Barry Schuler of DFJ Growth Ventures joins Nick to discuss Lessons from Jobs, Musk, Case, and Armstrong – What It Takes to Transform Industries and Build Trillion-Dollar Companies. In this episode we cover:
- The Similarities of the Jobs, Musk, Case and Armstrong
- Portfolio Construction
- Impressions from Steve Jobs
- The Need for Great Electric Cars
- The Decision to Invest in Coinbase
- Investment Thesis in the Data Center Space
- The Future of Interfaces
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0:18
Midas list investor and one of the pioneers of the modern internet. Barry Schuler joins us today from Montauk. He’s a founder and partner of DFJ growth ventures, a late stage venture capital firm that invests in visionaries who create the future. Prior to DFJ growth, he was the chairman and CEO of America Online, specializing in making the internet accessible to a broader audience. Barry has invested in notable companies, including Coinbase unity, Patreon, Tumblr and Twitter, and he’s also the founder of Meteor vineyard, producing high quality cab in Napa Valley. Barry, welcome to the show.
0:44
Great to be here. So I gave a little background there. But can you give us kind of the two minutes you know, the quick background on your path to DFJ,
1:02
yes, the two minutes. Well, interestingly enough, DFJ was kind of like coming home for me, but, but I, you know, have two halves of my career. The first half of my career, I was an entrepreneur. I was starting companies, trying to figure out, how do you hit that home run that every entrepreneur is is looking for. I started a company. Co founded a company with two other people called Meteor back in the 90s and when the internet was on its way, but when computers were kind of evolving from tech space to multimedia and and had a clear vision that the 90s was going to be a decade where exciting things happened around computing, and we started that company, we kind of were doing a little bit about of everything, work for hire, creating CD ROMs. Remember those? Maybe you won’t remember.
1:56
That’s how I got on AOL the first time, exactly.
1:59
And, you know, games and things like that. And then we were hired by America Online, when it was small and a distant third behind CompuServe and prodigy to redesign it completely. Steve Case had this vision that going online was not just a computer program, but it was a new medium being formed, and that it should be, and ultimately would be, in every home, and he wanted it to be easy to use. And so he hired us to do the UI, UX. I actually back then, I painted the screens, did the design, and it became a big hit, and they turned around and acquired us and and then I became part of the team that really was driving the rocket ship of AOL during during the 90s of straight into the merger with Time Warner. I think history calls it the worst merger in history, although, if you look at it, it was the most visionary merger. It was just 10 years too early, early, because the combination of internet and media is how the world runs, runs today, for sure. So I retired from that in 2003 took a little time. I had one investor in Meteor, and that was John Fisher of Draper Fisher Jarvis, and when they were a teeny little fund. And after I took a little time off, he called me up and said, Hey, what you doing? And I said, Well, I’m doing a little, you know, investing here or there. And we got together and talked, and we decided to found DFJ growth. This was back in 2005 and and what we saw was there was a lot of overhang from the.com the bubble and bust, and you could not get a tech company public for anything, and we just kind of postulated, if we did a fund that was a little later, downstream, not startupy idea phase, but you had a product, you were in the market, you were starting to see some traction, that we could get the capital and bring The operational experience to help these companies to stay private longer, and then IPO as much bigger mature companies. And that’s how DFJ growth got started.
4:20
And I want to talk more about DFJ growth before we do though. So AOL was the biggest name in tech for a number of years. Our young listeners wouldn’t know that, but
4:31
most of their they’re not. They haven’t quite aged out of instant messaging, nor has messagings relevance to everybody disappeared, for sure.
4:41
That’s fair. So, so AOL went through this, you know, very tumultuous time, sort of a disappointing outcome, as you mentioned before. What was the best lesson you took from that experience?
