Founders Fund alumni clash live: high-margin software vs. capital-intensive hard tech

Everett into the studio. Welcome to the stream. How you guys doing? I like that background. Very good. Energized. Here we go. We're going to be breaking it down live here. Yeah, we're going to be breaking it down live.

Uh I'll I'll every time one of you gets a point, I'll I'll put a we'll put a little point or if if things get out of hand, we'll be banging the gong and bringing order like it's a gavvel. Uh but I'm sure I'm sure this will be uh I'm sure everyone will be civil. Oh, I'm sure. Keep the name calling to a minimum.

Uh good to have you both. Thanks so much for being here. Let's let's kick it off with off. What's your least favorite thing about the other person? We should kick it off with the original story, like how did this all start? Basically, give us some backtory. Yeah, you want to you want to give it? Yep. I I'm I'm happy to.

So, we were um back at Founders Fund. We were um starting to beef up our our like CRM and data science efforts. And so we were we were integrating some external data into our CRM, figuring out how we could filter opportunities better to each of the each of the investment team professionals.

And we were looking and we were looking at the different data.

I was like, "Ah, it'd be really nice if we could filter this by gross margin so that all of the negative gross margin companies that come into our CRM, we could give them all the delion because it seems like those are the types of companies that that he loves to invest in.

" uh the the uh the the rivalry between um between you know the low gross margin side of the house and the high gross margin side of the house was born then. Okay. Uh and and Delian justify wh why why do you like these businesses? Is that is that even is that even a fair characterization? Um fair characterization.

I think um you know my sort of oneliner would be I'm not sure that you know sort of gross margin is actually like the right thing to sort of focus on in a business especially you know sort of early on what you want to be thinking about is obviously Ebot margin in particular a terminal you know Ebidot margin and so when I think about the like at least founders fund ethos to you know sort of investing we think that that terminal margin mostly is determined by ultimately how much of a you know monopoly your company can you be in the long term and so if you look at you know sort of mag 7 today obviously there's a decent chunk of them that you know have some phenomenal you know sort of gross margins And those tend to be the ones that are a little more software oriented.

If you look at the one that is at the biggest scale and has the best evidot margins, it's the one that is the most, you know, basically hardware oriented for sure. Some of it propped up by like CUDA and they're like, you know, sort of software side of the house.

But like Nvidia is the one that is performing the best of all those.

And then even if you study within those, you know, which of those um, you know, uh, companies on the hardware side have monopolies versus, you know, sort of not, you see it's the one that with the monopoly, you know, clearly outperform the ones that don't, right?

So Tesla obviously in that you know sort of mag 7 but a part of why they you know sort of suffer much worse margins than like an Apple or an Nvidia is because like they actually do have you know you know competition and so my general characterization of you know sort of SAS is people always you know sort of study their original you know sort of gross margin but weren't burdening in the you know sort of cost of sales marketing etc.

And because you just have much less of a monopoly typically in SAS that ends up totally you know hurting your EBO you know margin profile.

So take like the like the favorite you know terminal scale thought of as a monopoly you know sort of SAS company that you know Ev I'm sure loves Salesforce their market share and all things CRM is 25%.

And so that's why you end up seeing like yeah gross margin profile is only burdened by like you know cloud you know sort of cost but their eB margin profile is like you know sort of 40%. And so, you know, the reason that I like these negative gross margin businesses, yes, they're like tougher to start.

They may be more equity intensive at the beginning, but end up with way better, you know, sort of terminal margin profiles versus, you know, EV loves to, you know, invest in the, you know, AI slop codes that might have early gross margins and revenues, but So, Ev, what's the bullcase for for software?

What's the bullcase for SAS? What's the bullcase for AI slop codes? Look, so to to quote the godfather Neil Neil Meta himself, the laws of great businesses are the laws of great businesses. The job of a business in a capital society is to is to maximize and find the efficiency frontier for three things.

Reich aka return on invested capital, the amount of capital you can actually deploy, and how long you can deploy that amount of capital at and above market ro. There's a lot of different framings for the paths to do this and how companies can actually do this.

The one that people like in tech circles is Hamilton Hemler's seven powers.

A company accumulates power in the form of scale economies, network effects, uh whatever whatever power you want to take and then uses that power to produce above market re as long as possible and with as much capital invested in the business as possible. There are great Adams based businesses that do this.

