SPEAKER_00 0:04

Today on Scaling with Clarity, I'm joined by Shane Wilson, venture partner at Citacapital, where he focuses on the early stage B2B, AI, Deep Tech, and robotics. Shane brings experience across enterprise strategy, workforce technology, emerging technology commercialization, and venture investing. Our conversation today is not about just chasing the latest feature. It is indeed about a more fundamental question when software begins performing the work, not just simply helping the people that perform the work. How must found us retain customer value, pricing, defensibility, and the path to scale? Welcome to scaling with clarity, uh Shane.

SPEAKER_02 0:47

Maxim. Thanks so much for having me.

SPEAKER_00 0:50

It's my pleasure to have you. Looking forward to the conversation. So why don't we just take a big uh a bit of a step back? And how did you come to doing this? And what exactly is it you're doing? I mean, I read out the intro, provide some sense of what you're focusing on, but why don't you give us the the Shane version?

SPEAKER_02 1:10

Yeah, so uh venture partner at Citic Capital. I have one foot in the investing world, one foot in the operating world every day. Uh we are an early stage VC fund. We tend to invest in uh deep tech, robotics, P2P AI. Um C Series A. So of late, my uh experience or really kind of my focus has just been that split between, you know, not just finding the next companies, but really helping a lot of our companies that we might have invested in pre-2023. Um, really how do they kind of adapt and come up to speed to be proper AI and agenda companies? Now, how did I get here? Um, my background starts kind of winds its way through go-to-market for various startups in the New York City market. Um to this after undergrad, really learned everything I could about not just how to close deals, but really how to kind of think about the art of selling and the craft of selling, how marketing, sales, and products work together with early stage companies. Did that for eight or nine years. Um, and then I went to business school where I said, I'm gonna figure out how companies get funded, spend some time in the classroom thinking about that, do some internships along the way. And after I graduated on the East Coast, came out of the West Coast and linked up with sit up. So it's a uh I'm a business developer, um, you know, who's kind of transitioned to a venture investor.

SPEAKER_00 2:32

Makes sense. And I mean ventures best to is very much around business development, be it on the LP site or scouting for ventures to invest.

SPEAKER_02 2:41

Everybody's selling something, we're all part of the food team.

SPEAKER_00 2:45

Are you originally from the East Coast?

SPEAKER_02 2:47

I am. I grew up in New Jersey, lived in Manhattan for 10 years. Okay, do you miss it? Uh, I do, um, especially this time of year. So I'm out in San Francisco now, and like they kind of keep this thing a secret until you move out here. Like June and July are the coldest months of the year. So we were back on the East Coast for a wedding this weekend, and uh it was it was nice to like sweat a little bit. Now, everybody in the East Coast is like, ah, it's not that bad. You know, the summer's winter, but uh yeah, I guess I miss a little bit. I I obviously miss a lot of the people um the most, but um here and there, you know, pick and choose my seasons. I don't miss the east coast very much in February.

SPEAKER_00 3:25

Yeah, yeah, yeah. No, I get it. I get it. I live in Calvary and it is cold in the winter. Um, the summers are phenomenal, but I mean, right now we just I was out um driving my daughter to um a restaurant and uh it's smoky as hell. Um just these fire. I mean, Canada is so massive that we're talking like a thousand kilometers away, but the smoke blows over, right? So it's uh it's it's it's not fun. And it it seems like increasingly we have more and more fires in the summer, but yeah.

SPEAKER_01 4:00

Let's take a look. What's your what's your AQI today? AQI.

SPEAKER_00 4:05

I would say it's probably seven or eight. The quality index is not good at the moment. You can really smell it.

SPEAKER_02 4:13

Yeah, it looks like you're really 191. Yeah, that's that's pretty gnarly uh for the US AQI index. I um I spent some time in India in in January of 2024, and Maxim I'll tell you, man, you want to see some bad hair. It was like AQI 500, it was nothing dark in the middle of the day, you like walk outside, your eyes are watering, and for like the people of Delhi, it's just another winter day. So 191's not good, but you know, thank thank thank your lucky stars. It's only every once in a while, and it's uh you know just a 191.

SPEAKER_00 4:52

Yeah, no, I I hear our summers are usually pretty phenomenal. Um, and there's no industry. I mean, there's industry in terms of like oil and gas, but for the most part, all most oil and gas assets are in situ, so you're pumping steam and injecting oil, uh extracting oil. So there isn't much to see on the surface. There's no pollution or manufacturing, so it's pretty good. But I wanted to double-click on your focus. Um, why did your focus in terms of both investing and working with companies? I mean, typically an investor works with companies anyways, but kind of like he yours seem to be more evenly balanced.

SPEAKER_02 5:31

Yeah, yeah. Um, I mean, it's just it's a little bit of kind of what the what the fund needed right now. Um, you know, there's no secret that valuations are incredibly high. Um, and so the bar when valuations are this high, when we find an investment is just super, super up there. We need to find um, you know, if we're gonna exit at such a high multiple, we it it takes a long time to find a really great deal on the market right now. And I don't think enough VCs are really admitting that. Um, the short answer is like, you know, if there's not that many things that are going to really clear the bar, where can you add additional leverage? And the truth is, is like, you know, we've got a uh a bunch of companies that are good companies in our portfolio that can use a little help and a little bit more help with what VCs say. You know, I think every VC will say value add, we're gonna we're gonna pitch in, we're gonna help. A lot of that is just like, oh, well, you suck, do this. Well, it's not really helpful. Like, you know, you have to actually jump down, help implement a new system, work through some customer interviews, um to solve some some people problems that maybe popping up. So uh I would say every VC says they do this. The next question is, well, what are you actually doing? And that's where you can kind of separate who's operational and who's not.