4:53
Yeah, I mean, look, the the there were, there were many, many lessons. And for those who know the history. Of the 90s and the run up of the big.com bubble and then ultimate bust, probably an important lesson for every single entrepreneur today who’s trying to do anything about half of the internet went through AOL. You know, there were so many innovations that we did. We were able to take this complicated tech and bring it to consumers, but there was a disruption coming, and the disruption was broadband. Back in the early days, you had to dial up in a modem. We did make it easy to do, but it was using up a phone line. The speeds were slow, and the dream of always connected broadband was on its way and and while we had all the infrastructure for narrow band internet, the broadband infrastructure was being built out by cable and telecom companies, and they saw that as an opportunity to disrupt us, make price us out of the market by buying it From them, and we tried to solve that problem by buying Time Warner and using Time Warner Cable as a vehicle to be in that industry. And and it ultimately they were just as resistant to the disruption. And so, you know, to me, the major lesson of when you are doing disruption is it’s not about the tech alone. There’s different kinds of resistance to disruption. There’s the Accept, acceptance by human beings of a new tech, and how does it fit into their life? And then there’s institutional resistance, and that is the people who stand to be disrupted and have their businesses crater because of that disruption, will do everything they can to prevent it from happening. And this is a really important lesson. We saw it happen in crypto, you know, we, we it’s gonna happen again with AI. But so the big lessons for me is you can be mighty in tech, you can be a mega player. You know, we had a $200 billion market cap when we acquired Time Warner, you know, and this is circa late 90s. But, and nothing is forever in technology, and how you navigate when waves of disruption come is very is multifaceted. You know, you mentioned crypto, and
7:23
I was thinking about Steve Case. In your experience at AOL, all these entrepreneurs, especially the ones that stand out, are unique, and they have differences. But I’m curious about the similarities. You know, as you think about a Steve Case or Brian Armstrong, or some of the greats that you’ve worked with, you know, what do you find that many of them have in common? Probably
7:46
the single biggest thing is that the idea that’s driving them. When you are an entrepreneur and you have a picture in your head of what you’re trying to do, it is larger than life. It becomes part of your being you. You are so invested in in making it successful. And you also think that this idea is the greatest thing from then sliced bread and and, you know, it’s very easy to underestimate in the Silicon Valley culture that it’s not how how hard it is to make a disruption happen. It’s not just the tech. Human beings actually don’t care about the technology. They care about what it does for you. So you know, when crypto, something like the internet came along in the early days, and we were, we were building it out. And the whole job during the 90s was build the infrastructure, get it into people’s homes, make it easy to use, and then it’s like, then what, what do they do with it? So, you know, you have to pierce all of that to make it valuable for people. Then you have to face the people who hate it. I mean, we were launching e commerce in the 90s, and I was running around talking to booksellers, and you know, they’re saying to me, why would I put my products online? I have $3 billion invested in real estate, and so you have to get past that stuff. But, but the entrepreneurial spirit will say, I see this in my head. I know what the future looks like, and I have this huge drive to make this happen. Now, where I think we fail as entrepreneurs is we really suck at transfer of institutional information. In other words, when you’re trying to you know, as investors, we’re not just giving money. We’re also working with entrepreneurs, entrepreneurs to help them succeed and get past problems we recognize, but oftentimes, and I was just as guilty as of this as a young entrepreneur, Oh, you think that’s the other. Guy, my idea is so good, none of that bad stuff is ever gonna happen to me. And know this old guy who’s an investor trying to tell me I should do this or shouldn’t do this? What the hell do they know? Because my idea is is brilliant, and I think you know both of those pieces are really important, because when you’re trying to do something really big, like change the monetary system with crypto. You know, you have to have an absolute belief that this is better and ultimately is going to replace the way things and disrupt the way things are doing in the present. So
