If you're not motivated by the fear of

losing, I think you're asleep at the

wheel. At the very beginning, there's

three reasons why preede companies fail.

They run out of money. They run out of

hope. And now, if I could invest in one

emerging manager, sub$50 million fund,

it would be this manager today, Josh

Browder, Browder Capital. There are

three types of people. Those who make it

happen, those who watch it happen, and

those who wonder what happened. He makes

founders that he invests in live in his

spare room the four seasons until they

raise a seed round.

>> Pitching VCs is like a game of poker.

You should never reveal too much

information about what you're seeking.

>> Also, he turned his Teal Fellowship 100K

grant into a $10 million angel

portfolio. He was one of the first

investors in companies like Micro One,

Yuzu, and many more. For every anthropic

employee who's making 20 to 100 million,

there's 7,000 block employees being laid

off. It's not sustainable. You can't

have 50,000 people with all the money. I

think actually there could be a

revolution in our lifetime. Something

has to change.

>> Ready to go.

Josh, dude, I am so excited for this.

You mentioned very kindly before the

show about my levels of prep. I I think

it's stalking to some extent, but I have

loved getting to know you. So, thank you

so much for joining me first.

>> Thank you for having me. Growing up in

the UK, um I'm proud to have known of

you before you became a world famous

podcaster. So,

>> dude, I I think most of the stuff I post

these days actually just uh rage baits

most people on LinkedIn. But I want to

start with one that I always actually

wonder with CEOs that I interview and

meet, which is what actually inspires or

motivates you more. Is it the fear of

losing or is it the immense satisfactory

feeling of winning?

>> If you're not motivated by the fear of

losing, I think you're asleep at the

wheel. Um there only the paranoid

survive and the world is changing. It

feels like the world is changing a

year's worth of progress every few

weeks. So definitely the fear of losing.

>> You know, when I started, you very

kindly said like um about get getting to

know me through the show. I still kind

of have this to this day in all honesty

and this is why the show has become more

and more successful, which is I don't

really care what people think, but like

I was terrified of being McCauley

Kulkin. You ever seen and he was very

famous when he was young and then like

nothing became of him. And I was

terrified of being the like shot in the

pan. Did you ever have that? cuz you

were very successful young and I

remember seeing you in the same vein

like on magazine covers raising $22

million. Did you feel that pressure

early?

>> There's this saying among the teal

fellows that um they have an expiry date

and we all know these people who are

very hyped and then maybe didn't uh stay

relevant and they just some of them lost

their minds and so that was always a

huge fear of mine. You always have to

constantly be reinventing yourself to

kind of stay relevant and adapt because

the world changes very quickly. I

started do not pay in high school when I

was 17 and that was a completely

different world back then. That was in

2015.

>> Dude, it was so so different. I I am

actually just going to start with that

actually and kind of mix up the schedule

because you bet intensely now often on

very young founders and I spoke to so

many of them before this show.

>> Yeah. Why is it that you place such a

bet and conviction on very young

founders so much earlier than maybe

others would?

>> So I think young founders have no option

but to succeed. Um if you back a Google

engineer um the first thing they'll do

is they'll hire 10 of their friends and

it's like this endless like scheme of

hiring. Um the first thing a young

founder will do is they'll build the

product and they don't have anything to

fall back on especially if they have a

chip on their shoulder. they they really

the only thing they can do is succeed.

And so I think the grit level with young

founders is 10x and being an

entrepreneur is like eating glass. If

you don't like um have a true kind of

dedication to win

uh they'll give up at the first

opportunity.

>> It is the shittest question um which

I've often been asked but actually I've

found there's more and more nuance to

it. And Dak should grappile told me I

should ask this. He said, "You back

founders that others maybe wouldn't when

you actually look at them in that

instance. What is it that you look for

that is non-obvious or atypical in the

founders that you do invest in?"

>> So, the number one thing I look for is a

deep connection to the problem that they

won't give up. So, I I I go back to my

own journey. I'm Mr. Do not pay. Um, I'm

the type of person to get 10 parking

tickets just to test out the service or

wait on hold for hours to save 20 pounds

or dollars, I guess. Um, and I look for

those founders with with a really deep

connection to the problem. So, for

example, I was in the very very first

pre-p precede of a company called

owner.com with Adam Guild and he built

the initial version of the his product

to help his mother's dog grooming

business. And so many of these founders

come up with these BS stories, but um

that is a real story and he really did

it to help his mother. And similarly

with me, I really did it because I hate

the government with parking tickets. And

so I look for that sort of founder

market fit where they're they're first

customer. And I joke if you're building

for yourself, at least you have one

customer.

>> Do you worry about the susceptibility of

founders when they're that young? Like

bluntly, I see a lot of very young

founders now getting so caught up in the

fundraising game that it's like it's

almost a game of I raised a random from

who and it's like we're building a

business to create a product for

customers. Let's not forget why we're

here. Do you worry about that?

>> Yes. So, I escaped the UK to go to

Stanford and there was a um Stanford

review article which is a student

publication and the publication said

it's easier to for a Stanford student to

get into YC than it is for them to get a

job now. And so we've seen a rise of um

I would say fake founders where they

don't have that connection to their

problem and they're just starting

something just because it's cool or

because they have nothing to do for the

summer. And actually being an investor

you have to be very careful about

backing students over the summer. Um

because part of the signal is they've

dropped out and they're going all in on

this. But of course during the summer

you can't actually tell if they've

dropped out. So um I'm actually it's

scale back a bit during the summer. Not

because I'm in Capri like all the other

VCs, but because you have to worry about

these fake founders.

>> How do you determine whether someone is

a fake/tourist founder versus not? I

look at some of mine more recently

actually and I've made this mistake

where I thought they were missiondriven

and it transpires afterwards that

they're not.

>> So I have a huge list of huristics and I

have small signals and big signals. So,

a small signal would be um let's meet at

11 p.m. And um the best founders would

say, "Sure." Um the mediocre ones would

say, "Oh, no. Um can we meet uh Tuesday

week?" Um so, we meet at 11:00 p.m. And

and then we just I just like hit them

quick fire with questions and everything

they say I want them to validate. And

it's almost like a visa interview. So,

for example, they'll say, "I'm at 5,000

in revenue." I say, "Let's look up your

Stripe right now." And um the the the

fake ones get really nervous. They're

they're like, "I don't have my Stripe on

my phone. What serious entrepreneur

doesn't have the Stripe app on their

phone?" Um and then I go into like these

tactical questions like, "What's your

goal for the next 3 months, 6 months,

one year?" Um a D minus answer would be

some vague nonsense like I want to get a

partnership with Anthropic. Um, an A+

answer would be, um, I'm going to like

fly to Milwaukee to meet with a dentist

to get them to sign my $500 a month SAS

plan. So, it's like very tactical. Then

I look for, um, do they have a top 1%

skill in something to achieve their

business goals. And you see the best

entrepreneurs, they've proved something

in their childhood. Um, maybe they were

selling Minecraft servers like Adam Gild

or John Andrew, the founder of Wonder.

