231. Crisis Coverage w/ Ramy Adeeb – Why Facebook Should be Broken Up; SV Hype vs Returns; Amara’s Law; and VC’s Track Record Predicting Trends

231. Crisis Coverage w/ Ramy Adeeb - Why Facebook Should be Broken Up; SV Hype vs Returns; Amara's Law; and VC's Track Record Predicting Trends
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Ramy Adeeb of 1984 Ventures joins Nick on a special Crisis Coverage installment to discuss Why Facebook Should be Broken Up; SV Hype vs Returns; Amara’s Law; and VC’s Track Record Predicting Trends. In this episode, we cover:

  • Backstory/Path to Venture
  • Tell us more about what was it like working with Vinod. Is there anything he taught you in specific that was most influential? And how about Pierre?
  • How has the crisis impacted the way you invest as well as your thesis?
  • Have you seen an adjustment, a correction or a slow down amongst the Series B, C and growth stage investors? Any predictions on how long this period will last? 
  • What are some tips for founders when pitching to VC’s over zoom? 
  • Quick highlights of your thesis (stage, sectors, geos, check sizes, etc.)
  • You’ve said that one should “Avoid the hype – whatever is en vogue you should run away from” why should the hot trends be avoided?
  • What’s Amara’s Law and how does that inform your thesis?
  • Any stats or data on VCs ability to predict the future?
  • Let’s say someone describes one of your investments as feeling more like a product and not a company… how do you respond?
  • You’ve mentioned your focus on passing quickly… What are your tips and tricks to get to a quick pass?
  • You’ve said that Facebook is a monopoly and should be broken up… why?
  • In your estimation, what’s the most significant adverse effect from WeWork and The Vision Fund that no one’s talking about?
  • Tech is often credited for creating significant value but some also argue that it destroys jobs and widens the wealth gap. What’s your take on this and how, someone like Bernie Sanders, in office could affect venture?
  • When it comes to the economy and the effect of tech on the economy, we’ve seen unemployment fall to an all-time low while the # of people ‘not working’ is at an all time high… Are we measuring the right economic indicators when it comes to unemployment and also inflation?
  • I also came across something you tweeted about Tech Pessimism. You quoted: “We too often focus on the drawbacks of a new tech while taking its benefits for granted.” Meanwhile “To be Alive in the tech obsessed 2020 is to be among the luckiest people who have ever lived.” Can you give us some examples of Tech Pessimism and your take on it? Do you think there’s a resolution?

Guest Links:

Transcribed with AI

Intro 0:03
welcome to the podcast about investing in startups, where existing investors can learn how to get the best deal possible. And those that have never before invested in startups can learn the keys to success from the venture experts. Your host is Nick Moran and this is the full ratchet

Nick Moran 0:23
Ramy Adeeb joins us today from San Francisco. Ramy is the general partner at 1984 Ventures. 1984 is a Silicon Valley based venture firm with investments in shelf engine, trusted health and flow space. Among others. Rami was also the founder and CEO of snip.it, acquired by Yahoo, where he served as product executive under Marissa Mayer and one of the earliest engineers at telephony networks acquired by Microsoft. Previous to 1984. Rami started his investment career at Khosla ventures where he worked with investors, Vinod Khosla, and Pierre Lemond on a number of investments, including square GroupMe acquired by Skype and Storify acquired by Livefyre. Ramy, welcome to the program.

Ramy Adeeb 1:03
Thank you. Pleasure to be here.

Nick Moran 1:05
Unbelievable that, you know, you work with both Vanadzor and Pierre lamonta. I mean, that’s, that’s, that’s wild. That must have been a very formative experience.

Ramy Adeeb 1:15
It was pretty amazing. Actually, you know, when I when I joined Khosla ventures, the story of how I joined Khosla ventures was pretty interesting. He, Vinod came to Stanford when I was in business school, and gave a talk. And I was pretty fascinated by the talk. And at the end, I just started chatting with him. And he asked me if I had any business experience. And I said, No. And he said, Great, we should come interview with us. And that’s how it started. He was much more interested in my background as an engineer than my background as an MBA. I

Nick Moran 1:44
love it. Well, I mean, there’s few bigger names in the industry. I mean, you got like Vinod Khosla, Pierre Lavon, Don Valentine, I mean, that’s like the Mount Rushmore of VC right there.

Ramy Adeeb 1:55
You know, it’s been a pleasure. And it has been a real honor to work with them. And they taught me a ton. But probably, and I would say, it has also been very humbling, you would sit with in the room was Vinod. And each and every single time he knows more about the subject, than pretty much any other partner in there, which is really quite remarkable, because his appetite for knowledge, this never ceases. Until today, you go to YC Demo Day, and he would be sitting in like the third row, the fourth row, diligently taking notes in each and every pitch.

Nick Moran 2:27
Unreal, I’m going to put you on the spot here, can you distill down like one of the key salient lessons that you learned, you know, working with these amazing investors?

Ramy Adeeb 2:38
I think perhaps the one salient point is, each of these investors has different strengths. Some are phenomenal at reading people, others at phenomenal reading technology, or reading products, others are phenomenal at business. If I have to distill what I learned from Vinod, down to two or three things it would be always keep learning. Right, his appetite for for knowledge was really remarkable. I mean, the guy was a billionaire and decided to go get a third Master’s, which is pretty rare in this industry. The second would be to try and imagine the potential and things. Evernote was really good at that. There was always a pitch, there’s an intrapreneur. And more often than not, the intrapreneur may not be thinking towards the full potential of the idea. But some of the best investors are able to instead of obsessing over what could go wrong, rather obsess with what this could become. Or in other words, to get your greed to overcome your fear. And Vinod did that exceptionally well.

Nick Moran 3:39
one step removed from that, I mean, I hear investors talking frequently about all the risks and all the challenges to different businesses. And it’s, it’s not my style at all. I mean, of course, you have to be aware of the risks and you have to manage them and, or the founders rather, you don’t have to manage them and be aware, but typically, those things, you know, are not reasons for me to avoid investing in a startup. You know, I’m looking more for the people that are sort of the the optimists, I guess, in the industry. So you’re

Ramy Adeeb 4:10
saying you’re looking for the optimist, intrapreneur or the optimist venture capitalists after

Nick Moran 4:14
this entrepreneur, but I fancy myself I guess, is the optimist venture capitalist.

Ramy Adeeb 4:19
I mean, optimism is at the core of this whole industry. We are trying to imagine a better a different future from what we have today. It is enabled by technology. And optimism is the core because about eight out of 10 investments that we will invest in will likely fail. And so you have to be truly an optimist to embark on these investments. And when you look at the data, the best firms don’t have a lower failure rate. What they have is a higher outcome on their successes. Right?

Nick Moran 4:51
That’s right. Yep. And so did you spend much time with Pierre Lamont as well?

