Alex Konrad of Forbes joins Nick to discuss The Fallout of First Republic and SVB and its Implications on Tech, The Algorithm Behind the Midas List, and Will AI Actually Replace Journalists? . In this episode we cover:
What led to the demise of First Republic Bank
Venture Capital’s Response to the Crisis
How will the acquisition of First Republic Bank impact investors and venture capitalists?
How the Midas List is made
What are the use cases for Crypto?
Is AI coming for people’s jobs?
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Transcribed with AI: 0:02 Welcome to the podcast about venture capital, where investors and founders alike can learn how VCs make decisions and reach conviction. Your host is Nick Moran, and this is the full ratchet. 0:18 For today’s episode, this is not Nick Moran, but Nate Pierotti. Today’s episode will be a little different. For the first time, we are hosting a prominent editor in tech community, not an investor or a founder. 0:31 Today’s guest is Alex Konrad. For those that don’t know of Alex, Alex is a senior editor at Forbes, where he covers venture capital and technology. If you have have heard of the Midas List, the Cloud 100 or 30 under 30, you are familiar with Alex’s work. Alex also covers breaking stories, and today we will be getting his insight on the recent banking crisis with First Republic Bank and other trending topics. I hope you enjoy. 1:03 You know, so I’m excited to dive into some of the recent stories and topics across tech. But first, can you give the audience a bit more about your background and your role at Forbes? 1:14 Yeah, so I’m Alex Conrad. I’m a senior editor at Forbes magazine. I’ve worked there for over 10 years, which is kind of crazy. And I lead our venture capital coverage, which includes the Midas list, Midas list, Europe, the Midas seed list, as well as our 30 under 30 list in BC. And then I also do a lot of our startup coverage. So recently, I’ve done a lot of stories about AI. I’ve also written a lot about the cloud and CO created the cloud 100 list back in the day. So you know, startups, enterprise tech, you know, whether it’s cloud and AI and venture capital are kind of my focus areas. 1:46 Okay. Oh, that was a more modest intro than I was expecting to be honest with you. I think you’re downplaying it a bit, I guess, going back. So you’ve been at Forbes for a decade now. But you recall what initially sparked your interest in reporting and writing about technology and venture at large? 2:03 Yeah, so I actually wanted to be an archaeologist growing up, which always kind of surprises people. It’s funny, because I was excited about digging up, you know, lost civilizations, and getting my hands dirty that way. And now I get my hands dirty, looking at future technology and possible where you know, where civilization is going. But it’s not as crazy as it seems. Because kind of studying cultures and sort of big shifts in the past really helps me kind of have a framework as I look at what’s happening today. And I knew that I love telling stories. So when I realized that Indiana Jones and 2023 would go to jail immediately. That’s not a real job. Archaeology is actually a lot of fundraising, a lot of lab work. It’s kind of like 90% on fun stuff for the 10% of fun stuff. I’m too impatient for that. So I was like, How can I get paid to tell stories? And pretty quickly, I got an internship to Fortune magazine. Now I’ll be a little more braggy. I was the youngest person ever, to my knowledge to have a print story published at Fortune. I couldn’t recover yet. It was a story. I interviewed Robert Redford, actually about first amendment rights for documentary filmmakers. It was there was a huge case, where Chevron was fighting a documentary filmmaker who made a big movie that summer, about their dealings in the Amazon. And they wanted him to release his notebooks. And he was saying, No, I’m a journalist. And so me as a baby journalist, talked to Robert Redford about how a lot of filmmakers are rallying behind this guy. So my mom was really impressed. She was like, Wow, this journalism thing is actually a real thing. You talk to my old crush. So the rest is history. 3:44 Awesome. Well, as I mentioned, we’re going to cover a number of topics today. But I think the most appropriate place to start would be the demise of first Republican, everyone knows this by now. But the bank suffered a run on its positive just weeks after the collapse of two other large regional banks, Silicon Valley Bank and signature. What they may not know is collectively this group is an accounts for three of the largest for bank failures in the history of the United States, which is crazy that that’s still happening in 2023. The only larger bank failure being Washington Mutual in 2008. So from your perspective, I’m curious to your take first, like what led to the failure of first republic bank? Was it inevitable? What is your reaction there? 4:32 Yeah, well, first, I gotta say it, this is a little surreal. I don’t know how long you’ve been in the tech world. Exactly. But I became that journalist and started reading about New York startups. Right after the last financial crisis. You know, this was like 2009 2010. And a lot of people were going into startups because suddenly banking was like super uncool. And no one trusted the financial system. And they were going into these cool new companies like Blue Apron. ZocDoc Uber, you know, you name it, all these Trade companies came out of that moment. And that’s kind of shaped a lot of my career. And then here we are a little over a decade later and kind of, once again, the banks are not being trusted. But you know, with first republic, I feel like it was not nearly as big a shock or a new story from from my lens as SBB SPB was still that seismic seismic moment. First Republic going under and getting bought by JPMorgan Chase has impact on the startup ecosystem. It’s not