Maybe they were doing sneaker bots like

the founder of [ __ ] Um, my generation

when we were growing up, it was very big

to do jailblings. So, jailbreaking or

competitive drone racing. So many of

these things. And it doesn't have to be

engineering. Like I backed the youngest

engineer at Amazon. That was really

cool. But it can also be distribution

and like making sure their sneaker bots

get to the the right audience. I heard

from some of the founders that you will

house them in uh a Four Seasons

residence. Can you talk to me about this

and how you structure that environment

you put them in? I

>> I noticed over the years, so I've I've

tried all sorts of investments over the

years and and things have done very

well, but the best sort of investments

are the day one investments for me and I

think everyone is playing different

games. Um, some people are playing the

games where they're getting into the

hottest companies 100 million valuation

and then they become worth 25 billion

one day. Um, the game I'm playing is,

um, I'm getting into founders who when

they're just starting, they're not

polished at all and they can really use

my advice and my reliving my founder

journey to polish them and um, I try and

get in sub 5 million valuation. And the

question I'm sure you have is how do you

account for the adverse selection of

getting in at those low valuations? And

I noticed that over the years the best

founders that I invested in, I actually

live with them at some point. Um I was

roommates uh with the founder of a

company called Ashur um where we both

rented the house where Facebook was

started over the summer at Stanford. Um

I was roommates with the founder of a

company called Yuzu where um he worked

at do not pay. So he lived in the do not

pay house. the founder of Micro One

lived in my spare bedroom when I was his

first investor.

>> And what is it you see in the best in

those periods?

>> So, I've made so many mistakes with do

not pay 10 years. I'm 10 years in now. I

can give them a crash course so they

don't make the same mistakes as me in a

matter of 3 weeks. And bear in mind,

these are very young college firsttime

founders. So, they don't even know the

difference between pre- money and post

money valuation and all of this. So,

it's almost like a oneperson

accelerator. It's it's one person, one

partner at the accelerator, me, and then

one one founder or one company. Um, and

you mentioned Four Seasons. Um, I would

say it's not that luxurious. It's

adjacent to the Four Seasons is

technically a Four Seasons residence,

but sometimes if there's four

co-founders, it's four beds in a in one

room. So, I I'll rent beds for $50 a

night and then they all um one company,

they live in one room. And I say to

them, it's like it's in California, so

it's like Hotel California where you

can't check out until you've raised your

institutional seed. And then I the

company is off life support and I can

like relax a bit.

>> Okay. I I just have to kind of delve

into this process. What are the main

fuckups that they make in that period

where they're there? What do you need to

shape, polish, or create in that period?

>> At the very beginning, there's three

reasons why preede companies fail. They

run out of money. they run out of hope

and co-founder disputes. Um the running

out of money is comes down to pitching

and I help um I'm lucky to have pitched

almost everyone in Silicon Valley over

the years successfully and

unsuccessfully and so I teach them how

to present their business. Um running

out of hope is is also really important.

I want them to make them feel like

they're making progress every single

day. Um, so I'm like encouraging them to

ignore all of the kind of vanity signals

of being a young founder in SF and

actually focus on their customers and

then co-founder disputes and building

the team. I sometimes recruit my uh

smart friends who are not ready to start

a company into their organization and I

get them the vesting and all the boring

stuff. Uh, like everything that YC would

say I I I say to them.

>> It's so interesting there. We had money,

hope, co-founder dispute.

>> Yeah,

>> co-founder dispute is one that really

kills companies, I find. How do you

measure analyze co-founder relationships

when they're staying with you? And any

lessons there?

>> So, the good news is that with all sort

of red flags, young founders are very

bad at lying. So, um if they say we've

we've kind of best friends, and then

they start interrupting each other, you

kind of know that that that's not true.

Um, so I look for kind of a long

history. The best co-founder dynamic

that I've seen among young founders is

friends from high school. So I was the

first and they live with me as well. I

was the first investor in a company

called Haladier very recently and they

were uh friends from high school went to

different colleges, dropped out and

rejoined. So that's the that's the kind

of perfect uh dynamic. Um, one thing

I'll say is I I've noticed a really

worrying trend of people reverse

engineering what I say on podcasts and

in articles to pitch me exactly what I'm

looking for. So sometimes so just now I

said um friends from high school I can

guarantee you in 3 weeks someone is

going to say we were best friends in

high school and so this is a worrying

trend where they're using claude and

chat GPT deep research and so I have to

worry about that. It's it's the biggest

challenge that we actually have because

I've been very prescriptive in the past

that I look for and this sounds awful

but like family trauma is a big sign of

like future found success, gaming and

then early entrepreneurial success.

>> I would say nine out of 10 young

founders that we meet pitch those three

exactly and you're like wow

this is very aligned.

>> Yeah, it's disgusting. Um it's a certain

type of fraud. I call it ideological

fraud.

>> I agree completely. Can I ask you when

you bring them into the house? Is that

when you put the money in?

>> Yes. Um, so I put I put it in just

before.

>> Okay. And is that same size check at

certain price?

>> Yeah. Yeah. And it it varies depending

on how many co-founders there are. If

it's just one, sometime I sometimes I I

don't mind solo founders. Um, if it's

like three dropouts from Harvard, then

the price reflects that.

>> Do you find that 5 million price is

still attainable? it that's that it's

sometimes can be lower sometimes can be

hard higher

>> because I just find dropouts from

Stamford or Harvard in particular

>> just see tech crunch and see Twitter or

X and uh go I'm I'm 25 I'm a CS grad

from Stanford

>> often times it's so early that it's it's

it's definitely possible um for from my

latest fund um it's I've done 33 deals

so far the median across the entire fund

is five The minimum is 1.5, maximum is

uh 21.

>> Do you worry about the level of fraud

that's going on with the current

ecosystem with the founders that we're

seeing? Uh do you worry about that

increasing with the pressure we're

putting on?

>> I think that at the earlier stages, the

only fraud there can be is ideological,

which is not illegal. It's not illegal

to say you've had childhood trauma when

when you've actually grown up middle

class. And that's a huge huge issue.

It's it's interesting because the best

founders are hustlers in some ways. Um

so it's it's a it's a balance. Um

I actually think it's becoming easier

and easier. The world is becoming much

more transparent. Um you have Twitter

sleuths who will detect anything as like

several companies recently have been

taken down because of like someone

published an article about stock 2 or

something like that and the entire

company is done. Um, so I think actually

fraud that the illegal type of fraud is

becoming harder.

>> You mentioned you've pretty much met

every venture investor in the valley.

What was the best venture investor

meeting you had? You know, somewhere you

just meet them and you're like, "Wow,

this this person is really smart."

>> I I think it was Mark Andre. Um like so

many founders, I um after do not pay got

um all of the hype and um we were

starting to get a lot of usage um he

reached out on X and he said, "Do you

want to have breakfast?" And I was very

missiondriven. I I was not one of these

like like Stanford founders or anything.

I was actually on the verge of making do

not pay a nonprofit. In fact, I had a

pitch to like nonprofit style investors,

not investors, just funders to make like

a legal nonprofit to help people with

their rights. I was that focused on

fighting the system. And I went to this

breakfast and Mark convinced me that the

biggest organizations are for-profit

entities and you can have 10 times the

impact of a for-profit company because

the incentives are aligned. And do not

pay was a very small example of this,

but I guess you're seeing this today

with OpenAI with the $150 billion

lawsuit um where they switched from

nonforprofit to for-profit. So that was

the first major lesson I learned, I

would say.

>> How old were you at that breakfast?

>> I was 18 or 19.

>> Were you nervous? I

>> I was so nervous and um it was a

breakfast meeting. It was very It was a

house at his house in Athetherton and he

came down in like breakfast clothes and

>> what a breakfast.

>> I was fresh off the boat. I'm not trying

to get in trouble, but I was like fresh

off the boat from the UK. Came down in

breakfast clothes and um yeah, he's um

but I would say all of the luminaries

are incredibly nice people. Um

yeah, but Mark Andre is by far my

favorite and I'm very fortunate. He's my

first investor at do not pay and also

first investor first institutional

investor for my fund.