10:36
back to DFJ. Gary, why’d you start a growth firm? You
10:40
know, I had been investing and personally, and, you know, thinking about what I wanted to do with the next chapter of my life. When John Fisher called me, you know, who was on my board and invested in Meteor, and we started talking about the world, he had a pretty clear vision that traditional venture needed to expand that you know the traditional early stage venture, if you go back to the early 2000s that’s pretty much what it was you had early stage and some later stage mezzanine investors who came in pre IPO, and If you look@the.com bubble, it was because these immature companies were going out into the market on this dream that everything was changing and profitability didn’t matter anymore. And you know, there was a new economy with new rules. Well, yeah, right. Anytime you hear that, you know, to sell everything, because it’s the top of the market, the market, the market cycle, and and and and then so people retreated from tech. I mean, it’s kind of what you see today with Cloud SaaS boiling hot a couple of years ago now, you know, overvalued, and no one, no one wants to touch it. But we saw the big problem was, is that you were putting companies out into the public markets that just were not ready to be public companies and and so then the notion of DFJ growth was, let’s keep them private longer. Let’s grow without prematurely being under the spotlight of the street and the analysts in that whole game. They had to get to bigger scale because of Sarbanes Oxley, anyway, and and so our, our notion with DFJ growth was provide the capital to allow them to get bigger, but also we assembled a team of operators like myself to go in and help them make it, make it happen. And you know, fast forward to today. You know, the venture growth category is the biggest category of venture it has really exploded over the last almost 2020, years. Now, you know, people see it as very attractive, because you don’t have the early stage product risk. You have metrics, so you have signal coming out of these companies that you know, you can latch on to and do some some analytics, but that has created another problem, that is, everybody wants to be a venture capitalist. And when, when capital comes streaming into the market like we saw, you know, during the last boom cycle, it creates a whole other set of headaches. So
13:18
give us an idea of portfolio construction. You know, what stage do you tend to like to enter? You know, what’s the range and check sizes, and how many companies do you do per fund?
13:29
So basically, we’re going to do about 25 maybe a little more per fund. Our, our recent funds have been around a billion and and we’re, we, you know, the growth category has gotten so big that it’s now segmented. There’s early growth, you know, there’s mid stage, and then there’s late stage, right? There’s when a company’s mature, and it’s, you know, probably a year or two away from an IPO. And you’ve seen a lot of crossovers coming from private equity and other places, because basically what happened with the growth category is all of the alpha that you would see in an early stage IPO has now come down into the private markets, and so, you know, a lot of capital has wanted to chase that as well. We’re largely lean toward the early side. We will do kind of a barbell strategy, you know, because there’s a time vector, of course. So we will do some bets on later stage companies to get some returns in, in, in faster. You know, we’ll tend to do our riskier bets that are going to take a little bit more time earlier, earlier on, early in the life cycle of of our fund. But we’ll also try and put in some deals that that represent a quick IRR as well. So the portfolio construction will go. Go across those three phases, but our sweet spot is really in in the early growth stage, where we’ve demonstrated across our funds that we’ve been able to produce early stage or early stage investing kind of returns when we when we engage at that level. Our check sizes range from 25 million sometimes less. We don’t try and jam money, you know, into entrepreneurs hands that they’re not ready to handle or don’t want to handle, but so we’ll do fives and 10s, but I’d say 25 to 50. And you know, we’ve gone higher, you know, than that as well. Ultimately,
15:40
Barry, you once had a talk about putting a dent in the universe, and what that really meant for Steve Jobs. Did you know Steve, and what do you think he meant by that?
15:53
Actually, don’t remember that. You’re gonna edit this, right?
15:56
Yes, I can take that out if you No, I did know Steve.
