1 00:00:00,640 --> 00:00:03,720 Hi, I'm Eric Newcomer. And I am Madeline Rinbarger. 2 00:00:04,120 --> 00:00:06,960 And this is the newcomer podcast. 3 00:00:10,400 --> 00:00:14,000 Each week, Eric and I discuss the VC deals and the drama that 4 00:00:14,000 --> 00:00:15,800 went down. Let's do it. 5 00:00:16,040 --> 00:00:19,840 Here we go. This episode is presented by 6 00:00:19,840 --> 00:00:23,760 Breck's The Financial Stack that founders and VCs can truly bank 7 00:00:23,760 --> 00:00:25,800 On. Imagine what your founders could 8 00:00:25,800 --> 00:00:29,040 do with their runway if they had a banking solution that had no 9 00:00:29,040 --> 00:00:33,840 minimums, no transaction fees, and 20 times the standard FDIC 10 00:00:33,840 --> 00:00:36,420 protection. Plus they could earn an industry 11 00:00:36,420 --> 00:00:39,720 leading yield while maintaining access to funds whenever needed. 12 00:00:40,040 --> 00:00:43,320 Brex simplifies financial services for start-ups so they 13 00:00:43,320 --> 00:00:46,360 can focus on building. Connect your portfolio to the 14 00:00:46,360 --> 00:00:48,880 financial stack that one in three US venture backed 15 00:00:48,880 --> 00:00:55,080 start-ups already use. Check out brex.com/banking Dash 16 00:00:55,160 --> 00:00:58,880 solutions. Welcome back to the show. 17 00:00:58,960 --> 00:01:02,040 Lots happening in tech this week, although it feels like all 18 00:01:02,040 --> 00:01:05,920 of a sudden between the DealNews it just got completely switched 19 00:01:05,920 --> 00:01:08,920 around with the Biden announcement this week about the 20 00:01:08,920 --> 00:01:11,480 tech industrial. Comp yeah, it was like a drive 21 00:01:11,480 --> 00:01:13,520 by shooting presidential address. 22 00:01:14,240 --> 00:01:16,160 You know, all of a sudden we have plenty of going on in 23 00:01:16,160 --> 00:01:19,600 Silicon Valley and then the administration is like, Oh yeah, 24 00:01:19,600 --> 00:01:23,440 the my Eisenhower style warning about what's going on in America 25 00:01:23,440 --> 00:01:26,560 is about the oligarchs in the tech industry and the techno 26 00:01:26,560 --> 00:01:30,320 industrial complex. I mean, it's, it's crazy to hear 27 00:01:30,320 --> 00:01:32,640 when if you think about like, you know, Eisenhower warning 28 00:01:32,640 --> 00:01:35,640 about the military industrial complex and that's, you know, a 29 00:01:35,640 --> 00:01:37,600 thing of history books. And so now we're watching. 30 00:01:37,600 --> 00:01:40,680 It's like, wow, is, is tech this bad? 31 00:01:40,680 --> 00:01:42,160 What? What was your reaction? 32 00:01:42,800 --> 00:01:45,840 I mean, yeah, it's it's interesting too, also because of 33 00:01:45,840 --> 00:01:48,400 tech's, you know, increasing involvement within defense 34 00:01:48,400 --> 00:01:49,760 world. But that's an aside for another 35 00:01:49,760 --> 00:01:52,520 day. I would say my initial reaction 36 00:01:52,520 --> 00:01:57,520 was it was quite peculiar. I mean, partially, I have to 37 00:01:57,520 --> 00:02:01,400 think that some degree, you know, the tech people, a lot of 38 00:02:01,400 --> 00:02:05,600 tech leaders coming out and either endorsing Donald Trump or 39 00:02:05,600 --> 00:02:07,600 remaining silent in this election when they had 40 00:02:07,600 --> 00:02:10,000 historically been larger Democratic donors, or at least 41 00:02:10,000 --> 00:02:13,240 that was the public perception maybe played a part in this. 42 00:02:13,240 --> 00:02:17,440 It felt maybe a little personal on a couple accounts but I feel 43 00:02:17,440 --> 00:02:19,000 like. Really easy. 44 00:02:19,040 --> 00:02:23,800 Easy to be wary of the tech industrial complex when, you 45 00:02:23,800 --> 00:02:27,240 know, Elon Musk opening up his pocketbook might have lost you 46 00:02:27,240 --> 00:02:30,400 the election, right? I mean, it's very personal to 47 00:02:30,400 --> 00:02:36,160 Biden in that this the tech set did a lot to, you know, I mean, 48 00:02:36,160 --> 00:02:39,600 Elon was literally what, paying for the Trump ground game. 49 00:02:39,600 --> 00:02:43,160 So clearly it was very personal to the election. 50 00:02:43,680 --> 00:02:48,080 It feels personal and it also feels like a shift in the 51 00:02:48,120 --> 00:02:50,320 attitude of government towards the tech sector. 52 00:02:50,320 --> 00:02:54,200 I mean, we hear it newcomer, very pro tech, pro innovation. 