>> That is absolutely amazing. I love that.

I also love breakfast clothes. I have no

idea what that is. Do you think venture

investors add value? You know, Keith

Rebor says, "The best founders I work

with, honestly, they don't need venture

investors. Most VCs on LinkedIn or

Twitter tell me that I'm an idiot for

saying that." Do do you find that to be

true or what side of the fence do you

sit on? I have a friend, he has a great

saying which I'll copy. There are three

types of people. Those who make it

happen, those who watch it happen and

those who wonder what happened. And um I

think at best venture investors are in

the second one. Um sometimes

unfortunately they can be in the third.

So the biggest issue is like they don't

go crazy on the founders which happens a

lot. Um but of course they can add value

at strategic points. Going back to the

core ingredient of success in venture

that the founders themselves you you're

a dropout. Um how do you think about the

value of university today and if you

were sitting with you know university

students today advising them on whether

it's worth staying or worth pursuing a

dream.

>> People see their life as paint by

numbers. So they say if I go graduate, I

go to business school, I go work at X

company, then in five years I'll be

ready to start my company. The problem

is the world changes so quickly that the

paint by numbers approach doesn't work

anymore. And so I would say to any

founder who has an idea of what they

want to do, they should just go for it

and the world won't wait for them. Um on

the other hand, you see a lot of people

drop out just for the sake of it. In

fact, um, when I when I dropped out, um,

in 2018, I actually had like one or two

classes left at Stanford, so I was very

close. Um, it was very kind of taboo to

drop out. Um, now dropping out is almost

the establishment. So, you see people

drop out just for the sake of it. And I

think that's definitely wrong. Um,

because there are huge advantages to co

to being in college. Um, even if you're

doing a startup, like you can recruit

your friends. Um, you have your college

email and people will um, take you more

seriously if you email them from

Stanford or MIT.edu.

Um, also people give college students

more of a free pass. Um, if all of these

founders who are getting this

controversial stuff were in college,

they they might they might be able to

kind of pivot more quickly. Do you

think, you know, your father's an

incredible figure, incredibly respected

figure, but there was a little bit of a

safety net. Do you think that your

ability to have a safety net slightly

enabled you to drop out?

>> No, I think um the opposite was true.

So, I was sitting um and I've never told

the story before, but I was um sitting

at a poker game at Stamford with my

friends, and this is no exaggeration. I

I got a um news alert um saying so my

father is a human rights activist and

he's like enemy of the Russians and it

was a news alert about my father and

this that he' just been arrested they

just the Russians managed to get him and

I think it's taugh it's just made me

incredibly paranoid and so I I think I

was more paranoid um because of most

people um don't have the mafia after

your family and and So I I was um always

con like paranoid and fearless and so I

think actually um it's it kind of made

me more more paranoid to like

>> take big swings.

>> Yeah, take big swings.

>> What did you do in that moment?

>> I called him then. It didn't go through.

>> Then I called my mother. Um and then I

like cashed out my chips and left the

poker game and dealt with this

situation. And as a 19-year-old college

student, there's very little you can do

in that situation. And um but my biggest

thing was trying to make sure he didn't

get extradited to Russia because if he

got extradited, really bad things would

happen. Um and so I went to an event

British students at Stanford and it was

hosted by the um

um consil general and I thought the one

thing I can do maybe I email the console

general. So even as a teenager I was

just trying everything. Of course, that

made no difference.

>> Do you know what I find very funny is if

you if you've been like, you know what,

I will deal with this later. I'm playing

poker right now.

>> That is uh that that is quite the story.

I'm uh yeah, that

>> Yeah, it was a Financial Times news

alert.

>> Yeah, that's that's pretty terrifying.

Can I ask you when you think about like

a really challenging time like that

seeing that news, can you take me to a

really hard day you had with do not pay

and how did you learn about yourself

from it?

>> So this is probably the the hardest

point of do not pay which is um 3 years

into the company. So I I'd raised the

pre seed from Andre from Mark um and it

came time to raise the seed like two or

three years later and do not pay was

incredibly popular. Millions of people

were using our free product and I

thought it was a slam dunk pitch and

that was a huge mistake and I was going

down Sand Hill Road because all the VC

firms were in Sand Hill Road back then

and one after the other they were

rejecting me. I I I went just down the

list. Rejection, rejection, rejection.

And this was really depressing because

I'd actually just dropped out like a

week before. And there's as passionate

as I as I was about do not pay, there's

only so far I could go with just me, I

needed to hire a real team and and raise

some serious money to keep it going. And

I had like two or three pitches left.

Um, and I thought if these don't go

well, I'm just going to throw in the

towel and like do something really

depressing like like go work for big

tech or or something, go work at Google.

Um, because I I just have to give up and

even go back to Stanford. And um, so it

was the next day. who was one of my last

pitches. And um I I guess this kind of

speaks for um how bad the situ situation

was, but I turned to my outside counsel

lawyer for advice. If you're turning to

outside counsel for like business

advice, then you know things are really

bad. And um he's an amazing lawyer. He's

a partner a firm called Wilson Cassini.

His name is Damen Weiss. He's like on

the cap table of all the amazing

companies. And um I I told him the

predicament I was in and he said, "Well,

do the whole pitch in front of me right

now." Um and so I gave him the whole

pitch and he interrupted me halfway

through and he said, "You're doing it

completely wrong." Um he said, "First of

all, they're not investing in the the

PDF deck or some presentation. They're

investing in you and the product." And

so the fact that you're not doing a demo

is criminal. And um so I kind of quickly

scrambled together a demo of a robot

appealing someone's bank fees because do

not pay was expanding to bank fees in

the US and added that to the

presentation. He said second of all um

no one really knows what this can be.

You should put the logos of the biggest

companies that you one day want to

emulate. So I stuck in the logo of intu

which is a $200 billion company in the

US and I said we want to be the Turboax

which is one of their products of

consumer rights. And I also put the

Honey logo which was just acquired that

year for 6 billion. And then I put

Credit which was acquired for 8 billion.

Put that in the deck. He said finally um

this was around the time of the

Cambridge Analytica scandal. Um you

shouldn't say you want to do

advertising. Advertising is not very

fashionable right now among VCs. Um so I

I said okay what should I do? He said

subscription. So I put in subscription

and I didn't even really believe that it

could be like people would subscribe to

it but I put in subscription and he

turned out to be right everyone uh now

subscription is our main business model

anyway. So I made those three very minor

changes to the deck and did my

presentation the next day and Harry it

was like a night and day difference and

everything changed. Not only did they

want to invest they like they left I

left the room for a few minutes. I came

back and they wanted to invest on the

spot and um

first of all Silicon Valley is such a

kind of herd mentality place. Even the

people that previously rejected me once

they found out that this firm wanted to

invest everyone started like rescending

their rejections and and I thought that

was a bit depressing and and second of

all um it taught me a really valuable

lesson which is um

nothing changed about the company.

Nothing changed about me. Nothing

changed about the team. Nothing changed

about our usage. But the most minor

differences in framing and strategy made

all the difference. And that's actually

the like some of the lessons I give the

founders I invest in. If things aren't

working, you just need to change the

framing just slightly and that can make

a like monumental difference.

