Sam Lessin on Venture Capital & Investing

Essays

From the Podcast

So the question is, there has to be a shock. You need something. You need either a better narrative which sucks the wind out of the old narrative, which can happen, but is super hard when the narrative of AI is everything. Like, it, what's, what's more than everything, right? Like, or you need, like, something to go very badly that then people start having to rationalize, which is unclear how that plays out. So I'm with you. I, I think it's very difficult to defend stock prices that you'll never see financially make sense in numbers, in profit. So you either believe that, like, we're just ha- holding onto the chip 'cause there's a one in three chance it pays out, which is very venture capital, by the way. But you kind of still value the chip 'cause it still might pay out. It's, like, not impossible, right? That it pays out.

— Sam Lessin, More or Less Ep 163

I do think there is something with the devices, though, Brit, to your point, with OpenAI, 'cause again, they're great narrative capitalists, is like, it's a classic buy the narrative, sell the news, right? Which, again, makes these things hard to be public, which is, like, the argument that they will never release a device is because it will only hurt their stock price if they're public. It's hard to imagine a world, like... Which is very, very different than, like, I think Elon pulling off some rocket. Like, he has the downside of rocket blow up.

— Sam Lessin, More or Less Ep 163

You got a barbell. You're like, "Look, if this AI stuff works, we might as well have our hat in the ring here." Like, it doesn't mean they're not. And like, so I think they'll be able to raise capital and get out on a meme, but, like, these are gonna be stocks that, like, wildly hit and then wildly miss their quarters. You know, OpenAI, I think if you unwind the tr- the real story of OpenAI, which I give Sam Altman a lot of credit for, it's the greatest fundraising story in the history of the world, right? And to do that, right, the narrative was AI scary. It wasn't always consumer. It was enterprise, then it was consumer, then it was kind of, like, floating, figuring it out. It was get all the talent and tell the story there'll be one winner in AI, and it will be us 'cause we will compound and be so far ahead we're uncatchable. That's clearly not true. And Anthropic did a different strategy, which was just focus on the part that was working, which is, like, coding and business applications where people, like, there's a lot of spend, da, da, da, da. They're crushing it with that strategy. Will that last forever? Who know? I mean, like, technical people like Codex more now, right? But it doesn't actually matter. It doesn't matter who's in the lead right now. What matters is that no lead is secure, and projections don't mean anything, right? And so I think that's the real story is it's too easy to switch, leads don't matter, it's gonna be impossible to financially price any of this stuff, and I think OpenAI missing massively on quarter and getting so eclipsed is just... It's like if Uber got hit by a Lyft, right? That wasn't supposed to happen. It doesn't tell the story of, like, how growth is supposed to work in these things.

— Sam Lessin, More or Less Ep 163

My basic point is it's incredibly capital efficient. So you have, like, the guy who is one of the most important characters or whatever maybe gets 10 to 20 times as much money as the guy who very smartly takes no infrastructure and wraps a router on top, which is not that technical, but did a great job marketing it. That's kind of a funny 10Xer, right? A 10X, 20X difference. Like, what Dario did is a lot harder.

— Sam Lessin, More or Less Ep 163

Was it really that expensive? I guess they really did have to raise that much capital. Like, that's what it comes down to.

— Sam Lessin, More or Less Ep 163

Oh, you'd be surprised, Jess. All venture capital firms do is talk shit about each other. I want someone to declare Slow Ventures an unfair monopoly in venture capital. This is the greatest marketing you can- I declare it. I will call the Justice Department. Occam's Razor says the only plausible answer is that Marc Andreessen actually planted this 'cause it's great marketing. You're like- For sure ... we're such a great venture capital firm that it's a competition issue. You know? Like, that's gotta be it. 100%.

— Sam Lessin, More or Less Ep 163

What is the point of a private market if you can't have conflicts of interest? No, I knew we were gonna talk about it, I just don't understand. Like, what are they... Like, w- why? They're very angry that the sky is blue. They're gonna like write, like... Venturecopalis has board seat on two competitive companies. What do we do?

— Sam Lessin, More or Less Ep 163

It's like they don't understand that, how venture capital works. Yeah, it's like, what's the famous John Doerr-ism? No conflict, no interest.

— Sam Lessin, More or Less Ep 163

I'm with you. I have my own takes on where the leverage and I can deploy on this stuff is. I do think I'm with you ideologically. I do think it's one of the tr- problems of a Twitter or fun podcast with your friends who are all venture capitalists in different places is we can all fervently agree with each other and feel really good about it. Yeah. You guys, this was really fun. I appreciate you all joining. I hope you had fun doing it. Super fun. This was great. Thank you for hosting. So thank you all.

