Seth Levine of Foundry joins Nick to discuss A New Era For Venture: Dynamic Capitalism, Finding Alpha in the AI Cycle, Are Bubbles a Feature or a Bug, and Why the Future for America is Still Bright. In this episode we cover:
- State of Venture Capital and Investment Trends
- Challenges and Opportunities in Venture Capital
- Dynamic Capitalism and Its Principles
- The Role of Government and Market Dynamics
- The American Dream and Economic Mobility
- Balancing Values and Politics in Business
- The Future of Capitalism and American Optimism
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0:17
Seth Levine joins us today from Boulder, Colorado. He’s a Partner at Foundry, invested in unicorns including SeatGeek, Havenly, WHOOP, Rover, and Xometry, he’s the co-founder of Pledge 1%, and he’s an author… we’ve spoken about his book The New Builders here on TFR and I’m pleased to discuss his new book Capital Evolution today. Seth, welcome back!
0:45
Nick, It’s great to be back. My now, my nationally best selling new book, which is kind of exciting to be able to wow, that was quick. Yeah, we hit the national bestseller list the week it came out. I think people were super interested in it. I mean, I you know, it’s a business book, right? So that’s, you know, you kind of never know, but it seems like it a little bit of a, I will talk more about it, but I think it we hit, we just got lucky, right? Like this moment in time is when people are interested in talking about this subject, even though, you know, we decided to write this, whatever, three, three and a half years ago, amazing.
1:15
Well, congrats on on the success of the book. I’m not surprised. I’ve read it myself, and it’s, it is a page turner, while also being informative, which is pretty rare. So appreciate that, Seth, you know, I recently spoke with Brad on the show about the future of foundry, so we won’t rehash all of that here, but I am interested in Seth’s story, right? You’ve written a few life chapters now. You’ve built an iconic firm alongside your partners, and based on the books that that I’ve read, it seems like you’re in kind of a new phase. So, you know, what are your goals? What do you what would you most like to accomplish in your next decade?
1:52
Yeah, you know, it’s funny, Nick I I was just told that I’m going to receive a Lifetime Achievement Award for like, a local Technology Association group, and which is, you know, it’s great, right? It’s thrilling. But there was a little bit of me that’s like, Oh, wow. Like, I’m, I don’t, like, feel like I’m at the end of my career, right? Like, I’m not looking I mean, yeah, I’ve done a lot over the last 30 years, and it’s fun to look back on that. But it was kind of this, like, funny marker in the sand of like, well, okay, I guess I’m at that age now where people are like, Well, you’ve kind of
2:25
done Lifetime Achievement everyone. That’s their way of saying you’re old, right?
2:29
Yeah, maybe get out of the way. Well, I mean, part of the impetus for not wanting to raise another fund for foundry, and specifically not wanting to sort of create a generational firm, is we really wanted to step aside, completely aside, and let the next generation kind of take over, and especially in Colorado, just because we’re seeing, of course, as this, you know, local, large firm, or the largest firm by, I don’t know, 10x or so in Colorado, but, but we take up a lot of, you know, lot of lot of thought space, a lot of airspace. And so we were trying to give a little bit of room for other people to do that. So, I mean, so maybe that’s apropos to lifetime achievement awards and, you know, people looking back, but, but I appreciate the question, because I don’t at all feel like I’m done. I’m, you know, I feel like I’ve got a lot more to do. I’m still kind of thinking about what that looks like. I spent 2025 I had a very deliberate goal for 2025 and we’re here. We’re speaking at the very beginning of 2026 of trying to decide, did I want to do something that was next, that was structured, right? Because there’s a world in which I, I don’t know, sort of float around a little bit. I could advise some things, maybe take a board seat or two, but sort of not feel like I was going to do something particularly structured. I don’t necessarily mean full time job or not full time job, but but something where I had roles and responsibilities and sort of a regular cadence and schedule, and I spent a lot of time thinking about this and doing some work with friends, and in particular, my talking with my wife a lot about it, and the conclusion I came to is like, yeah, yeah. I really do want to, want to do something next. So that was 2025 so I, you know, I know I want to do something. 2026 is going to be around. What does that look like? I have a few things I’m kind of percolating on, and I suspect, by the way, that it’ll be an amalgam amalgamation of couple things, right? I mean, certainly I enjoy writing. Obviously, it’s my second book. Now, I’ll probably do another book at some point, maybe even a few more. So that’s part of it. I’m really enjoying. I’ve done a number of podcasts to support the book. It’s it. They’ve been on really interesting topics, sometimes about the book, sometimes maybe less about the book that’s been interesting as well. But I’ve also had some approaches from some other venture style firms, some other different style firms, so I’m kind of thinking about those. So there will definitely be something next. I suspect it’ll be a little bit different than what I have been doing. But. It’ll rhyme, if that makes sense. Amazing.
