Bryce Roberts on indie companies: stop playing the lottery and start playing chess

Wow, look at this background, brethren. I'm doing great. How are you all? We're great. Um I mean things are good. Was Jordy stunting on his reps? How many Did we talk about how many reps he did or was it just Well, we haven't leaked that. We haven't leaked. Yeah. You just want to get the story going in the press.

Hey, hey, the company's for sale. Probably in the billions. We're not going to tell you exactly. Exactly. X X is a a flutter about this these reps. They're they're pining to know. Yeah. Yeah. We know you respect the Church of Iron. We've seen many photos. So, welcome to the show. You fit right in. Uh, wait.

Uh, you're traveling now. Is that right? I am. Yeah, I'm on the road right now in Oakland, California right now, about to head over the Oakland Bay Bridge. Very cool. Wow. Dreams on the belly into the belly of the beast. Belly of the beast. Uh, what what uh what brings you to San Francisco? Meeting founders.

Meeting founders. We're recording some stuff and um I'm trying to get here more consistently. I live in Utah and it's just a quick trip. There's enough going on here that I've recently decided it's going to be kind of a weekly adventure out here to San Francisco. Nice.

So, I'm gonna try to try to keep that pace up for a bit. Wait, weekly? Weekly? That's I did that for the first five years of starting OTV back in '05. I commuted here uh once a week for 5 years. I think if you're going to San Francisco, you shouldn't go weekly. You should go strongly.

But I general the general that's a great point. But when you're in doing business, you want to be there strongly, not weekly. Wait, so so weekly? I'm just I'm just curious. Uh not to get too into your personal life, you just get an apartment and like because you're there so much or are you a hotel guy or a wander guy?

Hotel guy. Hotel can't do Airbnbs. Can't do uh can't you Well, you got to try Wander. Wander. com. Code TBPN. That was an incredible setup. Yeah. Yeah. I mean you set you up. I I I think we'll change it too.

We'll have you back on and you'll we don't do we don't do we don't do your Airbnbs either, but um we do but Wander Yeah. No, that that that's cool. I'm going to have to look into this. What was the What was the code again? VPN easy to remember. Um yeah, you can find a happy place.

You can book up Wander with inspiring views, hotel, great amenities, dreamy beds, top tier cleaning, and 24/7 concier service. Basically, Bryce, it's a vacation home but better. So, yeah, check it out. Wonderful. Would it be possible to get one with an eight sleep in? Oh, absolutely.

We can figure our people will talk to your people. Anyway, we wanted to have you on talk about uh it feels like uh indie is an you know traditional venture firm but built for good times and bad times uh and scary times and fearful times. And right now there's been there's been a lot of fear in the market.

you came out and um are you being greedy while others are fearful? It's possible to be greedy but pragmatic. I think that that what that's what we actually wanted to talk about. Advice for entrepreneurs, founders in the midst of market turmoil.

Maybe it doesn't affect their business today, but they're seeing bad news and that's going to put a you know, you know, their customers are going to be worried, their employees are going to be worried, their potential investors are going to be worried. Uh what advice are you giving to founders these days?

Well, you know, like like Jordy touched on, I mean, part of our whole thesis is traditional venture, same type of upside, but a different approach to building your business.

So, you know, the approach most people take today, you know, they go and raise their seed round, their preede round, their whatever it is, and then the objective of that round is to get to the next and the next and the next. And so, you're oftent times kind of anchoring on what that next fundable milestone might be.

And he takes a bit of a different approach. So our companies are kind of the default we set is like let's have that be the last round you need to raise and then you can kind of be a lot more offensive as you build your company so you don't necessarily need anybody else's permission to exist.

So, with that being the case, I think there's kind of two, you know, I I tweeted this out last night. We talked about a little bit. You know, there's kind of a few approaches to take with an indie company specifically.

You're, you know, you have, in many cases, you have infinite runway and so you get to operate and you can message in a very different way. So, part of what I said is hunker down, you know, conserve cash. Um, I don't think this environment goes away anytime soon.

Um, and so I think people need to be preparing um for, you know, to be long-term focused and what that often means is um, you know, getting getting the house in order because right now we've been playing the lottery and it's time to play, you know, it's time to play chess.

I think that's to me that's a really important distinction. And so much of how we've conditioned entrepreneurs is to kind of play for these lottery tickets. So it's all about fundraisers to get it in the next round.

We're trying to kind of work with people to play chess through this because I think the game has fundamentally changed. As you know, I I I'm been in venture for a long time now. I came in in 2001, so immediately after the dot crash. So I've kind of lived through the dot. I've lived through the financial crisis.