SPEAKER_00 6:53

Makes sense. Um, what do you what do you choose to focus on on this investment is in terms of AI, deep tech, robotics? Like, I mean, if the valuations are high, do you still feel like you can find reasonable valuations and and put companies to invest in?

SPEAKER_02 7:11

Yeah, so I mean, like the you know, reasonable valuations, you know, like just to kind of take a moment I'm closing out some uh um closing out some some of my my bots, they're taking up too much juice. Can you hear me?

SPEAKER_00 7:27

I can hear you now.

SPEAKER_02 7:29

Okay, good. Um, so what are we interested in? Um lost maxim. Um anyway, what are we interested in? What's working right now? Um the short answer is that valuations are incredibly high. And a lot of this is, you know, I think subject to correction when our frontier models finally actually get to the market. And and what is kind of really strange about the private markets today that I think is unprecedented is just how valuable these companies are becoming without the scrutiny of public investors. We don't have proper governance, we're not able to actually look at the numbers. And so, you know, we talk about vibe coding. Well, it's like five valuations that are happening, and the biggest ones are open AI and anthropic. And I think that we can, when we start to see in the numbers and we start to really kind of dig into this, we have an army of Wall Street analysts looking at exactly how profitable these companies are. I think there's gonna be a pretty big haircut, and then I think that haircut is gonna flow downhill. Um, and then there could be some real structural waddle in the global economy as we've kind of priced in the the amazing promise of AI, and we just still haven't yet seen it. Now, I say all those things, um, you know, that's like uh, you know, just kind of one way to think in the market as an investor, but I'm still fundamentally bullish on AI. And so where do you look for the excitement, especially as an early stage investor in a relatively smaller fund? And we're investing in a hundred million dollar fund. We are not uh, you know, a 16Z or foyer right now. Vertical AI is just scratching a surface maximum, and it's gonna be it's gonna be a big, big trend. And you know, the truth is if we can go from uh a software that kind of was a tool that helped to something that can actually solve a full solution and deliver business value, that's a good product, you know. Like I like those products, you have to enter early enough because it's unlikely that they're going to get to a mega mega tam. But if you build a good vertical tool for a billion-dollar market, you win 10 10 of that market and you keep an eye on your costs, I love that.

SPEAKER_00 9:43

Yes, for sure. Sure. And so I specifically look in for companies that they're selling that that value the business outcomes rather than like the traditional SaaS companies that were that were that were selling seats and licenses.

SPEAKER_02 9:59

Yeah, so I'm I am like a big nag on the seats and licenses moving forward because it was an easy thing to measure and it was something that was pretty comfortable for accounting to underwrite. And then also it became very easy for investors um to just kind of uh you know compile in based off revenue multiples and ARR, etc. Um, listen, I love outcomes because it is so easier for a buyer to say yes, it takes 12 months, six months, whatever it may be, for your enterprise software to get sold. You need to wait for the budget cycle, you need to go around and get a roof of polls. But if I can say, Maxim, what if I delivered your podcast 500 new subscribers? What would that be worth to you? You'd say, Well, I don't have to pay anything until they come out. No, Maxim, you just you just pay me a piece once or once a group. It's very easy for businesses to do that. So I think that that really changes um some of the the growth math that happens early in a company's journey. We don't have to wait for multiple cycles and prove itself. We can just come in and say, trust me, and if I deliver, you'll pay me. Uh that's really exciting. It's a little scary from an accounting perspective because we just have like a ton of variability in our cash flows and our business model. Um, but I think that you know, we can't just be, you know, we can't let the accountants slow down what could be like some really exciting business growth at the edge of those businesses. So that stuff's super exciting. Um, and then, you know, where can some durable advantage be found? You know, it's really hard is building real products, um, supply chains, uh, you know, especially if these become quite complex things like satellites, um, you know, systems that are going to kind of help us uh you know, kind of grow the space economy, I think are super interesting because it's like literally unbounded potential. Um, not everyone can vibe code a rocket. Um, so there's a little bit more defensibility in there, too. So, you know, it's kind of a a little all over the place when you go from a B2B AI workflow type company to someone who's maybe making satellites 20x cheaper than the next guy, but that's kind of what's fun about being a venture investor, is you just have to kind of pop into different ideas and context switch really fast.

SPEAKER_00 12:16

No, I completely agree with you. Um and uh it's amazing to see like we talked to we've we've talked to quite a few uh deep tech investors over the last uh probably 60 days. Um, and it it's interesting to see what's happening in the space, both Terra and as well as space. Um, quite a bit of excitement and momentum. And I think that the to your point, you can't even put a tan to it. Like you just at the moment, it's just really even hard to come up with a number for this as to what it could be.