great. I know people who had specifically gone to first republic from Chase, because they thought it had better customer service and better understood the startup ecosystem. And now they have to be back with Chase. So they’re pissed about that. But I don’t think it had the same existential crisis feeling as SVB, which was kind of a unique experience in my career, in terms of the stress the chaos, like working the phones, I’m sure you were too, it was just like, that was a week, I think we will all remember for probably the rest of our careers. Whereas by the time first republic goes under and gets bought it. I don’t want to say it was deja vu, but I don’t think it kind of like moved it didn’t seismically move the needle the same way that SVB did. It was kind of more a continuance in my mind. 6:13 Why do you think that is? Is it just SVB been first, like if you if the order was reversed? Do you think First Republic would have gotten more attention? Or is it just because the sea at large is more exposed? Through SVB? What what is the culprit there? 6:29 Yeah, great question. I think there are two main things that come to mind for me first is that SVB had more of a emotional grip on the venture and startup ecosystem. I mean, I’m sure you’ve been to many events that were sponsored by SVB. I regret not making a podcast that was sponsored by SVB. You know, they were there in the ecosystem. And you know, always helping people out, especially like emerging startups, emerging fund managers. And so there was kind of an emotional connection to SVB plus, so many startups and VC firms had their money there, whether it was through lending or deposits. And so I do feel like that, that just felt like a direct blow to the ecosystem. Whereas first republic, yes, there were a lot of startups, they did some lending. But it was also a lot of high net worth individual money. So it wasn’t quite as like seismic in that sense. And then I think there wasn’t that brands Association, where like the loss of sVv as a brand, I mean, yes, it’s still around, maybe it bounces back. But kind of that era, it felt like it was ending, if you will. 7:32 It’s where are we now? What is your assessment of the current landscape of banking since the downfall of both FRB and Silicon Valley Bank? 7:41 I think, you know, we’re sort of bracing in case there’s anything else that happens. But I do think that as you look at some of these regional banks, like PacWest, and others, that are not as committed to the sort of uninsured businesses and highworth net individuals, their ratios are not as vulnerable. And so yes, they could still face a challenge. But we’re getting farther and farther away from kind of the, the core situation that led to the SBB dominoes, which obviously affected signature and first republic. And so I think that there’s still tremors to be felt across the banking ecosystem. And you know, I really think about this from the startup perspective. So you might talk to, you know, person at the Fed who’s like, we’re not out of it yet. And that’s probably true. But I think from the startup standpoint, the bigger ramifications we’re going to see are questions about customer service and support at the big big banks who have now really consolidated power through lending and deposits. And will they care about startups and VC firms? And then also, will there be as much access to capital for especially kind of unconventional companies moving forward, like crypto startups or startups that have collateral that is not easy for, let’s say, a chase or a Bank of America to grok? What we need to see is whether those banks are going to, you know, dip their toes more into this and sort of have more venture friendly lending vehicles. Otherwise, there’s kind of a vacuum that somebody’s going to have to fill. 9:12 Are there are there any other residual or longer term effects that you’ve seen in the ecosystem? Like and if we’re to fast forward one or two years, do you think what has happened today is going to teach any lessons that inform, you know, the ecosystem or banks, three years from now, five years from now, any lessons learned that are gonna have effects on the ecosystem? 9:36 Yeah, Nate, you probably a lot of your guests probably are acting like they have major takeaways. But my concern would be that no history kind of repeats itself. I mean, we talked about the financial crisis, that I was coming out of college during that a lot of the sort of leading entrepreneurs of the current moment, you know, that was their crucible moment. Yes, there will probably be a crucible moment for another generation. founders and investors right now, especially young VCs, who kind of had never seen a bear market. And this reinforced that. But from a banking standpoint, it feels like you know, as things are good, you lean more into risk, you kind of have incentives that are dangerous, and you just kind of keep pushing the envelope eventually got burned. And so will we learn our lesson and not do this again, in another 10 or 10 plus years. I’m not optimistic about that. I do think this contributes to a sentiment or feeling in the startup world that was already there of tightening belts and tougher lending and fundraising, that SVB kind of really put an exclamation mark on, but I’m sure this would be true in your your experience, too. It’s not like that was out of the blue. Like we were already in a tough fundraising market and tough startup market before SBB. 10:50 Yeah, I’m glad that you brought up venture capitalists as well, because it was I was curious to pick your brain on the response from investors, right? Like it was very telling in a number of ways, which firms stepped up and which ones didn’t? My first question for you is, overall, how would you rate the response of the venture capital ecosystem, the investor side, that is, to the crises that have been unfolding over the past couple of months here? 11:18 