Keith Rabois on Ramp's moat, humanoid robot risks from China, and why he's skeptical of the crypto reserve

wild we got Keith in the waiting room oh yeah that's perfect you have to imagine blue Ghost was running on ramp to uh you know make it to the moon oh undoubtedly you can't you can't get to the moon if you're taking 45 days to close your books every month it's impossible what do you think Keith is it possible the future is on ramp so all the companies that want to create the future hopefully are saving time and money on ramp yes yes I love it uh can you give us the update uh what's going on with ramp they seem to be on a tear valuations never been higher uh actually I would push back and say take a take a victory lab I know the the job's not done Eric has been very clear about that but uh I feel like you can take a little bit of a Victory lap uh and probably more more this year to come given the momentum well the amazing thing about ramp is the value proposition you know has been clear from the beginning we're going to save you time we're going to save you money and now there's empirical evidence across any type of company we can show that you know 5% this 10% that so it's very obvious and the CFO world is one of the most archaic worlds parts of any business even the most Cutting Edge organizations typically have a very archaic call it uh analog uh CFO function and ramp has the vision of we're going to digitalize and bring the CFO function and all the finance into the Modern Age and use the same tools same techniques same data same software same SAS tools that everybody else in your organization uses and that's why it's such an exciting Vision like the Valu the valuation you know is somewhat art not science but the reason why investors all across the globe are static about you know investing in ramp at any point is because we have this vision of changing and transforming the CFO suite and every company has this broken engine has an old engine from the 1800s or 1900s and we're going to bring the engine of Finance into the 22nd century first 21st century uh AI will probably bring us into the 22nd century with ramp two so that's why everybody's excited the other the thing that's special about the company though and the short term is usually at this level of scale companies slow down the product velocity slows down the quality of talents uh decreases um we have a reversion to the mean so to speak and ramp of anything is fire out all cylinders the product velocity is increasing the quality and insights of the product um in the team are improving the intern classes for the last two years are by far the best intern classes anywhere in the globe so that's the future and so that's why this round is very exciting because it's a prediction for the future based upon a lot a a lot of Savvy people who get access to all the best companies that Ram still has the highest slope which is you know a play on their metaphor H do you think uh that's because Eric and Kareem are second time Founders like like can you break them down as Founders and like what makes them able to stay on the like just insane Cadence going into year six going into year 10 like H how do they have so much energy great question I wish I wish I knew the answer because I would love to invested more if you can come up with a formula or predict a formula that's great but having worked with them now for over five years I think there's a couple ingredients one subtle ingredient is Eric has amazing marketing instincts and you really can't train this the best CEOs or the chief marketing officer for the company and you know Eric entered originally a space that was quote unquote crowded there were large incumbents there were other funded startups and we were able to cut through the Clutter immediately and he he deserves the credit for being able to clarify succinctly powerfully and communicate the value proposition of RAM and then reinvent that every year or two to make it broader more relevant more more impressive actually Korean you know is setting the engineering both Tempo and Quality Bar and has been from the beginning and I think the combination is really interesting and you know maybe a global point is if you look at some of the other heroic companies and in people's portfolios let's say strike yeah you have two brothers um so you're getting two Executives for one I think you know ramp there's like you're getting two CEOs for one and so I think an other amazing company is that incredible Synergy between two incredibly talented people where you're always on the same page and you really reinforce each other is very rare and so if I can find two other Founders that are that much in sync um that might be the reason to invest actually yeah well what are you seeing for like young gen Z Founders like what what like like there's this narrative like oh gen Z hasn't produced their Zuck yet like what's what's your take on that and and and what would be some advice for you know the younger entrepreneurs who are coming in maybe deciding between like hey I build a chat GPT rapper make some money maybe it's not a vcable company but it gets me paid versus let me take a big shot at something massive like how do you counsel people these days I don't think there's a formula that works for building an iconic company like as you put it out Zuckerberg is his first company yeah um Eric and cream did build a company to sell a company so I don't I don't think there's a one siiz fits-all formula I think it really comes down to do you have a vision of what the world needs and do you have a strategic advantage in your own traits your own personal superpowers that maps to that problem set and if you have one when you're 19 years old or 20 years old or 21 years old it might be a really good idea to proceed