We've lived through Zerp. This one, you know, echoes the same, but there's some very fundamentally different dynamics going on here that are going to influence the amount of capital that's available to entrepreneurs over the next few funding cycles. Mhm.

In some ways, we were talking about this earlier with Logan, uh, Bartlett, but one one thing I've been maybe paying attention to is is the categories that felt overheated, AI, defense, tech, robotics, in many ways like the the sort of tariffs would just encourage like, you know, more investment.

And I imagine, you know, we had like Chris Powers on last week and and he's been, you know, banging the the reshoring drum. Um, but yeah, I guess like do do you think that do you think that over the next like couple months we'll see like a pretty big slowdown in investment activity or just like refocusing?

Um, or are you just less interested in like predicting investment volume and and more so just in any whatever the future holds just like run a tight ship? I you know I I think I think I'm always the fan of running a tight ship. You know I feel a bit like you know it's Groundhog's Day today.

You know I'm waiting for Sequoia to drop their memo. That would be the third time.

and and you know it it does feel like we learn the lesson and then we kind of go right back to the same behavior that got us in the problem in the first place not kind of globally but I think specifically to um the startup ecosystem specifically you know we came through Zerp everybody wanted to get really tight and then the money started flowing again and basically kind of people shifted to the you know the current narrative whether that is defense tech or AI or one of these things.

Um I think what fundamentally changes this time is you you saw last week CLA pul quietly pulled their IPO on Friday. You know this what you would call the denominator effect in venture like that name gets thrown around a bit. So I'm happy to explain it if someone hasn't already hit it today.

But I think that denominator effect is probably more pronounced than I've ever seen it in my venture career. And that's going to cause the longer term liquidity issues. you're talking about Jordy in terms of kind of how what the funding cycles look like over the next call it year or two. Yeah. Yeah.

Can you unpack the denominator effect a little bit more? I mean the denominator effect is is basically that um traditional institutional LPS have allocated a tremendous amount of money to the venture and private equity asset class.

So the topline number isn't the you know that the returns that are coming back from those investments don't come anywhere near to the size of allocations they've already made.

So another way to frame that is LPs are out way over their skis on venture and private equity and there's no there there's no relief coming in terms of returns. So Clara pulls their IPO. You know you've got this kind of regulatory uncertainty. There were a bunch of people cashing Figma checks a few years ago.

um that never materialized. And so you've got this real issue now that I think is really acute and I think it's already even starting to show up. Like if you look at that $40 billion Open AI deal that that Masa just did, right? How much of that is actual cash? How much of that is credits?

How much of that is debt that he's going to have to go out to find and service? Like the financial market, the financial picture in startups, I think, is a lot more murky than I've ever seen it before.

And so counting on either support from your existing investors or a next round materializing over the next 18 months if you aren't just like absolutely crushing it and putting up insane numbers like I'm sure most of your audience does.

But in that case, unless you're just such an obvious pick, the sidelines are going to be filled with people cheering for you. Can you talk?

I I I was honestly seeing that the tariffs, the trade war, and you know, if if rates come down, that kind of saving MASA in the sense that pulling together $40 billion by Q1 of next year, which I think is a target. A lot of it's coming from debt.

He can obviously secure it against, you know, ARM and whatever else he's doing. But still, it's a lot easier if rates drop. There's a trade war happening. And it's like, where do you put your money if if if you want to try to generate any type of return? But but who knows what were you going to say?

Uh I I was going to ask for a little deep dive on some of the buzzwords in the founder world specifically the difference between boot scaling in indie. You had a post about this but I liked uh unoorn. Yeah. Yeah. Yeah. I want to know more about Yeah. Yeah.

There's a lot of there's a lot of phrases out there and I think that you know obviously there's a little bit of hype around these oh what does founder mode really mean or whatever but they are useful tools and I'm a big fan of agree the mimemetics of it are great. Yeah.

So so no I mean I I would say you know you you touched on a few I mean Jordy jokingly kind of um amplified one from this morning. Somebody sent me an article they were writing that included India and they called companies who raise one round of funding. Yeah.

with the intent that they're going to get profitable and scale from there as an uno corn. So, you know, only one round. So, people getting very creative. Yeah, Zapier is a good example of Uno. Zapier is a great example of that.

Um, you know, Kalan Lee until they did their growth round was was a great example of that there. You know, I think this is a small but growing cohort of companies that are kind of working towards that as an objective.

Not necessarily to um kind of prove a point, more to kind of control their own destiny and to not be so at the whims of these financial markets that are they're whipping so intensely and also you know kind of putting putting their customers before their investors needs.