53 00:02:54,400 --> 00:02:57,160 It seems historically like that's one of the end all be 54 00:02:57,160 --> 00:03:00,040 alls of why people come to America and American identity 55 00:03:00,040 --> 00:03:01,720 and valleys, right And. Wow. 56 00:03:01,800 --> 00:03:03,840 The real. Texas girls coming out over 57 00:03:03,840 --> 00:03:07,080 here. I know my my individualism 58 00:03:07,360 --> 00:03:09,560 programming. Just immediately shot to the. 59 00:03:09,560 --> 00:03:13,280 Front for this one, but seriously doesn't like a shift 60 00:03:13,280 --> 00:03:16,960 in how the government is approaching tech, or at least 61 00:03:16,960 --> 00:03:20,320 one side of the government, before a new party takes control 62 00:03:20,320 --> 00:03:21,480 of the White House. Right. 63 00:03:21,640 --> 00:03:23,720 Yeah. I mean, you know, I'm on both 64 00:03:23,720 --> 00:03:26,080 sides of this. On the one hand, right after the 65 00:03:26,080 --> 00:03:29,960 election, I said, you know, I didn't vote for Trump. 66 00:03:29,960 --> 00:03:31,400 I think it's going to be a disaster. 67 00:03:31,400 --> 00:03:36,720 But the best possible outcome is that tech gets its talons in 68 00:03:36,720 --> 00:03:39,200 Trump world. I still think that's true. 69 00:03:39,200 --> 00:03:44,720 Like I think to me, tech sort of a tech administration is the 70 00:03:44,720 --> 00:03:48,160 best case scenario. Everyone wants their friends in 71 00:03:48,160 --> 00:03:49,840 tech in. The right exactly right their. 72 00:03:50,240 --> 00:03:52,000 Enemies in tech they don't want in the administration. 73 00:03:52,920 --> 00:03:54,160 Right. But I mean, I just think the 74 00:03:54,160 --> 00:03:58,000 general tech ideology of inevitably it's about sort of 75 00:03:58,000 --> 00:04:04,200 growth, pro GDP, sort of loose regulation on tech, sort of very 76 00:04:04,200 --> 00:04:07,440 free market. Like that's better to me than, 77 00:04:07,920 --> 00:04:13,600 you know, the sort of nationalist version of Trump 78 00:04:13,600 --> 00:04:16,279 that's all about sort of rounding up immigrants and 79 00:04:16,279 --> 00:04:19,040 tariffs. Like that's clearly sort of in 80 00:04:19,040 --> 00:04:22,040 contrast to the tech version. And then, you know, we could 81 00:04:22,040 --> 00:04:25,360 have sort of a neo con administration out of nowhere. 82 00:04:25,360 --> 00:04:29,520 That would be worse to me too. So if if if the options are sort 83 00:04:29,520 --> 00:04:35,880 of extreme tech favored capitalism, sort of nationalism 84 00:04:35,880 --> 00:04:41,200 and protectionism or a return to neoconservative Republicans, I 85 00:04:41,200 --> 00:04:44,000 would pick the tech set. That's still true. 86 00:04:45,080 --> 00:04:46,400 Absolutely. Well, if you're picking out of 87 00:04:46,400 --> 00:04:48,880 those three, that's easily. That's the path. 88 00:04:49,200 --> 00:04:51,600 Those are the paths, right? Am I missing one or like? 89 00:04:51,760 --> 00:04:54,120 No, not at all. And our government's about to 90 00:04:54,120 --> 00:04:55,840 get a lot more efficient seems too. 91 00:04:55,840 --> 00:05:00,920 So in some ways, when talking this week to people over at JPM 92 00:05:00,920 --> 00:05:04,040 Healthcare, I meant a lot of people mentioned that the new 93 00:05:04,040 --> 00:05:07,200 regulatory environment could really be favorable in part for 94 00:05:07,200 --> 00:05:09,080 biotech development, health development. 95 00:05:09,280 --> 00:05:12,440 And that's one thing that this new government set has really 96 00:05:12,480 --> 00:05:15,360 set out to cut back a lot of red tape within a lot of federal 97 00:05:15,360 --> 00:05:17,880 agencies, which no doubt would be helpful for innovation in 98 00:05:17,880 --> 00:05:20,640 these sectors. I mean, the, the oligarchs idea, 99 00:05:20,640 --> 00:05:22,600 I am deeply troubled by the idea. 100 00:05:22,600 --> 00:05:26,800 You know, Trump's putting, what, Jeff Bezos, Mark Zuckerberg, 101 00:05:26,800 --> 00:05:30,240 Elon Musk on stage with him as if they're like cabinet members. 102 00:05:31,000 --> 00:05:33,560 I don't like the sort of pay for play that's been. 103 00:05:33,560 --> 00:05:35,920 Happening. Around this, you know, that's 104 00:05:35,920 --> 00:05:38,760 one part that I will say like it does seem like a lot of these 105 00:05:38,840 --> 00:05:43,360 tech people have been really quick to go ahead and I won't 106 00:05:43,360 --> 00:05:45,480 say kiss the ring. You know, that's literally what 107 00:05:45,480 --> 00:05:48,360 it feels like. Yeah, donate right ahead of 108 00:05:48,360 --> 00:05:51,160 inauguration, like signaling with their money, hey, we're 109 00:05:51,200 --> 00:05:54,360 going to be your friend. Which to me feels like a little 110 00:05:54,360 --> 00:05:56,560 bit more ominous. And, you know, ominous, the 111 00:05:56,560 --> 00:05:59,520 inauguration donating obviously is always a thing. 