Yeah, I mean, I would give the venture community like a C minus, I was not give a good grade, whatever curve we want to give. I mean, the reality is, some firms acted kind of successfully for their own interests, and their portfolios interest by helping spark the initial SVB bank run by kind of telling their founders to get out early. And you know, when I talked to the leaders of those firms, they’re still unrepentant about that their position is basically, it wasn’t my job to prop up a bank, it was a bank’s job to be the bank. And it’s my job as a VC to protect my entrepreneurs. And so if there’s even a chance that a bank is going under, I’d rather my founders be the first ones out the door with their money than be in limbo as the last ones. And like, Okay, you get that point? You know, when I talk to entrepreneurs who are struggling to get out their money, I think, you know, the ones who had gotten their money out that Thursday morning, felt a lot better than the ones who had their deposits frozen when they tried to take them out, you know, Thursday night or Friday and cut initially, but I do think that there was just a real flight to kind of every man for himself thinking by a lot of these firms. And I think what you saw from kind of the group standpoint, to me was not super effective, like the dozens of VC firms who said that they would bank with SVB. Theoretically, if it’s stuck around, like that was some great vote of confidence, reminds me a little bit of this recent announcement by VC firms that they’re gonna push their startups to be carbon neutral, like, it’s great messaging, but I just am not sure how much that really moves the needle, frankly. And I also think that, you know, in this moment, what we really needed was strong leadership, public publicly facing. And unfortunately, you look at kind of who the biggest voices were that weekend and ongoing about banking, it’s not really those Midas list types, you know, the Midas list types aren’t really tweeting. It’s the VCs who have kind of built big social media platforms who get the loudest loudspeaker. And I was not impressed by their response. Let’s, let’s say, 13:27 so in terms of what do you think needs to change in terms of leadership moving forward? Would you have liked to see some of the larger names in the industry, you know, those that do make the Midas list step up in a time where they’re not usually the most socially active on Twitter, whatever other platforms, modalities are their choice? Is that what you think was missing big investors stepping up and really steering the ship? 13:52 I do think that was part of it. I mean, I got a bunch of like text and signal messages from VCs in sort of the first few weeks of all this basically, asking me, who, who did seem like they kind of spoke for the community, like who did seem like a very loud and charismatic voice of reason here, versus the loud and charismatic voice of, you know, concern or chaos or, you know, panic. And I think it was tough for me to give an answer. I was aware that other VCs were asking themselves that too. And you do think that maybe in the past cycle, you know, the the founder of Sequoia or the founder of one of these big firms, or even you know, the leader of one of the sort of traditional elite firms, their voice might have carried some clout here, and they could have kind of called for reason, but that’s not the current environment that we’re in, you know, they kind of kept quiet or were focused on their own portfolios and the people who are publicly facing shouting, buy guns and gas and all caps like we’re not those Midas list, folks. And I think that was felt by a lot of people in the community. I’m curious if you felt the same. 14:59 Yeah. I mean, it did feel like every man woman for themselves being in it, a lot of people looking out for their own portfolios. A lot of people love tweeting and trying to offer advice very little seem helpful the results. So I think one thing I noticed is people giving advice by doing the opposite, like, everyone’s say with SBB, but meanwhile they’re pulling, I’m hearing from their founders that they’re getting advice, like, pour all your funds out. So, I don’t know people love to be seen as a hero, when in reality, they’re, they’re gonna do what’s in their best interest and try and save their own ass. 15:37 Yeah, and that, you know, that’s honestly a little frustrating for me as a reporter, like I’ve, you know, I spoke to multiple founders who told me that they got messages from their firms who, as you said, were kind of publicly supporting SVB saying, we encourage you to diversify your whole, you know, your banking options and have multiple options, which was like code for take your money out, but gave them plausible deniability to say, oh, no, we never said to bail on SVB. But it was like, pretty obvious that that’s what they were, they were trying to say. And, to me, that’s a little cowardly. And look, I get, you know, I’ve written about venture capital for almost a decade. And I know that it’s a relationships, business, everyone’s doing business with each other, everyone wants to keep their options for the future, because that could be the next, you know, massive fund returner down the road. But that said, you would love to see people kind of, I don’t know, put put their their morals or kind of their place in the ecosystem first, at a moment of crisis, like, you’re still gonna make a lot of money, maybe. And you know, maybe someone gets annoyed if you tell them, hey, please, like stop saying that or knock it off. But like, they’re still going to do business with you a year or two later, I find it hard to believe that when people are fear mongering or pushing a panic, that people saying, hey, guys shut up, that that’s going to create some sort of blacklist for them or truly affect their business, you know, in the future. But I feel like people just kind of don’t