15:59
I just don’t recall the putting a dent, but I can give you a good I can give you a good sound bite on it was the
16:06
Napa Valley Film Festival. I don’t know what
16:08
year it was. Yeah, you want a little riff on Steve? I think
16:12
it’s, I think basically, based on this article I’m reading, it’s about, you know, really making an impact on everyone. Like, yeah, yeah. Okay,
16:19
let me give you a little riff on Steve perfect. I did know Steve across a couple of phases of our of our career. I was at a company called cricket software, which was an early Macintosh developer, very popular, if you you know, had a Macintosh in the 80s. You used cricket graph and Cricut draw and and, and then when he went off to to next, he was very much encouraging us to to port all of our products over there. Showed me the machine, and I just couldn’t get my head around the the business model at the time. But when he came back to Apple at that point, I was running AOL, and he really wanted to integrate the Internet into his new machines, and he called me, and we went on one of his infamous Hey, let’s go for a walk. And, you know, he taught he had a very clear vision of what he needed to do to turn Apple around, which was make a great desktop computer and a great laptop. And that’s it, and that’s all we have the money to do. And he thought the internet needed to be an important part about it. And he just wanted to hear, of course, he knew about the internet, but really not the consumer side of it, and and so we ended up working together. You know, the first versions of Apple messenger was built on top of our messaging platform. We talked about doing a browser together. Ultimately, we, at that point, we had bought an escape. And ultimately they decided to do do Safari. Now, the thing that impressed me about Steve is, you know, look, he was hardcore, but, and, you know, the story, our stories are infamous about how he treated people, etc, but his intentions were all about the product. I have never met anyone who was so intently invested in the products he created and how they relate to human beings. And you know, to him, if you’re going to be successful with technology, you had to be able to get humans to use it. So, you know his focus, his focus with Johnny Ive, I mean, I remember being in his office while they were working on the first iPod, and Ive coming in one after the other with different design iterations, and him obsessing over the bezel and where the bezel met the metal and and, you know, and he felt, and he also obsessed about the inside, how the boards looked, how and, and, and because, to him, he believed that The artistry of it made it really palpable, and made people want to engage. And if you look at his history with the iPhone, and what he did, and what Apple is missing today, is you felt cool being an Apple user. He made you feel cool. He made you feel like you understood and appreciated it, and and, and via that, he was able. I mean, think about the world today who is not walking around with their it could be their Android, same form factor, who is not walking around with that super computer in their pocket and obsessing about it. And so you want to talk about a dent in the world. That’s a dent.
19:40
Did you find him difficult to work with? Barry? Actually, we always
19:42
had a very, very good working relationship. You know, I always joke about how Steve was always there when he needed you. He did not care about calling you at 3am or if he had an idea he wanted to talk. He was calling you anytime, anytime, day or night. But. Know, I found him to be extremely pleasant person I didn’t ever experience. You know, the early stories of the first half of his career, and I think when he came back to Apple, he was aged like a fine cab, for sure,
20:14
very good. Another name that came up in our research was Elon Musk, and our source said that you helped finance Elon Musk’s $44 billion acquisition of Twitter. When did you first learn that Elon was interested in buying Twitter? You
20:31
know the we were in Twitter in the first stage, you know when pre, IPO and exit, when, when we went public. And look, Elon is, we’re invested in all of his companies. We were very early in SpaceX and Tesla, and, you know, we talked about Steve Jobs. Elon is the greatest entrepreneur and industrialist of our time, maybe in history. And so, you know, knowing the history of Twitter, when you know, there was no movement going on, you know, after it went public and the public, you know, markets were pretty lackluster because they were thinking it was another Facebook story. And Twitter has never been really like Facebook. And so when, when Elon got interested in it and interested in an acquisition, he always goes to, he has a core group of investors who he trusts and has done business with over time, and he came to us with his belief that if he went in there and streamlined the business and worked in getting innovation back into the platform, that he would be able to really rejuvenate and get the growth back into the Twitter engine. So you said he’s