112 00:05:59,520 --> 00:06:02,480 I think what's more troubling is because it's like they're going 113 00:06:02,480 --> 00:06:05,000 to mar a Lago. It feels like very like, yeah, I 114 00:06:05,040 --> 00:06:08,520 mean, it's kiss the ring. It feels very sort of mobster 115 00:06:08,520 --> 00:06:12,880 esque, which is you have to sort of pay your, do not pay your 116 00:06:12,880 --> 00:06:14,240 dues. You have to sort of, you know, 117 00:06:14,520 --> 00:06:17,680 yeah, you just have to kiss up to the leader, pay your yeah, 118 00:06:17,680 --> 00:06:20,080 you have to pay your respects to the great leader. 119 00:06:20,080 --> 00:06:23,400 And it feels like sort of proximity to him personally. 120 00:06:23,400 --> 00:06:26,760 I mean, semaphore basically had a piece saying, you know, it 121 00:06:26,760 --> 00:06:29,760 used to be we'd track all the, you know, business, money and 122 00:06:29,760 --> 00:06:32,280 politics, like looking, reading the tea leaves. 123 00:06:32,520 --> 00:06:34,800 And now it's the opposite where everybody's just like, yeah, 124 00:06:34,800 --> 00:06:37,080 obviously I'm kissing up to Trump. 125 00:06:37,080 --> 00:06:38,840 That's that's the name of the game. 126 00:06:38,840 --> 00:06:43,440 And then you pair that, you know, Ezra Klein's podcast just 127 00:06:43,440 --> 00:06:46,320 did something about how the Republican Party has moved from 128 00:06:46,320 --> 00:06:51,880 being, you know, an ideas type party or a party really ruled by 129 00:06:52,120 --> 00:06:55,200 a shared coalition of people trying to get some policy agenda 130 00:06:55,480 --> 00:06:59,080 to a personal party, one run by Trump and where it's really 131 00:06:59,080 --> 00:07:03,000 about that guy. And so I think tech has been 132 00:07:03,000 --> 00:07:04,400 uncomfortable. It's become a cult of 133 00:07:04,440 --> 00:07:07,520 personality. In some ways, tech's caught on. 134 00:07:07,520 --> 00:07:10,280 They're like fine, Yeah, all right, I want. 135 00:07:10,280 --> 00:07:12,280 What we'll do is. Amazon to be the most important 136 00:07:12,280 --> 00:07:14,440 company. And if it's not me, it's going 137 00:07:14,440 --> 00:07:16,200 to be Zuck. And so we're all going to kiss 138 00:07:16,200 --> 00:07:17,960 the ring. It's, you know, classic sort of 139 00:07:18,400 --> 00:07:20,920 collection action problem. And that's that's how we get 140 00:07:20,920 --> 00:07:23,680 sort of, yeah, the destruction of democratic norms. 141 00:07:23,680 --> 00:07:27,600 So to that degree, I agree 100% with Biden that they're 142 00:07:27,600 --> 00:07:30,040 oligarchs. That's terrifying. 143 00:07:30,080 --> 00:07:34,240 But then he just he sorry, I just lost my ran. 144 00:07:34,240 --> 00:07:37,120 I mean, he he's hitting on he's attacking profits, which is a 145 00:07:37,120 --> 00:07:39,640 classical classic, like caricature of Democrats. 146 00:07:39,640 --> 00:07:42,200 Like profits are the worst thing in the world when it's like 147 00:07:42,400 --> 00:07:45,240 profits reflect businesses successfully delivering things 148 00:07:45,440 --> 00:07:48,040 people want. And then he just like throws AI 149 00:07:48,040 --> 00:07:52,000 and it like he's shitting on AI and worried about that and 150 00:07:52,000 --> 00:07:53,960 social media, it's just like a kitchen. 151 00:07:53,960 --> 00:07:56,480 It felt very haphazard. It was sort of like a take 152 00:07:56,600 --> 00:07:59,640 choose your own adventure of grievances. 153 00:07:59,640 --> 00:08:02,600 Right, right. He doesn't seem the sharpest. 154 00:08:02,600 --> 00:08:04,400 You know, it's not necessarily that. 155 00:08:04,680 --> 00:08:07,160 Yeah, it feels an airtight argument. 156 00:08:07,280 --> 00:08:10,520 I think we can note where there are some causes for concern and 157 00:08:10,520 --> 00:08:14,440 also view the concept of the tech industrial complex being 158 00:08:14,680 --> 00:08:17,600 portrayed as much of A boogeyman as the military industrial 159 00:08:17,600 --> 00:08:20,800 complex was, is to be somewhat of a false comparison. 