Phin Upham of Haymaker Ventures joins Nick to discuss Why Fewer is Better; Pursuing a Frictionless World, The Value in Reframing Everything. In this episode we cover:
- The Challenges of Being a Good Venture Capitalist in a Rapidly Institutionalized Industry
- Startup Growth Strategies in a Capital-Tight Environment
- Fraud and Open Banking in the US
- Friction in Efficiency Business, Picking Good Companies and Adding Value after Investing
- The Benefits and Challenges of FinTech and AI in the Financial Industry
- US Business Culture, Trust, and Escape Velocity
- AI’s Role in Personalized Decision-Making
- Wealth Management, and Crypto Investments
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0:18
Phin Upham joins us today from New York City. He is Managing Partner at Haymaker Ventures, an early-stage venture firm investing in fintech. Prior to Haymaker, he spent nearly a decade at Thiel Capital as MD of VC/Fintech and previous to that he spent time at Morgan Stanley, Rothschild, and Lazard, specializing in fintech investments. Phin has invested in notable companies including SoFi, Gusto, SpaceX, Mundi, Flexpoint, and Flyr. Phin, welcome to the show!
0:49
Thanks so much. Appreciate the time.
0:51
Yeah, it’s a pleasure to connect. Tell us a bit about your backstory and your path to becoming a VC. You
0:57
said a lot of the a lot of the facts, but I guess the part that’s not there is really one of the transformational things for me was meeting Peter Thiel and working for him for about a decade. And I eventually, and I eventually worked on his family office FinTech strategy and invested in FinTech from about 2008 to 2017 with him. And that was a really important time in fintechs history, because it’s funny to think of it now, where Fintech is such a mainstream term, and that’s a good thing and a bad thing, and we can get into that later. But before 2008 whether the financial crisis, FinTech was really seen as a second tier kind of part of venture capital, really more about business model innovation that it was seen as core technology innovation. And with the financial crisis, you got a pullback, both for regulatory as well as financial reasons of all the banks and a lot of the products that they’re before used to being offered, and you had a sort of brownfield opportunity to replace that, those services with what then became fintech. And so FinTech really grew out of the financial crisis as a sector, and it the money and the technology and the innovation and the entrepreneurs that went into it made it the exciting place it was for the next, you know, number a decade, decade and a half. Interestingly, you know, you can sort of make this more you can sort of put numbers on this. And I think in 2008 about $2 billion per year went into FinTech startups. And I think by 2920 21 the number was over 100 billion. So it really did grow substantively. That number shrunk a little bit in recent years with with sort of a right sizing. But
2:40
exit growth, exit values have tracked with that as well. Certainly
2:43
during the 2021 and 22 kind of IPOs and SPACs, you saw about 25% of those being in FinTech. And a lot of the a lot of them did quite well for a while, and then valuations came down. So you know, you can, you can, you can choose a point where you want to evaluate it. But yes, a lot of the IPOs and SPACs were at FinTech as well, which were exits for those VCs.
3:07
Very good, very good.
3:08
So you worked with with Peter Thiel, and
3:10
you just started, you decided to launch your own firm, haymaker. You know what? What prompted you to to launch the firm and the fund. I
3:17
loved working with Peter, and he was an amazing mentor, if I could be presumptuous enough to call him that I ended up starting a game maker for two reasons. One, I think when you work for someone like Peter, the best way you can honor what they teach you is to is to do what is to start your own thing. You know, it’s hard to work for an entrepreneur without at least trying to do something on your own. Even though starting a VC isn’t quite entrepreneurship. It’s maybe the closest an investor can get. And, and secondly, you know, we wanted to just put more money to work. And, and so raising external capital was the easiest way to do that. And the opportunities at FinTech are enormous, and I think it can absorb a ton of capital if done thoughtfully and carefully,
3:56
perfect. And give us the broad strokes on, on the thesis, you know, size, stage entry point, check size.
4:03
So Haymaker Ventures is, is an early stage FinTech fund. So we do, we do series, mostly series seed and a, with some pre seeds. We are technically allowed to do small a, B’s. But really series seed and a is our focus. We do it in FinTech broadly, although in recent years, the majority of our investments have been in B to B FinTech, where a lot of opportunities have been, as well as sort of what they call, like Office of the CFO, or like, you know, white label back office products, whether that’s like, you know, accounting apps or payroll apps, or, you know, a lot of other financial apps that we People or HR apps that companies can use. And then we’ve been also pretty done a lot of cross border work. But generally we are broadly FinTech, broadly defined, and we are early stage broadly defined. And those terms sort of change their meaning a little bit over time. You know what used to be. You know, series seeds are getting bigger and bigger and bigger, and in recent years, you know. Been harder and harder to raise a B, so people call it a, two, A, three, a, four, which is, I think the new term for a B,
5:07
it’s like all these stages are becoming phases, right there in 3c, the C, the C, plus the extension, et cetera. Now that’s happening with a curious do you reserve Why or why not? So
5:18
I think we have a slightly contrarian view here, which is, we do not reserve any capital for follow ons. Technically, what we do is we try to hold ourselves to the standard that all investments should be the best investment we see that are available, whether they’re follow ons or not. I don’t mean to say we don’t follow on we often do, but we don’t see it as a, as a, as a, like as a, as a, as a, as a reserve for the fund. We see it as something we should re underwrite and reanalyze and reevaluate. And to be a little bit tongue in cheek, and I don’t mean this for everybody, but I think that the idea of a reserve for follow ons was to some extent, a legacy of the boom times when people wanted to finish investing their fund and raise their new fund. And so to say there’s a 40% reserve meant you could invest 60% of your fund and then raise your new fund and call the other 40% follow ons, instead of actually investing 90 or 80 or 90 or 100% of your fund and then raising your new fund, investing out of the new fund. And so I think to some extent it was a hack when people, when fundraising was easy to raise more funds more quickly, get more AUM, more management fees, etc. That’s not always true, but I think that was one of the reasons it got so popular.
6:32
So you will re underwrite a deal from scratch. Is it a different team and a different decision maker, or is it all the same group?