>> What do you find is the biggest problem

with the framing that founders often

come in with? I tell every founder I

invest in um

don't have too high of expectations. Um

you should I mean this is classic VC

advice. Never pitching VCs is like a

game of poker. You should never reveal

too much information about what you're

seeking. So every founder I invest in I

say don't reveal the price that you

want. Um the price is a function of how

hot the deal is which ironically is less

hot if you go in swinging for the fences

with something too high. Secondly, I try

and relive my story and I say it you

have to do a demo. Um and I um actually

there's a famous story of I gave this

founder advice to do a demo. He's a

biotech founder and he even like did a

demo like a very personal demo and that

that got a top tier everyone was passing

on him and then he did this demo and

then a top tier person came in. So I

definitely do the demo make it all about

them. Also, I think the C I mean there's

a million things like the CEO should be

doing it, not like five founders

speaking over each other. There's like a

whole list. I I send it to any founder I

invest in.

>> One of the worst things to me Exactly.

There is like when three people come to

a Zoom call in particular and it's like

we have 30 minutes. My job is to build a

relationship, try and get to know you.

Suddenly there's three founders on a

call.

>> Yeah. Well, Zoom is the first mistake.

They should fly to London in person. I

say um you should reject Zoom and always

do in person where imposs where

possible. If I was pitching you, I'd fly

to London.

>> That's very sweet. I would invest in you

if you were flying to London. Um, uh,

you said there like I didn't really

believe like subscription could be it.

We kind of put some logos of other big

companies.

>> How do you think about the Walt Disney,

sell me the dream, sell me the story

versus Jerry Maguire, show me the money,

sell me what you have, the hard

statistical. How do you advise that? And

is there a blurring of lines? So, I

think being British, um, the substance

is always I try and be more substantive

than hypy. I think it's just the UK

culture. Um, when I give references, I

always say, um, this this reference is

actually really good because it's coming

from a British person. I'm not like one

of these like hypy Americans. Um, I

think, and I give founders I invest in

this advice. Um, it's okay to be as

hyped as possible with your vision and

ambition. You should have boundless

ambition, but with how you're describing

the current state, it should be very

accurate. So, I think there's a balance

with what you your plans are versus

where it is today. Do you think that we

actually expect too much in the

ambitions of young people? And what I

mean by that is when I first started the

show and you kindly said you listened

early on, dude, I would I just wanted to

be an associate at a big fund. Like,

that was the dream job. You know, I

would have been a terrible associate,

I'm sure. But we put a limiter on our

ambitions because we don't know what

we're capable of. Do you think we need

to give founders credit or leeway to

have their ambitions expanded?

>> Unfortunately, all of the best founders

I've invested in, they they've uh had

delusional levels of ambition. The more

delusional, the better. And

unfortunately, it is a sign um of

success to be delusional. So, I think

it's better that they're more on the

delusional side. Um but I I agree with

you. Um I would have just like um do not

pay um initially we got an acquisition

offer for a million from like one of

these OG legal tech companies when we

when we just started and I was about to

take it. So I I agree that you never

kind of um realize how big things can

be.

>> Why did you not take it? A million

pounds. You're very young, probably a

teenager. Why did you not? I asked a lot

of people I knew for advice and they

kind of laughed at me and I was actually

really upset with them for like not not

um kind of validating this achievement

that we got this mill it was actually a

million dollar acquisition offer um and

that was a bit depressing but I think

they actually gave me like good advice

which is you can do bit better than

this. You said they kind of you went to

mentors. What advice would you have or

what thoughts do you have on the value

of mentorship and how young people

should seek out the right people to

surround themselves with? One should

create their own luck and meet as many

peers as possible. Um because you get

different things from different people.

One person is an expert at growth. One

person is an expert at fundraising. One

person is an expert at life. um Cliff

who uh introduced us um he I think he's

an expert at life

>> in terms of the people that you surround

yourself with and and learning from

their different skills. Talk to me about

deciding to be a teal fellow and how

that came about cuz that was a

significant turning point.

>> Yeah. So I was at Stanford and to

graduate Stanford like many universities

they have diversity requirements which

means you have to do various things in

the curriculum to get your degree. And

one um thing you have to do is it's

called creative expression. And I'm not

sure how I seem, but I'm not the most

creative person. I'm more of a kind of

Claude code style person. Um I I love

the code. Um anyway, so

this was the last requirement I had. And

the easiest way to satisfy this

requirement was to go to dance class

once a week. There's this famous class

at Stanford called social dance. And it

was at 9:00 a.m. It was it was like a a

schle. Um and um do not pay servers were

crashing and I really am very bad at

dancing. So um I had a like decision to

make. Did I want to go to this dance

class or did I want to keep my business

up for um millions of users and I didn't

go to the dance class. I kept do not pay

running um and failed out the dance

class and that was my precip kind of

precipitated my dropping out not the

teal fellowship. And I actually got the

Teal Fellowship a few weeks later. The

Teal Fellowship, the best thing about

it, um, is you have 19 other people who

also have these dance class style

problems, who have the same problems as

me as an entrepreneur. Like what one

example would be, how can you convince a

60-year-old to work for you? Um, at the

time do not pay was like very early in

the machine learning days. We were

trying to do some machine learning

classification for parking tickets. And

I was trying to um get one of these old

like OG machine learning people to work

for the company. And I was turning to

one of my Stanford like dorm mates who

was also trying to do apps and projects,

but he was more a committed college

student. And I said, "Do you have any

idea about how I can convince this

person to work for me?" um and he had no

idea rightly so because um he w he was

like dealing with his own college

problems versus building a company. So I

think the biggest benefit of the teal

fellowship is having 19 other young

people um or between 10 and 20 other

young people who are dealing with the

same challenges as you. And I went to

the first Teal Fellowship retreat and

back then they they made you share

rooms. Um, now Peter Teal is so wealthy

if you go on the retreat they actually

give you your own room. But back then

you have to share rooms with the other

fellas.

>> It's getting too luxurious these days.

>> And um, my roommate was a fellow Brit. I

guess they put the two Brits together.

And um, he he went on to found a company

called Fluid Stack which um, is publicly

reported to be a tens of billions uh,

kind of company. And so just having

those peers is absolutely incredible.

And so when we look at the teal

fellowship, what do you think made it so

successful? When you look back,

>> I think not being transactional, um it's

a it's a prize. So it goes to the

individual as a prize and you can do

anything you want with the prize money.

You can use it on research on how to

grow organs. You can invest it like I

did in my teal fellow uh classmates. Um

>> is that what you used it for? Yeah, I

put all my Teal Fellowship money and I

invested it in um Adam Gild and other

amazing entrepreneurs.

>> So they give you

>> that's how I started investing. Maybe

I'm an investor at heart in some ways

because that's what I did.

>> That's [ __ ] wild. I had no idea.

Wait, so they give you 200 grand?

>> So So when back in my day before the

hyperinflation, I'm getting old. It was

100K. Then last year it was 200k. Now

it's 250K. So it's going up. And so then

you get a 100k and you're like, "Wow,

the people I'm with are really good,

too. I'm gonna invest in 10 10ks."

>> Um so they have this tradition where

obviously the ultimate decision on who

gets the fellowship is up to the

foundation and Peter finally, but um

fellows help out every year in in the

selection in in various ways. And I was

helping out one year and I was actually

interviewing um fellows for the next

class and and that's how I met a lot of

these people. That is absolutely wild.

Did you do the same size check into

each? I'm just intrigued.

>> No. Um, so they um pay it in

installments um because I guess they

think these crazy young people we don't

want to give them 250k at once. They

might like buy drugs or something.

Probably not, but do some crazy stuff.

Um so so at least with me, they gave it

to me in installments. So I took all my

uh first installment and and just put it

into him

>> into Adam.

>> Yeah.