160 00:08:21,080 --> 00:08:24,560 Right well, to be an extreme Silicon Valley booster, the key 161 00:08:24,560 --> 00:08:28,440 element of Silicon Valley is that you know, it encourages new 162 00:08:28,440 --> 00:08:30,840 entrants. So it's it's there, you know 163 00:08:30,880 --> 00:08:33,679 there's a power center and certainly there are these VCs 164 00:08:33,679 --> 00:08:36,000 that stay in the mix and are power brokers. 165 00:08:36,000 --> 00:08:38,960 But it is like really searching for the next person with a great 166 00:08:38,960 --> 00:08:42,000 idea to thrust into the heart of everything, right? 167 00:08:42,000 --> 00:08:45,360 If you think of the new hot company, is is always like the 168 00:08:45,360 --> 00:08:48,120 most important piece of it. The problem with the defense 169 00:08:48,120 --> 00:08:51,280 industrial complex is that it was a lot like the government. 170 00:08:51,280 --> 00:08:53,080 There's a lot of protectionism. It's slow. 171 00:08:53,080 --> 00:08:57,720 It's sort of X extracting things against American interests where 172 00:08:57,720 --> 00:09:00,960 Silicon Valley is really a machine of people trying to say 173 00:09:01,320 --> 00:09:04,320 who's got the best new thing. Let's immediately pump them to 174 00:09:04,320 --> 00:09:07,520 the center of all our money and the culture. 175 00:09:07,520 --> 00:09:11,760 And so, yeah, I guess I'm just saying Silicon Valley is good in 176 00:09:11,760 --> 00:09:14,480 a way that the defense complex isn't. 177 00:09:15,040 --> 00:09:18,040 Counterpoint to you, Eric, how would you feel about the startup 178 00:09:18,040 --> 00:09:20,600 part of Silicon Valley versus the big tech part of Silicon 179 00:09:20,600 --> 00:09:22,120 Valley? Because it seems like also a lot 180 00:09:22,120 --> 00:09:24,800 of these fights have been picked with, you know, the Googles and 181 00:09:24,800 --> 00:09:26,960 the Microsoft's of the world rather than the innovation 182 00:09:26,960 --> 00:09:29,000 economy. I mean, people in the 183 00:09:29,000 --> 00:09:31,960 administration were, you know, this is much more active 184 00:09:32,000 --> 00:09:34,480 antitrust administration. We'll see what happens, but 185 00:09:34,480 --> 00:09:36,800 it'll probably let less so in the future, and there'll be more 186 00:09:36,800 --> 00:09:39,360 exits. But, you know, Gary Tan spoke 187 00:09:39,360 --> 00:09:43,000 pretty highly of Lena Khan over at YC because, you know, it 188 00:09:43,000 --> 00:09:46,360 leads to antitrust enforcement, leads to more little tech 189 00:09:46,360 --> 00:09:47,680 flourishing. Right. 190 00:09:47,680 --> 00:09:50,320 I mean, big tech is very company specific. 191 00:09:51,040 --> 00:09:55,960 Google, Microsoft, backbone of America represents everything 192 00:09:56,280 --> 00:10:01,040 great about what we're doing. Amazon pretty good, important to 193 00:10:01,040 --> 00:10:04,520 the, you know, logistics and getting us everything. 194 00:10:05,560 --> 00:10:08,720 Facebook somewhat soulless. I don't know. 195 00:10:08,720 --> 00:10:11,560 I'm never going to be able to book anybody from them if I say 196 00:10:11,560 --> 00:10:14,240 that. But no, I mean, you know, not 197 00:10:14,240 --> 00:10:16,880 the medic guest. Come back, Mama is good. 198 00:10:16,880 --> 00:10:20,400 But I just have to say, like, I mean, you even look at like the 199 00:10:20,400 --> 00:10:22,960 Facebook product. It's just like shameless, you 200 00:10:22,960 --> 00:10:25,680 know, I I just don't. And then Mark Zuckerberg went on 201 00:10:25,680 --> 00:10:28,480 Joe Rogan and he's shitting on Apple for never coming up with a 202 00:10:28,480 --> 00:10:31,680 new idea. It's like Apple delivers me the 203 00:10:31,680 --> 00:10:36,720 best device, best thing I hold built by anyone to date, whereas 204 00:10:36,720 --> 00:10:39,120 Mark Zuckerberg is like taking advantage of the fact that I 205 00:10:39,120 --> 00:10:42,080 look at Facebook every once in a while to, like, put a bunch of 206 00:10:42,080 --> 00:10:46,160 shit in front of me. Yeah, I, I I just think, yeah, I 207 00:10:46,320 --> 00:10:48,480 don't know. Zuck is not the bastion of 208 00:10:48,760 --> 00:10:50,960 principles. He's the most opportunistic here 209 00:10:50,960 --> 00:10:53,480 and just sucking up to Trump every couple years. 210 00:10:53,480 --> 00:10:56,280 It's like I'm going to totally reinvent myself. 