if you don't have that combination of a vision and your own superpowers then learning building working with other talented people might be a really good um sort of formula for those of you who are sports fans you know there's this epic debate constant in football about you draft a rookie quarterback in the first round do you start that quarterback and do they learn you know trial by fire or do you s of sit them on the bench for a year or two have them carry the clipboard around and occasionally you know enter a game that's you know over so to speak and I've studied this actually empirically and it's really interesting the people the there are Hall of Fame quarterbacks of both uh of both sort of backgrounds career progressions the career progressions of those who start right away typically the first season the performance of the quarterback is miserable it's the worst year of their career almost without fail interception to interception touchdown ratio as a specific illustration the people who sit on the bench though for two or three years and put aside the opportunity costs there when they start they don't have an upside down intercept touchdown ratio so they do learn things and so it depend upon the quality of the team anyway I think it's most useful most of the time for Founders to work in an outstanding Organization for a year or two before starting their own company you get a feel for Taste taste of what great is like what excellent really Excellence really means Excellence quality excellence in driving an organization forward and I think there isn't there isn't a great substitute for that but if you're really ready to go there are people who learn better by being told you know I'm throwing you in the pool learn to swim I love it yeah question I have is you know you obviously noted earlier that ramp was a already a pretty competitive category people thought that it was not you know a lot of people had made a bet and and were kind of ready to just watch the category play out do you see categories today that are like fintech in 2020 when you made the what I believe was your first time investing in ramp that are ripe for a team to come in and take this sort of new approach uh kind of potentially invert the value prop in the way that ramp did uh have you identified anything there is there kind of categories that you would like to invest in well I was fortunate it was in 2019 I had a fair amount of expert use in the space and I've come to the conclusion that there's massive opportunity in replacing Amazon business card let alone this bigger vision of you know digitalizing the CFOs world but the people that were funding other operations those Founders and teams were missing some key ingredients and we're kind of naive about some stuff underwriting specifically but there's other points so actually unusual for me I was proactively trying to find high quality Founders that were interested in this problem and then Deli unfortunately intercepted green playing a video game having listened to me probably annoyed by me pontificating every day that we need to find like people to you know kind of compete with bra or ax and blah blah blah divy and all this stuff and then he's like he actually walked into my office I was in shock he said like I found I think I found two Founders I was like really like um but he turns out he he did um we had actually been like pitching other Founders and trying to recruit people to do this so I don't usually do this but I have a lot of expertise in the area so I'm not usually proactive about trying to find investment opportunities and then similarly you know when I was working at Founders fund at the time was a very non-standard Founders fund investment in many many ways the most a cute one being if you have all these competitors that are doing well what's the Monopoly story yeah you know like and there is a monopoly story I believe ramp will be a monopoly but you know imagine pitching the investment team at Founders fund um the Monopoly store in 2019 in a category that includes MX actually svb even had a product in the market bra andd well very well funded you know with quote unquote traction so um you know it took a little bit of massaging fortunately Brian singerman also saw the potential at the time and really was alienated by some of the other Founders too so that that helped correct the antimonopoly you know kind Crusade it's great are there any uh categories that you're looking for right now hunting for found I mean obviously everybody talks about AI all the time and I think there are opportunities in AI that probably fit that characteristic where people have assumed there's a winner or winners or you know whether an application layer or foundational model layer or somewhere else infrastructure layer but perhaps the right Founders it's now 5 to 10 years into that story and use sometimes it takes a lot of time to bake before you get the next generation of Founders who have insights into what could be reinvented you think about this was kind of like what SpaceX did you know in some ways the Rockets was like the Rockets were really good but they were invented the 1960s in the United States and you know I waited about 20 years maybe 30 years uh to reinvent rockets and then rocket lab which has a very competitive offering at for certain kinds of uh payloads was another 20 years post SpaceX so sometimes you just have to let the wave you know sort of go on for a while before you have a vision about how to reinvent it and then it's the right founder so I would love to invest in something that's the next generation replacement for llm not a better llm but something that will TR you know transforms pretty good dou chra but that's something that would be a you know complete it would make llms obsolete that would be