6:40
It would be the, it would be the, it would be the same group, and more specifically, it would be the person who is on the board or involved in the company having to continue to put themselves on the line and put themselves to be responsible for that investment. We have a small team, so that’s not many people, but we really have to sort of believe it’s the best opportunity available to us. The tough part, of course, is, you know, I mean, I, by the way, I’ll exclude the like, they need a $5 check to say everyone participated. Like that’s, that’s probably a lower bar, although not a trivial one. I need to put any significant amount of money
7:13
in. So on a percentage basis, what would you say of the portfolio of initial checks? Get a meaningful check at a later stage,
7:23
we are gonna call it a reserve check. Then right, right. No, look, we are. Our goal is to make five to six investments per year, or say four to six investments per year of about, and allocate about $5 million per company, say two to four to $6 million per company. So if that means that we write a first check of one to 2 million, we might write a second check of one to two or three. And that’s kind of the way we think of portfolio construction. We have gone above that and we’ve gone below that, but I’d say we try to write a large check early and be have full commitment and full conviction. We don’t believe in putting a total check in and then invest you a little much more later. I am very skeptical, as I am skeptical of self knowledge and philosophy as a in the common set. Way that term is meant that is that we have some privileged access to understand ourselves. I think that’s highly questionable. I’m also skeptical of the idea that once you’re involved in a company, you have a better perspective on whether or not to invest in some ways. The first time you see a company, the first time you direct with it, you’re serious grappling and wrestling with it, is the best time to look at that company objectively, and like with friendships or family, you often get you get more information the more you know them. But you also get blinded to a number of things, and you have all these weird incentive structures to reinvest and sort of think about do it again, then back up your investment and commit to what you’ve done. So I think there’s such pros and cons that most VCs are better at the first check than they are at the second. And my bet would be that if you looked at the performance of VCs in their first check versus their follow on checks, almost definitionally, their first checks are better because they’re earlier and cheaper, but also, I think the quality of their underwriting and decision making is often much worse. And that may not be true of private equity or more more late stage investors. I think it is true a VC where getting excited and making that first investment and making the bet is by far the more important part perfect.
9:19
So you know, right at the top, you said Fintech is a hot term, and you said, that’s a good thing and it’s a bad thing. Why?
9:27
So I feel like, I feel like to be a good VC, you have to be against all the buzz, all the buzzwords, all the all the terms that are sectors, all the stuff that everyone understands. And as FinTech went from backwater, regulated, not even called FinTech, mostly to something which was such a large sector, and where there are specialists, while I applaud that they’re being specialists, and I like that there’s more attention to the space for my exits. It also makes it a lot harder to invest in, and it makes it a place where entrepreneurs go. It’s funny, I was with, I was with the fabs, with. Earl damlin Once, where he was the founder of Wanga, and he’s a hilarious guy and a great sort of Og at fintech. And we walked into a conference in the UK, and he looked around, and he said, Why is everyone wearing suits when I used to do FinTech a decade ago, and this is probably, you know, 2012 and so he was talking about 2002 he said, When I started in FinTech, everyone wore rebels and deviants and sort of like, somehow, they were all kind of weirdos that were doing fintech. And as banks, you know, JP Morgan becomes, you know, invest a ton in FinTech. And all banks and institutional players come in, they institutionalize it. They make it more. They make it more. They make they give you sort of a pathway to be a FinTech entrepreneur. And they give you a kind of thing you do. You know, there’s revenue streams from remittance, and revenue streams from, you know, interchange, and there’s all these business models, and this becomes much harder to be a good VC, because it’s so much easier just to fall in and do the thing everyone else is doing, and then you’re just getting beta, not alpha, in a weird way. It’s like, it’s like, it’s like, this is my general idea, like, it’s, it’s a lot easier to like, so it’s really, really hard to be good at investing, but it’s much easier to look like you’re good at investing like. It’s a lot harder to be a good investor than to look like a good investor like, and to look like a good investor is an art, and it’s like something that people get trained to do, and it’s something you can actually like, have a thing to do, like, you say these cool things on podcasts, you tweet about it, you say clever statements. You have a lot all the right friends. You show up at the right conferences, right you while you talk, you talk smoothly about all these trends you’re seeing in ways that are compelling. But to be a good investor, it’s a whole different thing. You have to be contrarian. You have to have insights. You have to have, you know, understand the sort of go against the grain and not be popular, at least in the moment you make the investment, even if later on, of course, the investment has to be recognized as being good. And so it’s very strange, right? Like VCs become more institutionalized, it becomes harder to be that good investor and a lot easier to look like a good investor. And that’s a real trap.
11:57
Well, everyone in the industry is, is, you know, is exposed to that and influenced by that, like we recently hired a principal at the firm, and many of the folks that you know are in the final running are talking about, oh, I got a mark on this. I got a mark on that. I got a mark on that. And, you know, one mark does not make a portfolio. It’s like many years ago, the head coach of Duke, Mike Krzyzewski, was talking about how, you know, most coaches talk about that initial NBA contract, but we index on the second contract, right? We want to get you to the second contract because that’s a more that’s more indicative of a long term, healthy career. And in our business, that one mark does not, you know, make a portfolio. It’s just a very short term indication that you know you are able to optimize for the next round.
12:47
It’s funny because like it where it does where those marks do matter is when people were playing the Aum game rather than the rather than the performance game, right? Like, right? If you get markups and you can raise a new fund that’s much bigger than markups, new fund that’s much bigger then your markups matter like and in a weird way, the goal is to get markups, not to get exits right, because exits are like way longer, and seven years is like an eternity. And in an equally strange misalignment of incentives, like you actually want to invest in companies that need a ton of capital, because that’s the way you allocate these big funds going forward. As you raise bigger and bigger and bigger funds, the goal is to invest in companies that can absorb capital so that you can allocate your next fund and raise your new fund. So you get this weird disincentive where, like cash burning companies that have huge markups, that need a lot of capital over their lifetime are the best investments in an environment in which you are looking like a good investor and much more capital efficient companies that maybe take longer to develop and mature their technology and come out of nowhere after five years of stealth or effective stealth, but have then some massive advantage over their competitors, because they’ve spent five years refining something radically Different and radically interesting and technologically complex, that’s the way to be a good investor. And so there’s all these ways in which being a good investor and looking like a good investor diverge in a much more fundamental way than we even talked about before. There’s probably a set of like systematic strategies to think about how to be a good investor, but it’s like it’s impossible to completely systematize it, because, by definition, being a good investor, you are finding companies that are one offs and unusual companies and weird companies and companies that are, you know, one of a kind, and therefore very valuable, and therefore it’s by inherently unsustainable. But there’s things like, like, you know, there’s certain like, mental tricks I certainly use, like, you know, and sort of heuristics that are non fakeable, heuristics like transforming questions. Like, how do you take a question and transform it into a less obvious question? Just to de familiarize it in your own head and ask a question that’s like, okay, it’s not about money. It’s about time. Why? How is time and money fungible to each other? I. Like Bitcoin, framing money as code, or framing biotech as code, it’s, it’s sort of like, you know, like you can talk about paradoxes. How do you identify interesting paradoxes where the world is not yet explained something and there’s and then they requires a lot of effort to explain it, not something trivial, but something actually important,
15:25
useful when you’re engaging with respective investments.