5:02
Love it. Love it. So, you know, before we dive into the book here, I’d love your take on kind of the state of VC. I mean, you’re still actively investing out of foundry, finishing out your funds, and we’re kind of at this, this interesting time. Do you think now is a good time to be investing in, in new tech companies?
5:24
Oh, absolutely. I mean, in some respects, as you think about the rise of AI, the rise of quantum, right? I mean, these two technologies are absolutely transformational. They’ll define the next 1015, plus years. I think it’s as exciting a time to be an investor, and frankly, just to be alive, you know, as as other great technological advancements, right? So the internet, sort of the dawn of the internet, was probably the last time it felt a little bit like this. So sort of late 90s, let’s say mid to late 90s. And I didn’t experience it as an investor, but I’m sure, you know, sort of other times during the industrialization of the world, they were, they were similar, sort of opportunities, but it feels like one of those transformational times. And like, and that’s a little bit related to your first question. Like, I don’t want to sit on the sidelines for that, right, being involved in that that’s exciting. And I think everyone should feel that way. Now. It’s an interesting time. Just generally in venture. I mean, venture is always sort of interesting, right? I mean, when I joined vent, you and I started in venture, it was, it had grown from a cottage industry from sort of the like the 80s into the early 90s. I joined in the in 2001 so it had sort of exploded in this bubble, you know, the internet bubble in the late 90s, sort of through 2000 and then it was like in the process of imploding again. And this is kind of how venture works, right? We expand and contract expand and contract the corpus grows, and it has been growing quite a bit. And, you know, we went through our latest expansion in, sort of like, I don’t know, 2020 let’s call it right. And there were a lot of funds that were started in 2019 2020, maybe even 2021, sort of peak of the zurp bubble, if that’s what you want to think of it as. And now we’re sort of maybe in a little bit of a contraction phase. I think one of the challenges with venture is that what happens is it expands and contracts in sort of the like, 90% if you will. Like 10% of the firms hold most of the assets right, and they grow bigger and they, you know, I mean, it’s not that they don’t expand, but, like, they’re relatively steady, and then all of this sort of expansion and contraction expansion that all happens in the 90% that sort of sits outside of those top 10 firms. There are amazing firms in that group, but I do worry, and I’m curious your perspective. I mean, you’re in that group right in terms of the work, that’s right. I worry a little bit that if you timed it wrong, really good managers get forced out of the market, right, because you raised your fund in 2020 and you invested it too fast. And you know, all of that, all your capital, got invested in 2020, and 2021, and now your DPI looks like crap, right? And so, you know, I do worry a little bit about, sort of what happens to those firms, because I think many of those firms do a particularly good job of investing. And again, you guys are a good example of this investing in ideas and founders that don’t necessarily pique the interest of that sort of core group, let’s say of 10 venture firms that control most of the market. And you know, so I worry about that a little bit in venture I’ve sort of come to accept it. It’s like, this is how the venture market works, right? A lot of people ask me, Are we in an AI bubble? And it seems like they’re asking that from an accusatory perspective. And my answer is like, yeah, obviously we’re in a like, every new technology creates some sort of investment bubble as everyone tries to jump in, and you’re really just buying an option, right? We don’t really know what exactly which pieces of that new technology are going to take off, and I think that that’s actually a feature and not a bug, yeah, how US investment ecosystem works, right? I think we do a really good job of that. And for them, I’m not saying bubbles are good, right, but certainly bubbles that expose individual investors to bubble like behavior that can be bad, right, especially if you pile in the kind of the mortgage stuff that happened in the GFC is a good example of this, right? That harms individual investors. The AI bubble is like, yes, there’s some, some people are going to lose money. Lots of venture firms are going to lose money on AI investments. And that’s okay, like, there’ll be a bunch of interesting things that come out of that and and we’ll eventually get the capital to the right companies and the right ideas. And, you know, wave some, sometimes Wave Two is more interesting than wave one. We certainly saw that in the internet bubble, right, where there were lots of gen one companies that had really good ideas, and gen two was the, you know, think of all of social media, right? I mean, basically everything in social media. Was done before whatever you’re thinking of in your mind as the you know, whether that’s Instagram or Facebook or whatever, before those companies, there was another version of that that didn’t quite work. And this is how, how the innovation cycle works, which I think is, I think is a good thing, right? I mean, I think that that’s okay.