I think this is this is kind of a growing you know what we see is a really growing trend in terms of you know there's there's kind of a this massive wave of returning founders who had built through financial crisis or built through Zer who've kind of lived through this kind of treadmill of an experience as an entrepreneur who are looking for a different way to do it and we hope we can be their partner but I think you hit on a few of those other terms right of boots scaling you know the idea with that one is bootstrap for a little bit and then raise money to scale later on.

So, kind of merging those two ideas. The other one I think was um seed strapping, right? So, again, that idea of lot of port mantoes, a lot of port mantoes on this. Look, hey, you know, I no no judgment, but tech hasn't exactly killed it on the marketing front of some of the stuff.

Um but yeah, the idea with seed scale is like raise one round and then scale it, you know, as much as you want.

um on the back of yeah I think the twe the tweet you mentioned was like yeah I basically was framing those two really as like fundraising tactics you know that that's that's still fundraising is still core to that idea and I think with India you know what what we like to embody is this idea of independence of this idea of kind of controlling your own destiny of building things that don't have to ask permission to exist and I think as we get to you know this kind of inflection point in tech whether it's in the financial markets are in this kind of new and evolving technologies coming, you know, um we want lots of possible futures.

We don't just want the one that's blessed by A16Z. We don't just want the one that's blessed by Sequoia. We want we want futures that could be um possible with or without their participation or with their blessing. So, I I think the world gets a lot less interesting once you start having to ask for permission to exist.

Yeah. Uh are you are you bullish on the app layer? I imagine if you want to scale efficiently right now and build an AI, you're not getting into the foundation model. Well, I mean, uh, SSI is technically a unicorn. One round. Yeah. One round. That's right. Exactly.

Most of the most foundation model companies actually straight to unicorn. One round. Yeah. One round. That's it. They didn't have to raise a ton of rounds to get to a billion dollar valuation. Yeah. But you're you're going to be an SF. You're gonna be an S SF later. Like what what are you looking for?

That feels like the place to build an indie company is in the rapper layer that's overlooked by VCs. Maybe it's not power law company, but you can build a fantastic business delivering amazing stuff. I'm super bullish on it, but I want to know what you think. No, super bullish on it, too.

In fact, I think you have Rahul coming on after me. And we we've had this kind of ongoing multi-, you know, multimonth, multi-year conversation going around kind of high status and low status startups. Yeah. Yeah. And the Yeah.

the kind of high status have to raise a ton of money or at least look like you have to to kind of position like you're really really innovating. I think those are so they're such a head fake here in the Bay Area specifically because the kind of social strata is so funny. I think John, you hit on it.

Like I think that that app layer is where so many incredible breakout indie companies can be built because you're now talking about, you know, swapping out any of those models and you get a benefit from all those improvements and just focus on a customer and their needs and the opportunity of a market.

I I think it's I think it's a huge opportunity that doesn't feel at all like you have the same kind of network effect lockins that you had with like Facebook back in the day or when Twitter turned off your API access.

I think so many of these models are like hyper competitive in terms of what their performance and output actually looks like that you can build incredible experiences off of those that can swap pretty easily between them. You know, I would think of them more like moving from, you know, Google Cloud to AWS, right?

That feels like more the analogy than like a, you know, the dependency of of Facebook and their platform. Yeah. Yeah, that makes a ton of sense. Uh, you got a last question or we're No, this was great.

I want to ask you how you're, you know, the all offline how you're trading the tariffs in terms of like, you know, uh, Japanese fashion and, you know, sort of collectibles, which I'm sure you're I'm sure you're making. I knew I knew I knew the fit check was coming at some point. Fit check. Fit check. This is great.

Always a pleasure, Bryce. Have fun. Have fun over uh across the bay. Enjoy. Looking forward to the next one. Yeah. Yeah, we'll have you back on soon. Thanks so much. Cheers. Appreciate it. Take care, guys. Bye. Uh well, next up we have Rahul Sonwalker coming on to talk about Julius.

uh he has a bunch of interesting traction on his startup and uh did just did a podcast with Bryce actually. Um but uh we'll we'll talk to him about rappers and high status and low status uh startups and all everything in between as soon as he joins. I'm excited.

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Um I've I've had I I've I've called support to try to get them to remove it. Uh we got Rahul in the studio. Welcome to the show. How you doing? Thanks for having me, guys. I appreciate Oh, he's got the suit. The suit. Thank you for dressing up. It's so good to see you, man. It's been way too long.

It's I I think it's been like almost two years since we got dinner, but uh thank you so much. Understood the assignment. Yeah, understood the assignment. Uh just quick introduction on you, the company, what you're building. Sounds good. I'm Rahul, founder of Julius. We're building an AI data analyst.

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