Ramy Adeeb 4:56
I did as well and Pierre is is a I would call him the father of modern venture capital mentorship in the valley. I mean, this guy, probably some of your other speakers may not, you know, may not know up here, well, especially the younger generation, but he founded national semiconductors as one of the co founders in the 60s, then joined Sequoia in 1982, and stayed there till 2009 When he joins us, of course, LA. And then, and then afterwards, he’s now at Eclipse. He’s 89 years old. So he’s the oldest actively practicing venture capitalist. And he’s all about mentorship. Pierre took us all under his wing. Uh, he would spend a ton of time teaching us to be better venture capitalists, teaching us to do our work, almost like a teacher at a class who is being harsh with his top students, because they want them to get better. I remember one of the very first interactions was Pierre, it was the very first week and I decided to work from home. Because it was a Friday and everybody was out of town that day. And Pierre didn’t think that was a good start. And so on the Monday after I just got an email from his assistant saying, Hey, Peter would like to see you in his office. So I went to his office. And he had printed, every email I written the week before was red lines after every mistake I made, and he walked me through all of them. And then he asked me, Where were you on Friday? And I said, I was working for him. And he says, What does that mean? And I was like, Well, you know, there was I wasn’t sure we’re going to have pitches. And so I decided to cut down on the commute. And then he slammed his fist on the table. And he said, This is not the right way to start young man. Your mom says that to you? Oh, yeah. And that was and you know what, from that point in time, he became the best mentor I’ve ever had. This was a decade ago till today, every three months or every four months, he would get together with me, ask me, How are things going, mentored me push me to do things better, to push me to take more risks? He’s really, and he has done that just to have any other venture capitalist in the valley. And we’re all we’re all. We’re all honored to have him in our lives.

Nick Moran 6:57
Amazing. So Rami, you know, have you guys done any investments since the crisis hit?

Ramy Adeeb 7:04
We have, we have, we have done a couple of new investments. And we also have done to follow on investments and existing portfolio companies.

Nick Moran 7:14
Now well, was it more difficult to do the new investments having not had a chance to meet the founders?

Ramy Adeeb 7:21
I think it was more difficult, less, because we have not had a chance to meet the founders, and more because we weren’t time constrained as a function of spending a lot of time with our portfolio. And also at this time, the business metrics can be very extraordinary. And almost unrecognizable. Companies can show 90% or 100% month over month gross, or their revenue could be down to zero. And being able to make a judgment call on a business becomes harder.

Nick Moran 7:53
Right? Yeah, I could see that. I mean, does that change the way that you vet companies going forward? Are you going to be looking for different metrics or different levels of you know, certain factors.

Ramy Adeeb 8:04
I mean, my one advice to all entrepreneurs is, do not overplay the pandemic. Right? It’s very easy for entrepreneurs to walk in every every deck today has a slide that says COVID is accelerating our growth. And it’s true in tech is the clear winner from COVID. At the same time, not every positive metrics from COVID is going to last, you know, a great example I tell many entrepreneurs is toilet paper, right? There’s this huge shortage of toilet paper, you know, some toilet paper prices have gone up, you know, extraordinarily, because they’re so hard to find. But nothing about the rate of consuming toilet paper has fundamentally changed. Right? We’re all pooping at the same rate. And I would not go out and invest in a toilet paper mill. In fact, if you really think about it, coming out of this crisis, what happened is so many people both days that actually consumption of toilet paper will go down. So it’s important to just be careful, you know, don’t go around boasting 100% month over month growth when you know, that’s not recognizable. What matters most is just the fundamental business metrics.

Nick Moran 9:12
So no, no smart TP company investments.

Unknown Speaker 9:15
Not Yeah.

Nick Moran 9:18
That’s good. Well, you know, how do you think it it changes your thesis, if at all, do you think the pace continues? Is the cheque size the same? are the sectors and types of tech companies of interest? Are they the same? Or have you had to adjust the frame slightly?

Ramy Adeeb 9:34
Frankly, for us, the impact on what we invest in has been almost almost none. Right? Today looking at our portfolio, we have about four different sectors. We have ecommerce and enablement the Met has done really well. We have digital health, which has some companies have done well. Some companies have actually struggled because many aspects of healthcare are totally shot today, and many hospitals are very unprofitable. Till then we have a lot of enterprise SAS logistics supply chain businesses, that’s just business as usual. And then we have some prop tech companies software related to prop tech that obviously has had near zero transactions during the pandemic. But I don’t think any of these data or factors are honestly lasting, I think we will be back people will be back buying homes, you know, prices might go up, prices might go down. But if you look at the leading economic indicators coming out of China, the first thing that happened after it was over is home property purchases actually skyrocketed to higher levels than the year before because there was so much unmet demand or kept demand. So, you know, it honestly hasn’t changed much. We’re still looking for strong intrapreneurs software, enterprise SAS, you know, maybe commercial real estate, tech is something we will probably avoid, I think commercial real estate is, is really in a tough spot. Yeah. And it’s probably going to be in a tough spot for a while. Yep. But that’s probably the one sector, you know, that I could see that truly decimated from the crisis in a lasting manner. I mean, obviously, there’s brick and mortar retail, which just as venture capitalists, we don’t really invest it. Right. Right.

Nick Moran 11:06
So you’ve worked with a number of the big names in the industry at at some very large firms. Have you seen an adjustment, a correction, a slowdown amongst the B and C and growth stage investors? And do you expect that to stay down and slower?

Ramy Adeeb 11:22
Frankly, I do not know whether it will stay slow or not, we haven’t seen as big of a correction as one would have anticipated. And it’s very early, but on the surface deals that made sense are still getting done. And the serious evaluations and the seed valuations took a bit of a hit but not a major hit. Now, historically, when you look at what happened after the financial crisis, the public markets crashed, but it took two or three quarters to the public market valuations trickle down to the private markets. But in this instance, in this particular crisis, the public markets have dropped, but they’re aware of but they’re buid. They’re where they are because of the public tech stocks. Because public tech stocks are saving the day. And so it’s unclear to me how severe and how problematic the drop in valuation is going to be in a world where tech is truly saving the day. It’s too early to tell.

Nick Moran 12:18
The Dow is at 26,000. Today I am in shock. The

Ramy Adeeb 12:23
public markets are I mean, I honestly think I will we’re not public market investors and and predicting the future is an act of a fool. But when you think of just the s&p 500, so the Dow was at 2600. The s&p 500 is almost almost like January levels, almost back to January, crazy, crazy. And and you realize you realize two or three different things. One, we’re clearly under estimating the economic impact on the lower class and how that could trickle through the economy to its appears that everybody you know, there are so many troubles in the world, so many troubles with earnings, but there is still no replacement for stocks. People want to buy US stocks, they look at the world and they go for the US. And and that is not that is not changing. And then the third thing I would add is actually I’m quoting another luminary venture capitalist I heard a few weeks ago in a talk where he said, you know, everybody asked if it’s going to be a V shaped recovery or a U shaped recovery. He said, I’m not an epidemiologist, I’m not an economist, all I know is my entire life. I’ve never witnessed a V shaped recovery. And so I’m sticking up for now. And I thought that was funny. And this is a gentleman in his 60s. That’s

Nick Moran 13:37
good. That’s good. Yeah, I do want to, you know, jump into your background in 1984, and more about thesis, but just a last thought on COVID Here, do you have a sense for over under on how long you know, this, this period is going to last and sort of this sustained shelter in place?