21:46
the greatest entrepreneur of our time, and maybe in history. I’m just an observer, but I tend to agree, based on what I’ve witnessed, what stands out to you that’s different? Before I asked you, what were the similarities and a lot of these great entrepreneurs, what’s truly unique and different about Elon? Elon
22:06
is willing to take on really hard problems that are important to mankind. I mean, when we went in the early days, when he did take over Tesla, he wasn’t, you know, a founder of it, but when he took it over, and I remember that pitch meeting, and he had a very clear vision. The world needs electric cars. We cannot continue to pollute the atmosphere with internal combustion cars. There’s no reason why we can’t have great electric cars, not golf carts or you know, little hippie cars, and that his vision was build the best car ever, a car that will be reviewed and not the review wouldn’t say, Hey, this is good for an electric car, that this is the best car of any kind. You make people lust after it. You go high end first, then go down market, yeah. And then, as the car becomes popular, you build out the charging infrastructure so that you don’t have range eggs anxiety with internal combustion. There’s so many, you know, gas stations, there’s no and never range anxiety. Probably in the 1800s when cars came out, there was range anxiety. And that’s right before there were petrol stations, exactly. And it was, it was a factor. I had a beta car. Let me, I had plenty anxiety driving around, and that turned out to be the s, and the S delivered on that vision and and, you know, his, his not patenting things, putting his patents out there, encouraging other automobile manufacturers to follow suit, not worrying about how would impact, you know, the value of Tesla, but, you know, making it a mission to transform the automotive industry. And look at it today, that vision has has played out. And the same thing with SpaceX, it, it, it, you know, this fervent belief that we need to be a multi planet, you know, society, species. And to do that, we’re going to have to build a different kind of approach to going into outer space. And again, same thing. These are hard problems. When we invested in those companies early, we were very early in those companies. Everyone thought we were crazy, but, but we we really bought into those, those visions, which always have a component of wanting to do something good, and if you can do something good and be a for profit and make money for your investors and deliver great products. I mean, how often does that ever happen?
24:50
You know, people used to, I used to talk to my team about this, years ago, eight years ago, about Tesla. And they would, you know, people would often refer to it as. This electric car company, and I’m like, no, no, it’s a it’s a self driving company. They’re collecting more data than anyone, absolutely, and that’s the huge win. When do you think we achieve this full self driving or what? What has Elon communicated? Well,
25:14
well, I mean, you could have it tomorrow, and it wouldn’t require any technology. You just have to make humans driving cars illegal. The biggest, the biggest problem with self driving vehicles is not the ability to do it. It’s to commingle with human drivers, who are horrible drivers. They don’t follow the laws, they drive drunk, and they’re unpredictable humans. I mean, this is going to be a part of everything with AI, where machines are trying to, you know, interact with humans, being very, very unpredictable. And I suspect at some point, some cities, probably in Asia, before here, may do exactly that. They would create zones where humans don’t drive. You know, you have all robot cars and and, and it works. So the hard technical problem here is really been, you know, think about, in the US alone, 50,000 people die on the road every year. That is the equivalent of an Airbus crashing every other day. All souls lost. We don’t think about, you know, we, we have accepted that as the price
26:25
one accident in a self driving car gets all this press, but it’s like, you know, orders of magnitude safer than a human exactly.
26:32
I mean, there have been some incidents, I think, one death with, with the Waymo cars, you know, which are now running around San Francisco, yeah, everywhere. And I think the, you know, the proper pre, you know, the proper pre PR, way to handle that death was, wait a minute, let’s talk about how many drivers killed people this month, and and, and again, it’s because people do unpredictable things. And, you know, while you’re still training these AIs. You know, when you think about all the variables that that are, you know, associated with it, like I said, if you took the humans out of the equation, you could be rocking, rocking and rolling. Now, I don’t suspect that’s going to happen anytime soon, but I do think, you know, 1020, years from now, there will probably be resorts that you go to to actually drive a car as something that’s fun and nostalgic.