>> Wow. Okay. So, of the 100K, what do you

think you've turned the 100K into on

paper?

>> I think when it's all said and done,

it'll be in the eight eight figures.

>> Wow.

>> And and that's that's why I started my

fund because I I um and I I did other

investments as well that did very well.

Um I also invested in my um going back

to my Stanford roommate Justin um and

various other ones at the time.

>> What did Justin do? He's building

insurance claims processing

>> assured. Yeah.

>> Um

>> lots lots of deals like that. And so I

thought, okay, I'm out of my teal

fellowship money. Maybe I should raise a

small fund to keep this going because

it's it pays to be early.

>> It 100% pays to be early. That is

absolutely amazing. It's the first

before we move on to kind of investing

in the first ones in that way. Um you're

on the selection committee also for the

teal fellowship.

>> So it's ultimately up to the fellowship

to decide, but I help out. How has what

you look for and they look for changed

over the years?

>> When the Teal Fellowship started, it was

really about um backing incredible um

incredible individuals out of

distribution individuals like Dylan was

working on a photo sharing app or and

then I think some drone ideas. Vitalic

was just a crazy individual doing crypto

which was not exciting at the time and

it was really about the individual. Um

in the kind of late 2010s it became

maybe about um a flood of people kind of

were applying to the teal fellowship um

with huge external validation um but now

I think it's going back to uh really

focusing on the individual. We said

there about the external validation and

kind of some group like thinking. I I am

interested because often

I don't know how to put it but like the

teal fellowship and say like a YC

compared in the same bucket. How do you

advise founders on the value of YC today

and how they should think about that?

>> Every founder needs some first believer

whether it's taking my spare bedroom or

the amazing programs out there. Um, I

really think you you need a first

believer and YC can be a great first

believer for them. I think um, some

companies do better in YC than others.

The problem with any accelerator, not

spec speaking specifically about YC, is

you're competing for attention with all

the other companies in the accelerator.

Um, if you're the top of the

accelerator, then that's incredible.

You're the kingmade or queenade company.

But if you're like a middling company,

it might actually be better to not be

compared to all those other companies.

And going back to my spare bedroom, um

it's a supply constraint. There's only

one spare bedroom. And so it actually is

a bar for me. It's like, do I want to

put these people in my spare bedroom?

And there's only one. So all my focus is

on them. So there's no dilution in terms

of the brand. Like I'm not doing a 100

companies in my spare bedroom. In fact,

one of my LPs asked me, "Why don't you

start buying a hotel or rent out a hotel

and just do 10 at a time?" And I said,

"Well, that's that removes the

artificial constraint of one." And so, I

think that's why I try and be different.

It's like a one person accelerator.

>> I have a unwavering man crush on Matthew

McConna. And he actually says something

brilliant, which is limitations reveal

style.

>> Yeah. And I think it's very much aligned

here to the constraints of your

I would love to partner with you Josh

and say hey this is the content marketer

within me. Hey could we get like a house

and do found a house and do five or six

and turn it also into a content

business.

>> So I was thinking of buying the Facebook

house. It's actually not that expensive

house. The actual house where Facebook

started. And when I was starting do not

pay um I I didn't know it was a Facebook

house. The first I found out it was a

Facebook house is there's a bus of um

tourists from Asia who would show up at

the house and it would be like Avenue of

the Stars. Like I guess grow growing up

we visit LA and you'd like go on a bus

with all the stars and and this was like

on the tour route and this bus showed up

of these tourists and I said what are

you here for? And they said we're here

to see Mark Zuckerberg's house and I

immediately thought I guess this is the

content marketer in me. Um you can come

in but you have to subscribe to do not

pay. So, we had a do not pay employee

outside with a clipboard and um to enter

the house, you actually had to become a

do not pay user.

>> That is amazing. I'm just wondering what

are the limitations on expansion for

you? The onebedroom works. Could it be

three? Could it be six?

>> That's such an LP question. Um I think

>> Thanks, Josh.

>> Um I think um you should start funds.

You have amazing judgment.

Um

I I think there's something special

about one.

>> H

>> um

>> how long are they in there for?

>> As long as it takes. Hotel California,

they can't check out until they're in a

stable spot. Usually that's a few weeks.

>> Usually a few weeks.

>> Yeah.

>> Wow. Okay. And so you'll tee them up

then for around and so you'll introduce

them to

>> maybe a traditional preede or seed.

Yeah.

>> And so you'll introduce them to 10 to 15

V seeds.

>> Yeah. And I will go very personally to

do everything to help them. So oftent

times this arbitrage is I'm moving them

internationally. I'll put their 01

Genius Visa on my credit card. I'll use

all my social capital to introduce them

to whoever it takes. Um I had I had one

person um he was building in data

centers. I phoned up my old friend Jamie

and introduced him to Jamie from Fluid

Stack that um do anything as anything

possible to kind of build up

credibility, build their team, and get

them in a stable spot.

>> I absolutely love that. It's so rare to

meet someone like that and it's so rare

to to be able to do that cuz most people

run portfolios and you just don't have

that. Can I ask you a tough one, which

is like, have you ever lost belief when

you've seen them in the first few weeks?

>> No, I I I um I've never lost belief in

someone who stayed with me. I I think

there's enough filters before that. The

opposite is true. I've um accosted them

at 2 a.m. while they're sitting on my

couch. I'm like, I want to put in

another 300K.

>> It's difficult to say no.

>> That Yeah, you're staying in my house.

Do you want to stay tonight? Um, that

that is amazing. I love that. And so,

you go to the 10 to 15. Is it always the

10 to 15 that are the same? Do you

tailor it to, oh, well, you're doing X

and you're doing Y, so this should be

different for you.

>> Yeah, some some are off to the races.

So, some um they

I introduce them to a top three firm and

they get it and then they're like and

it's actually going back to it's

actually sickening once they get the top

three firm it's like a stampede. It's

like safari stampede. Everyone is trying

to invest and I was thinking where were

all these people just 3 weeks ago. um

sometimes they require a bit more time

and then maybe I bring in a sector

expert like if they're doing government

I bring in a top government uh VC or if

they're doing um consumer I bring in

consumer um sometimes it takes longer

but I always get them in a stapled spot

and it it depends on the company.

>> Are you able to predict the ones that

will be hot versus not?

>> No, the the opposite is true actually.

the the crazier it is um the um the

better they do. Um so Aliari is a micro

one is objectively my best performing

investment in terms of multiple the

founders get upset when I reveal exact

valuation numbers but let's say over a

1000x well over a 1000x um and based on

the kind of the scale of the business um

and when I met him he um I said I'll

invest only on three conditions so it

was a California LLC uninvestable it has

to be Delaware CP um he was based in

kind of Los Angeles as a solo founder.

Um, and he was running a kind of a

staffing business. Um, which there's a

million staffing companies even in the

UK. So I said, "You have to move to the

Bay Area. You can live in my spare

bedroom. Um, you can um you have to

reinccorporate in Delaware or or shift

to Delaware. Um, and um you have to you

do a software style product. I don't

mind what you do, but it can be

anything." and we grinded and he's the

hardest one of the hardest working

people I've ever seen. Um and actually

um he still lives in my building to this

day and I like come at 12 a.m. and he's

like working like um middle of the night

and he did all those three things and it

changed everything.