Ramy Adeeb 13:56
To me the short answer is the world is going to look differently until we have a vaccine. At the same time when when things are different. For a week or two we want to revert back to our old habits. But when things are different for two months, becomes our new habits. You know, there’s some magic boundary between two or three months of doing the same thing where that becomes your new normal. And it’s obvious that we’ve crossed into a lot of new normals some of us are longing to go to the old world of for many of us we have adopted and we’re almost aware of what we have to lose if we go back to work days to go to having to go to the office like not being able to make sourdough bread at home anymore you know such luxuries that we have you know so there is an interesting you know, theory to be said that maybe what actually the America wants his kids to have childcare, but parents stay home that actually sounds like a dream. So it’s really hard for me to say like how long it will be to go back because I don’t know what we I do not know what we will ultimately go back to many trends As here, you look at ecommerce ecommerce. Before this crisis was at 16%, it took 10 years to go from 6% to 16%. Of all commerce. Well over the past eight weeks, it’s at 26%. So we have done the same thing. 10 percentage points rise in eight weeks as we did in the previous 10 years. It’s It’s mind boggling. Wow. Are we are we going to go but yeah, we dropped a little bit, but we’re probably going to stay. And the depth of all of brick and mortar, the death of Macy’s will probably is going to be here to stay working remote. It’s not, it’s not a Nirvana, there is a lot of benefits to being at the office. But also a lot of benefits of being able to spend time at home. When you have children. When you want to cook for the family. When you’re a certain stages in your life, it’s just a lot more convenient. How that affects real estate prices, how that affects where people choose to live, all of this, I think is we don’t know. And I don’t believe we’ll ever go back to the old normal per se because it has been too long for us to the new habits.

Nick Moran 15:55
Any quick tip for founders that are you know, pitching exclusively over zoom.

Ramy Adeeb 16:01
A few things one, it’s harder, obviously, always have a video, always have your video on and spend some time investing in your presentation over zoom. The same way you wore a nice sports coat to me or a nice shirt buttoned down shirt, when you went to meet a venture capitalist where what you need to do or showed up on time, what you need to do now is you need to have good lighting. You know, don’t sit with a window behind you. Because then you’re totally dark and I can’t see you turn around have the light come straight towards you, Nick, I wish they could see right now you have like the perfect setup, to have him have a microphone. It’s amazing. We all have wonderful MacBook Pros. But you start typing, you start scratching, and it’s very uncomfortable. There’s so much echo just by a $25 mic and use that speak. You don’t need to buy world class video camera, but definitely buy a mic. And then last, I think it’s a challenge of being on Zoom is just really the muddy chemistry between you and your co founder. When you have two people calling in from different places, you no longer have that same ability to communicate to channel thoughts back and forth. Practice. Spend time with your co founder practicing how he told the story together in different places. Before you do that with a VC figure out where your transitions are figuring out when you’re going to do the handoff. So many of our founders asked me, for existing portfolio companies, not folks raising new money, they asked me like,

Nick Moran 17:27
What do we do right now with the existing portfolio?

Ramy Adeeb 17:30
And then you know, like a founder tells me yeah, what should I do with my company? What should I do with my business, but I caught cost I not cut cost. And, you know, last week, we actually we held the portfolio day for our companies. And we invited a gentleman called Joel Peterson who is the chairman of he’s a professor at Stanford GSB and the chairman of of JetBlue. And he gave an exceptional talk for an hour, it was so good that I actually summed it up in a 92nd video, and I shared it on my LinkedIn profile. But I can just plagiarize it and share it with you roughly what he said very quickly. He said like number one, you have to survive. And survival often means cutting cost. So go cut that cost down. Number two, you need to create a plan, you we don’t know the future, it might be a V shaped recovery, it might be a yo it might be ll it might be a checkmark for you. You’ve got to create those scenarios, and articulate what you’re going to do with your team, with your product and with your cash and each of the different scenarios. And one thing that I think is very important is often lost on founders is instead of like having locker room conversations, it’s all going to be great, these conversations are actually demoralizing. What is mobilizing people to seeing a plan. The third thing is it’s probably time to clean things up. There’s many, probably hobbies and habits and inefficiencies in your business, that even if you’re you know, if even if you are surviving, this is a good time to cut them out. And then last he said he should really act fast. Not this is not a time to get there to wait for six months to then decide whether or not you’re going to do a cost cutting. And then the fifth thing is to be kind. This is a time when people are going to remember how they were treated. And even if you do have to do they have to do it properly. Do it kindly treat every employee as an alumnus of your business, not as someone who was let go. And yeah, that was really a summary. And I yeah, this is pure plagiarism here from Joe Peters. But I think it’s the same advice I give to all of our companies. So

Nick Moran 19:27
I’ll put you on the spot. Right? A venture firm is a form of a startup, and you’ve launched your own right you and Aaron 1984. So how are you adjusting at this time? How are you balancing all these different responsibilities, right, because all of a sudden, maybe you have some more time because you’re not traveling as much or going to events or meeting people in person. But you also have probably an order of magnitude more portfolio management responsibilities, as well as your investment responsibilities, as well as LP relationships right as well as everything else you should had to do to build the brand. So, you know, how have you been able to balance this being a startup founder yourself of a venture capital firm.

Ramy Adeeb 20:07
So again, I think it has been both a hard and phenomenal opportunity to like clean things up. So to give you some tactical examples, hard as in, we had to jump on a call with all of our portfolio companies, because you need to do that. We’ve always wanted to do a portfolio company day, but we’ve been frankly, like, just busy with new investments and didn’t really care. But when we realized, our companies, this is the time to spend time with with the portfolio, we just put the effort. We spoke out to speakers, we brought six great speakers, we had breakout sessions, and we had a wonderful day. It’s again, an example of cleaning things up things that we’ve always wanted to do, and we knew had to be done, but we hadn’t gotten a chance to do. I would say, just prioritizing your time, wake up in the morning and figure out what is truly instead of just going Inbox Zero and responding to every incoming request, take a step back and ask yourself, what do I really need to do? And now is the time to do it. And let’s do it.

Nick Moran 21:00
Boom, there it is. Well, I do want to transition talk about you a little bit in 1984. Before we kind of jump in into the topics of the day, you know, I gave a brief kind of background, very high level on on you. Can you tell us your own quick backstory and path into venture?

Ramy Adeeb 21:19
Absolutely. So my path into venture actually started in 1999. I was a senior in college, and I was interviewing with Tony networks, which was at the time one of the hottest companies telling me his mission was to bring the internet to the phone via voice recognition. So you would call a one 800 number and say, What is the weather in Microsoft? Or what is what is Microsoft trading at? Or what is the weather in Seattle. And when I was interviewing with the CEO, Mike McHugh, he told me, by the way, we’re one of the very few companies backed by Kleiner, that benchmark. And I had never heard of Kleiner Perkins or benchmark, I thought Kleiner and benchmark was a thing. And so I went back to my dorm room, and I Googled Kleiner and benchmark. And it took me a while to figure out that there was no such thing as Kleiner at benchmark, and benchmark, but it was pretty remarkable. And then I ended up obviously, working at Adobe for seven years, I learned a ton until it was acquired by Microsoft, I went to business school. And then I got into venture for the first time working with Vinod and ampere. But But I think my my passion for the industry really started in 2007 when I was in business school and took a class about venture capital by Andy Rackleff. And Andy is the founder of benchmark. And then he sort of semi retired and in the early 2000s, and started teaching this class at Stanford before later on founding Wealthfront. And he and what I loved about Andy, he really demystified a lot of a lot of the things about venture capital, and a lot of the hubris in the industry. And he always will talk about how venture capitalists always try to analyze trends and technologies, but the end of the day, it’s about people, we back strong intrapreneurs. And to me, that was a very humbling humbling thought that instead of trying to predict the future, and instead of trying to think foretell what the future holds, we just find really strong intrapreneurs. And they are ultimately the ones that that will create the future on our behalf. Yes, yeah. And then, you know, since then, I started 1984 Ventures about three years ago, we’re an early stage fund here in Silicon Valley, we focus on companies using software to go after large, antiquated, boring industries. So the more boring in the industry, the more we’re excited about it, we try hard to avoid the hype. And we do seed stage. So we try to come in as early as possible, typically write about a half a million dollar check,

Nick Moran 23:34
just SAS or, you know, across multiple different business types.

