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VENTURE CAPITAL & PRIVATE INVESTING
Recorded: April 3, 2025 Duration: 0:59:24Space Recording
Short Summary
In a dynamic discussion on venture capital, industry leaders explored the growing momentum in private investing, the impact of current market trends on automation and robotics, and significant fundraising events like OpenAI's $40 billion round. The conversation highlighted optimism for long-term growth in both the venture capital space and the broader market.
Full Transcription
Thank you. What is up, everyone? Happy Thursday. Don't look at your long-term portfolios too much,
but it still is a great day to have a wonderful conversation here with the Venture Capital and
Private Investing Crew, a show that we started this year that has been gaining a lot of momentum,
something I've really enjoyed being a part of and listening in on.
And I'm not going to take much longer. Sorry for the slight delay getting started here. We had Tom Lee and Dan Niles over on our other space that we were just wrapping up there. So some
great conversations from some really great minds all across the Wolf Financial Network and nothing
less right here as we jump into the venture capital space.
Kyle, great to have you as always. Going to turn it over to you to get us opened up here.
Hello, hello. Welcome back to our venture capital space.
We do this space every day, or every week, excuse me, Thursdays at 5 p.m.
And look, you make a great point with the markets.
I mean, everybody's talking about what's going on in stocks.
And I got to say, today is one of those days
where it's nice to be a venture capital investor
because of the fact that your stuff doesn't trade.
And so you don't know what's going on
on a day-to-day basis, and it doesn't actually matter.
I'm trading on a seven to 10-year timeframe.
And so anything that could happen over a period of time, as long as I'm betting that it's going
to get ironed out over a couple of periods is all going to work out fine. So as we roll into
this space, get this thing kicked off, we're going to be adding some people here into the space and
move forward here. But my name is Kyle Sondland. I'm
a venture investor. I'm also a founder. I have invested in over a dozen different companies,
as well as fundraised over $5 million for my own businesses. So I've done this
on both sides of the coin. I've also led some syndications with other investors as well. So
I've done a lot of things in the industry. I love venture capital and private markets. And of course, I'm joined with my co-host,
Jared. Jared, I wanted to give you the chance to introduce yourself.
Hey, Kyle. Appreciate that. Excited to chat some more VC today. A lot of great updates from this
week. So definitely excited to get into this. My name is Jared. I go by Self-Taught Success on the
internet. And the meaning of that name is all information you need is out there. And it's
just up to you to seek it out and find it and then go apply it. And kind of my connection to
the VC space is I help founders, CEOs, and startups anywhere from pre-C, pre-revenue,
all the way up to publicly traded mid-cap stocks. So I help them grow their brands on Twitter,
help them grow their brands on X. help them grow their brands on X,
and that's kind of my connection to the space is kind of getting to know those founders from
the marketing angle. So excited to dive into our topics here today.
Yes, sir. We have a really good panel set for a discussion here as we go week by week
through the venture capital industry, breaking down what's
going on. And I'm just really happy to have you here as always, Jared. And I think we may have
a couple of guests, but we're working out on how to bring them up on stage. So I think for now,
we can just kind of kick it off with talking about, Jared, I led a little bit there on the public market sentiment
right now and how that might impact startup investing, but just, you know, how are you
feeling about the markets right now? Do you see some benefit in having more private company
exposure? And what are your thoughts on the VC private equity market compared to what's going
on in the public markets? Yeah. So I'm not actively
trading, so I don't necessarily freak out as much about short-term stuff. I have my long-term bets.
I like what I got. And honestly, I don't check price hardly ever. I just hold it and I hear
things here and there, check up on updates and just kind of wait it out. I know I have a timeline.
there, check up on updates and just kind of wait it out. I know I have a timeline. You kind of
mentioned your seven to 10 year. I know I have a multi-year timeline as well. So I just kind of let
things play out and don't get so worried about it. I will say, I do think that the tariff
situation, I bring that up because why is the market down? You know, it's the tariff situation and people, you know, reacting to that.
I do think long term, I feel like that's a good benefit for the U.S. stock market.
And I feel like we'll see that rebound here in the coming months towards the end of the year.
So I am still bullish on the stock market in general for 2025 and beyond that. So I think the short-term
pain is an opportunity to go forward. And I'd pass it back to you, Kyle, one thing that I've seen,
and I see we have Ravi up here as well, so we can kick it to him and let him intro. But
I'd like to pose a question to you, Kyle.
But first, Ravi, do you want to hop in and give a quick 30-second intro, kind of who you are and what's your kind of connection to the VC space?
Hi, everybody.
Interesting day.
And I do agree, by the way, with your comments.
So, Ray, looking at the space of India-U.S investments, so Ray, looking at emerging markets and emerging opportunities, especially AI driven opportunities that I'll probably talk about it.
So great to be here.
Awesome. Glad to have you. So I'll pose this question to Kyle kind of as a continuation of my points there.
And then Ravi, I'd love to get your points as well.
But you mentioned public markets, private markets.
One thing that we're seeing that is typically a public market fund
is New York City's pension fund is now looking into private equity AI startups.
So Kyle, what do you kind of see as the vision of more of those broader funds,
more of those government-based funds, turning to maybe more of the private sector instead of the
traditional stocks, bonds kind of aspect? And then how much allocation do you think that's
going to end up taking? Yeah, well, it's a really good question. And I actually think that the
current market sentiment does provide an opportunity here, right?