15:28
I think it’s useful to think about what sort of what what? What is it about the company that others are not understanding? What paradise is it about the companies that are hard to understand? What secrets does the founder have, as Peter would put it, and if you can think about how you can think differently, whether by transforming the question in a way that others have not, or you can think of a paradox that is explained by this company or potentially explained by this company that others haven’t solved. Or you can think about a way in which there’s a secret this person has and can explore that others don’t believe, then you might actually have something valuable. But if the person saying conventional things in conventional ways to an audience that all accepts it’s valuable, then it’s probably fully priced and probably not very likely to be successful. And that seems obvious when you say it, but it’s like, much less obvious when you do it, because when you’re doing it, you’re like, Oh yeah, what the world really does need is a better payment app. But it’s like, everyone knows that pain is hard, and, like, a payment app would be valuable, and it should, would be great if it were fewer buttons to press and but, like, that’s like, obvious and true, but there isn’t one, and it’s really hard. And there’s all these ways in which it’s hard that you don’t understand, that you don’t that you don’t appreciate, because you think it’s easy. And so you sort of, you’re you, you’re you are going down a very dangerous path when you think you get it and the obvious things are true, and just no one thought of them before, because, trust me, they have
16:49
right. And I love what you said about how you know the obvious deals are going to be priced in if the founder and the founding team is, you know, obvious, in best in class, and the opportunity is obvious, like those things are going to be fully priced, and often they’re the ones that don’t work out so well. Something we talk here about with the team is, what are the truths, or what are the absolutes that the founder knows that others aren’t aware of or they disagree with? And those are some of the most compelling but, but Finn, you’ve, you’ve said that. You know, the three factors that are impacting your investment focus most right now are efficient growth, fraud and low margins. Let’s take each of these high
17:34
margins. I probably said high margins. Did I say low margins? You say low margins, low margins? I’m gonna, I’m gonna change that and say high margins are better than low margins.
17:42
Maybe you were adjusting. Maybe it was your, your fungible framing. You
17:45
were
17:46
framing it as a reversing.
17:50
All right, so talk about, you know, how do you define efficient growth? Is there an absolute there?
17:55
So look one of the I said, I said a while ago, we do a lot of B to B, and I think inefficient growth, by which I mean you acquire customers, often B to C, customers, and you and you believe in, like, you know, some morality, or you believe in some scale. Economies of scale, those games are for when there’s lots of capital available, but the economy of scale game doesn’t work in capital, tight environments, in a weird way. All startups are historically, many startups have these economy with scale characteristics that are probably underappreciated. So let’s just think about that for a second. You as a startup, you are competing against big incumbents. Maybe you’re doing something a little bit different, but like generally speaking, incumbents certainly are like potentially competitors, if not actual competitors, those incumbents have a lot of advantages. They’re massive. They have tons of resources. They have customer loyalty. They have brand right in a very strange way, when you start out, you are going to be losing on all those dimensions. And so you want to pick either a tiny market, which is sort of they are not focused on where you can provide a better product, or you want to sort of accept losses to your low margin point, although I’m not sure this is the right environment for low margins. It probably was five years ago, and then you want to scale up into into having economies of scale like them, with a different strategy, but in an environment where it’s hard to raise money and it’s hard to get to scale, you can’t depend upon economies of scale, so depend upon something else, and that might be, you know, diseconomies of scale. Paul Graham famously talked about doing unscalable things. I think that’s probably the environment we’re in where it’s hard to raise money, so you have to pick niches. Peter always used to frame that as sequential monopolies. You pick a small market and you dominate that market quickly, and then you pick a slightly bigger market, and you dominate that quickly. And his examples were always all the great startups in Silicon Valley. So this is an ironic fact that we see Google and Apple and, you know, and Facebook as these huge companies that have huge scale. But you know, when Facebook started, it was like Justin. And it had 70% market share at Harvard within, you know, a matter of weeks or months. And so it was, it was the opposite of scale. It was the definition of a niche. And when, and when Google started, it was like a fundamentally for academic purposes, and it was just, you know, really, for an academic exercise to organize data. And it was not really meant for consumers, or general consumer and consumer use. And it went from there, from academia, outward, from when the founders realized the potential of this of links and others. And then, like, when Tesla started, you know, it was like this very weird Class of, you know, Roadsters that were, like, super expensive Roadsters for, like, Silicon Valley elite who want to, like, show off, and that it slowly became more mass market electric cars. And so in this weird way, like all these huge companies, started as not attacking broad markets, but purposely attacking niche markets. And then they slowly got less and less niche over time and again. Seems kind of obvious when you say it, except when someone comes to your office and says, I want to build something which only, you know, 10,000 people would even potentially want to buy. You’re like, well, there’s not enough Tam, right? That’s what like a VC would say. And so then they’re incentivized to say, I want to build a general car. But that would be the exact wrong first strategy. And so when they come into your office and say, a huge Tam, your, your, your, you know, your antenna should go up and say, Wow, what are they not understanding about how hard it is when they start competing in such a broad category with so many people against such large incumbents. They need to start smaller. They need to have a path to that. Tam Finn, when,
21:33
when most people think about like a wedge in, they think vertical, typically like a niche, right? But take a company like gusto that you’re invested in, fairly horizontal, right? They’re doing payroll, they’re doing some benefits, they’re doing a variety of things that maybe used to be pure play was their niche kind of the type of customer that they went after, you know, like SMBs at first, or, you know, how do you think about their path to building sort of this category defining startup? Yeah, extraordinary
22:06
company. Josh and his team are amazing, and Tomer is amazing, and they’re really strong serial founders that started the company obsessed with product and beautiful product and beautiful experience, incredible customer service, all things that don’t scale right, like spending that amount of time on beautiful product and a customer experience throttling growth for so many years in order to get it right before they got big. Or was, you know, turned out to be just the right strategy. But the way in which gusto probably attacked a more niche market was a little bit it’s a little bit different. All the things I said are probably true and are probably niche, which is customer service and non scalable things, but they actually attacked this market which nobody was focused on, which is like much smaller micro companies, like one or two, three person companies, and then that’s a big market, but a completely undeveloped market, where they said to themselves, okay, I cannot build a product that’s complex enough and robust enough and sort of big enough to serve the middle market, but that requires all this in order to get them to onboard your product. Then you need to develop all this specialized, specialized code, specialized systems that there that fit their way they do their business, because the larger companies will not change the way they do their business. They want you to, you to install a product that fits them. What I can do is I can start with tiny companies, 123, and I can give them a box, a good box, a logical box, a rational box, and they all will fit into our box. So I can develop a much simpler product for one, two and three person companies in a much less competitive environment, and make a lot less money right than I can if I go mid market, but as those companies grow over time, I will add services and products, hopefully over time, to keep more and more of them, especially the ones that don’t leave my box, and I’ll be able to serve a large group of those rising cohorts in more and more complex markets in a way that’s much simpler and where they’ll fit into The way I do things and give them options, not not sort of like a personalization, like not building customization, but rather providing flexibility. And there’s a difference between customization of flexibility, right? Customization is one off, and flexibility is providing the 80% 70% 60% of the solution of customers, a decent solution. And so I think that they really were thoughtful about how they attacked the market, and they ended up getting something crazy, like 25% of all startups were using gusto when they were one, two or three person companies, and that trailed off quickly. But over time, these rising cohorts that did not jump off became a very significant business, and I think they they will continue to do extraordinarily well.