>> Dude, what did you see in him? I I don't

mean that rudely to Ali. He's I've seen

actually interviews. He's clearly

brilliant now, but you learn and develop

staffing business. How I'm sorry to be

rude. How uninteresting. as you said,

there's millions of them living in. What

did you see in him that made you so

convinced that he would pivot, change

the company location, change his

location,

never give up? Um, if you back someone

who's above average IQ, very smart, um,

and never give up, of course they'll

succeed. And I think this is actually a

mistake a lot of VCs are making. They

are focusing too much on on these

credentials. So there's a race right now

to back the math Olympiads. Um VCs are

like going to spelling bees and math

competitions in high school. And I think

IQ is very important. You need someone

smart. But much more important is

they'll never give up. And I could tell

from my own journey and and interviewing

people for the Teal Fellowship and

seeing so many founders that Ally was

someone who has never give up and he's

he's um overcome huge challenges along

the way to kind of build his business.

Do you agree with Ken Griffin who said

on the weekend that he likes athletes

with above average IQ?

>> Yes, I I I would agree with that. Um I

think athlete athletes is one form of

never giving up and and you can kind of

tell a huge chip on your shoulder is

another way. There are so many

>> Totally agree. You we said there about

micro on Ali. Take me to that then like

so he's in the house and then he's going

out to raise. You're introducing him to

VCs. How was that first round? Once once

the minor things get sorted,

um it's it's actually quite there's so

much money. People ask me, "Are you

worried about competition from XYZ uh

XYZ B5 seed firm?" I'm like, "No, that

that's that's an they're they're

helpful. They can kind of join these

companies and and kind of um babysit

them." And and so once these minor

things are sorted, it becomes legible

fairly quickly. Not for like a a

unicorn, but um certainly for an

institutional seed.

>> How much weight do you put on the idea

to your point on like Alli where his

never give up

>> and a staffing business? Awful.

>> So this is the biggest mistake I think

I've made as an investor over the years,

which is as an investor and

entrepreneur, my imagination can run

wild as to what they can build. I think

if only they did this, it would be huge.

Um, the problem with that is unless it

comes from them, it's not their life's

work. And so I'm very cautious. I I have

a rule. I never tell the entrepreneurs

what to build, which which might seem

surprising. Um, as an investor, I say to

them, it's your job to build the product

and get customers. I can help with

everything else. And so I never index

too much about the idea. It's about the

person. With that said, there's um a few

things that I'll never touch. I'll never

touch crypto. I'm not getting into

whether I believe in crypto or not. I

think it has huge use cases, but I think

it's best left to the crypto funds. Um,

consumer hardware is tough um

because of v various various different

consumer hardware issues. So, I try and

stay away from that at least from my

fund. But beyond that, anything

>> totally

>> and wet science as well, stay away from

that.

>> I agree with you. I would say kind of

for me it's specifically like biotech

and life sciences where it's like it's

far too intellectual for me and it's

like Atlas exists for a reason. You

should go and see them.

>> Yeah, I'm not a scientist.

>> Has what you need changed? I would say

again the show is successful cuz I'm

very open. I would say we as a firm are

struggling to make the transition

between what was good 1 to five million

good enterprise clients to what is

expected now which is you know Lora 1 to

100 million in 18 months lovable 1 to 11

in 15 months has what you need to see

changed

>> no I'm more excited than ever is

pitching this AI infrastructure nonsense

like We're building agent observability

like the jargon levels. I'm British. I I

think this all BS like they just add on

the jargon. I love people building real

businesses. So the more real it is, the

better.

>> What's real? Like

>> so and I think enterprise AI is really

exciting. Um like assured or owner or or

um micro one things like that. And what

you mean by that just so I understand is

like I sell a product that people pay

for and it's a simple transaction in

that way not the market will move

towards our way of seeing data access

for agents.

>> Yeah. And how do I Yeah. I mean if you

can't explain the business to someone at

the pub in the UK like if you go to a

pub and say I'm building observability

for AI agents they'll laugh at you. like

but if you say I'm building like

software to automate um health insurance

claims that makes sense.

>> Yeah, I I totally get that. When we go

back to the alleys and the micro ones

for the fund raise,

what do you advise founders when they

get multiple term sheets and the heat is

on?

>> There there's kind of two groups of

firms. There's like the kingmaker firms

that you should accept at any price. Um,

one example would be Founders Fund or

Sequoia or people like that. Um, and so

if you get an offer from them at X and

the offer from um, someone else is at

2x, you should take their offer because

even if you're maximizing

um, amount raised and minimizing

dilution in the long run, um, it you're

king made and it will save you in the

next round. Um, so you should definitely

go for but the the another mistake these

entrepreneurs make is they have the list

of the kingmaker firms as too big. Um,

that there's probably like some tier 2

firm that think very highly of

themselves that aren't in that same

level as as Founders Fund or Sequoia.

>> No tier 2 firm thinks they're tier 2 to

be very clear.

Um, can I ask I'm not going to Can I ask

if I were to put the pressure on and say

you can have three firms in tier one and

three only, what would they be?

>> Oh, I I No, it depends on the sector.

Um, it really depends on the sector.

Like if you're a consumer company,

getting 4Runner could be the king

kingmaking thing. If generally it could

be founders fund or sequoia or or

something. So that's a very diplomatic

answer. That's a very diplomatic answer.

I often think that kingmaking exists

very candidly. Do you agree that

kingmaking exists? You said it a couple

of times.

>> 100%. We live in such a noisy world that

people outsource their judgment to

established brands.

>> The thing I think you've also seen that

people really don't anticipate is how

king making really correlates to

customer adoption. And what I mean by

that is if you look at and you ask

Winston at Harvey or Max at Lagora, a

big part of their customer acquisition

is relying on their venture investors to

bring mega law firms. Like it is a

revenue generator.

>> Yeah. And it's not just law firms. Um

even um consumers who use do not pay. Um

I think I'm sure lots of people have

signed up because of the investors that

backed us.

>> You mentioned the word dilution there.

I'm seeing more and more firms uh

founders sorry who are like oh I'm being

very dilution sensitive with this round

and it's often very early rounds and

they'll do 5% maybe 10% dilution on a

seed round or a preede round where it

used to be 15 20

>> that's hard for me as a fund

>> what do you advise founders on dilution

sensitivity from your lessons and

observations I

>> I think it's it's nonsense I think um

they shouldn't do something stupid like

sell their company to sell 50% of their

company to a Midwest angel for like 100k

like you see with some of these Shark

Tank deals. But at the same time, the

number one thing I say to especially

these young founders I back is either it

succeeds or it doesn't. If it succeeds,

at a minimum, you're worth hundreds of

millions or billions. Um you're on the

cover of magazines. You it's change is

lifechanging. If it fails, you're

nothing. So it's it's best to if if if

taking that extra money can reduce the

chance of failure by even 5%. The kind

of expected value is infinity in terms

of life improvement. 5% of infinity you

should still do it.

>> For you as an investor dilution is real.

I mean like we're seeing on you know

anthropic I think series A round is a

92% dilution. Astonishing never seen

such levels of dilution. For you as an

investor with subsequent rounds do you

do reserves? Do you do them from the

fund? How do you think about that?

>> So, um I'm on my fourth fund. My first

three funds I did do reserves and I I

did some great reserve investments. Like

for example, I did a very hummingbird

style investment. I put 15% of my third

fund in owner at the series A which um

that fund has micro one lots of other

good things. So that would be a very

good fund because of that reserve

investment and also because of these

preeds.

>> You just let's pause on that. You put

15% into owner. 15% for people know is

an extraordinary large. which is almost

normally I would never go above 7%. So

you're doing 15. What did you see that

gave you the unwavering conviction to

put 15% in it?