— Sam Lessin, More or Less Ep 162

There are two directions I wanna divert us and jump off. One direction is, sure, I agree with that. But the early OpenAI pitch was, "We're building AGI, winner take all. You're either on our train or st- have fun staying poor." Like, it was, like, a one thing. That has kind of evolved into a lot of people who are really smart being like, "Oh my God, this is the moment where everything matters. Cost of capital is zero. I gotta take my shot. And by the way, I've already punched my card four times. If it does turn out to work, I'm protected. I've got plenty of stock."

— Sam Lessin, More or Less Ep 162

So but Josh, but d- can you build a company that way? Like, with people coming in, stamping the card, getting infinite free capital for their next startup. Like, does that work?

— Sam Lessin, More or Less Ep 162

Let me push on this for a second. Then I wanna talk, I really do wanna talk about one or two other topics before we wrap on the day. I hear you, and I totally think it'd be great to have Americans more dealt in in a lot of ways. I think, and obviously I believe deeply in capitalism and would love people to be more pro-capitalist and feel part of the story. Here's the problem. Historically, appeasement never works right? It just doesn't. Whenever you appease, you're like, okay, a- and the reality of capitalism, right, is that the story is supposed to be, "Hey, if you work hard and get lucky, you do really, really well." It's not a social security net story, right? And like i- is the American story, I would say. Now, we had a lot of benefits. First, we had a country which unfortunately all the people who lived here originally died from plagues and then wars. We had a huge amount of space, we had n- natural resources, we had Western expansion, we had the internet, we had all this terra nova, which meant that historically if you're an IQ 100 person and worked hard, you'd do fine. If you had a shovel, then it was like, "Oh, just go to school and you'll do fine," because there was so much demand for like intellectual jobs. Those stories have run out on the capitalism side and the American side. It's not clear what the next story is, but the story of, "Hey, here's 1,000 bucks. Hopefully it compounds in the market," I don't think solves the underlying problem of like how do you create opportunity for people and like the American story of capitalism free enterprise.

— Sam Lessin, More or Less Ep 162

That you're a mercantilist. You're a mercantilist. You're not a capitalist.

— Sam Lessin, More or Less Ep 162

Yeah. No, a hundred percent. I mean, I used to... We used to talk about, I mean, like, you talk about the composer and Facebook era, it was a data pump, right? It was an efficient free data pump to bring data online that couldn't exist anywhere else. And the reality is, if you go way back in the Facebook history, the real story was on day zero, internet's scary, so no one wants to post on it. You're never gonna put a real photo on it, da, da, da. Facebook created the trust and security for people to take a bunch of real world data, photos, relationships, messages, et cetera, and bring it online, right, for the first time, and created an enormous amount of value doing that, right? And so now we're in this weird multiverse where it's like the internet has all been scraped to hell, right? Like, good luck, New York Times, with their lawsuit, right? But, like, that has been, like, copied a thousand times and distilled a thousand times. You have personal private digital information, what's in Gmail, what's in da, da, da, where people have some say in theory as opposed to it just all being, like, dumpable effectively. And so that's where we were talking about the trust, things like that. There's then, like, the, the whole class of companies that are out there trying to, in some ways build new data sets, the Handshakes, the Scale AIs, where you just pay a ton of money and you turn financial capital in some form into, like, unique data. And then there's all the offline stuff. And so I guess the question for me is, like, assuming that multiplying big numbers is a commodity and will be, right? Like, is the story you just, like, really... You go back to day one, which is, like, if your data isn't unique, you're not gonna be valuable long term.

— Sam Lessin, More or Less Ep 162

Boom. Boom. So she took those operational chops to then run Uber North America, has started Construct Capital, represents the rare DC venture capitalist, but a breed that is growing, and get to do a lot of business with her now. So Rachel, great to have you on. Scott Belsky, I mean, look, Scott's done everything. I knew him originally when he was running Behance and founded Behance, which he sold. He's now a partner at A24 and, and running A24, A Labs, founded it, and is thinking more about kinda the future of creative than anyone I know. So I'm thrilled to have him here. Scott Stanford, I mean, you started out in an even dirtier job than venture capital, running Goldman, or a big piece of Goldman for a long time on the TMT side. You can correct me on the details, but you somehow did that forever, and then have had a, an illustrious venture career, now is the co-founding, uh, partner of, of Acme. And then Josh Wolfe, who... Does, do you even need an introduction at this point?

— Sam Lessin, More or Less Ep 162

Tweets