211 00:10:56,440 --> 00:10:59,800 Yeah. So company specific views of of 212 00:10:59,800 --> 00:11:02,760 the big tech ones here. The the last thing I'll say is, 213 00:11:02,840 --> 00:11:05,640 you know, I we always want to cover politics less and they 214 00:11:05,640 --> 00:11:08,960 keep dragging us back in. I think if Kamala had won, we'd 215 00:11:08,960 --> 00:11:12,200 gotten away with it. But we will be keeping you up to 216 00:11:12,200 --> 00:11:13,440 date just. When we thought we were out. 217 00:11:15,840 --> 00:11:19,840 We will be keeping you up to date on your favorite oligarchs 218 00:11:20,840 --> 00:11:26,280 malevolence, so stay tuned. Moving on, Eric, you had this 219 00:11:26,280 --> 00:11:29,920 great story of the behind the scenes of the bench fall and 220 00:11:29,920 --> 00:11:32,560 return. Eric, what even is bench? 221 00:11:32,560 --> 00:11:35,280 What is this Canadian company you fell into? 222 00:11:36,360 --> 00:11:39,360 Yeah, not a company I'd heard of a month ago. 223 00:11:40,320 --> 00:11:44,840 You know the companies? Old founder Ian Crosby basically 224 00:11:44,840 --> 00:11:49,360 after bench went kaput, tweeted out the story of how the board 225 00:11:49,360 --> 00:11:52,600 removed him and basically said I hope this is a lesson to all 226 00:11:52,600 --> 00:11:54,960 VC's not to remove your founders. 227 00:11:55,200 --> 00:11:58,560 It's only going to be a disaster and something every VC wants to 228 00:11:58,560 --> 00:12:01,480 be on board with. So you saw a lot of people being 229 00:12:01,480 --> 00:12:05,440 like who did this to you? And like Amjad Mossad at Replit 230 00:12:05,440 --> 00:12:08,360 was like, these are the VC's never to take money from and 231 00:12:08,840 --> 00:12:13,240 just very simple, satisfying narrative that people want to 232 00:12:13,240 --> 00:12:16,840 see play out on Twitter. And I, you know, played my small 233 00:12:16,840 --> 00:12:20,640 part tweeting out pitch book with the list of board members. 234 00:12:20,880 --> 00:12:23,480 And that got people being like, oh, you know, I wasn't even on 235 00:12:23,480 --> 00:12:25,600 the board then. And so then. 236 00:12:25,600 --> 00:12:27,640 Oh no, you. You were a factor in the witch 237 00:12:27,720 --> 00:12:28,920 hunt. Era right, exactly. 238 00:12:28,920 --> 00:12:31,400 So then it's like all right, let's what actually happened 239 00:12:31,400 --> 00:12:33,960 here? Was this as simple a story? 240 00:12:33,960 --> 00:12:36,920 And you know it wasn't. What did you find in your 241 00:12:36,920 --> 00:12:38,400 reporting? I mean, people should go read 242 00:12:38,400 --> 00:12:42,320 the story on newcomer.co to get the full picture, but what 243 00:12:42,320 --> 00:12:44,960 what's your biggest take away around the merits of being 244 00:12:44,960 --> 00:12:47,440 founder friendly or not? And what happened with Bench? 245 00:12:47,680 --> 00:12:50,320 You know, Bench was a substantial company, about 35 246 00:12:50,320 --> 00:12:52,880 million in revenue doing an accounting business. 247 00:12:53,160 --> 00:12:55,960 You know, they basically figured out how to do it, a services 248 00:12:55,960 --> 00:13:00,160 heavy business pretty well, you know, using some technology. 249 00:13:00,440 --> 00:13:04,280 Then they raised a substantial Series C at the peak, you know, 250 00:13:04,280 --> 00:13:08,480 in 2021, 30 million in equity and like 30 million in debt. 251 00:13:08,880 --> 00:13:12,280 And then they spent a lot of it, Ian Crosby spent a lot of it 252 00:13:12,280 --> 00:13:15,960 trying to build like a banking business and new ideas, not a 253 00:13:15,960 --> 00:13:20,400 lot of it seemingly to make the core bookkeeping business more 254 00:13:20,400 --> 00:13:21,880 scalable. And so all of a sudden, the 255 00:13:21,880 --> 00:13:25,240 business is losing a lot of money on products that it hasn't 256 00:13:25,240 --> 00:13:28,120 even launched without necessarily a plan for how 257 00:13:28,120 --> 00:13:30,880 they're going to raise more money that they might need 258 00:13:30,960 --> 00:13:33,320 eventually. And so that freaked out the 259 00:13:33,320 --> 00:13:35,520 board. You know, the board sort of 260 00:13:35,520 --> 00:13:38,680 pushed him out. And then at the same time, his 261 00:13:38,680 --> 00:13:41,840 executives sent a letter to the board sort of complaining about 262 00:13:41,840 --> 00:13:44,720 him and asking for an investigation into him. 263 00:13:44,760 --> 00:13:47,920 So it was just