10:18
So when you’re at that phase, when it’s still somewhat nascent. Infrastructure is being built out. Like, how do you find the ARB? You know, where is the ARB in the next one to
10:27
three years? Yeah. I mean, I think, I mean, I think our jobs as investors, and I think this is where we sometimes end up sort of getting things wrong, is to seek alpha and not beta, right? So I think the interesting thing is to take that alpha risk, and you have to be okay with, sorry, I don’t know why my camera went off there. You have to be okay with, with some real losses when you’re doing that right. And the way you seek alpha is, alpha is you spread that risk around. And I think what ends up happening, and this definitely happened, sort of in the 2020, 21 timeframe, is that a lot of funds end up actually seeking beta, like the behavior is seeking beta, which is to say, hey, we have a slightly better way of doing this thing that is already being done. And we kind of know is a market, et cetera, and and then you’re betting on operations, and you can make money doing that, but it’s hard to make outsize money doing that, right? That’s like, Hey, I’m going to out execute you Nick. I’ve got a slightly better version of what what you’re doing, and I’ll just, you know, I’ll operate a little bit better or a little bit more efficiently. That’s not venture capital, right? That’s not something else, right? What we’re really looking for as VCs is, is alpha, which is like, Hey, this is a absolutely different way of doing this. And, and because of that, we’re going to create something that’s foundational, right? And, and when you get it right, whether that’s Fitbit or whoop now, in the same category, or xometry, you know, it feels really good, because all of a sudden you create sort of a large platform style. By platform, I just mean like, sort of broad in terms of its reach business. And sometimes you get it right ish, and it still ends up being it’s more incremental in terms of its progress. And you’re like, All right, well, that was still good. You can make money again doing that. And sometimes you’re like, oh, wow, I funded the 18th company that’s kind of doing the same thing. I didn’t realize that because I didn’t do my market research, or, you know, I just, I didn’t know enough to know at that point, and when we all have those stories, right?
12:30
100% so capital evolution, right? Co authored with Elizabeth McBride. I’ve met Elizabeth. She was on the program last time? Yep, the story starts with capitalism, and we all live in a capitalist economy. And you know, we think we’re familiar with the term, but help us understand capitalism, right? This is not a static thing. When does it function well? When does it function poorly? Under what conditions, and can you give us some historical context to help frame where capitalism is at today?
13:10
Yeah, so I appreciate it, right? It’s I love talking about the book because I spent, you know, Elizabeth, I spent three years researching and writing it, and talked to some amazing people. We got interviews with Jamie Dimon from JP, Morgan and Dan Shulman, who’s now the CEO of Verizon. He was the CEO of PayPal at the time. We talked to him and Lisa green Hall, who basically invented impact invest. I mean, we probably did 100 interviews for this book, and we started by just sort of asking some basic questions about capitalism. Now, it turns out, when we started writing it, I wasn’t really thinking capitalism needed like a defense, although it did occur to us when we do the sort of beginning of the book does offer a bit of a defensive capitalism, because it was clear that particularly younger people were becoming a bit more disillusioned with capitalism. We’ve now elected a socialist mayor for the biggest city in the country. So perhaps we need to have maybe a deeper conversation about capitalism versus socialism, and the book does a little bit of that. It’s not intended to be a defensive capitalism, but it ends up being one. But more importantly, we talk about like, well, what’s the style of capitalism that we’ve been operating under and and is that the right style? Right? And we’re not the first people to ask that question, but I think many of us have kind of taken for granted both what capitalism is, which I’ll touch on in a second, but also that capitalism is sort of this kind of static thing, like in the US, capitalism looks in this certain way. It’s free markets, it’s shareholder value, it’s kind of the government stay out of the way. Government’s the problem. And as we looked at the history of capitalism, that’s actually even in just the US, that’s actually not really the case, right in terms of how the history of capitalism has evolved in the US. We’ve been operating under this sort of most recent version of capitalism, really, since about 1970 Milton Friedman, who’s famous Chicago, University of Chicago economist, outlined a bunch of ideas around. On capitalism, first in a book that he wrote in the late 60s, and then in 1970 he penned an essay, Op Ed, almost style thing from the New York Times. The title of it was, the only purpose of a corporation is to make money for its shareholders. And that does a pretty good job of summarizing what he said. And that took a little bit for that to kind of catch on, but that that really became the defining thesis for what we now call neoliberalism. You could call it the Washington consensus as well. But that style of capitalism and and, you know, Reagan in particular, market that Margaret Thatcher over in the UK, really embraced these ideals and kind of, kind of everyone eventually in politics, this wasn’t a left or right thing. Everyone eventually decided, hey, this is, this is the style of capitalism that we should be operating when Friedman died Larry Summers, who was the president of Harvard, and before that, he was the treasury secretary for Clinton. So for a Democrat, he said, everyone’s a friedmanite now, right? So like at that point, everyone had accepted that, or most everyone, at least in the in the halls of power, had accepted that, Friedman economics, shareholder only capitalism, was sort of what, what the way we were going to operate our economy. But there have always been people who have questioned that, and it’s never really been how companies operate anyway. I mean, it was sort of a nice heuristic and kind of an easy way to justify sort of crappy decisions if you were, you know, the head of a company. But it led to short term thinking. It led to non strategic thinking. Led to really everything between revenue and profits being treated as something that a resource to be extracted from, and that included workers, the middle class, the environment and and so we really, in the book, we kind of, we go through that history. We talk a little bit about it. We talk about what capitalism is, right, which is, in some respects, it’s an economic paradigm, but actually the way we define it is is more of a like a compact. It’s an agreement between and amongst members of a society that the those, those people and their government right about how we’re going to operate. It actually turns out that our definition of capitalism is relatively fluid, and it kind of depends on what that agreement looks like, and that was that, when we sort of defined it that way, it opened us up to some interesting thinking,
17:27
Yeah, can you introduce the concept of dynamic capitalism? Right? You talk about this in the book. I’d love to hear what this means. And does this have a more comprehensive view of these stakeholders.