Ramy Adeeb 23:39
For the most What about 80%? Enterprise? 20%? consumer? So

Nick Moran 23:43
interesting. Okay. Do you do any hardware deep tech investing,

Ramy Adeeb 23:47
I try to avoid both. Like, like the plague, alright. You know, hardware, it’s a tough thing. I’m a software guy. It’s what I know, it’s what I love. When you have a bug, you fix it the next day. In hardware, when you have a bug, it takes you a month. So it’s just a very different, very different world. And then deep Tech, I try to avoid because most of the time, it’s very speculative. Because I am because I really, to be honest, most of the deep tech tend to be incredibly hyped. And we sort of work hard. And believers in a modest law, that people tend to overestimate the impact of technology in the short term and underestimate its impact in the long term. So when you have a new piece of technology, you can get super excited about it and the valuations are high and everybody’s funneling money in, but we don’t know yet. When this technology will have an impact. Meanwhile, its customer adoption, can that truly drive sort of the innovation and to drive the value creation here? Yeah, talk

Nick Moran 24:39
talk more about the hype side of things. I mean, you’ve said before that, you know, one should avoid the hype, whatever’s in vogue you should run away from Why do you think the hot trend should be avoided?

Ramy Adeeb 24:49
The simple answer for why should the hot trend be avoided is because the biggest exits come from startups that were not operating in hype spaces? You look at Google where it was found domains In 99, and search was not hot at all, like clothes and excite were all around and nobody everybody was finding that was avoiding search right when Facebook started in oh five, same thing. So shell was MySpace was not exciting. When Uber started an Airbnb started in oh nine, nobody was talking about the sharing economy. In fact, nobody was convinced it would ever work. Now, contract and these are the biggest exits we have had contracts that was what has been hyped over the past decade. You know, when I started the industry in oh nine, the hottest things into biofuels. Well, that didn’t go very far. Then afterwards, we had IoT then we had 3d printing, 3d printing was the rage, we envisioned a world where everybody’s gonna buy 3d printed, everything is gonna be 3d printing. Obviously, it didn’t go anywhere. Then we moved from there to augmented reality and virtual reality and Google Glass and the only real application we get out of it was Pokemon Go. And then fast forward, it became cryptocurrency, right, the whole world was gonna shift to cryptocurrency. And then there was a ton of value creation, and then a ton of value reduction. And I think, to me, what’s most fascinating in terms of hype is after you know, after cryptocurrency, you would expect the next hype to be something like really complicated or sophisticated. But we went all the way back, and we decided that the hottest thing is going to be scooters. And all of a sudden, and all of a sudden, scooters became like the hottest thing ever and other companies like the whole world, scooters, were going out the end of water and economy, it’s crazy. In each and every instance of these look, there is typically a reaction or reaction to some success that has already happened. Or a reaction to some new technology that drives ton of capital drives a ton of talent. As a result, there is also a ton of competition, and the capital and the talent is way ahead of customer adoption and market adoption. And then you end up with big, big failures. And that’s why we try to avoid it. Instead, we look for just intrapreneurs coming from industries with a low NPS, ideally, with a SaaS business model or a high gross margin business model. And we tried to backfill

Nick Moran 26:57
it’s almost like a hazard of the industry, right? Because you, you get all these very smart people that are attracted to venture that many of which fancy themselves as futurists, right, and they’re they’re trying to predict what are the next hot areas? Or what are the next big trends. And here’s the other challenge. I feel like it’s those messages and those theses that are really attractive to LPs and LP capital, right? The message that Oh, you just back, we back amazing entrepreneurs that are super deep in their space that are creating the next big trend like it, at least in my experience that doesn’t resonate as powerfully as latching on to like the hottest thing of the moment.

Ramy Adeeb 27:41
So I think that that is absolutely correct. It is it’s very easy to tell a story about AI meets ml meets crypto changing the world. And we’re starting a fund to focus on that. Because Because just LPS will resonate some lesser sophisticated LPS that would resonate with them. But But frankly, we had a very different story. We went to LPs and said, Look, we have looked at the data, we’ve been in the Valley for the past 20 years. You want to make money, invest in enterprise SAS, that’s where the money is made, then you become a billionaire VC. And then you want to go to space or you want to change the world or you want to up and the modern financial systems. And that’s wonderful. But that’s not the game we’re playing. We’re playing the other game, which is good old, boring enterprise SAS, it’s where money is made high gross margins, you know, the same story that VISTA Equity Partners has been telling. And frankly, we were surprised because I mean, fundraising was very hard, but could be wrong. It’s probably one of the hardest things I’ve ever done in my life. But at the same time, there was a lot of residents because it sounded a little bit different. And because it wasn’t dependent on any future and only futuristic vision, it was really based on the reality on today’s reality of how enterprise SAS is creating efficiencies in corporate America and creating a ton of value in the process.

Nick Moran 28:58
Are you aware of any stats or data on VCs ability or inability to predict the future? Yeah,

Ramy Adeeb 29:05
80% of our investments fail? That’s right. Look, I think when it comes to predicting the future, I really believe that the future is always happening today, somewhere, you have to find it. Right. So a lot of the times you think of how cell phone adoption, for example, like cell phone adoption started happening in the rest of the world before it’s happened in the US. But it was obvious that it was inevitable that would happen in the US. And in fact, sometimes the most technologically advanced things happen in the most impoverished parts of the world. Like one of the first countries in the world to exceed I believe 50% mobile penetration was Lebanon, because Lebanon had a civil war in the 80s. So they have no landline infrastructure. So when cellphones came about the totally embraced it. The same way is that one of the fastest companies like that mobile payment has been Kenya again because so much of the population was unbanked. Right so you can look around you You can look at how people in China are using WeChat. And very easily extrapolate to how commerce would happen in the US three or four or five years later. But to me, that is all you could look at trends that are happening today, the aging us demographic, the rise of 1099 workers, right, the elimination of every job that has the word broker in it, right, because we don’t need brokers anymore when you when buyers and sellers can find each other online. These are trends that are happening all around us that we want to invest in. But the idea that the future is going to be us walking was Google Glasses trading was cryptocurrencies on scooters that are autonomous, you know, and it’s just to me that is, that is not really futurism. And if you think about it, we’re just so bad, we tend to be so bad at predicting the future. And so I choose instead to try as much as possible to interpret the present.