There are terrible Adam based businesses that don't do this. There are great digital businesses that do this. there's great or there's terrible digital businesses that don't do this. Um I mean you want to hear of a great Adamsbased business that does this listen to the acquired pod on Costco.

Like it's certainly not like a Adams versus SAS thing necessarily.

The advantage that digital businesses have is that like in this process of producing above market ro for a long time is that their product form factor and the way that they distribute their product lends itself more to the the process of creating power I'd argue than most atomsbased businesses.

So if you think about like network effects the best place to create network effects is in a digital marketplace like an Uber and Airbnb or a Door Dash. And so there's a lot of these forms of power that naturally lend themselves to digital products.

And the scalability of digital products tends to be a lot um a lot greater than than physical products. And so you can see these these rapid growth trajectories like we're seeing from OpenAI and Anthropic and many others. When did you guys find common ground?

Was it uh in the escooter era, the the sort of 15minute delivery era? Were you ever able to kind of come together and say like, "Yeah, the this is, you know, we can both agree that this is uh this is not it. " We're good. We're good.

I mean, uh to be fair, Kleiner Perkins, Founders Fund have both invested in Figma, Stripe, Airbnb. There is some portfolio overlap, right? Ripling as well. There's a Modern Health, I believe, as well. There's a few others.

Um but yeah well to to Jord's point where where else is the common ground and where where else is the divide or or or the consensus in in the disagreement? Yeah.

Yeah, I was going to say you ever and I were texting before this of like, you know, what are you sort of two companies that I think um you know, both of us were enthusiastic about in you sort of 2021 that actually both have, you know, sort of trended well, but our, you know, sort of counterpoints are two arguments.

The ones that we kind of came up with were um you know, 2021 I was really, you know, sort of, you know, high conviction on Hrien in 2021 was super, you know, high conviction on Rippling.

Both those investments have, you know, sort of performed quite well over the last couple years, but look, you know, sort of wildly different in terms of, you know, profile.

Um, you know, Ripling like many other, you know, sort of SAS companies does end up having, you know, an initial, you know, very high gross margin, but does still have to spend a lot on sales and marketing to bring in, you know, sort of net new customers.

Hadrien on the flip side, deeply, you know, sort of negative gross margin to start, but now as they've gotten to scale, they actually have like super limited, you know, sort of sales and marketing spend because there's only like, you know, 10 15 customers that matter.

And the moment that you're delivering for them, they just proactively start, you know, sort of throwing revenue, you know, at you. And so um you know I think there are times where um you know both of our you know sort of stories obviously you can play out.

The thing that I'd be curious to hear from you know sort of average is to actually like compare and contrast you know you were bringing up you know some of these digital businesses you know that um end up having these you know network effects.

I would kind of argue that like you know the like 2010s um negative gross margin businesses like you know the like Uber Door Dash you know uh you know types um I think of as more as like you know Adams businesses but there was a whole set of investors in like the mid2010s that were generally unwilling to approach both Adams based businesses that started with negative gross margin but even some of these local marketplaces that started with negative gross margin that they swore off of the Ubers the Door Dashes etc.

Um you know it's very clear that Uber Door Dash through you know lots of investment through building out these local you know sort of networks of you know both supply and demand were able to and you know drivers were able to eventually get to a point where now they actually you know have very attractive you know sort of financial profiles.

Today the equivalent of that is like there's all these investors that you know back in the 2010s would have refused to invest into any company that had negative gross margin and are all now pouring cash into both the like AI application layer companies and the like you know foundation models that all have like ridiculously I mean I forget I think it's girly is non-stop you know not my favorite person in the world but girly is non-stop talking about like you know what is going on here they're selling a buck for 90 cents and so I guess so so I think I think it's it's an important example because you had that um uh you know plenty of examples of these chain losses during that that era where a restaurant was selling something below cost to a platform that was selling something below cost to a logistics provider, an individual contractor that like maybe wasn't actually making money if you factored in depreciation and fuel cost of their vehicle.

And that ultimately worked out, right? Door Dash is a is a massive fantastic business uh based on the power of the American uh consumer.

But when you compare that to today where a lot of the conversation uh on the timeline this week has been the margin profile of this new generation of software companies that has to pay a lot for sales and marketing but also inference.