>> So in the private markets there's no

insider information and um speaking

generally all of these founders are like

my my good friends. I speak to them

sometimes at 2 a.m. And so if you can

build that depth of relationship and

conviction it's it's it's it's a kind of

um adverse kind of positive selection.

um through that kind of relationship

that you can build with the founders,

you can tell if it's real because I'm

not a professional investor and I'm sure

you'll ask me about being a founder

versus investor. I think people consider

me as a founder and that's a unique

edge. Um anyway going back to your

question so that was a good investment

but I realized the opportunity cost of

that investment given the where I come

in it could be 20 to 30 preeds and the

value creation at the preede is so high

that I decided for my fourth fund no

reserves just everything up front brower

hotel let's go

>> brower hotel let's go um along the way

you said hey um you'll be worth hundreds

of millions blah blah blah How do you

advise founders on the ability to take

secondaries off the table early? We're

seeing it more and more earlier and

earlier. How do you advise them?

>> I think that the people buying these

secondaries are shocks.

If if someone if someone um is emailing

you asking to buy anthropic shares, they

the value of anthropic is probably going

to go up. And the same is true with

these founders. And so I would say to

them um if you're being bombarded with

secondary office perhaps they have more

experience with the market than even you

do as a founder of your own business.

And so I think a lot of founders they've

regretted a lot of my friends they've

regretted taking secondaries um because

they've got one of these kingmaker firms

in and then the valuation has gone up 3x

in a few weeks. So why not do the

secondary at the higher price? Um, so I

would say if it's too much inbound, um,

there could be something that they have

within their investing experience that

as a founder, maybe it's their first

time business, they maybe shouldn't jump

to to sell too quickly.

>> Did you sell secondaries?

>> Uh, do not pay. We we haven't really had

to because of dividends, which is a

whole another thing.

>> It it is a whole another thing. Um, I

just wonder, do you think richer

investors make better investors? And my

my theory around this is like a Sequoia,

for example, is not worried about an LP

questioning their investment strategy.

They're not worried about losing a

company even. They're not going to get

fired for losing a $20 million check. A

firm that is more worried or needs the

money more is going to worry about their

next fund, is going to worry about

losing and they don't have that upside

maximization.

>> Yeah. Um I'll give you a classic example

of how this impacts decision- making

which is safes versus priced rounds. So

um as a preede and seed investor um the

kind of B minus VC investors will want

to get that um next round on a priced

basis to get that gap markup. Um but um

if you actually care about the economics

and making money in the long term, you

want the next round on a safe because

safes don't dilute other safes. And so I

was actually talking to a seed investor

about this and I said to them, why don't

everyone just encourage more safes?

Safes are beneficial for founders

because they can raise more quickly and

all of this stuff. And they said no, but

they want to get the price round to the

raise the next fund. So I think this

raising the next fund nonsense really

does impact decision-m and actually

directly hurts founders with some of

these things.

>> Does the safe on safe onsafe not

actually ultimately hurt the founder

when it ultimately converts and it's

kind of like a delayed debt that you

ultimately have to cash in your chips

for? Well, the VCs always win. If they

do a price round, some some of them are

shocks. They say, "We want a 15% option

pool at the seed." So, safe, you don't

you can just pursue the existing option

pool and wait till the company becomes

more valuable.

>> I love that.

>> I'm biased.

>> VCs are sharks. I love that. Um, it's a

good title. Um, what other ways do you

advise founders to just be mindful of a

shark-like mentality towards VCs or from

VCs?

So I say to the young founders, the VCs

will say anything to get you to sign

right there and then. Anything. They'll

say I they so they'll reverse engineer

what the founder is looking for and say,

"Oh, I'm friends. I'm buddies with that

uh guy. Um I know someone at that

company. We're golf buddies. I can get

him to be a customer like right now. I

can introduce you to so many customers."

And they just say exactly what the

founders want to hear. And these poor

young founders, they're so

impressionable. Sometimes they sign the

safe on the spot and afterwards of

course it never materializes. They never

get that uh customer that they were

wanting because it turns out they

weren't as close golf buddies as the

person who made it out. So I say to

founders, do not sign on the spot. And

going back to my offers, I don't make

them sign on the spot. It's just too

much. Especially for these young

founders. I say you have the night to

think about it. I think decisiveness is

a key quality. So I do want to know by

the next morning. If not, it's done. But

they can't sign on the spot. I freaking

hate this. I'm running a process. I'm

I'm get collecting term sheets and I'll

let you know by Friday evening. The same

with everyone else. That is an awful

feeling. Way to do business to

>> either a hell yes or a hell no.

>> So, what would you genuinely I'm asking

your advice. What would you say to me I

should do when a founder says, "We're

collecting term sheets. We so appreciate

your belief in us, but we'll let you

know on Friday."

>> I say it's probably not a fit,

especially given my investing model. and

I want to so many ways to win. They I'm

sure that they might win or not, but

that's not a fit for me. I say good

luck.

>> So when you advise founders on that

selection process and they say I've got

a term sheet, blah blah blah, you guys

then sit over dinner and talk about it,

you won't run a process.

>> Yeah. No, I definitely not. If they're

running a process, it's too I want to

help them with that process. And I'm

very collaborative. I typically take

five to seven percent um and um I will I

say to them and I really think this is

proven true. I will save them that over

the life of the company. Even if they

have the most top tier people, I will

save them that through various founder

tactics. I I'm helping founders at 2

a.m. even raise their series C. It never

ends. I I I will make it worth it for

them. It's not like I'm trying to get

like 25% of these founders.

>> How do you advise them on price

optimization?

Um I I I tell them the market sets the

price and is price optimization is a

function of how many offers you have. So

you should never say what price you

want. And of course these they ignore my

advice and then the they get hit with oh

I'm passed because the price is too high

when the VC would probably would have

given them an offer and that would have

actually helped improve the price.

>> Can I ask you mentioned the dividend

element there of do not pay? Do not pay

is such a fascinating business

especially in the way that you've run

it. Can you explain to me how many

people are at do not pay? Why it's not

the traditional venture business that

bluntly loses money is relying on the

next round desperately? Just tell me

about that before I dive into it.

>> So, do not pay in some ways is um a

media business. Um we get 90% plus of

our customers organically um through

SEO, earned media like viral stories and

referrals. Um, and so we're not playing

the meta spend 100K a month on Meta game

that some other founders are playing.

And that is a double-edged sword. It has

positives and negatives. The positives

are it's extremely efficient and

profitable. Um, we have hundreds of

thousands of customers and it's only a

team of 11 people and um it's automated,

fully automated, so it's like very

efficient. The downside is we can't just

decide to dump a million into Meta Ads

and and grow by X%. And so the organic

um is kind of a ceiling. Another ceiling

is that coming from the UK, I've always

wanted to build a real business. Um we

had a competitor in the 2021 peak, they

were spending like $300 to acquire a

customer worth $150. Um and they

actually managed to sell at the peak of

the market. Good for them. I can't play

these games. I think that the best thing

um is to actually build a real business.

>> Good for them indeed. Do you worry with

the reliance on SEO with that golden

goose potentially being threatened? You

I had the CEO of Monday.com Aran on the

show and he said I think that their SEO

performance had gone down by 15% which

doesn't sound huge but at the scale of

monday.com it's it's you know hund00

million plus. Do you worry about SEO

being potentially damaged?