a cool investment yeah yeah how durable do you think the AI revenue is today you obviously were around for the era and companies going public you know with with little to no Revenue five million of Revenue going public right the the Counterpoint today is that we have you know great private companies with nine fig run rates you know that are growing tremendously fast but you know we've talked about this on the show before this idea of like easy come easy go right so if you can create a bunch of traction really quickly how durable is that do you think that the companies that are you know adding 10 million of AR every month are you know sort of durable yet are they going to be leaders and five years what's your take there well there's a quality of Revenue and it's different like for example open AI most of the revenue comes from chat TBT subscriptions that's pretty durable yeah um consumers are or people using it you know for business applications but on an individual basis tot there are revenues you can get that are more like Pilots yeah and you know those are completely non- durable and then they're somewhere between like if you sell to an Enterprise and they roll out to the entire organization this AI based product the chance that they're going to swap you know in any short term is very very low yeah um so if you get through it you get through procurement you know you have a champion and you change business processes within a very large 14,000 organization that's pretty damn you know scalable durable revenue sustainably for probably five plus years and so those kind of companies those AI companies are pretty damn good shape in my opinion but you do see people adopting something as kind of like a trial like you know my told me there's this AI wave I need to test out this this and this and have an answer to my board that revenue is is very precarious another set of revenues is around training and posttraining I think the advances in AI are so fast that the way we build models today with fine-tuning and different kinds of training may be also obsolete a year two years from now um so there may be models that are built that don't require any human training so revenues that are built on and companies that are built on that kind of Revenue may not be as durable as people think either yeah while we have you here what's your take on one of the hotter categories in in deep Tech humanoid robots everybody's got to take uh because uh I think they rightfully should but uh I'm I'm guessing you have something spicy for us well spicy is that look Chinese are ahead of us and it's very dangerous politically geopolitically I think the administration is going to have to take some action there I think you have large companies like meta you know publicly embracing this and their CTO responsible for this so it's a very top down initiative you have a lot of startups we funded several ATVs probably the hottest sector among VCS right now is robotic startup you know walks in it's like okay how much money do you want and the be hundreds of million dollars um so you know and then Tesla has had a lot of progress like actually I think some of the private progress is better than the public stuff so it's very impressive so I think the sector will be successful for somebody I think as a VC right now it's really hard to invest in the sector given the proliferation of startups all with high potential the prices you have to invest that make money it's unclear that there will be monopolies yet some of these companies are being priced that way one one of the concerns that I have is I think we need to learn from DJI we need to understand that they were able to flood the market with products that they were selling for less than it costs them to produce right if you just take apart some of these you know products and you understand the component cost it's actually uh more than what the retail price is and unit tree is doing the same thing right now right there you can go on unit tree and and buy a humanoid and uh you imagine they're pretty happy with how the DGI roll out went and they want to do the same thing again no this is why I think geopolitically the Trump Administration is going to have to address this I think robotics have military applications too so you have this like imagine the data collection potential um but the military applications of a robot that can run 17 miles an hour so I I I would be shocked if this Administration doesn't figure out a way to ban Chinese robots before it's too late yeah with DJI there's this idea that you're not too worried about the Drone in your closet because it's like zippered in you know the box that it came in and and there's the idea that like okay like in this doomsday scenario the drones take off and you know become these sort of weaponized devices but a humanoid who's doing your laundry and then can turn around and you know get up any take you out is a is a totally different story so I think that you have a good point also training data I mean there's there's a lot of dangers and so I think this is a real political issue that needs to be top of mind like once we get through Tik Tock which will happen you sooner rather or later I think Robotics and humanoid robots are particularly severe particularly severe threat and so that said we will need an American competitor one way or the other like the world is going to develop at some point yeah humanoid robots that are effective and' better if American competitors are great y but we really need to slow down the Chinese progress especially if it involves subsidization by the CCP yeah yeah uh one thing that's been interesting is seeing how Uber's been positioning themselves in the context of autonomous driving right they're basically dar's positioned the company to be like a Booking.