24:43
Why is fraud impacting your approach to investing so much at the moment? So
24:47
I think fraud is like one of the most underappreciated things in the market right now. We’ve had, unfortunately, a few cases of founders who went under pressure and when things were going badly, or other 10. To or did get desperate. And I think that’s like, that’s like, such an important thing to avoid, both in underwriting your investment, to make sure there’s no fraud, and also to be disciplined as either a board member or an investor in making sure that as things as founders get desperate, they don’t engage in fraud. And look, Silicon Valley is kind of this weird place where, like, think until you make it, or like, do whatever it takes to succeed. There’s all these crazy stories about these founders doing these things that, by any logical measure, you could call fraud, but because it worked out, they’re heroes and they’re brave, and they did it. But when that, when that doesn’t work out, it turns out much, much worse than that. And so like, you know, it’s fine to like, you know, there are like, this is why therados And like, you know, turned out so badly. Like she through small increments, some of which were well intentioned, some of which were just pure fraud and badly intentioned. LED God went down the path that she, I’m sure, never expected to be in. And the problem is, is when you find yourself in a bad place, and I think the board members and investors job, job it is, is to make sure founders know where those guidelines are, where, like the bowling, like rails are. And look, the government’s job is to create good regulation. And some of that regulation, you know, like Uber and others, you break it, but you’re okay at breaking it turns out okay. And other ones, it’s not okay. And I think it’s a very weird and complex thing, but I suspect that more startups than one knows of, and more startups than one would like have engaged in, like desperate acts as they as things go badly, and I think the investor’s job is to stop that, and we have been revamping our systems, revamping our due diligence processes, revamping our compliance and sort of general oversight discipline in order to make sure that that does not happen. Because I think that’s a very dangerous thing and much more common than Silicon Valley would like to admit.
26:58
Finn, let’s talk open banking for a second. Is it realistic that we’re gonna have a legitimate, open banking system in the US in the next five years?
27:06
So the US is a tough one, because the banks are against open banking. So the government passes these weird laws that are largely framed by the banks. I mean, do you blame them the income? I don’t blame them. I understand why they don’t want the information to be there, but I think it’s so important that we have open banking, like, look at Europe and how much benefit they’ve accrued from it, and I think that the banks don’t want it, so they pass these laws and say, Oh yeah, I have to reveal the information, but it’s all going to be in this weird file with you can be spoke definitions, and it’s really hard to degrade. It’s not a simple API, so yes, it’s open, but it’s like enough friction to make it hard to use. And I mean talking about reframing questions, which I mentioned before, like this is a good example of it, right? So like, Ronald Coase was an economist that won the Nobel Prize in like the like the 80s, or he was an economist wrote in the 70s, and he wrote a wonderful book called transaction cost economics, and it was extremely influential in today. I believe it was a 73 article a book, and I could be off my ear. And he in this book, he wrote that he thought fundamentally, he asked this paradox, why do companies exist? And the reason it’s a paradox is because companies internally are not free market entities. There is a CEO or an owner who tells everyone to do they renegotiate contracts once a year. If then there’s, there’s a there’s a hierarchy. There’s no transactions that are occurring exchanges. There’s no exchanges of goods and services that are occurring within the company, usually, and then between companies is where free markets and capitalism exists. So you have this weird situation in which they’re sort of, you know, like this, the top down organizational hierarchy within companies, and then peer to peer relationships between companies. And that peer to peer is capitalism and free markets the top down. We don’t call, you know, you can call it what you want to call it, but it’s not capitalism or free markets. I mean, it is, in a loose sense of every year I negotiate my contract, but in the minute to minute sets, it’s not right, like when you’re an employee, you’re not like every day negotiating with your boss for for labor, maybe, or every year. And so the reason that he says, The reason companies exist that are the size they are, is because of the amount of friction in the system. Because if you have to negotiate, the downside of capitalism is that you have to negotiate your contracts, you have to enforce your contracts, you have to look out for fraud. You have to make sure that the quality of the product is good. So between companies is all this cost of friction within companies that friction is much less. You are sitting with somebody all day long. They dedicated to just working with you. You have repeated your actions with them. You know, if they’re doing a bad job, you can fire them. And there’s much more. You don’t have to negotiate every request you make of them. If you’re a boss, if they’re an employee, your employee, right? So you don’t have to negotiate with your employee. You tell them, you ask them to do something, and they either do it or don’t. If they don’t, they can get fired. But by and large, they do it and they don’t negotiate with them or. Check their work every time, because if you work with them for years, you know the quality of their work, so is less checking. And so his point is that the more friction there is in enforcing the rules and the laws and the systems, the bigger companies will be. And we see this in emerging markets with these huge family conglomerates. And the less friction there is between companies, the more rule of law is respected. There’s low fraud. People, generally speaking, have you know, trust each other, of repeated directions, the smaller companies can be in, the more outsourced things can be. And so there’s a variety of qual ways in which you can think about this, but the way I think about it is that really good economies will have high trust and low friction, and therefore smaller companies doing more innovative, more specialized things. And this becomes an incredibly important way to think about think about doing business. So it’s like fraud is exactly what you want to avoid when you think about friction, right? So fraud is the ultimate example of friction, and I think it’s just really like reframing it as friction. I think is a decent way to think about what startups and companies do.