17:42
So the position we take in the book is that capitalism works, right? We defended the chapter three. Is capitalism exploitative by nature? And essentially it’s like, let’s come to terms with the good and the bad of capitalism, right? We don’t say this directly in the book, but it’s a little bit like Churchill used to say about democracy, right, worst form of government except for all the others, right? Like capital, capitalism may be the same like we understand that there are flaws in it and run amok, which we kind of have let it run amok for the last 50 years. It can lead to the sorts of stratification that we’ve seen in our and inequalities we’ve seen in our markets, the kind of extractive behavior that we, you know, that I just described, and that we describe in detail in the book, but it still is by far the best, the best way of organizing society and our economy and so and we, but we talk in the book about sort of a better form of capitalism. How do we, how do we take this thing that is working, but maybe adjust it a little bit, and, and I think it’s the same question that the Business Roundtable was asking in 2019 when they decided to come out with a proclamation on the purpose of a corporation, right? And, and what they said was that, yeah, there, of course, there are other stakeholders, right? It’s not just shareholders. We have employees. There’s the environment. We work with suppliers, our, you know, we our businesses operate in communities. And that probably would have been a bigger deal, except that they put it out in November of 2019, and there was, like, a hot debate about it for like a second. And then, of course, covid hit, and we’ve moved on to some other things, but, but they were really on to something, right? And I think part of our thesis in the book is we have already moved past neoliberalism. We can talk about Trump because in some ways he’s this interesting sort of transitional figure. He kind of governs like a neoliberal, but he talks like a populist, like like a dynamic capitalist. So we’ve kind of already moved on from that. Exactly what we move towards is not clear. But in the book, we make an argument for what we call dynamic capitalism, which is this sort of very capitalist ideals, but that that sort of understand what we believe to be the reality is of how our this. And how societies work today and specifically in dynamic capitalism, we encourage leaders thought, you know, academics, people who are thinking about this, we encourage people to take a longer term view versus a short term view. Neoliberalism. Really push this short term thinking quarter, quarter by quarter earnings. We talk a lot about empowering an ownership economy. How do we create more capitalists? I think a little bit of what we see in New York and and some of these other cities where socialism has started to take hold is that people don’t feel like they have a foot on the economic ladder in the United States, and because of that, they are, you know, looking for something else, right? And it’s easy to not believe in free markets, if you feel like I Well, the free markets haven’t worked for me, and I don’t, I don’t own anything, even in the free markets. So that’s the second thing. Is we want to create more capitalists. We’ve got some ideas in the book for how to do that. We talk about the role of government. We believe that there is a role for government, sort of in, modify modern monitoring and and sort of putting up the guardrails for society, but it’s a limited role, right? And I think that, on the one hand, neoliberal said, Reagan famously said government is the problem, right? And they really wanted government to sort of be out of everything that that’s probably not a good idea. And on the other hand, there are a lot of people that feel like their government’s the government’s the solution to every problem. We should just nationalize it. And so we have, there’s an entire chapter where we talk about this called the government is not the problem, but it’s not the solution either. And so that’s the third pillar. And then the last pillar, which is kind of funny to have to say out loud, Nick, but it sort of feels like in 2026 we have to which is respect for the rule of law, right? Capitalism cannot flourish, and it does not flourish when there is not a clear understanding of what the rules are, what the laws are, and an even application of those laws, right? And we, couple months ago, we penned an op ed in the New York Times about some of Trump’s proclivities to crony capitalism, which we think are bad, right? That actually does not help markets make good decisions, make good capital allocation decisions. So those are the four pillars of dynamic capitalism as we as we talk about. Obviously, I’m simplifying them here. It’s laid out more freely in the book.