Nick Moran 30:54
Love it? Is there a country or a set of countries in particular that you follow closely and kind of watch the the tech trends?

Ramy Adeeb 31:01
I mean, honestly, the problem is they they vary, they’re all over the place, right? Like messaging and China is amazing. On the other hand, ecommerce in Dubai is is insane. At the same time, mobile payment in Africa has been really rising very fast. And mobility in South America is very interesting. You have to do you have a little bit of a global perspective, and and sort of look at those trends and try to extrapolate which of these would come eventually to the US. But honestly, I basically, I used to think now I read The Economist is the best.

Nick Moran 31:33
And with you. So Rami, let’s say someone describes one of your investments is feeling more like a product and not a company. How do you respond?

Ramy Adeeb 31:44
Well, that would be a compliment. If it’s a product, that’s great. My biggest problem is if they describe it investment as a feature and not a product, then we have a problem. Yes. But once it’s a product that people want to buy, then hopefully you’re able to build a company out of it. Look, I mean, I think there’s two pieces to your question, right? One is, how do we respond to people criticism of our investments? Yep. And honestly, the best way is to is to listen to it, listen to it, embrace it, and understand that we’re in the business of learning from our mistakes. And then extrapolating and pattern matching for the future. Yep. But then my immediate answer to this point is, I don’t care if it’s a feature or a product or a better product. What matters to me is, is to build something people want, which is really YCS model, build something people want. I’m less worried about whether it’s a product or a company, as long as Is there a demand for this product? My biggest concern is a company is a business that builds a product that is not getting adoption, that people don’t want, that whether it’s a product or a feature doesn’t matter, it is not going to get market pull. How

Nick Moran 32:51
much do you think about, you know, Sam, Sam, and Tam, and, you know, how big can the market be for x, you know, business at the time that you invest? I

Ramy Adeeb 33:01
mean, the challenge is, every pitch deck right now has three common pieces, its uses AI and ML, it has been growing 10x year over year, and it has a team of $100 billion. I mean, it’s so painful, right, but I’m sure you’re seeing that. You know that people have watched enough YC pitches, and I was like, our tablets $1,000,000,000.10 billion dollars. And when you really start slicing and dicing, it’s often the case that that’s not the case, what I really cared about is that the market is growing and has wind behind its tails. When the market is growing. It’s really easy for a startup to, to capture 5% and 10%. As part of that growth, when the market is shrinking, or is stagnant, it’s really hard. And I’ve learned that you know, firsthand, that tells me networks, at telling me we automated call center for enterprises. It was a world class team. It was an insane team who was there at the business that we have built. But because the market was shrinking, even though we worked incredibly hard, had a ton of funding. We were able to get about 100 million in revenue or 120 million in annual revenue, and then it’s just stagnated because we were answering the phone call for the top like 30 phone numbers in the country. The market wasn’t growing because call volume was going down as people move more to the internet. It’s tough headwind. Tough headwind. Exactly. So as long as there is when you have tailwind, it’s phenomenal when you have headwind, even if it’s a very big market, I’ve tried to avoid it. So

Nick Moran 34:19
if if you find a compelling startup, you know, doing some, let’s say horizontal SAS that’s got lots of utility and strong customer traction, but it’s selling into, I don’t know a category like brick and mortar retail, for instance. I mean, is that something that you you have pause and hesitation because because of the segment they’re selling into?

Ramy Adeeb 34:42
Yes, when you are, I mean, I’ve worked in the media industry for a bit and if you’re selling to brick and mortar retail or you’re selling to, to media and companies who are themselves running out of business, it’s really hard. Yeah, right. You know, we’re snippit we were providing tool products and our primary product let consumers share articles and the primary monetization for us would be to get paid by media companies as we drive them traffic. But the media companies themselves were going out of business. So it was hard for us to get money from them. So I know that problem firsthand. But I think strong intrapreneurs see that problem as well. Right. So and you need to let your imagination work a little bit. So the company today is selling to brick and mortar retail, can they sell to e commerce? The answer is never then yes, it’s not. It’s not exciting. But the answer is yes, absolutely. And we’re seeing a trend of more brick and mortar still going online, then then it becomes more interesting.

Nick Moran 35:38
Got it? You know, Robert, you’ve, you’ve emphasized to me sort of your focus on passing quickly, which I think you know, serves yourself well. And it serves the founders, well, too. What are your tips and tricks to get to a quick pass?

Ramy Adeeb 35:56
So just taking the step back, there are three ways to pass on an entrepreneur, there’s passed quickly, there is passed slowly, and then goes to them. Either the primary ways through, we as VCs work with entrepreneurs, yep, you should never ghost, it’s just, you know, nobody gains anything from it. Sometimes VCs take their time to create optionality. But I really believe that the best optionality comes from passing very quickly, being communicated captive to the founder. And then if things change the founder, more often than not, they will proactively come back and talk to you. Or if you want to re engage with them, and drop them a note, they will immediately jump back on a call with you. But if you ghost them, and then come back and drop them a note, they’re not gonna want to take that call, right. So passing through, so that’s really the reason I want to pass quickly, because it saves everybody’s time. And I’ve seen that, you know, was with Sequoia and was benchmark, they pass so fast. It’s really amazing. And when they pass, they send you a very classy, short, brief email explaining why they did the decision. And it leaves such a good taste in the in the mouth of the entrepreneur.

Nick Moran 37:02
Well, then, so yeah, what are the tips and tricks now that we’ve peel back the onion? They’re like, is it just about being very clear with your own thesis? I mean, is that kind of the way that you get to a quick pass?

Ramy Adeeb 37:14
No, honestly, to me is, is because I didn’t I mean, our thesis is to market product in that order. We want a very strong team, a team that we feel, can do something unique and different and brings the right level of experience and hunger and perseverance, we want to see a large market. And then at the end of the day, we want to see a product that people want, sometimes we invest before the product is in place, sometimes we invest it after the product is in place. Honestly, if I have a hesitation about the team, I pass right away, if the market looks small, we pass right away, if the team is strong, and we don’t really know what’s going on with the market, then we tell them, we want to diligence some more, and then we’re proactive with them, then we reach out and to folks who are experts in the industry. And from there on, we’re able to gain sort of a better conviction in the market. My partner Aaron, in particular, he is one of the most resourceful people I’ve ever worked with in my life, where any market, he would just find an expert on it randomly on LinkedIn, cold, call him and get him on the phone the next day, it’s really, really, it’s really amazing that you were able to sort of just diligence, the market really quickly, cold call people fight, you know, just do it quickly. And then within two or three days, the challenge is if the company stays stale for a week, then at any point in time, you have a list of 2030 ongoing companies. And just your brain is unable to process these and figure out what is high priority, what is low priority. But by passing quickly, you’re able to at any point in time, you’re focused on three or four companies, five companies that are really active, and you’re diligent seeing these and that is very manageable for a single individual.