31:06
I mean, does that suggest that in the future will increasingly become entities with 1090, nines and, you know, have more transactional relationships?
31:16
So I think that, like, that’s a future, and that’s a future in which, that’s a, that’s a, in many ways, a really nice future, because people should can be doing what they really want to do and choose what they do every day. I think there’s a lot of benefits to that. I think that, like, there’s real benefits to teamwork and having teams that work hard together, and so I don’t want to lose that as well. Like, I think there’s psychologists would say that there’s all these characteristics of a job that people enjoy as humans, and there’s like task completeness, task task task ownership, recognition by others that you did a good job, all this stuff that like you get in small, intense workplaces that are more similar to the way we evolved in small groups of people who are more tribal or more, like, you know, family oriented, yeah. And so, like, like 30, this is like that, like that number that, I forget the number, but it’s like the number of people you can keep in your head and be friends with it once. It’s like 30 or 35 or something. And so I think that they’re one of the reasons people love startups is that they they feel like these intense, very satisfying entities, whereas big companies, you feel isolated and lost to the size and the scale of it, and 1099 you feel alone and isolated because there’s no scale. And so I don’t want the whole world to be unhappy but productive. That would not be a good trade off. You kind of want people to be happy and productive. And this is kind of like, if I may like. This is also one of the paradoxes of like, of like fintech. To go back to FinTech for a second. Like, everyone always thinks that Fintech is Fintech is providing people more choices. And there’s a weird way in which more choices is good, and we all believe that like, choice is good, freedom is good, all this stuff. But also more choices can be, like, very painful. Like, if I have to give you 100 choices of an insurance plan with no more information, you have to read through every single 100 page policy. That’s like, a lot of choice, but a choice that requires a lot of cost, a lot of friction. Whereas, if I would provide you like, Hey, do you want, like, A, B or C, here’s like, the deductible for each which, how do you want to live your life? Do you want to, like, go to the doctor a lot, or do you want to go to the doctor very little? And, like, pay out of pocket? You might, like, that’s the right number of choices. And so in this weird way, I think that, like, the goal of FinTech properly understood is not to provide people more choices, but provide the better choices. And again, that sounds obvious, except, like, in order to get a world of better choices, instead of more choices, you have to, like, do all this stuff that’s really hard, like, have trust and under, add all this data on the person. So open banking is a good example to return to that briefly. Like, if you had true open banking, there’d be all these new companies that would evolve and start that would be able to use people’s data to have personalized, bespoke products that would be perfect fits for them, because they’d have all this data about them. And that would be a wonderful world of startups, not so good for big banks, but a really good world for startups. But the irony is, it would provide people with less choice, not more choice. That is, the options they would look at would be more personalized and not just a laundry list on a menu at the restaurant. Like, imagine if you walked into a restaurant or the restaurant, like, created a menu for you based upon your preferences and choices, and you only had and how you felt that day, and you got, like, steak or chicken, and that’s the only two choices you had, because, like, you know, you knew you had too much positive maybe you could ask for the full
34:41
menu, but it’s just a bunch of stuff. Yeah,
34:42
of stuff, right? So, like, you know, anyway, so like, in a weird way, like, I think this is also what’s happening with AI. And like, we haven’t brought it, talked about that too much. But like, the good version of AI is an AI that, like, knows a lot about you, has all your information and can provide you with like, choices that are. Have short circuited all the work and the friction you’d have to do just been
35:04
doing that for years, right? Right? That you don’t spend the
35:07
time to figure out all this stuff. It gives you, like, some pretty good choices. It allows you to act on a higher level with all this work having been done below you that was more manual work or the reading work,
35:17
right? I mean, Dick. So just the final point on the open banking thing, before we move to AI, are you investing actively in Europe then? Because, you know, it’s, it seems like a more favorable environment to spawn a number of fintechs. Great
35:32
from that perspective. Like, you know, they have open banking, they have lower interchange rates, which is a good and a bad thing. But like and and actually, interchange is an interesting one, because the US has been so resistant to reducing interchange, whereas Europe and other countries have forced lower interchange. And the the flip side of open banking that a lot of other countries are doing, that the US is doing a worse job in is a lot of these sort of centralized transaction exchanges, like like fed now in the US, but it’s probably not being pushed as hard or like UPI in India, or like you know, like you know, Brazil, for example, picks in Brazil like this, very interesting, lower friction versions of like open banking, plus like you know, centralized exchange, centralized transaction, like that provides a world in which startups can, I think, be extremely competitive with banks, and provides an opportunity for a low friction and therefore more anonymized, innovative firms in the sort of cosine sense of the word, and that you don’t need to have it all in a huge bank anymore. But like I think open bank is great. So Europe, Europe has its downsides. The problem with Europe is it doesn’t have a single large market. You can win all the different markets financially are different. The US has its version of that with all the different states. But by and large, the regulation is nationwide. So you have a 300 million person, very wealthy market with enough customers of any sort that you can actually serve them and have them be a large number of people in Europe, if you launch it in a given country, it’s very hard to expand past that country without changing the product significantly. And so in your little, tiny niche, in a given country, it’s not enough people to really satisfy your product. So now you have to go Pan European. And the complexity of different regulatory structures, different languages, different different cultures, becomes a challenge. And so there’s these weird ways in which the US is like and this is actually Alfred Chandler wrote a wonderful book called The visible hand, one of the great books about American advantages when it comes to economics. And he basically wrote, he basically wrote that, like the size of America allows for large companies to specialize and still be large. It’s sufficient to be a large company and specialized because the market’s big enough. And from that point of specialization and economies of scale, you can go global, whereas when you’re in a tiny country, you have to do seven things, okay, in order to get a big enough market to, like, make your money and be okay and hire people, which means you do nothing very well, because you do seven things okay, and in the US, you can do one thing exceptionally, and therefore scale that thing much broader, because you get scale and specialization simultaneously. And that’s what makes Europe so hard. You have to be very careful to pick something that can have scale and specialization simultaneously. So despite the some regulatory choices they made that are quite good around interchange and open banking, they have not solved that sort of regulatory problem. Super
38:26
interesting. That’s one of the best perspectives I’ve heard, actually, on why in many international markets, there are platform startups that try and do everything, versus in the States, there are a number of specialized players that can develop a beachhead, be best in class, or best of breed, and then expand from there, right? I
38:46