22:18
Well, and everyone should pick up the book. Absolutely, it’s master class, but, but Seth, I want to double click on the second one right, like there’s a huge portion of the population that no longer feels like they’ve got a foot on the economic economic ladder. As you say, yep, talk to us about the supposed meritocracy that America is. You know, is the American dream still alive? And can you share maybe some stats and some metrics on kind of the nature of social class and how that’s changed, you know, over time, that kind of leaves us in the situation we’re now in,
23:01
yeah, and so first, I should say that the American Dream is still alive, but we are, but barely right. And I think that we need to recognize that we can call it sort of mobility, meritocracy. We can also describe it in terms of overall dynamism of our economy. America has always been marked by very dynamic and very meritocratic economy, right? It’s never been perfect, far from it. But as a general matter, people have had a lot of ability to create mobility for themselves, just based on on grit, determination, smarts, etc. And we’ve moved away from that, right? I mean, if you look back 50 years ago. So two generations ago, if you were born in the bottom 25th percentile of wealth in the US, it’s easy to remember, you had a 25% chance of dying in the top 25th percentile of wealth, right? And that’s the kind of mobility we’re talking about today. You have a 5% chance of dying in the top top 25th percentile. So it’s gone from one in four to one in four to one in 20 Exactly. From that, we are much less able to move stations in life. I look and I think about this in my own life, right? My grandfather, my father’s father, didn’t finish high school, right? He was, was in high school in the Great Depression, and he dropped out of high school to make money for to help his family, and he and he ended up stitching together a pretty good middle class life for my dad. My dad has a PhD from Harvard, right? So, like in one generation, we, you know, we were able to, he was able to go from not or my family was able to go from not having finished high school. By the way, my grandmother went to college in the 30s. So, you know, there was definitely, which is was unusual back then for women. She went to Colorado women’s college. Actually, I’ve got my family has a long history here in the in the state of Colorado, but we went from my grandfather, my grandmother graduated from college. My grandfather not even graduated from high school, my to my dad. Had getting a PhD from Harvard, right? Like, that’s the kind of mobility that marked the American dream. And, look, I’ve lived it, right? I mean, that that, like, That set me on, I did not get a PhD from Harvard, but, but I That set me up for sort of the life that I’ve been able to live, and I’ve had this conversation with my kids, because, you know, like, like, a lot of people who are younger my kids, not necessarily all of them, but one in particular is has expressed some skepticism around, how does capitalism work? And, of course, I told her, Hey, read the book. But, but we’ve had this conversation about, like, Look, let me try to personalize it for you. Like, this is what this has meant for our family over just a very short period of time, I worry a lot that we’re moving away from that, right? And we are, statistically speaking, moving away from that and and I think that that, I think we can recapture that. And the book is an optimistic book. We’re not. It’s not a doomsday. You know, we’re in trouble. Sky is falling, but it is a let’s, let’s, let’s take a dose of reality, and then let’s talk about how we get back to some of these first principles that enabled this sort of mobility, right? And I think that that’s, that’s what I wish we were spending more time frankly, talking about in our politics, we’ve sort of moved away from the politics of opportunity, and now we sit in this sort of like politics of grievance, right? Like there’s, there’s a problem in your life, and let me tell you who to blame. And depending on what your politics are, the people to blame are immigrants, or, you know, people that are getting benefits that you shouldn’t be, that should be going to you instead. Or they are people who have made a bunch of money, and, you know, they’ve been taking from you as well, and you should just start taking more from them. And I think that that explains, sort of the, kind of explains, actually, why Mamdani and Trump got along so well in their oval office visit, right? Because they kind of speak from the same playbook, even if they have very different ideas about how to address it
26:52
is government the problem.
26:55
I would not say that government is the problem, but I don’t think it’s helping, right? And, I mean, I’d certainly look, we all wish we could, like, wave a magic wand and sort of fix everything. But I think that government, in many respects, has not, over the last, let’s say, 20 years, has not set us up to be successful. And I I think if I were to have to, like, if I were to point to a thing, I would point back to, frankly, the bailouts of banks and businesses, insurance companies in the GFC, and that was started under Bush. It was accelerated under Obama. I understand the I understand the thinking behind it. The problem is there was no accountability for anyone that had sort of created the problem that resulted in the crisis, and there was a lot of accountability for individuals who took out mortgages that they couldn’t afford and then lost their homes. And I’m not suggesting there shouldn’t have been individual accountability for people that made financial decisions that ultimately were not, you know, sort of not right, but there should have been accountability for others. And I think if I were to point to why, at least in my mind, populism rose on both the left and the right, and sort of where things started to go wrong, I think that that that may be the sort of beginnings of it. And I would put that firmly at the feet of government right now. We’ve continued both some of those sorts of policies as well as, just like general fiscal policies that I feel like are kind of unsustainable, right. I mean, we can’t continue to run I mean, the biggest problem in my mind with the big, beautiful bill as it was called was, I mean, there was plenty of policy things that I had opinions on, but just on a sort of macro basis, a $2 trillion a year deficit is not sustainable, right? And we are rapidly approaching that sort of death debt, death debt spiral that we don’t want to be in, right the interest on the debts now exceeding a trillion dollars. So those are some ways that I feel like government has kind of helped kind of create some of the challenges that we have. I also, as a general matter rule, argue for sort of smaller government. I mean, here in Colorado, I’ve been helping some people who are some of the candidates that are running for governor, think about their business positions and and one of the things I’ve said to them is like government, government should get out of the way as much as possible. There are places where government can be helpful, but there’s lots of places where government inserts itself that Colorado is easy to pick on because we’re the sixth most highly regulated state in the country. That just don’t make a lot of sense, right? And where we want to, we want to get out of the way of, we want government to get out of the way of new businesses starting, of businesses growing, etc. That doesn’t mean we can’t