27:26
It’s so funny. We were in San Francisco a few weeks ago. I was with my wife and son. He’s seven, and the one thing I was working most of the time, but the one thing I insisted my wife do with my son is getting away. Mo, because I would do it him to have he did it. Yeah, they did it. They just went like, four blocks. And did you do it too? I did not, not this time. I didn’t have time. But I’ll tell you,
27:49
they’ve done a really good job and, and I use it regularly. And, you know, look, Uber’s a great service. It’s just fine. I’m going to be very Larry David right now, I love Waymo, because I don’t have to talk to anybody, and I don’t have to feel bad about not talking to anybody. I
28:08
agree. I agree. So talk to me about crypto, right? You made a meaningful investment in Coinbase. Yes. My curiosity is, you know, why is crypto important for the future? That’s one. And then the second part is, why, in exchange, right? You could have chosen a lot of different areas of crypto and or blockchain to invest in. You locked arms with with Coinbase for a reason. Why was it? So, you
28:36
know, we were in very early. We’re very hands on investors, so we tend to be tinkering with things all the time. I was playing with Bitcoin. I was, I told this story that often gets repeated, that first crypto I bought was like a drug deal. I met some guy by a 711 and gave him money, and he transferred something to my wallet, and, and, but, but so we were, we were looking at this space, and our thesis was very much about blockchain and the potential of blockchain. And we still believe that blockchain is a transformative technology that can have huge impact on many things. It just so turns out that cryptocurrency was the first killer application of blockchain and and so, you know when, when we met Brian and Fred at the time, young companies, super smart guys. And you know when we talked, we loved their vision of trying to make it easy. It was kind of very AOL, AOL, like to me, where, you know, we won by making it easy for consumers to integrate and get online and do it. You know, they were trying to do the same thing, but then you had to deal with all this regulatory overhang, because you’re now a financial services company, and you’re dealing with fraud, and. Fraud Prevention, and know, your customer and and we were, were, and there was a lot going on in the early days of crypto that was pretty gray or black, and, you know, we, we wanted to make sure that if we we pulled the trigger on an investment, that it would be with a team that embraced that. This was a case where complying to regulation was critically important. And they got that and, you know, I can’t say that they actually loved what it meant, but, but at the same time, they understood that that that that was was critical, and that’s what led us to make, make the investment. And it was, it was funny time they didn’t even really have a board. Other early investors, Andreessen Union Square Ventures were nervous to create a board, because, you know, the legal issues unresolved, and, and, and I worked with them and said, Look, you know, we have to put real governance inside of here. We have to be legit. We have to face the regulators and and and and I, and the fact that that Brian and Fred were willing to do that was the best decision they made, because, you know, they’re standing today when other guys are in jail. The problem is, if you look at the world of industries out there, financial services are a magnet for fraud, because there’s so much, you know, money flowing, flowing through all kinds of of systems and and I was very disappointed that the SEC would just not engage. You know, we were hoping for a regulatory framework that would really legitimize everything going on. Instead, this administration just wanted to kill it. Wanted it to go away. Wanted to whether it was I don’t want to deal with it, and hopefully it goes away. But I think we’re past that. You know, what makes blockchain important is we don’t think about access to capital and banking and credit cards and walking down to an ATM and a stable currency, it’s innate to, you know, the United States. It’s not that way around the world. And giving people access to a stable form of currency, the ability to get loans and transfer, you know, make remittances, etc, all of that is easily doable on blockchain, but there’s more. I mean, if you really played out blockchain to its full potential, and you know, everything was was done with contracts and tokens, you could probably eliminate much of accounting. You wouldn’t have to have accounts receivables. You get paid when trend transactions happen. I still believe in that future. I think it was set back because blockchain was so closely associated with crypto, and then we had the Sam bankman Fried’s and all the headaches and illegitimacy and the boom and bust cycle. But I think we bottomed out, and we’re coming back, and I think we’re gonna finally see the kind of innovation that there is the potential of there. Love it. Bitcoin
33:06