Because of the fact that a lot of existing manufacturing businesses have relied so much on cheap overseas labor, that's where so much of these tariffs have really caused pain.
pain. In my mind, and this is maybe a hot take, and I certainly, you know, we like to save those
for later in the show. But perhaps this incentivizes automation from a robotics perspective,
because that really does seem like the only way that you're going to be able to bring down
manufacturing if you're building inside of the US. And so perhaps because of the fact that robotics,
all that kind of thing is generally expensive, A,
but B, would require a pretty huge overhaul for existing companies. This actually presents a
really cool opportunity for localized smaller businesses inside of the U.S. to take advantage
of these opportunities. And that's kind of where you may be highlighting with some of these investments.
There may be opportunities for these larger investment companies, whether they're pensions
or whether they're institutional endowment style of funds, or if it's government funds
for some level of grant program or injections of capital into local economics, perhaps this drives automation forward in some
of the smaller markets where traditionally they were just entirely overlooked with the ability
of just being able to outsource to cheap labor. So if cheap labor being outsourced internationally
is no longer quite the same economic arbitrage, it does incentivize some of these more autonomous
opportunities, which I think we could really see
a growth in, which in and of itself is a private market, venture capital, kind of emerging tech
style of industry. So I think that there's actually a really interesting bull case you
could make here, not necessarily saying it's how I feel directly, but I see it as a rather
compelling thought around driving robotics as an innovative technology.
I see Ravi is giving some emojis. Do you have any perspectives?
Kyle, it's very interesting because yesterday, the entire half day, I was working on a pitch deck on AI and manufacturing.
And this morning I was working on the new book because I just finished writing the AI for food. And one big chunk of that book, guys, you can go into my link there and get the book.
One big chunk we talk about is AI and food manufacturing,
which is, as you said, exactly spot on.
I just cannot agree more because, yes, you know,
you said it earlier that, you know,
we are, of course, there is this reaction,
but we know for a long term that, you know, the manufacturing will drive this economy to the next level.
And the only way manufacturing can rebound and be long-term gain will be in this sunrise
industry powered by AI.
And where I think it's going to be very critical is to really look at, you know,
the, you know, like you said, the digital factories, the, you know,
digital twins and all these interesting innovations with robotics that are coming through.
And we are seeing their application in smaller areas.
And I cannot reveal, like, we spend the entire day with another customer,
which is big, you know, metal company, big means one of
the biggest in the world. And they're like, you know, what are you guys doing with AI and
manufacturing? Because we want to change because we have this issue with the labor, but we know
that with robotics, with AI, we can completely overcome that pain point and really start
producing. So really from a VC perspective, you know, you know, the piece which,
you know, I really look at is really the AI startups and the opportunity that are sitting
between the US and the India market. I've started looking at East Africa too, but this is the
focus. So for us here in US, in the US market, yes, there is a lot of issue, but this will be
and is the future provided, as you said, provided.
And this is one of the gaps, you know, like I do a lot of work with universities like Cornell, UC Davis and others.
But we also see that, you know, we need to kind of rehaul the skill gap and reskilling and upskilling to ensure that the startups that are coming through or the guidance, the mentorship, the coaching.
to ensure that the startups that are coming through or the guidance, the mentorship, the coaching, where do we really fill that gap?
Because I see that that becomes a little more techie, but it's not just cannot be just techie.
It has to be from an investment perspective and little coaching has to evolve in that area.
That's a great perspective, Ravi. I appreciate you sharing that.
That's a great perspective, Ravi.
I appreciate you sharing that.
One thing that I think is interesting about the whole New York City aspect of adding some
AI startups into their pension fund is I just love the idea of Grandpa the Boomer sitting
on the couch and looking at his portfolio and seeing he got 1,000x on some AI startup
kind of thing.
In other AI news today, I think the big one that pretty much everybody in the AI space or the VC space is aware of is OpenAI raised $40 billion led by SoftBank at a $300 billion valuation.
And they're raising funds for research and infrastructure.
Obviously, $40 billion is a lot of cash, and there's a lot of different things
they can do with that. My question was, I want to know, for $40 billion of research,
that's pretty extensive. So I was trying to figure out, how do you get on payroll for
typing in some questions and figuring out answers? So Kyle, as somebody who has a little bit more
background in raising funds and allocating
funds once you raise funds, what does that deployment of that $40 billion, how does OpenAI
kind of go about deploying that, choosing where they spend that, and make sure that it's spent
well where that $300 billion valuation comes to fruition and is legitimate.
Yeah, it's a great question.
And I do think that there's an important caveat here that, you know, not all fundraisers are created equal.
And so as far as I understand, there's only about $10 billion of the $40 billion that was announced that actually goes to OpenAI on day one.
So I think initially they're going to be getting $10 billion,
and then the remaining $30 billion, as far as I understand,
is tranched out over the next 12 months or so.
But I did read that if there's not some restructuring and a bunch of other terms and caveats, this number
actually could be cut close to in half to $20 billion at a max. So this actually is much less
money than it initially seems. And the valuation is actually, I think, a post-money valuation,
meaning they're taking the valuation of the company somewhere around $250 billion and then
adding that expected $40 billion on top and saying,
all right, well, we're at a $260 billion valuation. Now we're throwing $40 billion on. So the company's
worth $300. But I think that that, again, has a lot of assumptions in play. Obviously, if they're
only getting $10 billion up front, then that alone takes off a pretty big chunk of that
valuation until the earn out actually happens. So I do think that that's an important clarification.
And this is a greater theme. We see this all the time in startups and venture capital,
is that companies are overstating these types of metrics for a performative style of effort.