Nick Moran 38:47
How did you and Aaron come together? Oh,

Ramy Adeeb 38:50
Erin, and I had we first met on as we share this key house in 2009. So we’ve known each other for a long time, when he first moved back to the Bay Area, and then that I was sort of informally advising him in his last startup and he got acquired at the time I we had just had our first close for the fund. And after and he got acquired and I was helping him a little bit through the acquisition. And then as a former entrepreneur, I know once an entrepreneur gets acquired, it’s the best time to snatch them away. And so we had a few conversations, and I told him, maybe it’s time for him to come and join the dark side and he came over has been phenomenal. You know, honestly, partnerships are a complicated thing. Yep. They either work or they don’t. And when they work, all we can do is just is just be grateful that it’s working. So well. That’s

Nick Moran 39:34
great. So while I’ve got you on the mic here, I got to put you on the spot and ask you the hard questions. So you’ve been on the record saying that Facebook is a monopoly and it should be broken up. Why?

Ramy Adeeb 39:46
I believe it should be broken. So every time I say Facebook is a monopoly in which I break it down. People tell me ah, you know Elizabeth suorin fan? And my answer to them is no. I don’t want Facebook to be broken up because I’m a soul shitless I wanted to be broken up because I was a capitalist, because monopolies are bad for innovation and monopolies are bad for capitalism. And what you’re seeing with Facebook today is by having such a monopoly over online advertising, particularly, you know, Google owns demand response. But But But Facebook owns every brand advertising, every direct to consumer company needs to spend all of its money buying ads on either Facebook or an Instagram. And you will see the same trend is initially the cost per click is very cheap. as the company grows in size, the prices go higher and higher and higher. And Facebook effectively captures all the margins. And as a result, because of that monopolistic power, it’s very basic market dynamic, you have only one seller and a gazillion buyers. As a result of that. All the in funding to ecommerce brands is really drying out, because we know they can’t have much of a margin. Meanwhile, Facebook has a ton of margins, right and ton of free cash flow coming from its operation that is bad for innovation. And not only has funding to ecommerce brands dried out, but even funding to social media companies has died out, right VCs don’t want to touch Social Media 30 foot pole, they’re like, oh, Facebook will copy it, and are executed. So what is the outcome of that? For the first time in history? The fastest growing social media company in America is a Chinese business. And that is tick tock. Right. So we have actually reached a point now where we have killed innovation and social because of that monopoly that now innovation is happening outside of the world. In a category that, you know, five years ago, it would have been unfathomable to think that China, you know, China could come up with a social media product that sort of spreads like wildfire to our teenager demographic. And then last, I would say sometime, but the VCs, frankly, are scared of saying, you know, we feel that we’re part of tech. And as a result, we should back big tech. Some say, Well, you know, Facebook has been good for acquisitions, even that, I would say that’s not necessarily true. Yes, Facebook and Google, they buy companies, but Facebook bought Instagram for a billion dollars, or a billion and a half, one would argue that Instagram kept executing would be $100 billion business today, and that that’s all lost in venture capital returns. I think, look, at the end of the day, there are rules or a capitalism that is inherent, which is anti trust, and if not having a monopoly. And for us to want to cheat and say oh, but you know, we should give Facebook and Google as is I think that will eventually come back and bite us in the head. Yeah, you know,

Nick Moran 42:26
I, I saw some statistic fairly recently that I think like 40% plus of all venture dollars end up going to Facebook, Google Twitter, in the form of paid ads.

Ramy Adeeb 42:36
It is a very, I don’t know the exact number. But it’s been it’s very, very high. And look, here’s what’s happening. Facebook is actually an interesting analogy. But Facebook is more like a landlord. Right. In the old world, when you had a brick and mortar store, and you had a good foot traffic, the next year, you lease you know, was up for negotiation. And then your landlord would increase your lease by like 10%, or 15%, because you knew you’re doing well as business, and you would negotiate it down with them, and then move on. And that would only happen every two or three years. And if your landlord raised your prices by 30% or 40%, then you just shut down the shop and move it, you know, one block down the street. What was Facebook, there was only one landlord in town. Yeah, that’s it. And you’re paying Facebook for traffic, which is what you paid, you paid your landlord for, you know, you paid your rent, or for foot traffic, you’re paying Facebook for online traffic, but you only have one landlord in town, and they have insane amount of data. And they are able to adjust your lease price every second, as opposed to every two years. It’s a really powerful, it’s a really, you know, powerful force that they have. And I would say, Look, our antitrust laws inherently were not built for technology because technology creates, you know, what economists like to call demand side increasing returns, or market power or whatever the right term, you know, network effects, right that as you get big, you actually get cheaper and better for everybody. And that the more people there’s demand for your product that are able to serve that demand. So I know that it we shouldn’t let it go on forever how we deal with it. I’m not sure.

Nick Moran 44:12
Ya know, I don’t know either. And it’s, it’s a tricky one, right? I mean, in theory, if Facebook wanted to raise the prices on all paid ads on their platform, by 25%, tomorrow, they could do it and there’s no recourse. We’re so over reliant or tech in general is so over reliant on those sources for customer acquisition. There’s not much that can be done. And

Ramy Adeeb 44:34
look, I want to acknowledge that Facebook didn’t like stumbled on this was you know, except by incredible, incredible execution. I mean, what Facebook did, by acquiring Instagram, and then evolving Instagram into Snapchat, you know, Facebook saw how well Snapchat stories were doing. And then they took what was a photo sharing company and introduced stories right away, head to head. There was a point for Snapchat was growing really fast until Instagram launched stories copied it, you know, they effectively copied it and improved on it. Right? And then they were able to retain their users away from, you know, instead of losing them to Snapchat, you gotta give them credit. Yeah, right. I mean, that company’s done both class execution. It’s just that the, you know, the price gouging is harmful for the industry.

Nick Moran 45:22
So what about like, a counter argument that emerging tech companies, you know, that are trying to create their own monopolies? You know, VCs will talk about this, that the goal is for defensible businesses that can create a monopoly. What about the counter argument that breaking up the Facebook’s of the world will impact the upside, you know, valuation and the pricing of large emerging private tech companies?

Ramy Adeeb 45:48
Yeah, so So I think a great example, look, we can go back to history of this the challenges the last time we saw a similar situation was in the minors. And Bill Gates did everything humanly possible to not get Microsoft to be broken up and he succeeded. Yep. But if you go a decade earlier, and you see what happened in the 80s, right, back then AT and T or what was called Ma Bell, or the old Bell company, had a full monopoly over phones. And they were manufacturing the phones and leasing them at incredibly high prices. And the long the costs of telecom are incredibly high. And the government came down on them. And you know, it was only the Reagan administration that finally was able to break away at a&t. And instantly, the price of long distance calls plummeted. And, and that Unleashed, basically, you could argue that unleashed the entire wave of modern, like cheap telecommunication, and then cheap broadband that followed. And then the internet. Now in parallel agency was broken down into seven different companies, one of which was the original at&t over the course of the next 20 years, what happened? Well, AT and T actually is almost back to where it started, right? They kept getting bigger, slowly, and mergers and acquisitions and hitting the mergers and acquisition. And now we’re almost back to what we have three, you know, we have three mobile operators, it NT is like number one of them. Number two in them, right? And but in the process we had so much consumers benefit so much from hard from cheaper hardware, from cheaper long distance calls, you know, I came to this country I used to pay $5 to call my parents in Egypt in 1994 $5 per minute, right now I get free video conference anywhere in the world. Right? So so you can’t put a price on that. The idea that, look, monopolies are just bad for innovation. They are bad for capitalism. And as capitalists and as people who are pro innovation, we should really like resist the urge to defend monopolies because ultimately, they will slow down progress and inevitably slow down our own success.