com for autonomous vehicles giving you opportunity to potentially uh talk your book a little bit does traba and I don't know if you can speak to this but does traba have a position where you know today they're using sort of human capital to Across the sort of network of uh customers that they have is their world where you know I'd be curious if you could speak to sort of long potential of humanoids through tra well I think not immediately I think if you look at the tasks in light industrial warehouses where tra specializes a lot of those tasks are not yet ready for robotic intervention however but 10 years from now if tra is succeeding in running an organiz in running you know the most sensitive part of a light industrial operation is the human labor and your action quality control reliability all of those things if you get the credibility of making a business more successful you may be a great Pathway to introduce more and more technology sure so you may not obviate humans you may supplement humans you may make a com you may introduce a combination that does some humans and some robotics but it's some company from afar that doesn't understand how a warehouse works that doesn't understand real workers and what real workers you know needs are and tries to run a mixed system without having any understanding of real people I don't think it's going to be very successful and I don't think we're ready to rip out in the longtail fragmented sense um light industrial that the investment required for robotics to R out all the humans yeah isn't going to be economically feasible Amazon may be able to justify you know the R&D plus the fixed cost but no and we we had uh we had Ryan Peterson on the show last week talking about how the bar the the bar to clear if you want to replace humans is so high because we're actually we're pretty good at what we do right right we've got you know all this you know ability to to an agency um and uh it's you know very clearly going to be the same type of uh situation within within warehouses as in ports but over 20 years I could see tra introducing more and more technology to their current customer base like say you know look look we've already satisfied were delighting you trust us this is going to make you more efficient more competitive more scalable Etc and so that could be a long-term strategy that makes tons of sense for the company and for their customer base yeah how do you think about the roll out of humanoids uh specifically around depreciation in the EV space we've seen massive depreciation on the consumer side right somebody buys a model y it's worth you know 30 grand less a few months later right this sort of extreme depreciation do you see that as as a potentially a headwind for the roll out of humanoids where you know Factory basically say hey look uh I think your Tech has potential but if I just wait a year I can get a much better you know robot for uh you know the same price well I don't think anybody really knows on a Decay curve you know because what is wear and tear due to these robots like in what functions too it may be very different like if you ask robots to do this vers this vers this but like a year are they completely dysfunctional like imagine a simplified metaphor you if you have a weight like a gym at home probably last for a decade easily like you're squat rocking your wa you throw them in a commercial gym those things are going to show wear terar in the first year espe and you bar you they got to change the treadmill out every day after you at Barry I'm sure lit literally like the wear so it does depend upon the use the use and I don't think anybody knows really what that like curve looks like and then that affects the economics like how prudent just on a purely rational basis is using a robot to do X Y or Z because you don't you don't really understand that trade right now the only way to really do that is you have to throw some robots at some problems and then monitor what breaks why and how and how fast and how expensive or the replacement parts yeah totally uh what about the Strategic Bitcoin Reserve do you have a take uh prepared for that yet yeah I'm probably not the biggest fan I mean I'm very supportive of the Trump Administration I think almost everything they've done has been really good and really strong and I've been very impressed I probably if I was going to do it would have done it Bitcoin only I don't think I don't think we need to do it but if we were going to do it I don't think kind of stepped in the middle of a bunch of messaging Problems by like including a bunch of other cryptocurrencies but I'm not the biggest fan of like the government doing uh performing business functions period so I don't like the Sovereign wealth fund either um I mean I'm happy to manage it if they you know KB wants if they need KB if they need professional managers we'll probably do it but that's great the the reality is I don't think mixing business function in politics