sort of the perfect storm of, you know, 264 00:13:48,120 --> 00:13:51,440 classic perfect. Storm and almost and almost pile 265 00:13:51,440 --> 00:13:54,040 on, if you will, to the founder. Here these stories are always 266 00:13:54,040 --> 00:13:58,160 more complicated than could be boiled down on Twitter, but yeah 267 00:13:58,160 --> 00:14:00,000 I mean, I think it's an open question I mean you read the 268 00:14:00,000 --> 00:14:04,920 story do you did you come away pro founder or yeah what was 269 00:14:04,920 --> 00:14:07,040 your point of view I'm. Going to take the case for being 270 00:14:07,040 --> 00:14:09,320 founder friendly on this one, because we know what happened to 271 00:14:09,320 --> 00:14:12,000 bench after they pushed the founder out, right? 272 00:14:12,560 --> 00:14:16,080 It basically collapsed and they had a willing buyer, but it was 273 00:14:16,080 --> 00:14:20,040 not the exit that VCs dream of. So that's I'm going to put stake 274 00:14:20,040 --> 00:14:24,680 my claim here for that case that being founder friendly and to 275 00:14:24,680 --> 00:14:28,800 go, you know, to focus on sort of a very pro founder posture in 276 00:14:28,800 --> 00:14:33,080 this case actually made a difference, made a difference in 277 00:14:33,080 --> 00:14:35,760 the future of this company. The fact that they did not do 278 00:14:35,760 --> 00:14:37,920 this. Yeah, I don't know. 279 00:14:37,920 --> 00:14:40,000 In your own reporting, you can take another stance. 280 00:14:40,000 --> 00:14:44,240 I mean, replacing the founder always has this sort of anything 281 00:14:44,240 --> 00:14:48,480 could be the alternative world and then often it's terrible. 282 00:14:49,560 --> 00:14:53,320 I think the key thing is if you are a founder that wants to stay 283 00:14:53,320 --> 00:14:58,000 at your company, generate profits or at least grow revenue 284 00:14:58,120 --> 00:15:02,200 substantially and improve profit margins, you know, like at the 285 00:15:02,200 --> 00:15:05,360 end of the day, like board will put up with bad behavior if 286 00:15:05,360 --> 00:15:07,400 you're delivering like business results. 287 00:15:07,400 --> 00:15:12,080 But if they're you're angering your executives, your strategy 288 00:15:12,080 --> 00:15:16,160 seems sort of wild and you're not your core business isn't 289 00:15:16,160 --> 00:15:19,760 throwing off a bunch of money, then you know, you don't have 290 00:15:19,760 --> 00:15:23,240 anything like revenue, revenue growth, profits. 291 00:15:23,240 --> 00:15:27,400 Those are the things that 'cause people to ignore questionable 292 00:15:27,400 --> 00:15:30,840 sort of behavior and sort of people who piss people off. 293 00:15:30,920 --> 00:15:33,600 If you don't have those things, all of a sudden it's like you 294 00:15:33,600 --> 00:15:35,600 should be a nicer person to these executives. 295 00:15:35,600 --> 00:15:37,120 And that's, that's sort of my view. 296 00:15:37,120 --> 00:15:39,800 It's like, sure you can like, you know, the, you know, the 297 00:15:39,800 --> 00:15:43,840 Uber is my sort of case study. And it's just like, man, you 298 00:15:43,840 --> 00:15:47,800 burned so much money and then you didn't let your early 299 00:15:47,800 --> 00:15:50,520 investors really take a lot of money off the table. 300 00:15:50,520 --> 00:15:53,520 If you just let, you know, Benchmark, just sell their stake 301 00:15:53,520 --> 00:15:56,240 and walk away, then maybe you don't have the mutiny anyway. 302 00:15:56,240 --> 00:15:58,640 So these investors? Are I see your point here? 303 00:15:58,720 --> 00:16:02,040 I see your point here. Yeah, strong, strong opinions 304 00:16:02,040 --> 00:16:04,400 loosely held on my part. I'm, I'm always generally pro 305 00:16:04,400 --> 00:16:06,520 founder. But when like you, to your 306 00:16:06,520 --> 00:16:09,800 point, if the actual core part of the business is no longer 307 00:16:09,800 --> 00:16:13,080 functioning, what are investors supposed to do at that point or 308 00:16:13,080 --> 00:16:14,920 not function? The actual core part of the 309 00:16:14,920 --> 00:16:18,240 business is off the path and you don't see the revenue that you'd 310 00:16:18,240 --> 00:16:20,520 want and you don't see the profits that you want because 311 00:16:20,520 --> 00:16:22,280 you're working on these other projects. 