I'm not saying that that's what OpenAI is doing, but I'm just
saying it's a trend that we see a lot in the private equity venture capital space. Now, to
kick over to your question, what is this being used for? I would bet a big chunk of this is
actually infrastructure. So much of what OpenAI is trying to do revolves around how many generations
they can do within their AI software, which means they've got to run computers to actually do it.
Right.
And so a lot of what they actually spend this money on is securing compute,
computing hardware so that they can actually successfully fulfill the demands.
Right.
They actually had to begin rate limiting free users on chat GPT for image
generation last week or the week before,
because of the fact that everybody wanted to do the Studio Ghibli style of image generation, but they just don't have
enough processing power and server power to do that. They also may be actually operating at a
loss even despite that. And we don't necessarily get insight into how much money they're making,
but I do understand
that in the past, they actually hadn't been profitable as a business. So a lot of this
actually may be continuing to subsidize the service as they figure out what their core
competitive moat is as a company. So I think that a lot of those things fall into play here.
It actually rolls into a conversation that I don't want to jump into yet because I do want to pass it
over to Ravi if he has any thoughts.
But I'm pretty bullish on CoreWeave, as we talked about.
They are an infrastructure provider that provides the compute power for these types of companies.
They have totally ripped over the last couple of days.
I guess today, I'm sure a lot of that gain was wiped out.
I haven't really checked the markets at all today, despite all the FUD all over the internet.
But I think that those types of companies that are selling infrastructure for these software
businesses are going to continue to grind and succeed. So those are kind of my high-level
thoughts on that fundraise. I can certainly provide more if you have any other questions.
No, that's great. I do have a follow-up question that I want to get to that might tie into the point that you said you want to get to later. But first, I want to pass it to Ravi and see if you had any thoughts you wanted to add in on that.
And I think one thing that's becoming critical is also the sustainability aspect of it.
So I fully see the investment in infrastructure.
It's huge.
It's massive.
And really, you know, and that's why we need to understand where the world economy is when this economy is moving.
There will be completely an AI-generated commodity space that will come in 20, maybe in the next five years.
That we'll see a lot of stuff that we're consuming are really coming becoming more efficient so i really see that path very very
clear so there will be that infrastructure and i think a lot you know i was just funny on the on
the uh boomers that you were joking this morning i was in a conversation with somebody in that age
group and they said you know here's x amount of money you know just put it in any ai startup that
you really believe in so there is also that very strange wave that is coming through where people are like, you know,
I want to put and be part of this conversation because we want to put the money in. So my going
back to another question to, you know, I'm a speaker here, but just to guys for you to reflect
is given what's happening to the market, will you see money move to the VC world or will it move
away? I mean, this is a question.
I see a different story in India because the Indian market responded very differently to
what we're seeing here.
And there, there seems to be an opportunity visibly China and Vietnam.
So we might see a very big rise in a stronger startups and investments coming there.
But what is your take on the American side?
That's a really good question, Ravi. Bill Ackman actually put a tweet out on that this week.
So I'm going to go find that tweet. And in the meantime, Kyle, I want to pass it to you on this.
Yeah, it's look, there's a lot of factors at play here. And, you know, it'll be cool to see how the public market continues to adjust to this.
I mean, like I was reading, speaking of interesting tweets, you know, just how much sell off Warren Buffett, for example, has done on Apple, who really tried to get into the AI game.
And they really have struggled so far.
And I don't want to necessarily say that that will be forever.
But, you know, going on two or three years now that they really have been pushing this
AI thing and haven't quite figured out what to do.
We're now, what, 10 years into Siri and that's still useless.
I have it disabled on my phone.
I don't know about anybody else.
I can't think of a single person that actually uses Siri.
And so, like so it's just a
fascinating dynamic here. Whether it's robotics, like we talked about earlier, whether it's AI,
it'll be fascinating to see if this technology is another example of the paper company that
gets put out of business by the new tech internet businesses. And is that going to be a similar style of
situation for some of these overweight software companies from the 2000s to the 2010s to,
you know, the early 2020s? As I said, with Warren Buffett, he has sold, I think, close to 70%
of his position in Apple. And his position in Apple, let's not forget, was an incredibly
large portion in his portfolio for Berkshire Hathaway. And he has de-levered over the last
year plus. And I can't help but see that they're writing on the wall here. I mean, a lot of these
companies have kind of hit a stone wall with respect to the hardware and the software doesn't seem to really
be improving in a meaningful way from a GDP expansion perspective. I think it does open up
really big opportunities to decouple or debundle some of these industries. Now, with hardware,
it is tougher because of how much upfront cost there is in actual physical products.
But on the software side, if you're not at the top, if you're not at the top of your game, you can be displaced really, really quickly.
And, you know, the minute that OpenAI or some other company launches a phone that's got AI built in through and through, it's going to be a really interesting play for American businesses.
And I think that there's a really fair question to be asked there around how these companies are going to be able to respond. And so, you know, I guess you'd rather
rip that bandaid off now and have to deal with the consequences of it in the short term,
instead of having this be a long drawn out fall of Rome kind of situation. So from my perspective,
I think that, you know, drastic times call for drastic measures and necessity breeds innovation.
And I think it's a really interesting time in the market right now where we have all the tools.
It's just a matter of who's going to step up to the plate and really drive meaningful change.
That's awesome.
So I did find the tweet I was looking for, not Bill Ackman, but from Jamie Diamond.
So I don't know, maybe you could say that's the same guy there.
But I pinned that at the top if you guys want to check that out.
But I'll just kind of read this tweet to you guys,
and then I'd love to hear your guys' response.