SPEAKER_02 12:54

Yeah, it's a fool's errand. I think that you just have to, you know, one, take a little bit of a leap of faith right now. Um, obviously, SpaceX, you know, having the IPO day that it had, it's huge. It's since come back down to Earth a little bit, but I think it generally shows that there is market excitement around space. Um, you know, I think as a venture investor, what's pretty interesting about the sector at the moment is it tends to be quite tightly congregated, you know, and you have SpaceX alum and you meet one and then they can introduce you to the next one. So it feels you know, it's it's probably a little bit bigger than like the early days of semiconductors out here in the valley, but it's not so big that it's impossible to wrap your arms around it and learn. So um, space is a pretty cool one.

SPEAKER_00 13:40

Yeah. Um, what at the back track a little bit around the outcome-based pricing? Uh, and full disclosure, I'm a CPA. Um, so I know it's probably well. Um curious. Um, I mean, accountants from a revenue recognition perspective, which kind of the standard, like we we like um tangible things. If you're a company that's that sells outcome-based, um that that has outcome-based pricing, how do you determine what is the the value of this outcome? And to your point, I mean, to give the example wrong for subscribers to a podcast, but my valuation may be different than somebody else that that's doing the equivalent, the same thing.

SPEAKER_02 14:29

Yeah, yeah. Um, so it's a case-by-case basis. Your outcome-based price really needs to be negotiated based on the business, what you're doing, and the impact that you're having. And so I would say as a first order, if you're going to be outcomes-based pricing, do not publish it on your website. Uh, you know, chances are you could you're going to be, you know, overpricing some people in your market and underpricing some others where you're leaving money on the table. Um, how do you make it more predictable, more bankable, uh, more acceptable to CPAs of the world? Um, there really is like a spectrum to this. And I'm I'm forgetting uh who was on the podcast, but it was a Sequoia podcast I listened to a couple months back, and they were talking about different pricing models within the AI market. And kind of the base base level of the spectrum would be like outcome or excuse me, uh usage-based pricing. You know, like how many tokens did you use charge of margin on top of that? Well, that's pretty terrible because the margin, you know, that the token price is changing and it's collapsing quite rapidly. And you're, you know, maybe you're making two cents on every token, but if a token drops you know below a cent, it it's you you're basically exposing yourself to the frontier model risk within your business model by demonstrating how much they get and how much you get. You know, are you 60? Are you 20? So I hate that. Um, next up would be like an outcomes-based thing where it'd say, Maxim, if I do this, how much is it worth to you? Um this puts a lot of risk on me as the operator. And I think that this is something that could be attractive if you're like a stage zero company and you're just trying to get some dollars in your door, maybe do that. Um, but it's only gonna work for stuff like sales and marketing and um you know, for many other big value chains, we don't really know exactly how to price time saving or filming operational efficiency. Um, I think where this gets interesting and where you can really command a consistent repeatable revenue for your product, so when you can price it against labor, something that a lot of people are kind of afraid to talk about because we don't want to talk about AI as a job taker. But the truth is, is like you pay $70,000 for this person to do this job for you. And if I can do 80% of it, well, what's 0.8 times 70k? That's that's what a lot of these products really have on the table for them. And you know, the fear aside and the the pitchforks and torches that people are coming after AI for, like, the truth is like you're probably still gonna have that $70,000 person, but now they can do the equivalent of like five times of that. Um, and so if you're really kind of a forward-thinking operator, that should be super attractive. So I think the real right now, the best companies are able to price around labor replacement economics. It's more durable, it's a line item that companies already have, and it's an opportunity where I can take something that feels really good for my business, and I can still give you some savings that feel really great for yours.

SPEAKER_00 17:37

I just want to add a bit of context to this. Um, I started off my career with EY and Deloitte. I spent 13 years working in big four firms consulting clients, and this is no different than when we're doing optimization work when quantifying it's point seven of an FTE in terms of driving uh efficiencies. And so it's um from my perspective, it's it's it's it's as old as as time. Um the the one thing that we're doing similar work. Uh, when we're working with companies, one thing that companies fail to appreciate um or or the media maybe so uh sensationalizing. So to example, point eight of an FT. Um yes, maybe it's displacing this point F of an FT, but but what's happened is that that FT is not necessarily in some cases maybe may disappear, but that workload, um it's either taken by uh machines or the whatever cannot is replaced, uh is moved to other people or to this person. And the the companies that what they what they do is wherever possible, because of the organizational institutional knowledge that somebody has developed, they are uh consciously trying to upskill the person to take on a different role. So this is not a display. If possible, it's upskill that person to do high-level tasks. And the more clerical or more structured tasks are done by machines. Um, but yes, uh technically you're displacing point F on FTE with technology.

SPEAKER_02 19:22

And listen, you can sit and you can cry and try and protect, you know, like protect that you know job that you do today. But I mean, this you know, if we're sitting out in Silicon Valley right now, this march feels pretty inevitable. The winner's move is to accept the upskilling, move up or and do more. So for anybody that is kind of you know taking any time to spill ink on we need to stop and slow down AI, chances are you're not powerful enough to do it and you're and you're gonna be unsuccessful. The real, I think, smart move with your career is figure out how to become, you know, if you're a software engineer, become the 10x engineer. If you're a business fan, 10x business. So scary, uncomfortable, you know, the amount of people who don't want to learn is most of them, but don't be one of those people. And and you know, I'm yeah, as we'd say, as we'd say out here, like AI pill. I want to be the 10x investor, I want to be the 10x operator. Um, I think that's just kind of the natural way of the world.