feel incentivized to be the voice of reason right now. 17:04 Yeah. I want to circle back to something you mentioned, it was a question I forget, who asked you who did step up who stood out as being a leader during the time? I mean, is there anyone that comes to mind that’s worth highlighting here? Because I do think it’s worth highlighting for other people to take notice, like, Hey, this is an example and take note of what leadership looks like. 17:26 Yeah, I mean, I wrote a little bit about this topic, because basically, a bunch of firms announced that they were going to backup payroll checks if necessary, or kind of do things. And the reality is, some of them are kind of just counting on the Fed moving in and sort of deposits being secured. And that not being the issue. So it’s kind of like empty promises. But I think that a few firms and investors really did kind of step up, you know, behind the scenes, there was a concerted policy effort by people like Roy the hot at Bloomberg, beta, Gary tan at Y Combinator. They were Gary was obviously tweeting too, and I think Roy was but behind the scenes, they were also trying to send resources to policymakers, and try to kind of have an influence in a helpful way there. And then, you know, I was particularly impressed by solo capitalists and kind of smaller funds were investors were either a lot more aligned with the founders, like, you know, kind of in the same boat as them and really trying to actually figure out tactical things for them to do, because their money was there too. Or they felt, you know, pretty similar. Or some of these more established folks like Sarah gwo, Nat Friedman, Sam Altman, Jason Lemkin, they basically just wired money upfront, you know, and said, if you need this for payroll, great, if not, you send it back to us. But it’s not money that it’s going to make or break our business right now. And that kind of just forward thinking and sort of trust in the founders. I love to see that. You know, it was one thing for firms to basically make a commitment. Like, oh, we’re gonna do this. We see a lot of commitments and venture capital these days, but to actually just wire the money, whether it was needed or not. that stood out to me too. 19:05 Yeah, that one of the notes that I have on this, too, going back to one of your questions on behaviors that we observed is a lot of firms use it as an opportunity to be predatory and try and snatch up equity on very egregious terms. It Yeah. So it’s just there’s quite a dichotomy between that of Jason Lumpkin, who’s just wiring money and those firms on the other end of the spectrum that are saying a while, like we can buy shares, pennies on the dollar right now. Right? And, yeah, it’s just interesting to see how two groups behave, right? 19:42 It does kind of speak to you know, why you’re a VC, right? Like if you’re a VC because you’re just like love hanging out with founders and you’re already successful. And, yes, you want to like, you know, deliver great returns, but you are not all about a zero sum game, then I think maybe you’re more likely And to just try to help and be useful in the crisis, maybe you actually take pride in that there is an ego factor, but like about being helpful, that I think there are people unfortunately, like in probably every industry, who do see things more zero sum and took a more Machiavellian approach, as you said that like, hey, this creates blood in the streets by property type scenario. 20:20 Yeah. The last question I have for you prior to moving on and talking about some of the other topics that we’ll get to today, and you touched on this earlier, but how will the acquisition of first republic impact investors and venture capitalists? And are there any risks investors and VC should be aware of that aren’t readily obvious? 20:39 Yeah. So I mean, if your deposits are now with Chase, you don’t worry about that. And I think in terms of sort of money that was held with first republic, that’s, that’s not so much a concern. I do think this lending question is going to be a big subject of debate, what counts as good collateral for the big banks, what risk profile the big banks want to take with startups? You know, we see some talk of venture debt in the ecosystem, you see press releases, occasionally, reporters, like me get pitch, you know, let’s say a $200 million funding round of which 50 million is equity. And 150 million is like a financing lined up and theoretical and sort of that 200 Number is really inflated looking in that sense. But this venture debt is real and unhelpful to some companies, it can be problematic, when things are not going great as well. But if we take that off the table as an option to a greater degree, because of the loss of first republic, I do think that as companies want to kind of get moving again with hiring and growing and are thinking about non equity, non diluted options, that will be a long term ramification where I would not be surprised if a year from now we’re like, oh, who did that? Oh, yeah, that was SVP and first republic rip. Yeah. 21:59 Well, moving on. So you just published the Midas list of top VCs. So first, congratulations on being done. I know it’s a ton of work. It’s only one 22:07 copy? If, yeah, 22:11 exactly. I’m sure you get all sorts of good and bad messages. But I guess first, how did it look different this year? And how does you know not to rehash first Republican SVB? Again, but how does the how does the first Republican SVB story intersect with that this year? 22:29 Yeah, I mean, I, I’d be curious your reaction to this. But my general feeling is that this is just a weird time for venture capital. So weird time for fundraising in the startup world. And we’re seeing this with the banks. And we’re seeing this with the Midas list. You know, there was a flight to liquidity with MIDAS, that led to one of the stranger kind of reactions to the list that I’ve had in 