CEO Jamie Diamond last week said,
we've gone from, I'm going back like 20 years now,
8,000 public companies to 4,000.
We're driving companies out of the public markets because of litigation, regulation,
reporting requirements, cookie cutter expectations of how we want boards to be,
excess regulation, shareholder meetings, which are frivolous.
So basically he's saying he does see that shift from public to private companies,
but the reason he sees that
is just because of all the legal framework that's a pain to deal with
so Kyle, Ravi, I want to give you guys a chance to respond to that
I'm having some audio issues, Ravi you take it first
Kyle I was actually trying to read it so because because I got a call in between, so I'm reading it.
I mean, you know, honestly, you know, I was also trying to go back to,
I don't know if you guys have gone back to the Nixon shock and the Reaganomics
and understand what happened to the investments and stuff.
And I think, like you said, Kyle, that this is definitely a pill that we need
to swallow and we need to turn this into an opportunity. I think one thing which has always
happened, especially here, is that there has always been the sunrise given what we're seeing here.
And, you know, in terms of really looking at, it's like a mix, right? Because you could look at from a VC perspective saying that I need to watch this and really see whether there will be enough startups, especially in the AI world, because the AI is also becoming like almost like a dot-com bubble.
But AI that is linked to manufacturing, production, process manufacturing is something that was not being done in the first wave.
And I think that's something which we need to look at. And I was speaking to another person this morning, and they're saying,
you know, we are very clear that there is a shift. And this is a big, you know, about about, I think,
about a million fund based out of Chicago. They said we're moving away from just peripheral
investments, but really manufacturing in the Midwest.
So that conversation I did not see two years ago.
And that is new.
And I really welcome it because, you know, I've been talking about AI manufacturing.
People thought it was crazy.
And I was saying that given this market, we need to pivot into robotics, into innovation in that space.
So on your point, Kyle, that if Jamie Dimon's another, I really hope they put the money
into it because they haven't.
Right. And this is where I think it'll be interesting to see some big funds and big investors making that shift.
The danger to that is that maybe everybody wants to do it.
So to really understand the market and the consumer base and then say, you know, we don't overproduce because we have this whole tariff situation going on.
And then we know that there are other markets, secondary markets, who want to do well with,
and I know the Indian market well better than the others.
And they are like lining up and saying that, you know, we are going to fill the void
and be the U.S.-India buddy for the next 20 years.
So also, I would say that look at this, I think you said it earlier, from a long-term perspective.
This is not going to be five years, 10 years.
This is a long-term opportunity to make money.
Absolutely agree.
Absolutely agree.
And, you know, I think that it's this bundling, unbundling theory that Paul Graham has talked about a lot,
It's this bundling, unbundling theory that Paul Graham has talked about a lot, where,
you know, over time, you see this type of system where conglomeratization or the collection
of things put together sees massive scale, right?
Economics of scale and this type of thing is a pretty well-documented economic concept.
The problem with that, though, is that you reach a certain scale where the inefficiencies of bureaucracy actually end up hindering the
business's growth over time, especially when you have new technologies or new paradigms that can
kind of the corporate inertia prevents the changes from actually happening, whether it's from the
banking systems, whether it's from traditional tech companies or just general other factors at play. And then you see somewhat of an unbundling where
then services get stripped out and are offered kind of at a much cheaper rate at a much smaller
service stack. But people are willing to pay for just a piece of it for much cheaper. And you kind
of see this bundling, unbundling go in a pendulum back and forth over time, over market cycles and things like that. And I think that we're
definitely at one of those kind of peak bundle style of situations where everyone's in mutual
funds and passively traded funds. There's a lot of bulk, a lot of venture capital has been following
kind of the same trends. They all kind of pile into the same businesses. You've got open AI that raises 10 plus billion dollars in a funding round, right? A lot of these kind of
really large style of rounds and very concentrated industries, but that presents opportunities
because then there are overlooked companies and there's overweight business models and practices.
And again, I'm just very optimistic despite what's going on and the sentiment, what seems like everybody's just really pissed off
these days. I'm actually really bullish on innovation in general, and that might look
different in terms of who's doing it or where it's happening or how it's performing. But I
really feel like there is definitely a lot of opportunity in the market because the biggest
players, while they do have the largest capital stack, they are not moving as efficiently and I think capturing the 10x
opportunity of whether it's robotics, whether it's AI, even if it's global trade, there's
a lot of opportunities right now, a lot of alpha in the market that really doesn't feel
like it's being taken advantage of properly by the existing incumbents.
That's what's got me excited.
So I just want to add one point kyle uh you know today there was a very interesting speech by the
indian commerce minister and they were looking at the startup ecosystem in india and they basically
remember the last week when i was speaking and i made this comparison because you know i know
there's some startups who are not getting the vc money they're looking sba and others
and in india i shared like they have a completely evolved government investing and promoting the startup culture, innovation.
And this minister was extremely critical of the startups in India saying that, you know, we need to go beyond this into really smart manufacturing, into innovation and the areas that we are not comfortable with.
And he did make a very interesting comparison with china and he said you know we don't know so much about china but we know that china money which is mainly ccp
money does do that right and most of these startups in china are so-called private but
then we know that they're not really really private but there is innovation right and i think
the biggest on your point i think the biggest trump uh oh my God, I'm using the word Trump card. It is, I don't know guys, whether it's a Trump card, but do you know the Trump card this country has?
It's one thing which has been constant has been continued innovation, right?