SPEAKER_00 20:23

Uh makes sense. Uh, I completely agree with you. I mean, like I'm a CPA by by designation, a lot of my background experience using financing consulting, but over the last 18 months, I've done a ton of coding, building, building products. Um, and and not because I want to build product to sell to others. I built products because I that unlocked 10x capacity, that unlocked 10 times efficiency. But more importantly, it drive it it drove quality and outcomes. Because what if we're doing fundraising, you're targeting the right investors, you're building relationships better, like you're uh accelerating the or compressing the timeline in terms of raising the capital. And it's that was the purpose of it. It's not like, oh, I want to build another CRM or oh, I want to build another email client. Um it's interesting, it's very easy. What have you built? What are you proud of? Um, well, we built our own capital intelligence platform, um, essentially that takes the entire life cycle from analyzing a company. Um, what are they good at? What are they not good at? Like my kind of consulting Brago and putting through a majority scale into like in each one of the dimensions from governance people, processing technology, kind of like are they venture backable? Like, do they have the right uh frameworks in place? Do they have the the right ingredients to go and raise money? Um, like the the equity story, the pitch tech, the financial models, like everything is just going to be enabled by technology, the matching to investors based on different criteria. Of check side job, like all of this is like pretty much automated using AI, and then 18,000 investors like map them up, and then instead of like blasting indiscriminately emails to to investors, like, okay, well, let's out of these 18,000, let's pick 20 that they're highly, highly aligned with what you're doing, and then let's treat it as if it's investor relations, build out the relationship with them because we find this to work better than oh, I'm gonna put the run a code reach out, the code email outreach campaign, and and and somebody's gonna write me a check. At least that's not our experience.

SPEAKER_01 22:38

Nice, nice.

SPEAKER_00 22:41

Yeah, so this is just one. I mean, we're building a mini RP for um a particular industry. In this case, it's alcohol. These I mean, you you live in the states, you live in California. It has a four-tier system, every state is different. Uh, you have GTB as well, like the governing body, but every state is different. So we're building a product because it is it's not like I can say, okay, I'm gonna go to Microsoft Dynamics, I'm gonna buy a product. It just doesn't exist. It's just because so okay, we're focusing on something like that, that that's niche. But speaking of this, like we'd love to get your perspective. How should founders and companies think about building a motor, building like this, like defensibility around the things that they that they're doing?

SPEAKER_02 23:26

Regulatory capture is a really smart, uh, smart parameter to build against. You know, if you're in uh you know alcohol, if you're in financial services, um you know, the regulation is a hard parameter that you need to build around. And historically, this has meant that developers move away from it. But if you lean into it and you start asking why can't people use the existing tools and you learn what's going on with the regulation, all of a sudden the bones of your solution start to come into focus. So that's one way you go into a space that's been too hard historically to do in the past, and you serve those people really well. Um, I think that now that building has largely become trivial, um, distribution and your customers is really like what everything comes down to. So, how can you um you know really kind of grow your customer base in a way that's novel compared to your competitors? Um, can you have stronger relationships with them such that they give you better data and information to build better products? Um, that's really big. Um, you know, do you have any channels? Are you a YouTuber or a podcaster where leads come to you? Um, those are really great, great things there. Um so I'd say, like, look, regulatory capture is a good one. Uh, focusing on your distribution is another one. And then, you know, like I spent some time at Amazon and like, you know, they basically make everyone get a tattoo that says customer obsession, not just distribution and how many customers you can talk to, but like really getting in their workflows, um, you know, solving that problem that is so specific and so unique. Right now, if you can really do that for an underserved segment, your distribution, your product market fit, they're gonna rip pretty quickly because you solved one of those big problems that people have just overlooked or ignored for many years. Um, yeah, so those are a couple things. Uh, you know, what else can you do? You can add a physical component to your product, um, control supply chains, uh, you know, building products, um, you know, efficiently and safely. These are really hard things a lot of people uh you know swerve away from. Um and then you know, one that is kind of uh I've seen this happen a lot on companies that I'm operating in is like stop offboarding all your thinking AI. There's a lot of these companies where it's like, yeah, we just you know, like we we offboarded the the thinking part of what we should do to the model, and the model told us this is good. Well, guess what? The model tells everybody that's good. So understand like you know, don't you use it as a research tool, use it to dig deeper, use it to build a market map. But like you can't cede creative control to your model yet. Um, so that's that's it, that's a mix mix of ideas there, but those are all all things I probably touched on in the last week and probably have every week for the last six months.

SPEAKER_00 26:26

Yeah, I couldn't agree more. And and and the one that you talked about with you things you maybe call it out is that proprietary data, like can you get something that like just makes you use so unique that like only you have this? Um, I mean the the perfect example I have is like Calgary is is is like or border where I live is like the equivalent of Texas for the United States or oil and gas. And so you look at companies, the the service companies like Schlumberger now, SLB or other service companies, they have outperformed the integrated oil and gas companies, something like 10 to 1. And the reason is is that they were they were performing work services for the integrated companies, but requiring massive amounts of data. Well, guess what? If I have the data, now I have IP and value that I can sell. Uh so just kind of like uh an example. And this was this was studied by University of Adelaide, like profession in terms of like this actual study that supports this. This is not me just coming up with some random statistics.