10 years doing it, you know, you look at its people who had real IPOs like new bank and snowflake and Airbnb, and coupon and DoorDash that aren’t even necessarily new IPOs. But those investors did really well, because a lot of these unicorn valuations, whether it was stripe, or Klarna, or, you know, non FinTech businesses to like even Databricks and others weren’t as buzzy, from a valuation standpoint, good companies. You see them going down, you see crypto going down, and suddenly it’s kind of these Revenge of the IPO guys and women who are doing better. And I think that kind of had a visceral reaction on folks, you know, they were like, Oh, wow, some of these investments were made eight years ago. And it’s like, yes, that is that is how venture capital used to be. 23:43 Yeah, yeah. Well, especially in an environment to where real returns are being counted, and not just paper gains. And there are a lot of startups that raise that, I find valuations and who knows, I mean, a number of names will end up IP owing and have tremendous success. But there’s definitely a premium being placed on companies that have actually created real enterprise value that have actually been acquired for the billion dollars plus not just have the unicorn tag. And the miners is reflected in the 24:16 list. Yeah, the Midas list has always discounted private valuations versus real exits to keep to keep in mind, how frothy things can get, you know, we’ve been doing this through multiple hype cycles and down cycles, you know, and especially this was challenged and kind of peak Softbank era with some of the valuations that they were throwing out to companies like WeWork, and others. And you never saw a massive takeover of the Midas list by WeWork. Investors, thankfully, but I do think that the list gets challenged when there aren’t exits happening. I mean, thigma is supposed to be the huge sale and it actually you know, it hasn’t been approved yet. So we were like, we were like how do we treat this? Do we treat this as a private company, a public company, it was announced as a $20 billion sail. But that money hasn’t hit VC or LP, you know, bank accounts, whether it’s with Chase or Bank of America at this point to throw it back. But you know, so it’s just kind of a weird flux moment. And we saw that with the Midas list. And I hope that next year’s list has a lot more than the seven newcomers and five attorneys that we had this year. Usually, we’re looking for about a quarter of the list to turn over. 25:25 I’m gonna ask a question that I think a large part of the audience is curious about. But is there anything you can share about how the list is actually made? What goes into the selection process? I’m sure you can’t give away all your secrets. But if you can share, you know, some fidelity into the process, and the ingredients that make the soup. I think everyone would be very curious to hear that. 25:49 Yeah, so we go on Twitter. And we look at how every VC tweets, and the more they tweet, the lower score they get. We it’s a danger, something there. Yeah, I would love that. I actually, someone actually did an analysis once and found that most Midas list investors were very infrequent tweeters, which I thought was really interesting. I don’t think there’s really causation there. But as a correlation, it was interesting. But no, the Midas list is data driven, we have a model, we’ve run the model for a long time for about a decade, we’ve done it with a fund of funds called Trubridge. Trubridge has a lot of insight into the industry, but they also kind of, because of that aren’t thirsty for in ways that would make us concerned as a data partner. You know, they already work with a lot of big firms and are well established. And so we collect data from dozens of firms, hundreds of partners. And then more importantly, we have all of our past data to so we can triangulate positions. So if someone says, Hey, I was a huge investor, in a company like Airbnb, we actually can verify that, you know, or if they say, Hey, I was actually a big investor in stripe, we can say, oh, no, that was actually an angel investment you wrote, or actually, you did that. The Series II, even though maybe you want people to think you did a series C. And we don’t, you know, our job is not to publicly shame those people and call them out. But it does give us a lot of comfort, that the data we’re getting is mostly really strong. From there, we run a model that basically tries to reward bigger and bolder bets. So people can from any stage can make the Midas list. But it kind of is easiest for that classic early stage investor from a model standpoint, who’s getting a lot of equity, who’s getting a lot of cash back, I think the the more you go on a sliding scale towards less cash back, or later stage, the harder it gets. 27:40 Got it? Does the algorithm evolve each year? Would you say or have you guys 27:46 we tweak every year, I mean, continuity is really important. But we do also kind of try to improve every year we get feedback. We talked to people in the industry, who are not necessarily the VCs, but more like LPS or observers to get feedback on each year, obviously, like this year was was a challenge with, as I said, these IPOs that were not necessarily new, driving a lot of the list. So we think about, oh, if we tweak the model a bit, what would it feel more genuine or less genuine? And so there is a little bit of art to kind of how the model gets adjusted. But at the end of the day, we’re trying to reward that real Midas persona. Who is that high conviction fund returning high multiple investor with probably a handful of qualifying companies? 28:34 And what about the differences between the regular Midas list and then the seed Midas list? Can you speak to the differences between the two and the factors that go into ranking those investors? 