mean, no, it’s actually, if I may, it’s like, even more profound, like, if you’ve ever, if you’ve never done this, you should, which is, pick the 500 largest companies the world, you know, for Fortune or Forbes, or something, does the 500 largest companies in the world every year? Yep, take that list and look at the number of there in the US versus other countries. And there’s a Europe, US, China like and I haven’t done this study in a couple of years, so I’m just gonna give you the general numbers. It may not be true of last year’s list. It’s something like 40% is us, 20, 30% is Europe, 10% is China, and the rest is the rest of the world. So it’s like this massive number of large companies that come from the US, of the world’s largest companies. And what’s even more exceptional is when you look at the rest of the world, if you exclude monopoly, government based monopolies, or natural monopolies, like telephone companies, mining and oil companies like is Saudi Aramco really a large company? Or is it just like a monopoly on oil and by a
39:40
country that I’ve been holding Yes, enough
39:43
said. You know what I mean? Like it’s like if you exclude natural resource monopolies, telecom monopolies, and countries with banking monopolies, not just banks, but banking monopolies, where it’s a force centralized, then the numbers get even more skewed, and the US has a true domination of World War. Winners. And then you look like one level deeper on that, because it’s like interesting to do this work. You say, Why does the US have this? And you say, Well, how do they, how do they compare against other countries when it comes to small businesses? Surely, when I, when I look at politicians, the US is the nation of small businesses. Well, it turns out the US as a percentage of GDP, the US has one of the smallest percents of GDP and small businesses of any country in the world. It’s the US percentage of small businesses, much smaller than for Greece, and it’s a large country, but much smaller than Greece or France or Germany or China. They have much larger small business sectors than the US, and ditto for the number of job creation created by those small businesses. US patents are more filed by large businesses than small ones. Job creation is it’s a complex job creation is a complex topic. But has this changed over time? No, no. So the reason for this is very simple. Like, when you look at it, it’s like, then the economists call it antelopes versus like in Germany, there’s just a lot of small businesses that exist and have existed for generations or existed for years, and they do okay, and they neither grow nor shrink. They’re like little mini farms, for lack of a better example, there’s like a farmer, and he does his plot and he makes enough money to live and feed his family, which is, by the way, a noble thing and good, but it doesn’t grow and it doesn’t shrink, and it’s kind of protected by regulation. In the US, it’s like antelopes. They either scale fast or fail fast. And so the US has this thing where lots of companies are started, most of them fail if they don’t either grow or fail, but not as many people just sort of sit there in the economy with a medium sized business. And they don’t get this like tons of small businesses. And if they scale, they quickly become not small businesses. So they grow, they fall out of that small business category. So it’s either they scale and they serve a huge sector, or they fail as they start a new business. So the reason the small business sector is small is because you get this high failure rate, high escape velocity, relatively high Escape Velocity rate. So the percentage of the economy that small business is very low. But the productivity that comes from businesses that were small businesses is enormous because they grow and they dominate. So it’s just like super interesting way in which the US is special in terms of size of market, in terms of this antelope characteristic of sort of escape velocity or failure. And then lastly, you could go back to like Max Weber and the sort of the Protestant Ethic and the Spirit of Capitalism, the extent to which the US has trust, and culture of trust. And I cannot emphasize this enough, like a lot of other countries, simply don’t have the ability to trust other people. Take China, for lack of a better example. It’s commonly known this idea of red envelopes in China, bribery, bribery, bribery. Right? The rate of bribery is so high because as soon as you delegate one factory to two factories, you have to have a manager of the second factory that’s not the owner, and that guy’s just gonna get bribed, or he’s gonna charge money to hire his cousins and his relatives. It doesn’t cost him anything to hire his relatives on your payroll. And so in the US, this is like, much less common. Like in the US, we have a relatively high trust rate, and whether that’s due to culture or some kind of legacy of Protestantism in Max Weber’s framing or something else. And I’m not speculating on what it is. It’s an enormous advantage to be able to have a large business, because you can have all these managers that you can basically trust to serve in the company’s best interest, not their own. And that’s an extraordinary thing, something that does not exist in the rest of the world. Try scaling a business in China, and look at the cost of oversight. The cost of oversight is enormous, and you can’t give these managers any latitude, because if they get latitude, not any, it’s harder to give managers, more costly to give latitude, because that latitude is often used for self enrichment, whereas in the US is their Latitude is cheaper. Is
43:46
there a proxy for measuring this level of trust, and is it persisting over time in the US? It’s a
43:52
great question. I don’t know what a good proxy would be. I mean, there’s lots of economists that estimate fraud and bribery in companies. So I’d say bribery is the most obvious one. You could probably do a measure of nepotism, like nepotism of non owners. That’s probably a measure. You could do efficiency of managers versus owners. That’s probably a measure, right? But I don’t know if I have a great measure, but there’s lots of measures of fraud and bribery, and that’s probably the most directable. So
44:22
we got to jump into AI, I guess just a lob out kind of a high level question, what do you know? What do you think is the impact of AI and fintech? Broadly speaking,
44:30
it’s such a it’s such an interesting area because, like, it’s a good example of reframing. So like, remember, we this is named recurring theme in this conversation of reframing, right? So, like, yes, if you think about it, like all this AI stuff has been happening for a really long time. It’s like llms and and AI and all this has been happening for a long time. It just wasn’t very well useful or well thought of. And all of a sudden, one year, maybe with open AI, launching a chatgpt, but maybe with something else, it became the hot thing, and it. Everyone thought it was the future. And there’s something magical about a reframing. So all of a sudden, every problem became an LLM problem, and it became like we’re really good as a society in like, solving problems deductively rather than inductively, right? Like using, or is it inductively, um, using tons of data to get to a solution, right? It’s easy to throw data at a problem. It’s much harder to use judgment, and it’s much harder to use like go from the data to the to the theory and then back to the data, than it is just use the data to to or to To conclude, like the the actual sort of most efficient path. And I think llms transformed our ability and said, Okay, we are now going to unite around one problem. The amount of data we can throw at something allows us to predict the next thing, and the ability to throw more data can predict better, and more data predicts even better. And then, of course, by this prediction, we create more data that allows you to think better. And so it’s in a weird way, we’ve all sort of collapsed upon AI in Vc as the future. And therefore it is the future because we’ve collapsed on it, and it shows the sort of, it shows the fall, the fallacy of thinking of the world as statistical rather than as deterministic. That is the fact that we are investing in AI makes AI so effective. It’s been around for a long time. It just was never affected because we weren’t investing it, because we didn’t believe in it, because we didn’t use it. But now that we believe in it, use it and invest in it, it becomes more useful. And therefore we’re right in our belief. And so it’s this self generating self. It’s this self sort of actualizing prophecy, where the fact that we’ve decided it’s the future makes it the future or not, right? And the thing about bubbles is bubbles are just consensus that doesn’t work out right, like when you believe in something and it turns out not to be true. If everyone believes in something, it turns out not to be true. They call that a bubble. When everyone believes in something it turns out to be true, they call that like electricity, or like running water, or like toilets, or like movement cars, right? Like it just turns out to be the future platform, yeah, and so