Nick Moran 47:56
What are the chances that Facebook does get broken up? If you had to handicap?

Ramy Adeeb 48:01
I do not know. I tried to avoid for the Kindle future, probably not. Did we cover this?

Nick Moran 48:11
Alright, so one controversial topic to another. Let’s talk a little bit about we work in in the Vision Fund. What do you think are the most significant adverse effects of that whole thing playing out that maybe nobody’s talking about?

Ramy Adeeb 48:24
Well, the problem was we work is it was such a juicy story. And there was so much juicy details, the media fixated on that I think the core story was lost interest, like there was all these juicy details. But I had this founder who owned worked with cocoa, but then was like a real hot cocoa and was leasing it for 5 million bucks. And he was like taking a private jet and like smoking a joint in the jet, and all of those things, and it was terrible. But at the end of the day, we were works problem actually came down it came down to a very simple issue we work with had 3 billion in revenue, and it was effectively a REIT, a real estate investment trust, like long term leases, short term leases is what $3 billion read and read straight at two three times revenue. So that’s an eight or $9 billion business. But the founder was able to pitch it very effectively to Softbank as, just like any other technology enabled business that it should treat at 10 times revenue or 20 times revenue. So with 3 billion revenue reads that 40 billion valuation, then it went to IPO on the public markets were like, Nope, this is this is a business that has 20% gross margins, it should trade it two or three times revenue, not 15 Times revenue. And then the whole thing blew up, and it didn’t IPO. The principal outcome of that whole fiasco is all of these things realized, whoa, we can’t apply software valuations to non software companies. Okay, I guess we’re gonna stop investing in anything with low gross margins. And there has been a real sort of drop out of investment in low margins. This when in reality, it’s not that we should stop investing in them, it’s that we should invest in them but was very different valuation right DTC direct to consumer company was 2 million in revenue should be worth four or 5 million bucks, not 25 million bucks or 40 million bucks. So there’s a bit of a correction going on. And I think there is still a ton of opportunities to invest in low margin businesses, we generally look for software, which has high gross margins. But I think there’s still opportunities to a lot of innovation in the low margin business, it’s just that the valuations are you know, are need to be adjusted in the entrepreneurs expectations need to be adjusted and intrapreneurs need to be a lot more diligence with cash, they need to figure out their unit economics before scaling, they need to be you know, they need to build the business in a way that is a little bit different than how they were used to in a sort of a free cash world

Nick Moran 50:49
yet, so you can compare we work or the we company to REITs. And the multiples, you know, what do you think of a company like Tesla, that the P E ratio is, you know, significantly different than the other auto manufacturers. But there’s an argument to be made that it’s it’s not, you know, a standard auto company. There’s a lot more to it.

Ramy Adeeb 51:11
But I think, my love and respect for Elan musk, I tried to reconcile that with my desire to short Tesla stock, which I’ve already done. And Elon Musk has, Tesla has pioneered an industry to be it occupies the same space, as the Wright brothers who pioneered airlines or the aircraft control at the same time. It’s a car manufacturer, I have not been presented with any compelling argument about Tesla not being anything but a car manufacturer. There is there should be some premium for growth. The auto manufacturers have, you know, did their credit, have really rushed very quickly to to adopt electric cars. I mean, go to an Audi dealership, and just check out the new electron, which is their full electric SUV. It’s gorgeous. It’s cheaper than a Tesla. You know, Bill Gates was just quoted as saying he would never want to just like he just bought that electric Porsche, like all of the car manufacturers needed. I mean, look@the.if Without going to Porsche and Audi. Look at a Prius. Like there is a reason why every Ober is a Prius, I think is so you know, so efficient. So I think at every price point, right, the car manufacturers have been able to outperform this, I think Tesla’s you know, have also recognized that levering technology, Tesla created the first modern car brand in I don’t know how many decades. But when was the last time you’ve heard of a new car brand, right, that has gained that scale. So definitely, the company has been very, very successful. But at the end of the day, it’s going to be a car company. And it’s going to be the the car markets.

Nick Moran 52:52
So Rami, you know, tech is often credited with creating significant value. But some also argue that it destroys value, and it it destroys jobs, and it widens the wealth gap. What’s your take on this? And, you know, amidst current events, I don’t like getting political on the podcast, but um, it’s current events, you know, how would somebody like Bernie Sanders, for instance, affect venture if he’s elected? So the all softballs today rally?

Ramy Adeeb 53:22
Love, you know, it’s a right. So I need to basically now be advocate for you know, having advocated for war. And now I advocate for birdie. And Rob, and I, and then I lose about 80% of my LPS at the end of the show, but this is phenomenal. No, I wouldn’t say, look, there are sort of two camps take us creating jobs, there’s a second camps, oh, well, tick is destroying jobs faster than they’re creating them. We don’t know whether ultimately, tick is going to create more jobs or less jobs than the jobs, it’s destroying the world. Society is a very, it’s a very adaptive thing. Humans are adaptive, like our generation is very different. Our as you know, my parents generation, they wanted to be engineers and doctors, the next generation, they want to be different things. So we will evolve. What we do know for a fact, though, is that tech is changing jobs faster than the skill sets are changing. Right? We’re eliminating a ton of jobs and creating new ones, but we don’t have the resources. And humans don’t have the will to then adapt their skills for the new jobs. Right, every person with and I’m not just talking about manufacturing. I mean, obviously you’re seeing that was manufacturing. We first lost jobs to outsourcing now we’re losing them totally to automation. Yeah. We’re seeing that and, by the way, I do believe that outsourcing is an intermediary step towards automation. Like everything we moved to China eventually comes back here but with no labor, including manufacturing. Then the next step is we’re seeing that was even brokers like every person who was broker, whether it’s a real estate broker or insurance broker, you know, you don’t need to go to insurance broker in a small town anymore. We’re seeing that was brick and mortar restore, all of these jobs are being lost. And as a result, we have, you know, we have it very funny about, you know, we have technically very low unemployment, but we actually have a very large number of unemployed people who are who are struggling, right. So that they today, and that is creating a certain level of societal tension. And that was the very same tension that Trump addressed. And that is arguably the very same sort of tension or anxiety about future income, and about job stability that, you know, that Bernie is creating. And you, you know, add to that the fact that Americans are living longer than ever, but also that many don’t have proper sort of retirement plans. And there’s, there’s just, you know, and people are losing their jobs at age 40, and 45. And they have 40 more years to live, these are serious problems that we need to address. Right, irrespective of whether or not tech is, you know, going to create, you know, maybe in 20 years, we’re all gonna be computer scientists, it’s a different world, but it’s in 20 years, what do we do now, there’s been many, many different ideas being thrown out, obviously, the simplest is training, we as a country need to bring back some of the better trading some of the trade schools that we’ve seen happen in places like Germany and others for our labor force. Another part of it is honestly education, we as a society seem to have like, the number of people going to stem in this country is so low, incredibly low as women, much it’s one of the lowest rates for women and pretty low for men as well. But there’s gonna be more than more STEM jobs, like we need more STEM jobs. Yep. That’s not a critique of liberal and then you graduate with a liberal arts degree and $120,000 in debt. That’s a real problem. So I think, you know, these are problems we need to do with education. And then some would go as Andrew Yang and say, we should give them 1000 bucks. I don’t know if that works or not. And then some, like Bernie Sanders, believe we should just tax the rich, and use that tax money to help fix all of these problems. And honestly, I don’t know if that will work or not. And let me say what I mean by that, as venture capitalists were at the intersection of technology and the intersection of finance and innovation. Right, we’re basically financiers who work on the industry of innovation. Yep. And someone like Bernie, in the White House is definitely bad for finance, just based on what he says. And it’s not hard to imagine the financial markets sort of plummeting on the news of, or on the perception of him coming to coming to the office. Because his stated policies is to increase taxation. He’s running on the promise that, you know, if Donald Trump ran on the promise of China and Mexico are bad, Bernie’s like No, actually, it’s the Wall Street. That’s bad. Yeah. That is Bernie bad for innovation. However, we don’t know the answer to that. We don’t know. Like him, raising taxes on big corporations may actually allow startups to compete better with larger organizations, he might push for breakup of big tech, which then results in more startups, you might push for a better education, which then creates a better labor force in this country that is able to accelerate our development of software. Like it is not, it is not very obvious to me that someone who is that is socialist government would be bad for innovation. And here’s why. Right, we can go back to history. And go back to the 60s there was the US and the Soviet Union. People in the Soviet Union work like the as a communist country, the Soviet Union was terrible in terms of, you know, everybody was trying to run away you, you couldn’t buy bananas. But their science was almost as good as ours. Like we were going to the booth and they were going to the moon, they had a very large percentage of female working in technology much more than the US. It’s a very complex world, you don’t know what the outcome is. What we do know though, is that if Bernie is a front runner, we’re going to have a few and it’s Bernie versus Trump, the markets are probably going to be freaked out for a few months.