have environmental, health, safety employment regulations. It means that that we don’t, we don’t want to overdo both those and other things, right? I mean, we were, is it just a dumb example, but my wife’s a small business owner. She’s a real estate developer. She also owns the bookstore in our hometown we live, we actually live just outside of a boulder. At a city called Longmont. She was going to set a bunch of things up for her business. Couldn’t figure out, like, how to do this properly on the various Colorado State websites. Asked me to help. I couldn’t figure it out. Asked her bookkeeper to help. She couldn’t figure it out. Eventually, she called some helpline, and they were like, Oh, yeah. Actually, that page doesn’t exist anywhere. Let me send you the link, and that’s what you need to do. And I was like, why are we making it so hard? I actually told the story to one of the gubernatorial candidates. It’s like, why would we make it that hard? How many people wanted to set up a business and then either just decided, look, it’s too much trouble. I can’t figure it out, or they sort of went around the system and they’re sort of operating on the edges, in the gray zone. It’s like, well, that’s not what we want. We want to make things easier. Another example that I think we all experienced during covid Is there are a lot of regulations on what you can and can’t do that are city by city, county by county, and state by state, and they’re for things that maybe made sense 150 years ago when we were licensing. I don’t know people to cut hair and and barbers to, like, shave and things like that, where you kind of didn’t really know the people in the town over because you weren’t, you didn’t have a car and you weren’t driving there. But in today’s day and age, that seems like absolute overkill, not to mention some of the state by state things, right? And we lifted a lot of them in covid, and all of a sudden, you could see a therapist anywhere you wanted. So if there was a particular expertise you were looking for in therapy, you could choose, not just from the people in your state, from all over the place. Now we’ve gone back to some of that. I just I would love to redo some of these licensure requirements for As just one example, and allow for more mobility, right? These are, these are impediments to the capitalist system. They’re impediments
31:46
to free markets. I mean, this reminds me, you’ve pointed out some of the sort of fundamental flaws and various movements over the years, like we’ve, we’ve had the woke movement, and we’ve had, you know, various climate eras, and, you know, you’ve got, even got a chapter with a phrase called the climate fallacy. Could you help us understand what were some of the issues underlying issues with each of these and why they don’t work in a dynamic capitalist environment?
32:16
I think that a lot of what we argue for in the book is to get away from the extremes. I think a lot of the reason that some of these ideas ran amok is that they were there were lots of great ideas taken to extremes that didn’t make sense. I say this about Trump a lot too, like he has pretty good instincts about things that are going on, and then very often takes them too far, right? And so, and I think we but the movement you’re describing, the sort of woke movement Dei, fits under this as well, like it got it got to be almost a caricature of itself. Does it make sense to understand someone’s background in history and the journey they traveled. Absolutely. Adam Grant has a great book on this entire subject, right, called hidden potential. I think about it all the time. When I am interacting with people, what it not just what did they achieve, but what did they have to to, to overcome to make that achievement? And I think about that and i i place value judgments. I think that totally fine, but that got taken to an absolute sort of extreme in a bunch of instances that were then able to be weaponized by people that wanted to move way too far back in the other direction. And I think that we just we so regularly open ourselves up to that in our society for some reason. But I think that’s the history of the woke movement. I think that’s a lot of what happens on, you know, in the Maga movement as well, right? We take these, like general principles, and then we take them to such an extreme that they’re so easily, kind of debunked and and easy to fight back against and so, you know, we talk a lot about that in the book. I mean, again, the book’s a pretty middle of the road book, because Elizabeth and I generally speaking are pretty middle of the road people, but, but not just because we that’s our predilection, but also because, like, that ends up being what actually works, right? And so I think that, I think it’s important for people to understand that. And by the way, part of how we got to those conclusions is we spent a lot of time reading, listening to, talking to if we could people that disagreed with us, right? We learned a lot by actually engaging in some of those conversations. And I think part of what we observed is that whether you’re politically left or politically right, you in today’s society, have a have less of a likelihood to be open to even hearing ideas that contradict your sort of way of thinking, right? And I think that we actually found that our views on subjects moved quite a bit by opening ourselves up to some thinking on this. And by the way, one of the most important things that moved in our thinking, I mean, one of the fundamental questions we ask in the book is like, what’s the role of business in society? And if you think back to sort of 2020, 2021, companies were being asked to weigh in on every single societal thing that came up, right? And CEOs were sort of being put on the spot about that and and and I think our ultimate conclusion is that that’s not really the society we want to live in. There’s values. Jamie Dimon did a good job of describing this to us. We quote him in the book on his there, there’s values, and then there’s politics and, and there’s actually a line between the two, and it’s okay, of course, and expected that companies express their values, but those don’t necessarily need to be overtly political and shouldn’t be right. And Jamie talked about not becoming weaponized by forces that you know sort of want to use you for their whatever their sort of ultimate political lane is. And and at first I kind of dismissed it, and I was like, Ah, this is, like, CEO happy speak, and I don’t really know what you mean, like, what I mean, we really pushed Jamie hard on what’s the distinction between values and politics. But as we, as we thought about it some more, as we reviewed the transcript from his and other discussions that we had, we really, I think I really came to appreciate absolutely there is a distinction, and they were, and we’re asking companies a bit too much right now, and so we we suggest in the book, sort of pulling back from that a bit, right? I mean, again, this is back to the sort of middle of the road idea of like, look, let’s we can expect companies to operate on a set of principles and values, and those values should include stakeholders that are not just shareholders. And most importantly, should include a long term orientation, right? I mean, really long term shareholders benefit when companies operate in these ways, but shouldn’t necessarily be CEO going on the political shows talking about every single thing that happens in our society that feels like it needs some sort of response.