in a weird way, like, we don’t know yet if AI is a bubble or if it’s the future, but the fact that everyone believes is the future is a really good thing, and that’s probably the most important thing, much more important than the quality of the technology, because there’s lots of subpar technologies, like the old joke about VHS and its competitor, where the fact that everyone converged on it max or so, like data AI, if we continue to invest a ton of money on it, is actually a like potentially solves a lot of problems. Um, what? But what do you think? So to me, I have to go back to sort of core principles. What do I care about in FinTech specifically? And I said this earlier, but I’m going to emphasize it again. I don’t care if all we’re doing, I don’t think it’s worth a career, a life, or all the money, not that it’s not valuable or that I wouldn’t think it’s valuable to do, but I don’t think it’s nearly as valuable if all we’re doing is providing a few more choices to people with lots of choices in FinTech, that is if all we’re doing is we’re providing like, I mean, look at the way FinTech actually functions. If you have a bunch of money and you are very sophisticated, you can probably optimize certain loans and certain transactions with FinTech largely. That’s like people in developed nations who are technologically savvy with plenty of money. That’s who Fintech is basically geared towards over the last 30 years. And that’s a very valid customer base, a very, a very attractive customer base from financial perspective. But if all we’re doing is providing people with lots of choices, more choices that seems much worse than providing better choices to a huge number of people that is going to be fundamentally find a product that benefits people with very few choices and gives them much better choices than they had previously, not just more choices for People with good choices already, but good choices people without good choices. And
49:04
then is this fundamentally about access? Just So fundamentally,
49:06
the problem with Fintech is that when you generalize old FinTech, pre LLM, pre AI FinTech, when you offer these complex, sophisticated products to everyone, it often doesn’t do very well, because most people either don’t want don’t understand, or they get defrauded by people who present the problem in complex ways, but in the fine print on the credit card messes their life up, or the fine print on the payday loan messes their life up, or the fine print on the bank account messes their life up because they didn’t read the fine print and they don’t have enough money to open money to absorb that volatility of that hit that got hit on them when they didn’t pay their bill that month, and all of a sudden it was a downward spiral on the payday loan to destroy their life. Yep, and it’s not that lending is bad, it’s that it’s an appropriate product for an appropriate person, and when you’re out at night at. Midnight and you’re taking a payday loan to get more, you know, to keep the night going. That’s a very bad use of a payday loan to fix your car so you can get to work the next day. Is an okay use for a payday loan, potentially. And my point is that, like, what I think excited about with AI, and the reason I brought up this, like, long discursion on FinTech, is because I think AI has the potential to actually offer everyone much better options than they had before, in particular, those people who had very few options before. And I say that because I think it allows for personalization. It allows for a bespoke, so bespoke personalization, it allows for it allows for cheaper transactions, because you get automated transactions largely, and it allows for automization, so personalization, digitalization, so cheaper, more personalized, more more more more faster transactions about friction before it reduces friction Exactly. And in a world like that, I think you could potentially get an AI that was able to recommend the right product for the right person at the right time, and that is exactly what most people need, versus just having lots of options on the menu and choosing the one you feel like that day, which is, I think, a luxury for people with lots of options already. So I think that like, if fintechs to work, if AI is to work, it needs to benefit a much broader percentage of the population, and it needs to provide them with not just more choices, but better choices. I’d even be controversial in saying better fewer choices. That is, it’s not important they get more choices. It’s more important they get better choices, even if that means better fewer choices. The motto of our firm comes from, is a little bit, is a little bit provocative at Haymaker we which is Vladimir Lenin, the communist, the famous communist who was extremely smart, even if we don’t agree with communism at all. And his final essay before he died was sort of an anti Stalin essay, and it was the title of the essay we took as our motto, which is better fewer, but better, better, fewer, but better once, not twice. But that’s, I just repeat that, and what he meant by that. What he meant by that is, when you want to start a revolution, it’s much more important that you have high a small number of high quality revolutionaries on your side. It’s much more important than having a large number of mediocre or passionate, but not sophisticated or not dedicated revolutionaries, that a small number of people in the cliche can change the world, but like, it has to be very high quality people. And I think that, like, I think better fewer, but better is sort of one of those deep secrets that I think FinTech and AI can learn from. And in an ideal world, AI can provide that the complexity there is not to be misunderstood, though. So let’s just muse for a moment on this idea that AI is going to make choices for us or present us with choices in a sort of paternalistic sense, which I don’t like. When I say it that way, one does not respond well to it, but when you think about it like you don’t want your mom making all your choices for you their whole life, even though your mom loves you and is really smart and is really experienced. You also don’t want your boss or your bank or your neighbor or even a PhD scientist who knows a lot about game theory and and about like, you know, studies psychology for a living, so like, you don’t want other people making your choices for you at the same time, people make these obviously bad choices in life that ruin their lives, that you wish they’d made different choices. So sort of finding a happy medium between having some advice and oversight while still allowing people to choose their future and allowing room for new things to emerge that are outside the world view of sort of the experts. That’s where I think AI can be really powerful. They can provide you with better, more personalized choices to allow you to truly express yourself and express your your preferences, rather than just confuse you and take advantage of you, which I think is sort of the danger of lots of bad choices.
54:00
Well, it’s really difficult to get access to expertise in an area where you have no expertise, right, without putting in a ton of time and work and effort or spending
54:09
a lot of money, right? So rich people have right private wealth managers. They have lawyers, they have like, you know, they have professionals, they have they have experts, they get all and they pay them $1,000 an hour to tell them how to think about diversification and correlation and good stocks for setting up your Yes. Llms can potentially make that level of expertise, maybe not the very highest level, but the level of at least the meat of that available to everybody. So everyone can have some cases better and Okay, less biased. You’re an okay, expert dietitian. So they can eat better, and they can spend better, and they can write contracts better, maybe not like, super better, but if it’s somewhat personalized and it provides pretty good advice, there’s some things you shouldn’t do, right? Like, you shouldn’t drink, like, too much coke, and you shouldn’t, like, spend all your money on fast cars. If you don’t. Very much money, and you definitely should not, like, enter the handshake agreements with people rather than contracts when it’s very, very important for the future of your family, unless you know them well. So, like, there’s all these ways in which llms can provide this stuff that rich people have and pay a lot of money for to the masses. And if that happens, and there are better choices being made, I think that’s really important. All
55:20
right, so before we leave this, I have to ask you about defi and about crypto a little bit, right, an accepted killer app for Bitcoin and store of value, right? What do you think will be the killer app, or apps for crypto at large and defi in business commerce?