Nick Moran 58:59
Interesting, interesting points about Bernie, you know, Romney, I came across something he tweeted recently about tech pessimism. You quoted, we too often focus on the drawbacks of a new tech, while taking its benefits for granted. Meanwhile, to be alive in the tech obsessed 2020 has to be among the luckiest people who ever lived. Can you give us some examples of tech pessimism and your take on it?

Ramy Adeeb 59:21
Yeah, absolutely. Look, I mean, technology changed the way we live. And today, you know, we live in a world where almost everything you do is automated. Is there is so much surveillance happening around us. Yesterday I came back to the US via Houston. And I don’t know if you if you’ve heard about this, but now the Global Entry Program, you don’t scan your passport anymore. You just look at a camera, and it uses facial recognition and in simply my name popped up on the Global Entry machine and I just walked in I it was pure facial recognition was the only form of identification for me to enter the US. You’re kidding. By now, mind boggling. The fact that this is happening I hadn’t heard about it was, and then I Googled it. And it’s it’s piloted in three airports right now Houston being one of them. Wow, right. Now a lot of folks are like, Oh my God, that’s scary. Our liberties are at stake, blah, blah, blah. But you have to also understand, yes, for every new technology, there are some drawbacks, but the benefits, the benefits are amazing. Like, crime is at an all time low, violent crime is at an all time low, in great part because of, of technology. Right? Communication is an all time low, I’m able to, you know, when I travel internationally, I can then any foreign country, between Uber and Airbnb, I can go anywhere and stay anywhere, and feel safe. That is remarkable. Right? So we have a lot of critique of tech and fear. But ultimately, I, we I’m very optimistic. And I believe that our life is way simpler, and way easier, and way more connected than the generation before us. And whatever drawbacks to technology there is, society will come back and fix them while still maintaining the games.

Nick Moran 1:01:07
I couldn’t agree more. I mean, we live in a time where there’s a lot of pessimism, you know, societal, political technology. But I feel like we’re living in a golden age. I mean, we have access to more knowledge and more capability and more lifestyle advancement than I mean ever before, obviously, and I just, I don’t know, it’s very empowering to me, maybe that’s part of the reason why I’m in this industry. But I just feel so special to be alive at this time, when we have access to so much. And we can we can pursue what we want to pursue, especially being in this country. I mean, it’s, it’s, I think, more meritocratic than than any opportunity over any generation in any country.

Ramy Adeeb 1:01:54
Absolutely. Absolutely. I could. I couldn’t agree more. We’re adapting technology very fast. And we’re a very meritocratic country. We just got to keep it that way.

Nick Moran 1:02:03
Rami, what resource could be a book blog, video tool article, you know, your your call, but what resource Have you found really valuable that you’d recommend to listeners?

Ramy Adeeb 1:02:13
I know this sounds a little cheesy, but I really like reading The Economist. And I like reading The Economist, because I think Larry Ellison is the one who said, I used to think nobody The Economist, but what’s particularly great about it, is it provides this global perspective to what’s happening around the world. And sometimes in the US, wisetech, we’re within our own echo chambers. We’re saying the same thing to each other all the time. Yeah. And it’s very distracting. And so I would encourage other investors to actually, instead of reading more Tech Tech Tech Tech Tech, which will then feed into the same echo chamber to look a little bit outside. And I find a lot of success on in reading literature, like we’ve in our fund is called 1984 Ventures, again, an ode to a piece of literature listed in 1949, that talks about the technology in a very remarkable way and almost, you know, almost prophetic way about the world we live in today. And I would say reading things like the economist, which doesn’t cover necessarily cutting edge tech, but covers more what’s happening around the world around us, because they are lies a very good sort of insight into what could happen and then obviously, you have to, you know, if you’re not following Bilger, all his blog above the crowd read that it’s one post year, but it’s the one post you should read that year. Yep. Yep.

Nick Moran 1:03:27
Rami, what do you know, you need to get better at?

Ramy Adeeb 1:03:29
I need to get better at managing my time. I need to get better at saying no. And I need to get better at go to the gym. You and me both. And finally,

Nick Moran 1:03:41
what’s the best way for listeners to connect with you?

Ramy Adeeb 1:03:43
You can follow me on Twitter at Ramita de RMYE. Or following me on medium. He

Nick Moran 1:03:50
is Rami a de Brahmi thanks so much for doing this. This was so much fun. And you know, I always learned so much talking to you. And I hope you know you’re also mentoring many young folks and venture as pure Lemond and Vinod did with you because your insights are are super valuable. And I really appreciate you sharing that time.

Ramy Adeeb 1:04:08
Thank you very much, Nick and, and I love this podcast as well. And I love all the insights that we hear on this. Thank you for having me on your show.

Nick Moran 1:04:15
You’re the man Thanks so much.

Speaker 2 1:04:21
That will wrap up today’s episode. Thanks for joining us here on the show. And if you’d like to get involved further, you can join our investment group for free on AngelList. Head over to angel.co and search for new stack ventures. There you can back the syndicate to see our deal flow. See how we choose startups to invest in and read our thesis on investment in each startup we choose. As always show notes and links for the interview are at full ratchet.net And until next time, remember to over prepare, choose carefully and invest confidently thanks for joining us