36:59
It does. It does, and you do argue that a new consensus is already forming. It’s funny, because consensus, you know, it almost feels like a foreign concept in this day and age. So, so who is actually driving this, this shift toward consensus
37:16
right now? I mean, I think that the so in our world, we tend to listen to the people that are loudest, and there are very loud voices, sort of on either side of the spectrum. But the truth is, there are a lot of people who are quieter, but going about sort of the business of operating their companies. This is especially true for small and medium sized businesses, are operating their businesses to a set of values that think longer term, that empower their employees, that don’t try to take advantage of their employees, and that that are thoughtful about how they interact with customers, suppliers, etc, in a way that kind of pulls politics out of it, right? And I think there’s there we give some examples in the book. One of the ones that actually really like is, because it’s maybe counterintuitive, is KKR, which is a big private, you know, global private equity firms actually public. Everyone can own a piece of it, if you want. And there’s a guy, one of the partners at KKR, Pete Stavros, in particular, has sort of taken some of these principles and put them into practice in the global manufacturing division of KKR that he runs specifically around employee ownership and to great Success, right? And not in an altruistic sense, right? I mean, KKR exists to make more money. And Pete is very clear, like, Yeah, this is, I mean, we do this because I think it’s the right thing to do, and we make more money, not every time, but over the long haul, on average, we do better doing this, which is why KKR is, you know, they started, they piloted it with a couple companies. Now they’ve rolled it out much more broadly and beyond just the global manufacturing group, but I think that’s a good example of and that looks like giving ownership, basically, to employees in these manufacturing businesses, kind of what Silicon Valley has always done, a version of. But we need to recognize like that kind of employee ownership concept, you know, has not existed outside, doesn’t exist outside of Silicon Valley, particularly by Silicon Valley, I mean tech entrepreneurship, particularly broadly. But it also changes the mindset of how management works with the rest of the company versus, sort of against the rest of the company, right? And it gets you, get you out of this extractive mindset. Hey, how do I? How do I take every dollar out of this workforce, if you will? Because that’s just a cost of good, right? It’s or the cost of production. And that was the neoliberal mentality that led to outsourcing like crazy. And, you know, critical supply chains being all. Offshore and, you know, incredibly thin things we all things we learned over covid and and in the Suez blockage and things like that. And it, it makes you think a little bit differently about that, right? And I think that, I think these are concepts that are easily transferred to many different types of businesses. I’ll be very interested in particular to see sort of how Verizon operates under Dan Schulman, because he had some very, very interesting concepts that he rolled out at PayPal for how to compensate people. I mean that broadly, right, how to deal with healthcare, some other things in a way that allowed them to be better focused, frankly, on their jobs, reduced employee turnover, etc, doesn’t mean you can never fire a group of employees. Doesn’t mean you, you know, everyone has to make some crazy, you know, unsustainable wage. It just means that that you need to find the right, the right balance, right? And there is a balance in these sorts of things. And I think that, I think that that what often gets missed on one side or the other? Is that nuance right on one side? It’s, Hey, we should pay workers as little as we possibly can, because we just want to, you know, we want to make as much profit as possible, and that leads to short term thinking and higher turnover and some of these other issues that we talk about in the it’s, I think it’s chapter two where we talk about Dan Schulman and his work at PayPal. On the other hand, like it may sound great to some people that you raise minimum wages, I was thinking about this sort of in our local context, almost all the restaurants in the town next to us have gone out of business because they the town adopted the boulder minimum wage scale, and they raised minimum wages so quickly that those restaurants couldn’t afford to stay in business for, you know, what people were willing to pay to go out to dinner. A friend of ours was an owner of one of those businesses. She was like, Yeah, we can’t do it, right? We’ve got 15 people working here. If you know, we got to increase our, you know, our wages by whatever was $3 an hour, like, I just like, she’s like, that’s, that’s 40 to $60 per ticket per table that I have to pass on. People aren’t going to pay that much money to come out to easier. And so I give that story, because neither of those two things is the right thing to do, right? You got to take avoid the extremes.