55:41
So I don’t for, I don’t know, like, so far, it’s been store value, right? So not transactional store value, and it’s been sort of like an unregulated version, like a non government version of gold, right? Yeah, that’s been pretty powerful. That’s the way you should have that. That was the right bet. So that bet probably continues. That bed probably has legs, especially in a world of, like, the US dollar becoming less of the sort of the the default currency of the world, because then there’s, like, nowhere you can put money that’s a store value, that’s safe. If the dollar doesn’t exist, then it’s like, gold or Bitcoin. And like, gold doesn’t, can’t absorb that level of money. But I have, like, let’s so let’s just assume that’s probably the right bet. But, like, just for a minute, let’s think of other bets. So I want to go back to our theme that we’ve had at this interview of friction. Like, the thing about Bitcoin and sort of like and defi and web three and like, sort of generally this technology is that it has incredibly low friction, that once you get this working, you can just rinse and repeat and do a billion one penny transactions and no calls. Much better than interchange, much better. That’s like, it’s just code. Code is free, code is cheap, code is fast, right? Code is a lot easier than, like, you know, non code. And so, like, in my world, I’ll just combine AI and Bitcoin for a minute. Like, you could have an AI optimizing your life and your transactions online, doing a million little things, all of which you pay a few cents for, a few pennies. For the silly example that Balaji once gave me, and he knows a lot about Bitcoin, a lot more than I’ll ever know, is you’re driving on the highway and you’re in a rush. You press a button and you pay the car in front of you $1 to move aside in real time, or one penny to move aside in real time, that car, who’s not in a rush, takes three seconds longer to get to its destination. You get to your destination three seconds faster. He made 10 cents. You lost 10 cents. Now multiply that by your entire journey. You can get there in 10 minutes if you want to pay $100 or you can get there in 20 minutes if you want to pay $3 that’s like a huge value to be able to say the extent to which you’re in a rush. La, you can pay for being in a rush. Like, that’s like, the ultimate monopoly. Like, right now, everyone’s in the traffic jam together, but there’s a world in which if you want to pay to be out of the traffic jam, you can pay to be out of the traffic jam. But it’s not a world which I can get out of my car go to the guy in front of me and say, Hey, can you please move over? I’ll give you $1 that’s too much friction. But if you’re AI, pay the guy to move and in real time, you can drive at full speed through us, through a traffic jam, that’d be like, well, now think of that more generalized, right? I I’m in work, and I want my computer to be faster. I can pay the server for slightly faster, like processing speed, and everyone else who’s not doing a product process, that is very important, right then, or they’re not in a rush, who doesn’t mind waiting 10 more seconds for Windows to load, they like they can not pay for that processing. They can sell you the processing power of the server, and especially as you get to cloud functionality, you can have this real time transactions for tiny, micro transactions with incredibly low friction that allow you to finally break that sort of, everyone is treated the same in all situations to sort of, I think AI and low friction meets like Bitcoin and sort of web three could be a very powerful use case that’s underappreciated. And I think there’s lots of ways in which everyone should not be not all situations in your life are the same, and you shouldn’t be always treated as the same.
59:05
Finn Do you have any habits, tactics or techniques that are a force multiplier?
59:09
I must say, I think there’s there’s efficiency, and then there’s like, on the stuff that’s important, I’m not efficient on the stuff that matters. I spend the extra time because on the stuff that matters, if you have to spend 10 hours to be 1% better at picking companies that’s worth 10 hours on the stuff that doesn’t matter, you want efficiency. You want to spend as little time as possible on, like, you know, on stuff that is basically doesn’t move the needle. Yes, and you want to spend as much time as possible, even if it’s marginally better to do stuff that does matter, so you want to just sort of satisfy for the stuff that doesn’t matter, do just enough, but not announce more, and probably optimize to spending your time. And the more I try to build a VC firm with people that are on my team, the more inefficient I get, because the more time I spend on the stuff that doesn’t matter, rather than knocking out the stuff that I have to do. Two, but doesn’t really move the needle. And I think that like, so I think the answer is, I’m not sure I have a force multiplier, except to be inefficient. And that’s not much of a force multiplier, but to be inefficient on the stuff that matters, I once, I once, I once asked Peter about, like, the three chunks of VC, which I see as finding great companies, negotiating term sheets and adding value after you invest. So like finding, negotiating and then being a being a part, a team member with the CEO, a partner, a supporter of the CEO after you invest. And I said, Where do you think in VC, in general, the value is accrued? And he said, 70% is picking the right company. Negative 10% of the VC industry’s value is created and negotiated the term sheet, by which he meant most VCs over optimized the term sheet to the detriment of doing good deals. They lose deals that are good because of terms that don’t matter. They put terms in and waste time and energy when they don’t matter, and they overemphasize the term sheet. And then he said, and this is the funny part, 70 negative 10, and then 40% is the value add afterward. But the idea that the term sheet was negative 10 is hilarious because so many VCs think they’re great at negotiating term sheets and on terms and Peter’s view, at least, that’s actually detriment. It’s overemphasized and that it’s really number one, choosing the right companies, and number two, helping them grow. And I think I’m pretty sympathetic to that. And so I think you should be very inefficient at picking good companies. Now, there’s not ways to be more efficient in seeing more companies, talking to more companies, finding better companies. But when you find a company you love, don’t try to be efficient in trying to understand it deeply and profoundly and find getting to know the founder and doing your due diligence, that’s an inefficient, inherently and rightfully inefficient thing to do.
1:01:47
Very well said, sir. He is Finn Upham. The firm is Haymaker Finn. I really enjoyed this discussion. I look forward to the next one, and hopefully we can go deeper on some of these topics, friction and why fewer is better, and how to reframe everything. So thank you, sir.
1:02:03
Appreciate it very much. Enjoy the conversation. Thank you.
1:02:10
All right, that’ll wrap up today’s interview. If you enjoyed the episode or a previous one, let the guest know about it. Share your thoughts on social or shoot them 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.