>> So GEO uh the AI version of SEO is is

rising uh in parallel. Um so we're not

too worried that people always rely on

some acquisition channel. Um,

fortunately for us, we haven't yet seen

it because, um, one of my life

philosophies is, um, the world doesn't

move at the pace of San Francisco. Um, a

lot of our customers are from middle

America and actually the UK. Um, they're

not they're still I mean, Google is

still huge, so it'll take a while, but

we are definitely insuring ourselves

with lots of GEO related strategy. Was

there a moment where you're like, we're

not a traditional VC company and I'm not

going to go down this route of like

raise raise headcount ra?

>> I think from the very beginning we were

always I mean the the clue is in the

name like do not pay. We we I joke it's

not just a company, it's a lifestyle.

I'm like Mr. Do not pay. Um and and so

we never wanted to do anything stupid.

And when I was hiring my friends, um, I

was always hiring the people who were

like browsing Reddit at 2 a.m. trying to

save money. Um, and so we're really in

it for the do not pay. And so we we

never kind of I I think I think this is

controversial. I think founders who burn

all the money, I I think that's not

cool. I think it's kind of lame because

why did they run out of money? Why

didn't they just cut the burn? Um, and

obviously some founders fail because of

some like black swan event and I can

understand that they take a massive

swing and there's like back like some

huge litigation or something patent

thing that Apple crushes them or

something that makes sense. But if they

just run out of the money, that's not

cool. That's kind of lame. They should

have just managed their burn better.

>> I totally agree with you. Um, okay. And

so the dividends, how does that work?

Basically, we're so profitable, we just

dividend now. We have more money than

we've raised and we're actually doing

another dividend next month. So, it's

like quarterly. Um, yeah, we're planning

on doing it now quarterly. Um, and um,

the investors I think it works for us

because the investors got in at such low

prices. We we never we didn't raise 100

million. We could have at the peak of

2021.

>> You raised 22.

>> Yeah. Which when I was uh fresh off the

boat from the UK, dropping out of

college, that seemed like the world of

money. But in the grand scheme of

things, given the scale of our business,

it's not actually that much money.

>> Do you worry that to your VCs, you're

not a success? And I don't mean that

badly, but just like you know as well as

I do, we look for fund returners. You're

not going to dividend your way to a fund

return.

>> I think that we

are going to take some big swings this

year. Um we are looking to kind of roll

up some different consumer things within

do not pay. And so we we're still I'm

still 10 years in still extremely

excited and ambitious and who knows.

>> You said there about hiring friends.

>> Yeah.

>> How do you advise founders on how to

build the best first five to 10 people?

>> I think business school is actually a

counter signal. Um I'm not going to be

very popular among the business school

people, but

>> I agree 100%.

>> Um

>> my favorite is when it's like in the

LinkedIn title though.

>> Yeah. So stay away from the strategy

highest. strategy is a meaningless hire

because um what does that even mean?

Everything is strategic. Um I think

connection to the problem is really

important similar to investing. Um like

do not pay employees. They they're

scaling themselves. Um like we had one

do not pay employee. He would go to

Target the US um retailer and he'd buy

prepaid Visa gift cards so that whenever

he would sign up for a treat free trial

they wouldn't be linked to his direct

debit real payment details one of your

products.

>> Yeah that like that would make a great

product. Um so we're trying to hire

people to scale themselves. Um my very

first hire at do not pay obviously I

built the thing myself. The design

looked terrible. It it gave me a

headache. It was like a moving uh road

background. Um and you would look at it

and it give our early users headaches.

We would give we get complaints that

people would get headaches from the

design. So the first hire for me was a

designer. So you need to like fill like

immediately solve these bottlenecks

quickly.

>> I absolutely love that one. What role

does not exist today that you think will

be very commonplace within 5 years?

custom evals is like um e evval. So

everyone is very excited about

foundation models like claw code and all

all of this stuff but I think the future

of AI will actually be organization

specific specifically around the data

that do not pay has where we're doing

evals on our own data. So I think custom

eval will be really big.

>> Do you worry about the concentration of

value to very few numbers of companies?

If you look at where markets think

valuations will go and where companies

will go, it looks more and more like

eight companies will take $5 trillion

plus of market cap and actually could

eat up large parts of the software

market in some respects. I think

there'll be a rise of um medium-siz

businesses like almost do not pays that

fill the niche and then these massive

companies. the the middle where there's

just like a large company, I think they

have to be very worried. I I I was

saying to a friend, for every anthropic

employee who's making 20 to 100 million,

there's 7,000 of like block employees

being laid off. Um and and so I think

there is a huge transfer going on

between the extremely large companies

and the quite large companies, but I

think the smaller ones will still have a

role. Do you worry about what happens to

San Francisco when you have I think it

was announced this morning 600 Open AAI

employees that took out an average of 11

million. I I think there's a lot of pain

happening in San Francisco at the same

time. I think a lot of meta employees

are being laid off. A lot of big tech

employees are being laid off. Um I think

there's like two types of goods. There's

like absolute goods like a standard

apartment or some food and things like

that. And I think that the price of that

will stay the same. But then there's

like positional goods. There's only like

eight seats in Delta First class.

There's only eight houses where they

want to buy like on the best road in San

Francisco. And the positional goods will

just go off the charts. So if you're

someone who values your success in life

by attaining positional goods, like one

of the eight houses that everyone wants

to be in, good luck.

>> You I I I spoke to so many of the

founders that you work with. Um most of

them said about buying land as something

that we should talk about which I was

not expecting by any when the I think

Grappile said it we talking I was like

what cuz I type I write take notes and I

was like what buy he buys land why do

you buy land Josh? Um so um in terms of

like my diversification retirement um I

take all the money I make and I buy

land. Um I don't put in the stock

market. Um I don't um buy I don't keep

it in cash because I think that the

dollar is it doesn't have a good future.

Don't buy bonds or anything like that

and I buy land. Um it could be being

British. Uh there's a famous quote from

Winston Churchill. Land is the only

scarce resource. And I think I'm

diversifying on two outcomes. The first

outcome is that AI creates like a um

posteconomic world where it replaces all

big companies and the only thing that's

that's scarce that's left is land. And

so AI doing extremely well, land can

still be valuable. And then the second

is maybe maybe it's all a bubble and all

of tech goes to zero, but land will

still be valuable. The land I buy is in

Nevada. um far away from the tech

bubble. Um and um it has like nail

salons and all sorts of things. There's

passive um investment and um it's just

diversification for like the AI the

various outcomes that will happen with

AI.

>> Why Nevada?

>> Um I think there's like secular trends

regarding it being very uh pro business

um and population growth. Um in fact,

there's only three things are true in

Nevada. Um there's no state income tax.

there's very low property tax um and um

it has a rising population um and that

is not true in my opinion anywhere else

in the US um so if you compare it to

Florida for example there is no state

income tax but very high property tax

>> do you worry about the rising hatred

towards the super rich in the US

>> I think that it's it's not sustainable

you can't have 50,000 people with all

the money I I think actually there could

be a revolution in our lifetime

something has to age.

>> It's my biggest worry actually today.

You see it in the UK too. We all sit

here in the bubble of London. You know,

33% of children say in the UK grow up in

poverty. It's an astonishing fact. What

What do you think happens in that

respect? Is that just social revolution

and unrest? I mean,

>> I'm an optimist. I think that um the

jobs that will exist in 20 years, we

couldn't even imagine what jobs would

exist. Um like AI data cleaning, like

these companies like Merore, Micro One,

those jobs didn't even exist five years

ago. five years ago and I think

similarly AI will create a huge number

of jobs maybe um working in air

conditioning in data centers and all of

that stuff. Um the problem is there'll

be a shift in the economy and people

will have to transition and I think the

government will have to get a lot better

at helping people transition.

>> Has Trump been better for business for

you?