312 00:16:22,600 --> 00:16:25,240 That to me seems like a point where it makes sense that people 313 00:16:25,240 --> 00:16:28,080 would want to intervene, because if you're not landing on what 314 00:16:28,080 --> 00:16:31,480 you've promised to do, how that path may not be the way that the 315 00:16:31,480 --> 00:16:33,960 business should be going. But if I want to flip this side, 316 00:16:34,240 --> 00:16:38,440 it's like the founder gets sort of these intangible things about 317 00:16:38,440 --> 00:16:40,680 the business. They have a really visceral 318 00:16:40,680 --> 00:16:44,400 sense of what they're good at and what the business is capable 319 00:16:44,400 --> 00:16:47,240 of. And so they can steer it towards 320 00:16:47,240 --> 00:16:50,520 new ideas and sort of things that are going to deliver sort 321 00:16:50,520 --> 00:16:54,280 of a level of creativity that a traditional business wouldn't. 322 00:16:54,280 --> 00:16:56,480 And that's what you're betting on with a startup. 323 00:16:56,480 --> 00:16:59,000 And if you get rid of the founder, you're sort of just 324 00:16:59,000 --> 00:17:01,120 going to be a regular company. And so you're never going to 325 00:17:01,120 --> 00:17:05,960 deliver sort of the exceptional returns the venture capitalists 326 00:17:06,119 --> 00:17:08,240 want. So we can both see both sides of 327 00:17:08,240 --> 00:17:11,359 it and like I. I It's a nuanced position. 328 00:17:12,000 --> 00:17:14,480 And it's funny with this specific one, I mean, I will 329 00:17:14,480 --> 00:17:18,760 say, like, I mean, clearly that Crosby brought in executive 330 00:17:18,760 --> 00:17:23,240 coaches to try to improve the relationship with executives in 331 00:17:23,240 --> 00:17:25,960 some ways. And that was a negative 332 00:17:26,000 --> 00:17:28,280 experience, you know, that it went poorly. 333 00:17:28,359 --> 00:17:31,120 And so it's like if that had gone well, you know, there are 334 00:17:31,120 --> 00:17:33,960 there are things where it's like if they could have found a way 335 00:17:33,960 --> 00:17:37,080 to to sort of improve that, you know, there are little things. 336 00:17:37,560 --> 00:17:40,240 And and, you know, even some of the executives that I talked to 337 00:17:40,240 --> 00:17:44,760 sign the letter regret that he was sort of like totally ousted 338 00:17:44,760 --> 00:17:46,920 from the company. You know, it might have been the 339 00:17:46,920 --> 00:17:49,840 kind of thing where it's like bringing Aceo who can make it 340 00:17:49,840 --> 00:17:53,920 seem a little more normal or bring in a new CEO, but you're 341 00:17:53,920 --> 00:17:55,680 the chair and you're still the visionary. 342 00:17:55,960 --> 00:17:59,600 And also like this this guy, a lot of people praise him Ian, 343 00:17:59,800 --> 00:18:03,200 for being like a visionary, you know, And so in some ways it's 344 00:18:03,200 --> 00:18:08,440 very natural that the visionary CEO plays more of a chair role. 345 00:18:08,440 --> 00:18:12,160 So, you know, I it really seems like they should have navigated 346 00:18:12,160 --> 00:18:14,400 to that and this letter maybe it. 347 00:18:14,400 --> 00:18:16,360 Seems like there were to jump in. 348 00:18:16,360 --> 00:18:18,720 It seems like there were avenues that they could have taken that 349 00:18:18,720 --> 00:18:22,800 weren't entirely just 0 sum ousting the the the founder of 350 00:18:22,800 --> 00:18:25,120 the company from the company. He didn't have to keep leading 351 00:18:25,120 --> 00:18:28,720 the company, but they made the call to fully remove him in a 352 00:18:28,720 --> 00:18:31,880 way that led to a lot of spite and animosity and ultimately 353 00:18:31,880 --> 00:18:34,400 seemed to be not productive. But if you get this intense 354 00:18:34,400 --> 00:18:37,560 letter from executives, you already sort of want the guy to 355 00:18:37,560 --> 00:18:40,720 go and you're going to have to do in a complicated 356 00:18:40,720 --> 00:18:44,880 investigation where you might, you know, I then you're like, 357 00:18:44,880 --> 00:18:48,000 whatever, like let's let's manage this guy out. 358 00:18:48,000 --> 00:18:51,000 I know. So it's it's a tough it's a 359 00:18:51,000 --> 00:18:53,400 tough one. I have a lot of empathy for 360 00:18:53,400 --> 00:18:57,200 everybody around employer.com, you know, is scooping up the 361 00:18:57,200 --> 00:19:00,840 remnants and I think they're going to be potentially buzzy 362 00:19:00,840 --> 00:19:06,000 with a number of acquisitions. I also think sort of sadly for 363 00:19:06,000 --> 00:19:10,080 