And I think this is that opportunity on the manufacturing front, robotics, and the way we're looking at the economy coming through.
true really this is this is going to be very very big and on the on the government side i'll be very
Really, this is going to be very, very big.
very intrigued i really hope because i'm trying to go to dc next week to meet some folks there
really hope that we get some uh while the way the market is responding to really look at on the
point about the of this new york pension fund or will there be some federal support initiatives
for startups who want to venture into new areas that they may not find some money easily?
Because I suspect that there will be in the beginning, there will be some VCs who are brave, like who want to invest in innovation.
And but some will hold back and some may even some of the IPOs will be delayed because of what we're looking at the situation.
at the situation. But overall, I'm absolutely with you. Yes, pause, but this is to be very
ambitious and look at innovation as the biggest opportunity. That's a lot of really good points
there. And the aspect of will there be federal funding is a really interesting standpoint.
I know the Trump administration is very big on built-in America and so I could see there being some benefits from that aspect. For the audience we are at the
halfway point of the show. We host this venture capital private investing
spaces every Thursday the same time. We have a lot of great speakers that we
rotate through so if you're in the crowd go ahead and give the speakers here a
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stay up to date with all their great content that they put out and also if you would click the
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and go ahead and retweet our space so we can get more people in here to continue educating them
i want to shift a little bit here, but still saying on the
AI topic, question that I want to pose for our panel here is earlier this week, Isomorphic Labs
raised $600 million. And if you're not familiar with them, that is Google's AI arm of Google. And they are raising that money to help drug discovery
with AI. And so, Kyle, you talk about different advancements and being bullish on innovation.
What does AI do for the pharmaceutical side, the health sector, but also tying that in with the private investing
side of the health sector. Yeah, it's fascinating because on one hand, I want to be really optimistic
here. I really want to believe that, and I think that what most people would suggest and most of
these investors are buying into and what everybody kind of from a trend perspective is psyched about is this idea that, okay,
if we can use AI and compute to model the human behavior and the human biological design,
we can then start to pull levers and test to see if it actually makes changes inside the body.
And if we can pull those levers, because obviously, as people know, with your body,
you know, there's a lot of different cycles and things that are balanced off of each other. So
if we can start to play and test in a sandbox environment to see what levers need to get pulled,
and test in a sandbox environment to see what levers need to get pulled, we can then figure
out how to reverse engineer a pharmaceutical that does that exact thing that we know solves
the exact problem, right?
So it's actually kind of tackling biomedical from the opposite spectrum.
Let's find the solution and then build a product that triggers that solution within the
body, as opposed to let's develop a bunch of different drugs and test which one has the best
effect long-term to solve for the symptoms. And while, you know, I think that this is a
fascinating idea, and we see this actually at play in astrophysics. A lot of the biochemistry and
astrophysics that's used in modeling satellites and spaceships, a lot of this stuff is where they
build out environments that have all the different gravitational poles, and then they can run the
math to factor in these things together. That all makes sense to me. The biggest problem for me in
biomedical is actually the bureaucracy. You know. To get drugs passed, to do clinical
trials, to get these things, to work with insurance companies, to work with hospitals,
this stuff, there's so much manual issues. And as far as I understand, a lot of the problems
in drug discovery are actually not really from the research and from the development of drugs,
not to say that AI wouldn't 10x that, but the bigger problem, even if you did come up with
those solutions, is actually getting it approved. And that can take years and years and years.
That can take so much funding and expense, not necessarily on developing the drug,
but also on getting the paperwork, getting the regulatory buy-in,
all of these types of things. And that's my biggest concern around working in the health tech
industries is just the amount of bureaucracy that no matter how you can develop the actual
end solution, if it's going to go into your body as a pill or as a shot or however, as a topical,
as a pill or as a shot or however, as a topical,
if it's a drug to be used via prescription,
you have a lot of hoops to jump through
that AI doesn't solve for you.
Maybe they would do some filling out of forms.
Maybe there'd be some things that AI would help with,
but the months and months and months of wait time
in between the different approval ratings
and evaluations and stuff,
AI at this point, unfortunately, can't speed those things up, which I think is probably
the biggest hurdle in that industry.
So I don't know if Ravi has a different perspective there, but I'm actually, I think, a little
bit less bullish than others might be on this topic.
You know, it's very funny because for the last four days, there's been a very interesting conversation on a pharma startup that is coming through from Texas.
And it's interesting because the reason I say that is because one of the biggest opportunity here is really to solve some medical problems and especially on the R&D side.
And that's where a lot of these pharma people really put in money.
And the pain point really there is that, you know, you're not able to really either be accurate, the quality, and as you said, timely delivery.
So we are seeing at least with some early stages of some interesting breakthroughs using AI models in helping find some fantastic remedies and solutions that have not really been there because it
takes forever to really come up with it.
And as you said, there are multiple, multiple, multiple levels of certification and all that
happens before it really comes to the production.
And the other piece with the pharma industry, which is a very big opportunity, is really on the AI manufacturing in the pharma, you know, from a bench to, you know, up the way to manufacturing is, will this really improve?
Because this is going back to your question, Kyle, that imagine if there is a, finally, we have a factory here somewhere in the US, and it says, okay, we're bringing jobs back.
But even if we are bringing jobs back,
the jobs will look different.
Because with robotics, you're looking at creating these new drugs,
whether they're pills or they're whatever, injections,
you will have more robotics in place.
Because when the jobs went away, it was a very different industry,
very different factory.
But now this factory will be this dark factory or the factory of the future,
which will almost run at least, if not 24 hours, 20 hours, increasing yield and efficiency.
So AI can play a very critical role in that aspect.