is at all time highs. We’re 100,000 it’s really incredible, yep. So Barry, while I’ve got you, I have to ask you about the world of AI, oh, yeah, What? What? What’s your thesis, and are you actively investing in the infra layer, the model layer, the application layer, or all of the above? Yeah, well,
33:26
where we we’ve made investments in the infra layer. I mean, I first of all, you know, this is the beginning of a of what we would call a mega cycle. You know, there are waves of innovation. You go back to the desktop revolution and home PCs, and then the internet came along, and that was another mega cycle. And then mobile came along, and another mega cycle. This is definitely the mother of all mega cycles, because it’s kind of the culmination of everything but, and there’s a big but we kind of never learned from our mistakes. You know, if you, if you go back to the.com bubble, and you had all these companies with.com ideas and investors throwing money at it, at Crazy, crazy valuations, before they had a business model, and, you know, the FOMO driving the whole thing. Now you have all these public companies, the market crashes, and no one wants anything to do with the internet for a while. I mean, I remember people say, Oh, finally, the internet’s dead. It was a fad and and, you know, come back and look at the crypto cycle. We just went through same thing. You know, wow, look at all this stuff that’s going to happen, we’re going to stress, disrupt financial services, capital pouring in, people not even doing diligence on deals. Valuations crazy. And, you know, we we advance via boom and bust cycle, and it’s very and it’s very painful, and it ultimately slow, slows things down. Yeah, so, so, you know, where are we in the roadmap? There is no question my mind over the 10 and 20 year framework. When we look at the outside of that, every single thing will be impacted by AI, your refrigerator. You know, we will fundamentally change how we relate and communicate with machines. Let’s face it, you look at today’s UI, UX, it’s the same as it was in the 70s. You have a mouse. You’re doing pull down menus, you have a desktop cluttered with files everywhere you’re running around. Search sucks and and all that’s going to change. All of that will be made, made made better, but it is going to take time. And so again, if I go back to the analogy of the early internet, in the mid 90s, we were building out the infrastructure we wanted to connect the world. Our dream was, you know, everyone around the world could shop at night and in their fuzzy slippers and pajamas. We don’t even think about that today. But to get there, you had to put fiber in the ground, you had to build data centers, points of presence, all of the fundamental infrastructure that that could support our ability to just seamlessly get we don’t think about it, you know, it’s, it’s in the atmosphere we we’re online any, anytime we want. You know, everyone knows AI is extraordinarily compute intensive. You know, there’s a scramble to build out these massive data centers, and they’re going to require lots of power. You know, there is a whole big chain of infrastructure that needs to build out to support that future. Meanwhile, everything’s being so hyped, it’s like it’s here already. And so, you know what you’re going to see, like we’ve seen over and over again, is a lot of the early companies that are getting funded to chase after many applications, they’re going to blow up in the first, you know, downturn relating to AI, the you know, the first disappointing. Just like, if you go back and you study the.com bubble, you know they refer to many crazy ideas that turned into nothing. They all exist today. The problem was our desire to get rich quick by pushing all of that technology into human beings was greater than humans beings ability to absorb that into their lives. They just aren’t ready yet, and that’s the Human Factors resistance I was talking about. So I am very bullish on the opportunities. I think we’re going to see multiple trillion dollar companies come out of it. I do think the big action today is everything around the infrastructure to build it out. But I also think that there are going to be some exciting new applications, particularly on the agentic side. Many industries stand to be disrupted. I think the existing ad stack, which is bludgeoning you with ads and making the internet unusable when I have an agent that knows what I like and wants, it’s never going to let that shit through and and, you know, but these disruptions will be, will take a long time, even if you use any of the llms, I don’t care which it is, you know, Gemini, chat, GPT, your muscle memory is still go search on Google, yeah, it will take a long time before you go, oh, you know, I could have had this conversation and and so we have to get through the human factors. We have to create AI driven applications that create real value, that, you know, that change and create, you know, real value. And we’re gonna have to get through some pain with the early, you know, the early starters, early adopters, I mean, our early developers of tech in the in the space, because, you know, they may have started a little too early. They may have gotten overvalued. They may not be able to produce, you know, the kind of business that stands behind that. And