28:47 Yeah, I mean, if anyone in your audience wants to annoy me, the best way to get us to create a new list is to just bombard me for years until I give up and I you know, create more work for myself. So for years, we got criticism that we didn’t have European investors on the Midas list. Some of them actually now do make the international list. But you know, a few years ago, we did create a Midas Europe list that focused just on European investors because that ecosystem is still growing. And you know, it is allows us to showcase a lot more investors who aren’t quite ready for the International list from just a dollars basis. Similarly with the Midas seed list, you know, we heard from a lot of people being like I was the first check into snowflake are I was the first check into coupon or whatever it may be. And your model, you know, dwarfs me compared to a big investor from a later stage firm. So how can I compete? How can I ever make the Midas list despite being the first check into a lot of great companies just at too small of a percentage bases are too small of a cash basis? And we were like We hear you. You’re obviously great investors. What can we do about this? And this is one where actually, you know to try to tweak the model to help those people too much would have undermined the whole thing. And so we figured the most intellectually honest thing to do was to just create a whole separate list of 25 investors who are only seed stage investors. They’re only from seed firms. And they have amazing companies. But like the the way that the math works for them to be successful VCs is just a little bit different. So we’re really proud of that list. And it showcases some great investors, who wouldn’t necessarily make the main Midas list because they’re up against, you know, the Andreessen growth and some huge you know, funds like that. 30:34 In prior to wrapping up for the day, I’d be remiss if I didn’t talk about the last, you know, buzz word of probably the past six months generative AI. So in, you know, you’ve been doing this for a decade plus now, you said all the way back to 2008, is when you first started, where does generative AI rank in terms of the amount of interest and, and just sheer buzz around a topic since you’ve started covering technology and venture? 31:03 It’s, I mean, it’s crazy. I always have a mental list of like, what were the old buzzwords there was SoLoMo, which was social, local, mobile, there was, you know, big data, which was kind of like a predecessor in a way to AI, then there was like another AI phase, actually, then there was cloud, there was serverless, computing, there was what was, you know, the big app explosion of like native apps, you know, we’ve had all these phrases, and then obviously, web three and crypto. But this AI, one, I think, is unique, because it is both massively overheated and really substantial. So we if we were to make a chart, you see some other hype cycles that maybe rival AI, but thrival AI, with the substance of let’s say, cloud computing, which wasn’t quite as buzzy, but when you look at, you know, AWS, and the transformation on the tech world and the rest of the world that the cloud has had, no one can argue with how important you know, cloud ended up being, I think AI is kind of closer to that, with all the buzz of crypto and web three. I mean, I just every day I see something new, where I’m just like, Oh, my goodness, you know, I’m off this week. So thankfully, it’s not my problem. But there have been about five AI announcements in the last couple of days that just had me, you know, doing some sort of shocked reaction gift, like, you know, we had Bessemer announced a commitment to invest a billion dollars into AI companies like those are AI companies that they haven’t already backed. I’m just amazed that there’s so much money, supposedly earmarked for future AI opportunities, when you think that a lot of these companies have already raised billions of dollars. That’s, that’s just really unique. And you spend that summer as a very good firm with a lot of great investments. So clearly, they see that this is probably more than marketing, but it does kind of when you just think about where does the money go? It feels kind of crazy. On some level. 32:59 Yeah, there’s so much entropy in the market right now. And I think a few things that are interesting, from my standpoint, just how quickly it’s been embraced by incumbent firms, right? Like the enterprises are adopting generative AI, with all the initiatives or announcements on new models being built, or whatever it might be. On the other end, the same number of announcements of Adobe, creating some sort of strategic initiative around generative AI or whatever other companies like go down the list, everyone is participating, which makes it really interesting from the early stage, because you don’t really know where the true opportunities are just yet, at least, at the very earliest stages. So that’s what I 33:46 do think I do think it’s a good sign, though, that you do have, you know, smart people like Scott Belsky at Adobe or Melanie Perkins at Canva, or you know, a bunch of other folks kind of from another another moment in software, I mean notion pretty much any any work software business, they are embedding these AI tools in smart ways. And so I think at the least, that is that is substantive and transformative on its own. Right, like, like we can kind of be excited about that safely. 