Bench, there's this trend now, which is like service heavy 364 00:19:10,080 --> 00:19:14,480 businesses can be sort of smoothed out with AI. 365 00:19:14,480 --> 00:19:17,600 And so I think investors are actually somewhat excited about 366 00:19:17,600 --> 00:19:20,080 things like bookkeeping at the moment because you can throw 367 00:19:20,080 --> 00:19:23,760 language models at them to try and really extend bookkeepers 368 00:19:23,760 --> 00:19:26,560 across a lot of customers, which is what Bench was trying to do. 369 00:19:27,160 --> 00:19:30,800 So it is sort of the classic, maybe, you know, wrong time, 370 00:19:30,800 --> 00:19:33,360 right idea. And then Crosby, you know, he's 371 00:19:33,360 --> 00:19:36,240 at Mercury. He's actually working as part 372 00:19:36,240 --> 00:19:38,640 of, you know, a banking startup on accounting. 373 00:19:38,640 --> 00:19:40,880 So he sold his company to Mercury. 374 00:19:40,880 --> 00:19:43,040 So it's always he's doing what he wanted. 375 00:19:43,440 --> 00:19:46,240 So I just feel bad for the he's. Doing what he set out to do 376 00:19:46,360 --> 00:19:49,400 right yeah I just you know I feel bad for the employees that 377 00:19:49,400 --> 00:19:52,160 get sort of caught up in this right that we're working on this 378 00:19:52,160 --> 00:19:55,480 mission and don't have as clean of an exit as maybe the founders 379 00:19:55,480 --> 00:19:59,320 or executives will out of this right moving on from 1 startups 380 00:19:59,400 --> 00:20:02,800 lows we can move to another startups highs with our deal of 381 00:20:02,800 --> 00:20:07,120 the week with rush capital coming in any sphere the makers 382 00:20:07,160 --> 00:20:11,000 of cursor the popular coding assistant that's powered by 383 00:20:11,000 --> 00:20:15,440 generative AI raised 100 and. 5 million in new funding Co led by 384 00:20:15,440 --> 00:20:19,320 Thrive Capital and A16Z and Benchmark additionally 385 00:20:19,320 --> 00:20:20,720 participated in the round as well. 386 00:20:21,120 --> 00:20:25,120 A really big round for what won our newcomer Superlative for 387 00:20:25,120 --> 00:20:29,240 Product of the Year, right? Yeah, No, no bigger honor. 388 00:20:30,360 --> 00:20:32,200 No, the buzziest. You're actually building. 389 00:20:32,200 --> 00:20:35,480 Buzziest product in Silicon Valley right now? 390 00:20:35,480 --> 00:20:38,240 Probably that in granola. AI have got to be two of the 391 00:20:38,240 --> 00:20:40,880 buzziest AI products at the moment. 392 00:20:41,200 --> 00:20:44,440 But as we've covered in the newsletter, coding assistants 393 00:20:44,480 --> 00:20:48,760 had a really big wave earlier last year with a lot of VC sort 394 00:20:48,760 --> 00:20:51,200 of staking their claim into which ones that they thought 395 00:20:51,200 --> 00:20:55,000 were going to be the Microsoft Copilot upender Cursor seems to 396 00:20:55,000 --> 00:20:58,320 be in the lead right now just based on user chatter and based 397 00:20:58,320 --> 00:21:01,440 on venture interest. But we will see. 398 00:21:01,640 --> 00:21:03,560 There's always room for more entrance in the space. 399 00:21:03,560 --> 00:21:05,480 It's pretty, it's pretty saturated. 400 00:21:05,600 --> 00:21:09,920 And leads, as we've seen in this AI era, can have the lead and 401 00:21:09,920 --> 00:21:12,560 then be immediately usurped by a new up and Comer. 402 00:21:12,720 --> 00:21:14,720 It's, it's hard to be at the top for very long. 403 00:21:14,720 --> 00:21:16,760 Everyone's always nipping at your heels a little bit. 404 00:21:16,760 --> 00:21:20,960 So congratulations to any sphere for the funding. 405 00:21:21,520 --> 00:21:25,560 There's a subplot in that Anthropic, I think Cursor is 406 00:21:25,560 --> 00:21:28,600 like running through Anthropic. So like it's great business for 407 00:21:28,600 --> 00:21:31,000 Anthropic too. And it'll be interesting to see 408 00:21:31,200 --> 00:21:34,880 who really benefits more. Is it like Anthropic sort of 409 00:21:34,880 --> 00:21:39,480 genius, or is it Cursor's product that's more valuable and 410 00:21:39,680 --> 00:21:42,560 that that'll play out over time? Well, that's our show. 411 00:21:42,560 --> 00:21:46,200 We covered everything from politics to startup failures to 412 00:21:46,200 --> 00:21:49,040 startup wins. It's all of Silicon Valley in 413 00:21:49,040 --> 00:21:51,840 one episode. Run the gamut. 414 00:21:51,960 --> 00:21:53,360 All right. See you guys next week.