42:19
Yeah. I mean, after doing all this research and diligence with Elizabeth and looking at counter positions and all sides and where we found ourselves today, kind of the polarizing environment that we’re in, are you a net optimist on America’s future free land?
42:40
Yeah, I’m long America, right? Like, I strongly believe that we figure these things out, right? And I feel like, you know, I don’t love some of what I see going on, right? There’s, no, I’m not, not excusing some of the things that I’m looking at in any way, right? And then there are a lot of things that are happening that are, I think, are very, very troubling. But I also believe in our overall system of checks and balances. I believe in sort of the ethos of America. I believe in the it’s funny, I’m watching the Ken Burns thing on the American Revolution. It’s so good, it’s really long, and he was talking about, I can’t remember what it was. It was, it was like a German guy who came to train a bunch of American soldiers. And he told the story about how, you know, he was used to just telling his soldiers, like, do this. And he said, that doesn’t work with the Americans. I have to tell them do this. And here’s why, right? And that it just, I love that story, because I was like, that sounds like America. And I love that back in where I’m in 1777 right now, in where we are, in the documentary, in 1777 that was how Americans were, and we’re still like that. And I love that, right? And I and so that all of these things make me optimistic about about the US now, we can’t take it for granted. Right? Optimism is not an excuse to say it’s fine. I don’t need to fight for what I believe in. That’s not what I’m saying at all. Right? We, we cannot take for granted the things that we care about as a society and as a people. And we need to fight for them. We need to protest for them. We need to, you know, be out in the streets, yelling and screaming about it, right, peacefully, like all of those things are absolutely true. And, you know, I believe in our political system as well. And I mean, politics infuriates me, but, but I also, you know, I believe in it and and I would encourage people to be engaged in it, not just voting, but also, you know, supporting candidates that they like by whatever canvassing or giving money and things like that, like all of that creates the environment that allows America ultimately to be successful. Now, do I think we make some bad decisions? Like, yeah, absolutely. And I think we make bad decisions both on the left and the right, right, not one political party has a lock on that. So. So, you know, but I’m still an optimist. I let me ask you that same question, Nick, are you optimistic?
45:06
I am. I’ve always been a very bullish and very optimistic. I mean, I’m a tech investor, and I have to, I have to be a long term figure, and I have to be very optimistic to get so excited about what I do.
45:18
You’re used to things going wrong, right? I mean, you know, Yeah, amazing tech investor, you’re wrong eight out of 10 times anyway. So, like, so you’re used to being like, yeah, okay, that was wrong. Next one, I’m going to get it right 100% the next investment.
45:30
I mean, we talked before about, like, the consolidation of capital and how that affects the long tail, you know, firms like mine. And the reality is, we have ups and downs, just like the startups do. They’re just a little longer cycle, you might be in the trough for longer, and so survivors are going to survive, right?
45:46
Yeah, yeah, I think that’s right, and I think that that it’s part of what I like about the venture business, right? It can be frustrating because the data points are so few and far between, and ultimately, many of the things you work on don’t work out the way that you expected them to work out. But I love the like, the types of people that are attracted to venture, the types of people that are attracted to entrepreneurship, more generally, are optimistic. They’re go getters. They’re like, I’m gonna make it happen. I’m not gonna wait for it to happen. I love that’s right, right? I like spending time with those sorts
46:17
of people. That’s right. Such a good quote. Two minutes. So two really quick ones here. Seth, do you have any habits or behaviors that are a secret weapon?
46:25
Well, I’m going to write it. My next book, actually, is going to be about productivity, so I’ll write about all of them. The main thing that I would say, so if I were to pick one of the things I’m going to talk about it is, I do not use my email as my task manager, right? So I don’t return to my email to figure out what do I need to do next? I use it. I do use a task manager. And every morning, I sort of go through my day, I look at my calendar, I go through my day, and I write out what my priorities are, and then I or my tasks are, and then I prioritize them, and I only go check email a handful of times a day.
46:58
Amazing. And then finally, here’s Seth, what’s the best way for listeners to connect with you and pick up the book? Awesome.
47:05
So you can get the book. You can find more about the book at the capital evolution.com you can find more about me at Seth levine.com or foundry.vc and you know, let me draw me a line, like my emails all over the place. I would love to hear what you thought about the ideas, particularly where maybe you just agreed with some of the ideas in the book. I’ve had some great, great feedback, and would love to hear from
47:26
you very good. He is Seth Levine, the firmness Foundry Group. And Seth is also a New York Times bestselling author. Seth, thanks so much for being on today. This is such a pleasure.
47:38
Nick, this was great. I really appreciate you. Thank you, sir.
47:44
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.