SPEAKER_02 27:27

Um it's also you know, we're paying such crazy premiums for AI right now. There are great fundamental businesses out there that you can still be investing in. So one of the deals that I love up late is uh Stripe moving to acquire PayPal. They're paying like uh, you know, the the offer right now is like less than one X uh revenue. Um PayPal like comes with a significant amount of infrastructure, it's like one of the best brands that the e-commerce space has ever made. Um, I feel like the people at Stripe are demonstrating why the people at Stripe they're really freaking smart. When everyone is getting excited about the latest uh you know, frontier model that is like you know, $100 billion and has no hope of making money in the next year. There's good teams out there. Like people have been running good companies for long before AI. They are good, they can be very good investments if they're good at well operated and they they just kind of execute on an advantage, like Michelin Bruce.

SPEAKER_00 28:26

I couldn't agree more. Um in um in our system, we get quite a few inquiries of like, oh, I'm a Facebook engineer. Can I sign up uh and just be on the deal flow uh newsletter? Um but private equity in particular, they're aggressively hunting for deals in a moment. And and and so if they if if you have a deal to give them that's like one X revenue and the quality of earnings is high, uh, you can close that deal within like 30 days.

SPEAKER_02 28:53

Yeah, and I mean look, they're they're they're they need a they need a you know, AI has really crushed a lot of these software investments they made. Um where they were expecting to just have amazing multiples forever, and now all of a sudden they're totally getting undercut. Um, so you got a 1x deal. Uh there's a lot of people who buy 1x right now.

SPEAKER_00 29:13

For sure. I mean, like um that kind of reminds me of the recent IPO of Bending Spoon, the Italian company was buying like this software assets that maybe have waned, um, but they still have a lot of value.

SPEAKER_02 29:26

The distribution part is big. I think that this is something that we can all like we should all start thinking critically about like, you know, hey, maybe the market has moved on from your product, but you have a list of customers who pick up the phone when you call them. And now that everyone has a bot sending cold outreach for them, you can't email those customers, you can't link in those customers anymore. So, like, hey, you know, think of what you do have. Um, buying distribution, I think we're gonna see a lot more deals like this.

SPEAKER_00 29:58

Yeah, okay, agreed. And uh people underestimate how hard it is to build distribution and how long does it take? It always takes longer and it's always harder than you think it is. It's true, man.

SPEAKER_02 30:12

It really is. I mean, you know, I remember back when when selling was my full-time job, you know, I I was like 2015, I figured out how to do mail merge, you know, and that felt like really tech, really tech forward. And like 13 positive response rate, like that was unheard of, you know. Now that is unheard of. But if you could just figure out how to run a mail merge back in 2015, like you could fill your pipeline really well. Um now Gmail is so good, you can't you can't get away with that stuff.

SPEAKER_00 30:45

Yeah. No, not at all, not at all. I you end up resorting to mail warming up services and deliverability of services and this and that, and AI personalization, and and but people are so attuned to to all of this that like it's not that hard for them to spot what is like a real human on the other end.

SPEAKER_02 31:10

I'll tell you what drives me the most nuts is when I get an AI uh cold call. Like I understand like how from a you know, if you're a great engineer and you're looking at voice and all the opportunities and you know how effective calls are as a channel, but like when we use AI to like obviate an opportunity to have a conversation, like do that. We don't do like we need to think about if it's taking away brainless, mindless work that nobody ever loved, game on, great, go for it. But the second it starts to disintermediate the connections between people, that's when I'm like out very quickly.

SPEAKER_00 31:49

Yeah, for sure. I I and especially after COVID, I think that uh people are just having this analog connection, uh, and yes, digital skills, but analog builds trust, and we are living in a trust economy. So anything that would give buyers or partners the reason to connect, the reason to buy is uh is far better than just deploying technology. Yeah, for sure. So is there a particular area with NAI that you are just super excited uh at the moment?

SPEAKER_02 32:34

I love knowledge graphs right now. I'm like all about them. Okay. Um so I think that we could put knowledge graphs at the root of many different processes and start kind of seeing the interconnections between things like tell me how my customers are connected, tell me how the watch, you know, the users on my uh your my subscribers are connected. Can we kind of find new rich information based off of this kind of uh architecture and structure? And then if we build one that is well enriched and it is novel, this feels like an asset that can have some long-term value, which is very hard to find in AI. Because if I build, say, a good knowledge graph that describes how companies are interrelated, well, in a headless architecture uh rollout, this means that you know now I can basically build agents that kind of skate along these rails that you've already built. And it starts to feel almost more like a visa for information or a mastercard for information if you build that knowledge graph really well. So I'd say that's kind of like one of the key boring things that I tend to be like, there's knowledge graph here. Tell me how it works. How are you enriching it? You know, what's the uh tool that you're using to build the graph itself? So um I geek out on knowledge graphs, I talk about them a lot right now.

SPEAKER_00 33:53

Um is there a company that that you have not invested in? You're not investing that you're really like that you can give us an example. The company that I'm not investing in that I wouldn't I don't want you to necessarily open up the Qono. I mean, if you want to give a company that you've invested, it's in the knowledge graph space by all means. Um but if you want to keep these in the lit, yeah.