Of course, I think there is a lot of work that needs to go into all the clearance and the compliance and safety, everything.
to go into all the clearance and the compliance and safety, everything.
And there, I think, I hope that this administration is going to take out those insane layers
because we've seen that the reason India market, remember, the pharma was very big in China,
but India slowly started moving in and out.
The biggest manufacturing in pharma is really India, seen as the pharmacy of the world.
And that's what it
especially in the last 10 years you saw the uh indian um you know especially after this
administration came in modi they removed those layers they were insane you know i'm just telling
you from a time just a very simple indicators to set up a new company it took you like seven weeks
any company doesn't matter now it takes you one and
they had to go to like five to six different offices now you go to one shop and you go to one
window and say that this is what i want to set up and in an hour's time you can actually set up
something and this is the bureaucracy that had to be cut and i think that's so critical to look at
the the the i would say the impediments and the hurdles that we put in for innovation.
I think they have to go, whether it's pharma industry, agri-industry, food industry, any industry, that is the opportunity.
I think that ties in pretty closely with what we talked about a little earlier with as far as Jamie Dimon's perspective of just all the hoops you have to jump through makes that a bit of a
challenge. Wolf, I saw that you had your hand up and had a question. Did you want to hop in?
Yeah, great conversation as always. Kyle and Ravi both kind of want to maybe pivot slightly here,
but it kind of got my brain moving a little bit thinking about, one, what Jared brought up there with Jamie Dimon's comments about kind of moving backwards,
it seems, when it comes to public companies. But for maybe myself and the audience here,
we've talked a lot on this space about what we look for or what you guys look for in the VC private investing world.
But recently in the market side of things, we've had some IPOs that have gone absolutely crazy.
So kind of a two-pronged question here. As a VC from your perspective,
what does your process look like when you're investing? We know that seed investors,
early investors are ones that make the biggest returns before something goes public. What are your thoughts around IPOs? Do you want to see something that you're involved in look to IPO and to actually go public? Is that a goal of
yours? And also, just any thoughts around, I would love to hear how that process looks to you,
and then your thoughts around the IPOs in general. I mean, this past week, we had CoreWeave go red initially and then shoot up. It's up 40% still from the IPO.
Newsmax was a really big one that people were looking at that shot up like crazy. It's pulled
back drastically now, but I mean, it hit like a $30 billion, $40 billion market cap at one point, which is absolutely insane. It's still up over 300% from the IPO price there. But I would love to get your
thoughts around IPOs in general and then your process, your strategy from the VC perspective
and the private investing perspective. Is that even an ultimate goal of yours? And what do you think around these IPOs going on?
Great, great question. And I love that you brought up this topic. I love IPOs personally. My background, I started in the public markets. Anybody that trades crypto, I've also been in that space for a while, recognizes and understands the value of being able to trade these things.
Not only is it such an important mechanism because it's the only thing that you can control.
So I had one time I had an investor that actually gave me some really good feedback.
And when I was raising for one of my businesses, we were talking about exit opportunities,
because just like what you're mentioning, one of the big things I think as a VC is you want to see,
all right, does this founder have a good idea of how they're actually going to return capital?
And part of that is, okay, we want to run a profitable business forever,
and I'll give you dividends on if you own 10%, then you can get 10% of the revenue.
But that's not usually
what the pitch is. Usually it is, I would like to get acquired by another company, or I would like
to IPO. Now in acquisition, it sounds great. Yeah. Citadel is going to acquire me or yeah.
You know, Google's going to acquire me or Apple's going to acquire me. Sounds great, but it is
really difficult because it's out of your control, right? You're never going to directly be able to a hundred percent control
that Apple is going to acquire your business. You can control that you have a good business
and you might be able to control that Apple might be interested one day, but to be able to control
that they will buy you is just not something you can guarantee. Now, on the other
side, if you look at an IPO, that's a company going public. That is a company making a decision
to do the legal filings, to make sure that their business is in good legal standing,
to have a healthy balance sheet, to pitch investment banks. And all of that is actually
in your direct control. So maybe you could get
a acquisition offer and maybe you'll take it or maybe you won't if it's not a good thing for you.
But I love IPOs and I like when I hear founders are focused on a future IPO because that is
something that you can directly control as the founder or CEO of a business is that you want to
take it public and that you are
going to take it public. And so I think that it's a really, really important piece of our capital
markets. I think it is a, you know, I've talked about this with some friends privately. You know,
I'm not necessarily the biggest regulation guy. I wouldn't say that I'm anti-regulation by any
means. I'm probably more compliant and regulatory focused than most of my crypto compatriots.
But despite that, it feels wrong to me that a company like OpenAI can raise tens of billions
of dollars in the private markets.
Like when you look at how Apple or Amazon, for example, Amazon went public with Jeff
Bezos at a $500 million valuation.
And this OpenAI company, it's a decent chance that they will be a private company that does
a $500 billion valuation fundraise, a 1,000 times larger business than Amazon. And they will not be
public at that point. That's not even a 2x valuation increase from what they just raised from, basically. So I think that that's a really flawed capital market system. I think it's disappointing because I do think that this is part of why the middle class is struggling right now outside of all of the other reasons that most people like to point to. I actually point to the fact that the public markets just don't allow retail investors to actually get exposure to the healthy, successful businesses.
The only ones doing crowdfunds, and I know because I was a crowdfunding guy,
are businesses that have struggled to do it other ways. And companies like OpenAI,
of course they don't want to go public, but it is their duty, in my opinion, to make themselves available to the broader public,
as well as the fact that it forces them to do disclosures and things that are just generally
healthy for the capital markets infrastructure.