38:57
what’s it’s like, what you said at the top of the interview, it’s like the people don’t care about the tech behind the scenes. They care about doing the thing that they want done. Which relates to your point recently about interfaces, yeah, which, you know, I interview, I’ve interviewed probably 800 venture capitalists, and very few people talk about this like we’ve only seen incremental like we’re getting audio now, right now, you can request things via audio, but I’m really curious about the future of interfaces. And back in 2013 this crazy startup pitched me, and they put this thing on your head, and they purported to like, oh, we can translate what you’re thinking, you know, onto a page. And it didn’t work, and I laughed. But maybe there’s a future, future eventuality where you can just think what you want to type and look,
39:46
I think that our entire relationship with how we receive information, data, e commerce, they’re through these glass windows. They’re through the little glass window in our pocket. Pocket, and our laptop glass window, maybe our iPad glass window, and we have acclimated to it, but it’s pretty clunky and and it’s very concentrated. And you know the fact is, is when what’s driving thing, things are intelligent, the things you want to do can be done by voice. Can be done by thinking. I mean, look at neuralink. They’re down the road to, you know, make making, making that future happen when it’s distributed across all of your appliances and your vehicles, not just being compressed into that little window. That’s why, I think the most important and exciting thing about AI is it will really change the way that humans relate to machines and interact machines with machines, and become easier and much more convenient
40:53
Barry, if we can feature anyone on the show, who do you think we should interview and what topic would you like to hear them speak about? No, I would
41:00
go back to some of the OG people like Brad Feld, who, you know, I think they’re winding down their fund. I think it would be great to get some perspective from him. He’s awesome. He’s one of my favorite investors. I’d put Fred Wilson in that same category. You know these because so many generations of people you know come through that are entrepreneurs and investors. They may not have heard from them in a while, and, you know, we all have different perspectives. And so I would definitely, you know, I’ll give you a hand trying to get them on but, but I think it would be great to hear from them. That would be
41:36
great. Barry, what book, article or video would you recommend the listeners? You
41:40
know, if it has to be one, one book, and it’s, you know, a couple of years old now, but cast, you know, C, A, S, T, E, the origins of our discontent, by Isabel Wilkerson, is a profound book. First of all, the prose is beautiful, but it is really the history of, you know, how American society got to where it is today. And it, there are some parts of it that are hard read, but if you’re a CEO and you’re going to be managing people, and you care about diversity, and you care about getting the best out of your people, having an understanding of, you know, how we got to where we are in in this country in particular, I think is incredibly important when I, when I that book first came out, and I read, read it, and was floored. I think I got 300 copies and sent them to every, every CEO I knew. I think it’s a really, really important book.
42:39
Amazing. Barry, do you have any habits, tactics or behaviors that are a force multiplier? Yeah. I
42:47
mean, I do. I do follow my own advice. I am a voracious learner, tinkerer. I have my maker shop. I’m always playing with products. I think to be great at investing and being a good investor, once you’re inside, like I said, you can’t just have your nose in the spreadsheet. You have to understand what the company you invested in is really doing and what the competitors are doing, and to be additive to them and provide insights to them, you have to be super, super engaged. So I am spending all my spare time literally just geeking out
43:25
amazing. And then finally, here, Barry, what’s the best way for listeners to connect with you and follow along with DFJ growth. Barry,
43:31
at DFJ will get me. It’ll be better than Ben, LinkedIn. Not that I don’t love LinkedIn, but it’s a little spammy and and we’re about to launch a new website. We kind of do it with each each new fund. So DFJ growth.com. Is the way. He
43:48
is. Barry Schuler, the firm is DFJ growth. You know, this has been an incredible experience, one that I’ve looked forward to for a long time. One of the best to have done it, Barry. Thanks so much for
43:59
coming on fun to chat. Thank you.
44:07
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 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.