SPEAKER_02 34:19

So I'm working on them right now, it would be distasteful to to disclose um in this setting. Um, you know, some things that I wouldn't invest in right now. Uh I mean, look, I'm just not in the right zip code to be investing in foundation models right now. You need multi-billion just in your in your uh your war chest to be able to do that. Um, I am super skeptical on a lot of these late stage SPVs. I think like what we're looking at is like a bigger idiot game, you know, rather than kind of liquidating uh deals in the public market like it's supposed to be done, where we share wealth with retirement funds and you know, general public investors get the opportunity to share in the bounty that gets created by innovation. We're just selling it to the next rich person who wants to get a fancy logo on their website. Um, I hate those deals. I really hate those deals because I think that you know, when we think about innovations, whether it's AI or fiber optics or the internet or semiconductors, um, you know, countries like the US and Canada are funding the early stages of innovation almost always, um, whether it's through university or research lab. And, you know, when Microsoft hit the market in 1985, you know, they were riding a wave of that early investment in computer science technology. When they hit the market, and John Q Public was able to buy stock in Microsoft when it's 10x to 100x to 1000x, society benefited from that. And as did the VCs who invested early in Microsoft. And guess what? They could have held on to that public equity for a long time in a fund like uh, I think what is Sequoia called, like the Eternal Fund or something. So um that's a big part of why the innovation economy works and why countries court high like high value, high growth um sectors. And they're violating that right now. And AI should be really careful because we are now butting up against physical constraints on the expansion of this technology, the energy that comes into it, the water that goes into it, communities are starting to say, no, I don't think so. Well, guess what? If I had stock in open AI and it was in my uh like, you know, basically my fiduciary interest to have that data center go in, I'm gonna vote very differently. But if all the wealth is concentrating in the small number of hands out here in the Bay Area, and we need communities in Nebraska to accept data centers, it's not fair that we're just taking from them and being extracted without letting them share in this wealth. And I think that that is something that um like the hubris uh that we kind of are are emanating in a lot of these AI companies dramatically needs to come in check. And if you look, what companies are really good at things like this? Amazon. If Amazon's gonna build a data, you know, if Amazon's gonna build a warehouse in your community, they're probably making an investment into the local school, they're probably working with the government. Um, you know, when I worked for Amazon for trust, our office was in uh Newark, New Jersey, which is a historically um low-income city, um, and they were doing a ton of out to bring the community around the brand. So like AI needs to get on that train. We do not just live in a bubble, we do not live in a vacuum, and especially when we need more compute, more energy, we need to be better citizens. And I think that um, you know, innovation economies intersection with the public investors is like that's kind of our our social contract here violent right now.

SPEAKER_00 38:07

For sure. I I I I couldn't agree more with you. Um one uh top that I would offer, um as as I mentioned, um CPA, uh, I've been the chief already executive. Um in three of the uh three publicly traded companies they work with, a common conversation almost on an annual basis was like should we try to go private? The compliance cost is really high. Completely that there has to be diligence in numbers that are being reported. If you go on a public market, I don't disagree. What I'm wondering is like, how do we make it easier and cheaper to go public? Because I think that if that if if that's a if if that roadblock is removed, we're gonna see more companies go public um sooner. Um, and two, you know, compliance cost doesn't matter what size company is, it starts at two million dollars. Um and so it's significant. So hence why companies are delaying this, uh, because you have to have publicly, like you know, we have to have one of the big four or another reputable firm, audit the financial statements, uh, produce the report you want to qualify on. So it it takes effort to get it up, but so I'm just kind of one of these other mechanism to to drive continuous assurance over the information that's being produced by a company. And especially with with AI, we should be able to produce information because we we've done this in corporate uh corporate social responsibility, HG reports. There's no reason why you can't do it. Um, and then figure out what is for blockchain or auto mechanism, a way to assure on the veracity and the and uh integrity of the numbers.

SPEAKER_02 40:03

You uh I think that you're definitely hitting on what's what's you know, a couple of things that are very wrong right now. It is too cumbersome for companies to go public. Compliance a total bear, and it does kind of, especially for a small to mid-sized company, dramatically hamper their ability to operate. Yes, yes, yes. Start with the IPO. If you start to understand how an IPO works, there is zero way to justify that. Zero way to justify that. I mean, it is fundamentally unfair. The way that we are letting bankers decide who gets to win and who doesn't, you know, you can be uh an early employee who's been, you know, blood, sweat, and tears to that company. You have a six-month lockup, but your banker could sell it the minute it hits. That's wrong. Like that is absolutely wrong. I don't care. I have plenty of banker friends who, you know, if they happen to listen to this, they're gonna, you know, gonna say, Oh, no, it's wrong. We can do better, it's an antiquated system. Um, one of my favorite, uh, favorite people to read and listen to is Bill Gurley. And I've heard Bill Gurley say multiple places. Like, if you put two, you know, computer science major and a finance major in a room in any college in America, they would come up with a better system than this. It'd probably look like a thing.

SPEAKER_00 41:20

I I don't disagree. I mean, like, I look at uh um in in that space, you have a company like Vanta that that produces what code service organization controls report, type one, type two. Um how do they do it? Control is a control, risk is risk. You have processed risk controls, right? You have the uh the assertions. If you can do it over technology control, you should be able to do it over financial controls, right? Uh just it it's a really nice parallel to that.