And it provides insight for other businesses.
And it helps us understand where the trends are going.
And so I could go on this forever.
I want to pause there so that I don't just ramble. But I'm very bullish on IPOs. I think it's something that's really,
really important. I'd love to make IPOs cool again. And so I want to celebrate companies
like CoreWeave. Again, I don't own any stocks. So anybody that knows, I literally own zero
of the company. I'm just super bullish on this process.
I'm bullish on their application of the infrastructure.
And I hope more companies IPO.
We see Circle just filed.
I'd love to see more IPOs because we need more of this kind of mid-market tech that
still has 10, 100x return profiles available on the public markets.
Not to mention, it allows VCs and early investors
to actually get out.
Go ahead, Ravi.
No, no, go ahead.
I'll speak after you.
Go ahead.
I was just going to say, for me, when I look at different companies, it's like I want them
to IPO.
I mean, I think that access, I mean, there's different ways to get liquidity in the process but to be able to sell stocks you know your shares it's once
you go public it that's the really the easiest way and so also there's there's a little bit of
pride in that saying yeah I bought it you know at this point and now we IPO if you're in early
enough you get to go and ring the bell I mean mean, some of those things, I don't know. I think those are worth a little bit.
But I definitely, when I look at companies here and there, I'm definitely a fan of the
aspect of the founder wanting to go public at some point.
Ravi?
Yeah, I think I fully agree.
I hope you guys can hear me.
I think the timing of IPO is really critical because I think, you know,
I know that some folks get in a hurry to IPO and say, oh, I need to go now.
And then we've seen some major blunders.
And, you know, there's one company which I've been coaching and, you know,
invested in, which is going IPO this coming May.
And they wanted to go last year.
And I said, you know, don't look at where the market is.
Are you ready?
And I'm absolutely,
and IPO is a great indicator
of a good economy.
I think that's definitely important,
but we should not,
because, you know,
something we saw in the Indian market
was almost like a fashion
that everybody wants to go IPO.
And I think that's something
which needs to be really be
handled more cautiously.
And where you've seen some of the investors also pushing and saying, you know, go IPO.
And this guy who I've been mentoring for years, he said, you know, I need to go.
I said, let's look at evaluate.
And yes, do IPO when the time is right and you're totally ready.
Because then it can be a very big turning point, not for your own company but also to that particular industry without naming the name of
the company drones are becoming big in india right and this is one company that i've really
seen the entire journey through and uh and then you see now finally because they're not going
away from the chinese-made drones i said now it is a time you see the policy you see the demand
you've seen the investment you've seen You see the demand. You've seen the
investment. You've seen the government money come in. You've seen the other competitors.
This is the time to go. So I think that is really critical. And definitely, I'm totally an IPO
person too. But the timing is very, very critical. It is very much to look at the journey before we
really get into that. Awesome.
I appreciate you guys sharing your perspective.
I have one more topic that I want to get into here today before we hop off.
And if you're new here, thanks for being here. We're here every Thursday, same time, our show, and we love to just talk VC.
So thanks for being here.
One last topic before we go.
I have this pinned in the scoreboard at the top. Cursor closed a round at a $9.6 billion evaluation.
And this round is up in November 2024, when they did $200 million ARRR, threw up 4x from that, a $2.5 billion round.
But both times they raised the 50x multiple of ARR. I wanted to kind of get your guys' thoughts on
the valuation aspects and why people are so bullish to invest in a company so early at such
a high multiple of what they're showing in revenue
there? Yeah, this is a fascinating discussion. I mean, Cursor is the poster child for the,
you know, quote unquote, GPT wrapper company. And I remember when, when, you know, some of these
foundational large language models came out, everybody said, oh, you know, there's no money
to be made at the wrapper level. It's all at the foundational base model level. Well, Cursor is a great example. I
don't know what model they run on, but I'm fairly certain that they don't run their own model. And
yet they're making, you know, close to a billion dollars in run rate. And they've got like 20 or 30 employees. They have
just a couple of cracked developers and they have built an unbelievable company. And I think that
this is why they're able to get such high revenue multiples. It's just because the ceiling is
unclear in a good way, like in the best way, in the sense that, you know, how far can these this small little team take this?
There's a lot of market share and their margins, obviously, from an operational expense perspective is way lower than what an existing traditional company that might provide IT services would would cost and would do.
And that's incredibly competitive and that's really, really attractive.
So I think that this is a tremendous, tremendous round. This is a great company. And I don't think
it's unreasonable, to be honest with you. I think you look at what some of these companies in the
traditional markets are valued at, and you might say that $9 billion is undervalued. At the same
time, we'll see what happens over the next couple of
years. Perhaps they flatline or perhaps they get displaced by somebody else. But I think that this
era of having a small employee headcount and a ton, a ton of revenue, you look at a company like
Tether that has 50 employees and makes tens of billions a year on a financial side with stable
coins and how that changes banking dynamics.
You now have Cursor that does IT development.
What this is going to look like in other industries is a really, really interesting case study
and a great, great article to bring up, Jared.
Yeah, I think there's – I've seen a lot of different things on the aspect of pretty soon we're going to have, you know, one person companies where the guy is just absolutely incredible at what he does with AI and what he does with software.
And one person alone is going to build a hundred billion dollar company by himself just because of the aspect of AI can basically duplicate so many people with the work of one once it's programmed.
So that's definitely some interesting points you bring up there. Kyle, Ravi, I want to give you a chance.