34:15 100% I mean, going back, you’ve mentioned crypto one, three, everyone was wondering like, what are the what are the use cases for what web three and crypto here? And I think people are still trying to answer that question other than just being a store of value in like in Bitcoin, but 34:30 they still might like I sometimes it’s an easy comparison. But you know, people I respect and crypto feel like it’s kind of an unfair potshots against them. And like, I want to, you know, make it clear to the audience like I do think there can still be really useful use cases for a lot of crypto projects, but I do think that they are in this valley of a gap between the product market fit of like really popular solutions and something that is not just financial speculation, you know, like, like If he’s really being useful without being something that you get rich quick on or, or similar similar projects across the crypto landscape, that’s going to take a lot of time. Whereas I think the real you know, the comparison in AI is that this is just happening really fast with the most boring players, right, which is, which is a good thing? 35:17 Yeah, agreed. The other interesting thing with generative AI, if you contrast it with that of like cloud computing, cloud computing, it ends up touching the consumer, but they, they there’s like a disconnect between really realizing the value, right of cloud computing. But a generative AI like people are just logging on to chat GPT, or they’re generating images, like consumers are aware of the power because they can actually interface with it. And I think because consumers are interfacing with the technology, like its relevance across not just the enterprise or emerging startups, but the economy at large. And like how quickly we’ve been able to get to what is it now? 100 million users on open AI? It’s crazy, but I think so large, its amount of it? Yeah, because it’s consumer facing too. 36:09 I think you’re totally right. I think like, if I’m an entrepreneur, soaking up this conversation, there are a couple of interesting lessons there. Because on the one hand, you know, a lot of the leading AI players raised huge amounts of money, because it was very expensive to get where they are, you know, anthropic opening AI stability, they’ve all raised hundreds of millions or billions of dollars. And so that’s, that’s something that is not easily replicable for another company. But on the other hand, you look at some of the startups that are kind of just integrating AI or taking off because of AI friendly use cases, like a tome index, or you know, some others. It is a classic example of product led growth, right. And like you said, there’s a, there’s a bottoms upside to this, where if you can actually get the product out there for maybe cheaply, the average user will use it. I mean, that’s a huge difference from let’s say, security, where there’s still some great unicorns and great businesses, but a CISO has to sign off on usage of a new security tool. It’s not like some five person team is going to start like hacking around with a company like this. Yeah. 37:10 It another claim that it’d be curious to get your perspective on, given that you’re at the forefront of content creation is everyone’s claiming, like, oh, AI is coming for people’s jobs, especially those that are creating content, written content, eventually, audio, video, etc. But given you know, you’re an editor at Forbes, I think you’re going to be probably the best person that give true perspective on that question, or that statement? I guess, what’s your take on that? 37:40 Yeah. I mean, at the highest level, I am on the team that is the it’s going to take all our jobs and and the world side is a little sensationalized and kind of overly, honestly, overly, like, appreciative or exaggerating how good these technological tools are. I mean, I think it’s, it’s good to have, you know, science fiction that shows us dystopias, so we can try to avoid them. And it’s good to kind of raise these big existential questions now. And I think Sam Altman, speaking to Congress makes sense and stuff like that. But at the same time, I do think that the practical uses a lot of these tools are a lot less disruptive, at least initially, then people might think, you know, just because an AI could do your job and interview me for the full ratchet, the questions wouldn’t be very good. And your audience would not find it enjoyable, right? You could also have an AI, study my articles and pretend to be me, but I don’t think AI you talking to ai me is just a good user experience. So on some level, I do think it pushes just more reinforcement of quality and differentiation that was already out there. Like there’s so many great podcasts out there. You have your niche and your audience and you know, your your style that you’ve practiced for a long time, in the same way I do. I do that with my articles, you know, and if it would be easy for someone to just replicate my work, even as a human, you know, like some content farm, then I haven’t really created anything differentiated. And that’d be really disappointing. So I, you know, I think on the media side, we’ve seen with the, you know, with the SEO world and with kind of the the rise of content farms, we’ve seen a flood of content already. Ai just takes it to the next level. And maybe that content is a little bit better. But you just have to kind of keep skiing ahead of the Avalanche or whatever metaphor you want to use and just stand out in that world. I don’t think that’s new. I think it just kind of makes it more obvious. Curious if you would agree or not. 39:48 Yeah, I mean, I feel like the element that is being missed right now in generative AI or that is lacking is the creativity, right? Like it’s good if you give it a prompt but you It’s it doesn’t have the ability to like, quite be creative. And to your point, like, if we had an AI do this interview, it’s like the questions would not be, they wouldn’t be great. And you can even put in a prompt right now into generative AI, like write me an article on this. And you can tell like it is, it is auto generated. And, and you know, we’re early and it’ll evolve, but still, like, I lacks the human element of, of creativity, that element has been missed. 