've worked with, uh, Cha and Eric a ton and, you know, great respect. Um, hard to say not not say Sequo as well, but anyway, since you asked for one. And then growth funds a little trickier. Um, you know, uh, there's so many great full stack firms. So, it's like there used to be a very clear set of growth funds. Like when we were talking about Swim Lace, it used to be like, okay, well, there's IVP and and, you know, there's Maritech and and I have high respect for both of those folks. But now the reality is that the growth funds that you look at, it's like, well, it's uh, Lightseed, uh, you know, Thrive, you know, f folks like that that we, you know, you know, partner with a lot and even Sequoa and Andre. So, it's harder to just kind of pinpoint one growth fund because it's it's like it's like a blend of a dollar. There's not there's no way to really index on that market anymore.
I get you. I'd probably say just size of firm. You could be like, you know, when you reach $5 billion plus, you're probably a growth fund at that point, my friend. [laughter] Like, [gasps] that might constitute it. But yeah, I get you. Um, I think also, by the way, everyone who was a boutique growth fund is now just a growth fund. I think you will see all of your IVPs, your marits just raise large funds. You can't play growth with under a billion.
I agree. I agree that that the growth market has changed dramatically.
Yeah, I I I think Yeah. Um where is overheated right now, do you think?
Oh, um robotics and neolabs, you know, and maybe maybe defense tech, but just because there's so much going in. But, you know, I like all three of those sectors. But like Neolabs, Dee put out a my partner Dee put out a text I mean a tweet uh yesterday on how there's like 60 Neolabs. I told you we're in seven. But but you know some of them are very you know generic like we're building we're getting a band together. We're going to build something really cool researchy and we'll see what happens. And then others are like chai where it's like hey we're we're going to be very focused on creating drugs and antibodies and and or axiom focused on math and things like that. But, you know, there's 60 plus of these and uh you know, when the dust settles uh that that's I I I don't know what's going to come of that. You can't you can't expect all these companies to have great aqua hires and there's no way in hell that you know we're going to have 60 independent model companies in addition to all the open source and everything. So, I think that's way too big of rounds they've raised for where they are. Huge concentrated positions for some firms. So, I think that's a challenge.
Totally agree with you. um where is underinvested? I think that there was a bit of a false negative on some of the infrastructure stack you know whether it's like um you know observability Asian frameworks you know all this kind of stuff that started maybe 3 4 years ago and a lot of these companies didn't end up panning out right and now the problem was goes back to what you and I talked about earlier people were very focused on like single model so you didn't need all this surrounding infrastructure but now as the as the as the kind of the whole ecosystem has gotten so much bigger and you're doing optimizations, you want to manage your your spend, you need to, you know, uh have much more robust observability solutions, you need something like open router. I just think, oh, we're we're in this company called Gimlet, which is, you know, kind of like this technology layer to uh kind of offiscate the underlying chips and technology stacks like CUDA, etc. There's so much more there and I think we started off investing in that area two three years ago. Nothing really came out of it. Now these companies are really taking off. So that's one we're excited about kind of the develop the developer stack all the tooling above the the foundation model. Final one for you dude. What are you most excited about when you look forwards 10 years? So like for me you know my mother's got MS. I'm incredibly excited to think about medical breakthroughs for you diseases where we always kind of just accepted that oh it's a chronic condition and you're like okay I'll just live a much worse quality of life with that then I'm excited for breakthroughs there. How do you think about where you're most excited?
Yeah. I mean well I'll just pick on that one and then riff from there. But like we're totally excited about that. We have about eight of these models. I mentioned Chai, but we have a company called Zera Villia. I can go down the list of companies building specific models to do drug discovery. So I think and then we did something like assort health for very you know for better healthcare delivery right so like the whole medical system which we all know is kind of broken even though the US has great healthcare there's so much more that can happen and come to us from both from therapeutics um as well as just kind of workflows and how the medical system operates and of course you know that's a very near and dear mission to anthropic and Daario um but aside from that like the thing I'm most excited about probably goes back to like where Menllo is now and watching uh how we really lean into and take advantage of this opportunity with the team we have now that we've assembled. Um that to me is probably the most rewarding thing in my career is kind of where the firm is and the people we have to execute going forward. I'd say from like a you know trend of AI and all that these things only come around as you know every 10 years and this one feels like the biggest. I've been through four or five in my career and so I am just completely fascinated to see what this looks like because we kind of know what it looks like now and we kind of think we know what it's going to look like in a year or two but given the pace of innovation what in the world is this going to look like in 5 or 10 years nobody can tell and I think the how many things will be transformed over that period of time is going to be more mindboggling than what we've seen in our society and in in my lifetime and and your shorter lifetime. So, I'm super excited to be investing in the middle of that and, you know, partnering with great partners and and people like you who I want to syndicate more with.
It is the greatest time to do venture. I do feel very lucky to be doing venture in this moment. Like, what a privilege.
Totally 100%.
Dude, you are a star. Thank you so much for doing this. Uh, I hope that I've improved as an interviewer in, you know, six years. May maybe not, but uh I will continue to try. But you've been amazing, dude.
Thank you for having me on. You went from uh great to uh greater. And uh I hope I hope you'll invite me on before another seven years. And always love chatting with you.