SPEAKER_02 41:57

Yeah, you know, uh Vanta's Vanta is a solid one. Don't have anything bad to say about Vanta, but there are some I forget what the company was. There was a YC company that was doing the SOC to compliance for like a radio YC company that just came out that they're just making it up. Like so um, yeah, look, we've got a I I do think like a hundred percent we can get so much better there. Um, but there's been a couple use cases of late where at least people were just sending over PDFs that said things were compliant when it wasn't really true.

SPEAKER_00 42:27

You can't do that. I mean, if even with technology, whatever is produced, it it is just impossible not to have human in the loop. Um because because things break. I mean, like if you build if you build software, you write code and two months later something may break. It's just just the reality of it.

SPEAKER_02 42:49

I think that you should be looking at human in the loop as a leverage opportunity. There are some things I would I would qualify disagree with you there. I think there are some things that you can just let the agent run and it gets better every day. But if you want to make something that's special, you're going to have to be involved enough to kind of use some creativity to think you know, one plus b actually creates something really amazing. Like, humans still do that. So if you back to the idea of like if you just off-board everything to the model, you're gonna get the same thing as everything else. So, like, yes, there's a lot that can be automated, but the really exciting solutions and the exciting businesses are made when people are at the center and are using these superpowers to build some really cool stuff.

SPEAKER_00 43:36

I I I I don't disagree. I mean, this this was a good qualification. Um just to continue on your thought process. Um, what decisions or work you should never uh outsource to ER? You talked about creativity, you talked about some of the strategy position, kind of like what are the things that uh you you kind of need this. like you know the the the synapses in the brain to fire to to you know to to to come up with something that wouldn't be wouldn't be a regurgitation of of an LM model.

SPEAKER_02 44:16

I mean I probably am I'm probably offboarding some things that I shouldn't frankly and I think we probably all are because we're a little bit lazy. Don't offboard okay so I I get really concerned about young kids and are they ever gonna actually learn how to write um so like find some time to write has always just been important to me like I'm a lover of both the spoken and written word and when I see m-dashes and it's not this it's that sentences I literally want to scream so I hope that we will preserve as a species some ability to write uh in the next probably in the next decade please God I hope that we can still write um so don't offboard all of your writing do a little bit of writing find things that you care about you know like I've obcoded uh like a uh compiler of all these different VC letters so that I can just kind of go and comment what I think on the side and at the end of the week it wraps it up into a blog post. That's like a good good use of like I'm still writing but I'm using AI to increase the leverage on yeah um you know I I was not that long ago I was in business school a little over a year um I think if you can really shut the screen and adopt some frameworks um I think that's like a place where you can have like a ton of leverage um as you're gonna go to do analysis with AI. So like you know don't just tell me if this is a good investment or not you know tell me about the Porter's five forces for this particular business. Like kind of knowing what you know get it gain gaining some structure to kind of you know it's great to use the model to flush that in but like if you can use the bones of someone else's thinking and really internalize and adopt it I think there's a ton of leverage for that. So you know like learn some of the old boring stuff uh you know if it's boring but it's hard and nobody wants to do it that's an opportunity to really differentiate. But yeah I'm gonna say it's one thing it's like please everybody just go write something just go write something every once in a while uh think sit in a quiet room with your thoughts and just put something on paper. It's it was one of the best things we did as a species I'd hate to see away one generation.

SPEAKER_00 46:32

I agree um I do need to interject and and offer a qualifier but I completely agree when I write the initial draft um it is it comes for me. I do use AI to polish so it enhance but the initial draft that the the thinking the thought process comes for me and and and and some of this may be in the form of like actual writing some of it maybe like um like I I use whisper flow a ton. So I could be walking the dog um and then for almost an hour I'm talking to it. I mean it cuts you off I think every five minutes I just kind of restart restart restart but um that's my way of of kind of organizing my thoughts and then obviously use AI to kind of synthesize start to clarify and polish them. Where I have seen AI help my writing um is in um grandma's tower how to break the rules of writing and like I don't know if you follow there's a guy by the name of David Perel that that talks about writing all the time he's phenomenal uh phenomenal he's got a podcast um but it's just like because if you if I mean you in business development um it it's all about storytelling right and in order to be a good storyteller you have to be a good writer because you're telling stories so um it it it it's a fundamental skill i i i tell my kids that if they can learn something that would last them for a lifetime it's storytelling it's it's it's it yeah you know Maxim it's one of the first things storytelling is one of those first things that usually comes up lacking in a founder evaluation um because you know it's critical to business development and your founder tends to need to be the first person to sell this thing but it's a really good proxy for leadership because if I can't tell you a story about how this is valuable and how you're going to contribute to the company and this is going to work for you the story gets people aligned and moving very very early on and so like when I'm with the founder and it's just like you're not painting a picture for me it's not just that I'm bored it's just that I think everyone else you need to convince other investors customers employees is also going to be bored and is not going to listen to you.