40:30 I was talking to an artist over the weekend, who is very successful artists, and we were talking about how AI will affect their industry. And they were basically saying that at this point, they have a direct relationship with their fans and their brand. And people will value the art because they want that relationship with the artist and that couldn’t AI replicate what they’re doing, especially digital art. Yes. But is that different from me going online and buying a $10 print of a Monet and putting it on my college dorm wall, which I did back in the day and thought it was super classy? I don’t think it’s that different. And no one was impressed by my $10 Monet. 41:10 Yeah, that’s, that is interesting. Well, to wrap up here, I know we’re running out of time. Alex, if we could feature anyone on the show, who should we interview? And what what topic? Would you like to hear him speak about? 41:20 Oh, wow. Okay. Yeah, the interview that I can’t get that I’d love someone to get is with the Google, the internet that they feel they’ve created. And if they have regrets, Dustin Moskovitz is someone who has a Facebook co founder is very transparent on social media and with with interviews about what he feels Facebook, appreciated, or didn’t when they were building that transformative social network. The Google guys are very quiet. And I think that they have arguably had an even bigger impact on the internet and where we are today, and are maybe more invested now and things with the rise of AI and how that could affect Google. So gosh, I would love to just have someone pick their brain in an open conversation. But I can’t get that interview, if you could, I would bow down. Otherwise, I would say I’d love to see more interviews with emerging managers who have kind of had to navigate this current landscape like I read about Christina Simmons from overwater ventures recently who raised a fund despite the headwinds, but you know, there are a lot of Christina’s out there to talk to. And I also think I’d love to see more talk with women CEOs in AI, because unfortunately, you know, Sam Altman, and a lot of these kind of biggest names. We’ve all spoken to a million times. You know, Sam has had like six profiles in the last month I’ve written one myself. And that’s great. But I would love to kind of hear more from those alternative voices and AI as well. who maybe aren’t, you know, this amps? 42:51 Yeah, those are all great suggestions. You know, this next one, I’m especially excited to get to get your answer on what book articles or videos would you recommend to listeners, you know, something in recent memory that you’ve found informative or inspiring? 43:07 Yeah, so I recently read and got to do an interview for their launch with a colleague and a former colleague who just wrote a book called Wonderboy. That’s, that’s out right now about Tony Shea. It’s about the rise and fall of him as the leader of Zappos, his earlier story in Silicon Valley, and kind of his life trying to transform Las Vegas after Zappos, and kind of his unfortunate and untimely passing. It’s it’s a story that I thought as someone who was plugged into the tech world that I already knew, and frankly, reading the book, I learned so much, I think it really raises important questions about mental health, in entrepreneurship in the startup world, how we evaluate success, how we try to enjoy success, you know, you can have a life changing and massive when to your name like Zappos and still have demons and still struggle to kind of figure out what’s next. It’s kind of like this famous song Is that all there is. And so I was blown away by the book. I couldn’t put it down. And I really think that anyone in the startup world whether investors, entrepreneurs, employees of tech companies, could could learn a lot from Tony’s life. It’s frustrating, because you’re you’re rooting for Tony to snap out of it, and do something great again, and you know that that’s not going to happen. But I think it’s important medicine for everyone to take. 44:28 Yeah, they’re also topics just don’t garner enough attention and get talked about enough. 44:33 Yeah, I mean, behind closed doors. I think founders, when they talk to each other are talking about really tough times from a mental health standpoint, from a stress standpoint, that’s not something that they feel comfortable saying to someone like me, or maybe posting on social media that much, but these are conversations that are important, and we should encourage them. 44:51 Definitely. And then Alex, lastly, what is the best ways for listeners to connect with you? Aside from DMing you on Twitter? About the Midas list. 45:00 Yeah, they can give us suggestions for new lists. I’m on Twitter at Alex or Conrad. I’m also Alex our Conrad on blue sky, which I’ve been playing with, although I haven’t really made sense of it yet. Instagram, I’m the same. My email is a firstname.lastname@example.org. I welcome any tips, feedback, even people just saying they read a story that made the master question. It makes my day because we tell stories for them to inform people and provoke conversation. So even if you don’t like the story, it’s always an honor for me when people read them. 45:33 Awesome. Well, thanks again for coming on. I know it’s your vacation, and you’ve been grinding away over there. So appreciate you making time for us. 45:40 Yeah, I think I’ve earned a little Jedi survivor after this. I’m excited. 45:45 Well, thanks again. 45:50 All right, that’ll wrap up today’s interview. If you enjoyed the episode or a previous one, let the guests know about it. Share your thoughts on social or shoot him an email. Let them know what particularly resonated with you. I can’t tell you how much I appreciate that. Some of the smartest folks in venture are willing to take the time and share their insights with us. If you feel the same, a compliment goes a long way. Okay, that’s a wrap for today. Until next time, remember to over prepare, choose carefully and invest confidently thanks so much for listening Transcribed by https://otter.ai