No, it's like you were reading my mind. I was going to say exactly the same point on the, you know,
the whole talk about the one employee, you know, unicorns. But I think the point that Kyle talked about,
you know, that is something which people need to understand that the way the world economy has been very labor heavy, pick up anything.
With the agentic AI and with artificial super intelligence coming in, we will actually have a very, very different look, feel and outcomes of the economy.
very, very different look, feel, and outcomes of the economy.
And I think anybody who's able to crack it,
no matter which sector you are in,
if you're able to get that early in
and find that innovation that Kyle was talking about,
that is going to be the secret sauce.
And that really is, and now there's no excuse to say,
like the point you just said, there's no excuse.
If you're really looking at some bright idea,
you have the tools now. You know, you're not sitting and coding any longer than ag ag is according for you
right so this is that very interesting point and i think where we are in five years we'll look at
that you remember that i was part of those uh you know, computer guys in India who were before computer science and after computer science.
So I think you see that very clearly. We are in that era and that time.
And we really need to get excited about it.
And if any of those listeners who are excited to go back and look at your idea and do apply the AI lens to it and do use these tools that are available because there is that opportunity.
to it and do use these tools that are available because there is that opportunity.
So on your point, I think really that, you know, especially on this particular case,
the last point I want to land here is the AI-driven companies will be personnel light.
So we don't have to have endless number.
And that's what I think you've seen with X is a great example of, I'm not getting into
the discussion with who he is and what he's done, but you can do much more with a smaller, efficient team with the right tools.
And that can really improve efficiency and delivery.
I think that is the opportunity.
Efficiency is the name of the game.
And AI is going to continue to make that the winning part of the game.
And so it's going to be one of those things, you know, you're either going to figure it out or you're going to fall behind.
Kind of like, you know, if you go back however many years, it was that way with email.
Like if you didn't use it, you're going to fall behind.
Same thing with Internet.
Same thing with cell phones.
Same thing with smartphones.
AI is just the next thing in that cycle.
So everybody's going to have to start using it.
Schools are going to have to start teaching it because once these companies
start to show the capabilities of what's possible,
it gets to a point where you can't deny the strength behind that.
So that's kind of the thought.
Ravi, I'll pass it back to you for a quick 30 seconds before we wrap up.
Yeah, quick 30 seconds on the school piece. Between 2020 to 2023, during COVID,
the schools in India, and I'm not going to go crazy because I'm Indian, but Indian origin,
they were teaching AI skills in middle and in high school. and they also introduce, you know, optional curriculum to set up your AI company.
And, you know, when I go back to all these universities here,
and they're like, oh, we're still struggling to integrate AI
into my curriculum.
Can you write the course for me?
And this is a very, very important point,
because if you're looking at the future,
we need to ensure whatever we're teaching,
no matter where, whether it's medicine too or pharma, any industry, including finance, wherever, we need to look at the application like yesterday.
And whoever cracks this earlier, that's another very big opportunity on the education and skilling piece.
So that's going to be key.
Awesome. Appreciate that insight.
I'm going to pass it here to Kyle and Emp and let us wrap us up for today. Thanks, everybody, for joining. Make sure to go ahead and follow all of our speakers. They post a lot of good content every day. And so stay up to date with what they're working on, their content, and continue to learn from them. So Kyle, thanks for joining us today. I'll pass it to you.
learn from them. So Kyle, thanks for joining us today. I'll pass it to you.
Hey, Jared, I thought you did an awesome job as the host and moderator today. I was happy to kind
of sit in a bit more of a panelist style of role. I think Ravi and I had a great dynamic. It was
really, really great to hear his perspectives. Always wonderful to have him on the show.
Major shout out to everybody tuning in. We had 250,
close to 300 concurrent listeners. That means thousands of people have listened and tuned in
to this week's episode of the Venture Capital and Private Investing Show here on Wolf Financial.
If you don't know Wolf Financial, there's all kinds of Twitter spaces that go on all day.
There's a separate account for Web3. This one's all about public
markets, trading, finance, everything that you want to get for your MBA on the Twittersphere
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Want to shout out Emp and all the other Wolf Financial team members behind the scenes,
Sam, Evan, and others for making the whole thing happen. And with that, I'll tune it over to the host so that we can close out the show.
Appreciate that, Kyle.
Big shout out to you and Ravi.
Great conversation today.
Jared as well, self-taught success.
Hopefully all of you guys in the crowd are already following.
If not, definitely improve your experience on this app by giving those guys a
follow. And of course, right here on Wolf Financial, as Kyle was just mentioning, we have all kinds of
Spaces content all the time, pretty much all week long, all throughout the day. Yesterday, we actually
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over 62,000 people tune in to that space yesterday. We had Dan
Niles and Tom Lee on today on that same account. So make sure you're checking out all the different
content that we do offer here on X. We appreciate everyone that tuned in. And one last comment,
if you do have any questions, if you're a typical listener of this show that we run each and every
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If you ever have any questions that you want to throw to our panelists,
go ahead and tap that purple pill down on the bottom of the spaces.
Respond to the space with some questions. I'll remind everyone next week as well, and we can get some feedback from the crowd.
We'd love to get some more participation from everyone.
We do have three great guests lined up for next week as well.
Ravi, we hope that you will come back with us
as well as the rest of the panel.
And of course, Kyle and Jared, my two co-hosts,
thank you so much.
Hope everyone has a great, great rest
of their Thursday evening.
And we'll see you around all of our other spaces content.
And then of course, right here on this show
next Thursday at 5 Eastern. Thanks all.
Hope you have a great evening.
Take care.