SPEAKER_02 48:51

So like yes like the art of storytelling like absolutely learn it unpack it read the Joseph Campbell stuff on the hero's journey like adopt like out on storytelling that is what feels like the kind of old school skill that will like really separate you in the the years to come are there authors being like authors authors like writers or VCs that you follow their writing kind of like who who stands out for you like you said that you're using a compiler to come up with like like to analyze letters from BC who do you follow like in yeah so I I mentioned it briefly Bill Gurley is one of my favorites what I really appreciate about Bill Gurley is he started his career on Wall Street and he is kind of this like East meets west it uh investor in terms of like Wall Street and Silicon Valley and then now as his career has kind of moved on he's east meast meets west in terms of the US and China and he's like a really interesting observer of their society and things that they've done and kind of like has a very open and balanced view of what Chinese business needs. So Bill Gurley is somebody that I I follow quite well and I think that he is someone who you know he would probably say like look writing is a practice of organizing your thoughts and it helps you be cleaner and be more ready to have conversations like this. And it's really just a it's a prepared mind exercise. So when it comes to VC Bill Gurley is like one of my favorites I listen to and read everything that he does. You know the podcasts are pretty awesome now they're great. Mark Andrewsen is the guy is Mark Andreessen because he's Mark Andreessen. Like he does not need to do any polish on his speaking like every speaking coach would probably faint the first time they heard him how we talk so fast and he's always like sorry here and it's over here but like the quality and caliber of thought is just off the charts. So if you can keep up with Andreessen like that's that's really you know one the quality of thought is really there. And then when we think about what is happening in private markets the fact that you know Horowitz and Andreessen are speaking for a $1 billion fund right now they're not just sharing their opinions you're basically learning the direction that VC is going to go at the front of the pack. So it's really important that you listen to those guys right now they are kingmakers and and newsmakers um and they talk a lot just take the time to listen to them so there's there's a couple years back to the night when Mark and Jason and Ben Horowitz were starting off in in a VC space they really broke the frame around what VC is and how to go about it. They did do you know who they they were copying off of no Michael Ovitz and CAA so there's a good book it's called Powerhouse that talks about how um you know creative arts agency you know realized that there was an inefficiency in the way that that you know creative talent was being managed and you know started to build more of a mothership versus like a collection of individual agents. And yeah um yeah I think it was I listened to Ben Horowitz and he was saying like you know they got in touch with Michael Ovitz before the book came out and that was really kind of what they structured Andrews and Horowitz around. So like look that's an idea of like someone breaking you know just kind of using their creativity let's look for a model somewhere else for someone who was successful and let's put it over here and see what happens um but yeah Michael Ovitz uh probably deserves a lot of credit for the modern day 16zig amazing yeah I just wrote it down um we'll definitely pick up the book I mean the other thing about uh Jason is that this guy's a voracious reader um and like the ability for him to to draw interconnections between this event and and this what happened here uh uh of history like it becomes really important because in in in many ways um what we do is a repetition of the past uh so if you look to kind of what has transpired it helps you predict the future um and and I mean he's he's amazing in that history doesn't repeat but it sure rhymes um you know I I'll throw one other person to read out there um it's an economist it's Carlotta Perez um and uh she does a lot or you know she basically literally wrote the book on how financing innovation works and it talks about things like bubbles are sorry what's the first what's the first mixture Carlotta Carlota Carlotta C-A-R-L-O-T-A Perez um very famous economist and she writes about funding innovation and in particular the financial bubble and the bubble is a pattern of financing that has happened many times before and so her kind of seminal book and I'm blanking on it it's on one of my shelves over here her kind of seminal book starts off with like canals in the US like you know eerie canal days and talks about how that bubble looked versus railroads versus you know different stock market bubbles that have happened and um it's it's just a feature of innovation in crowdfunding like a bubble is not necessarily pejorative if you understand kind of how she defines it. So that's somebody who like took a really great view on history that I think is like helping me kind of keep myself grounded in the AI era right now. Like yes we're in a bubble no that does not that does not mean you should stop investing it also does not mean you should try and time the top of the bubble but you have to really kind of maintain discipline around looking for the businesses that have good fundamentals. And it's the fundamentals that that separate from the hype and the hype is where all the money gets lost um but a few strong fundamental businesses will still remain so that's the one that I would really read um and and a lot of uh a lot of what smart pcs are saying is they're just cribbing off Carlotta yeah okay definitely what give a read um I know we're almost at time um closing question and you have a choice what's the best advice you've ever received or what's the kindest thing that anybody has done for you yeah I'm getting I'm I'm running out of my stuff you got you hit me in the face I was all ready to talk innovation and funding and financing um no I think like the kindest thing anything's ever done or just kind of like an act of confidence demonstration love. So when uh my wife and I got married in 2023 I quit my job and went to business school and she followed me up to Connecticut. She had it you know like a ton she could have stayed in New York and it was you know something where like I asked her no look I want you to be there once you got married well you know please come up and she made a ton of sacrifices for that and because she kept working and kept uh you know kept um you know uh you know basically did a ton of sacrifice just to kind of make my life comfortable that happened very for most successful uh you know couple years for me and I think that uh yeah that's definitely the kindest thing that anyone's done for me that's amazing that's amazing um shout out what's your name Jen shout out to Jen um I mean this truly is a an act of sacrifice that's helped build your uh future and build your hopes and dreams I have a lot to work amazing I mean this is a good good um good note to close on um shout out to all the significant artists that that support us in our journeys um I want to thank you for the time Shane and for the insights it was a really lovely conversation uh really enjoyed it yeah Maxim thanks so much for having me uh totally enjoyed it best of luck to you and uh the team at Future Ventures and uh looking forward to staying in touch man absolutely