is a good idea I think you at those and you know free enterprise works really well capitalism works extremely well and the government should do you know protect the American people defend defend the Border you know Etc um and I don't I don't see any you know the only argument for the Bitcoin strategic Reserve is obviously we do have gold reserves yep you know and if you believe the metaphor that the future of shore value is like C you can talk yourself into it but I don't think it's the most appalling thing you know yeah there was a good point the administration like the Strategic Reserve could just be Bitcoin we seiz from criminals right and it just goes into fun for that too yeah I mean obvious obviously the FBI and other people W uh you know treasury winds up getting their hands on a lot of valuable assets yep and you know that could be a good way to fund it without taking American tax dollars you know I think the burden and I think doge is showing this you know is really setting a great example here is the burden for taking a dollar from an American family should be increased by an order of magnitude the justification should be go up not that there's never a justification but we need to raise that bar the dollar belongs with the people who earned it baring the most extraordinary justification for it you can't have these frivolous soft justifications or low R justifications it really belongs to the people who create the value interesting well said yeah you're spending more time in DC do you think that there's a a like a potential for startups or specifically like defense Tech startups like to to move offices there earlier or like actually like build companies there I don't know I think for non-defense startups I wouldn't recommend starting an early stage company DC obviously the people who are already successful are spending more time in DC which is you know valuable to me to some extent but I think if you're an early stage company that's not really targeting the government as your first customer Federal yeah you know in some way then I think it's probably a mistake right now that could change in five or 10 years and you know maybe there's a better ecosystem there yeah I don't know the defense landscape and how fast the defense department is going to innovate um we'll see I mean there are people in the administration who believe that reform is going to be fast and furious in the defense department and that we need it from a budget perspective we have to the defense of Ary needs to do more with less yeah and so but until the proofs in the pudding I don't know how vast the opportunity is right now we have time for maybe one more question I'm curious to get your take on uh on Sundar do you think he's still got a job in a year a year from now uh the roll out of of a across the Google uh ecosystem has been atrocious from my view and I think consumers feel this John always jokes he's like I I pay for Gemini I don't know where to find it but I it's cool when it pops up uh he seems to be underp underperforming dramatically in the context of SAA you know what's your what's your take on on that whole situation well he he seems to be outperforming Tim Cook which you've read the latest at least they have TR that are good yeah for those that missed it Apple just said we're delay years two years something like that two years as other people pointed out two years in an AI world is an eternity might as Welling something for 20 years orations at this point and so I think that's a serious problem and I'm an apple Fanboy for ever you know how forever so I think it's pretty devastating that they're so far behind I think suar made several miscalculations and I actually do think that Microsoft and you know sa got a lot of credit but I think they're seeing some of the sides to some of their strategies now um like I think they are going to wind up not having quite as much of a strategic like lock on AI as they thought they were I think that said they maybe played the cards the best they could you know you can't always control everything uh but I think the world is changing really rapidly and the people who control the future of AI may not be at Microsoft yeah that makes sense right well thanks for stopping by we love having you you're welcome anytime anytime there's breaking news I'm sure I'll give you a call this is fantastic uh we're going to hop on uh keep talking about ramp uh we're going to packing McCormack yet next so awesome thanks for stopping by keth talk to you soon great to chat have a great day that was great uh good questions Jordy I like I like I like keeping the humanoid question going across all of these we got to ask py that too and then eventually we can put together a super cut here's every every important Capital allocator every Silicon Valley person uh talking about humanoids well while we are waiting two minutes to bring Pac in uh let's talk about wander find your 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