And so I think like the debate should really be you know continue to be around just how quickly will uh the cost per token fall. And I think a lot of people have a lot of confidence around that. But I think that that is the the key thing that Everett's sort of like broad investment thesis right now is dependent on.

Yeah. Ev, do you think there's going to be that same path of like Uber for a while had a bunch of negative gross margin people going into it? Like do you actually think that I want to pull this post up? Uh Everett actually posted this in Jan January 31 of 2024.

So over 18 months ago, he said, "I'm making a real effort to not take for granted the $3 Uber across town era of AI, and I hope you are, too. " Uh, and so I I I guess the question is, uh, and it's funny because because then then a bunch of people I I thought it was a good point.

I thought it was a hot take then, and I think then, uh, you know, a bunch of people kind of pared that take all over the timeline. Um, stole your whole flow, as you'd like to say.

Um but uh but but but I guess the question is like are we in some sort of different regime right now where uh the the traditional gravity and like uh fundamentals of software investing have changed because we are out of the zero marginal cost era and does that impose risks to the strategy that you know you've sort of employed or like we're kind of putting you in this in this box.

Uh but if the if the fundamental structure of zero marginal cost era is going away that that presumably uh forces like a rewrite of your logic around investing I would imagine.

Yeah, I think that I think that the biggest variable that's changed from the 2010s SAS era to today is that in the 2010s and you you basically made this this point without making it Delian though is that the thing that that was missing from from your talk track is that the competitive intensity of SAS during the 2010s was much much much lower than it is today.

uh like during the 2010s there was an entire crop of companies in the 2000s but then especially in the 2010s you could basically pick either a vertical segment uh you know like HVAC or car dealerships or you could do a horizontal function like the CRM or you know some very niche workflow for like the finance team you could build a software product around that workflow around that vertical and you really only had to deal with typically like two to three competitors like there really wasn't that much competition relative to what there is day.

Um, and there was less um, just just like general pricing pressure, competitive pressure, um, just the general pressure that you actually had a lot with, um, with some of the digital marketplaces early on.

And so, so like I think there was a whole crop of investors then and like the SAS investors then were like, well, we don't need to we don't need a bunch of cash burn. And it's actually, it's a really unhealthy indicator if these SAS companies are producing a bunch of burn because they're not competing with anybody.

So if they can't like sell their product for good unit economics on day one when the competitive intensity isn't very high then they're probably not a very good business.

I think the thing that's changed now is one you have the change from zero marginal cost to actual meaningful marginal cost in the in the form of in uh inference and it's also just a hell of a lot more competitive than it used to be.

And so you you are have and by the way there's an immense you there's probably 10x more capital than there was 15 years ago to go into these companies.

And so like every single category now has become like mini, you know, it's like mini ride share or like mini Uber market where it's like, hey, there's probably a really big pot of gold at the end of the tunnel. Um, and we need to be the ones that get first to scale.

And in a lot of these categories, the ones that have gotten first to scale um have gotten a lot of brand equity out of it and have gotten um a pretty resounding lead. I think the um the only other piece I I would say I lost my train of thought. So yeah. Yeah.

But it's going to basically it's going to be like a capital fight now on the on the SAS side.

Uh I I wonder if if uh if the contrarian trade around hard tech is is is entering a similar era where it's become consensus and so we're going to see more capital fights and when a founder goes out and says yeah I'm going to do something crazy but I need to spend a billion dollars of capex people are just like yeah I this could be the next base.

Sure. you it made sense to have a capital war in ride share, but now we have a capital war in like this niche agentic workflow in some industry that that most people have never heard of.

And also a capital here's $200 million for military boats and UAS and and UAP like all these different subsegments are going to wind up if if capital wars start popping up there that could potentially uh be a headwind to Delian's model. Is that is that roughly correct?

How would you how would you uh how would you fight back against that? Look, I think it's it's always, you know, sort of uh important to talk about, you know, sort of specifics here, right?

Um, you know, one of EV's, you know, sort of major investments in the last year is this, uh, you know, company called Captions that basically does AI captioning of, you know, various, you know, sort of videos on social media.

Um, when I think about, you know, handing, you know, sort of two Stanford grads and $100 million to go try and, you know, sort of replicate that, yeah, feels like, you know, they could, you know, go do something like that. There's like, you know, clear, you know, voice recognition models.

They can go, you know, sort of pay on ads on Tik Tok, etc. Um, and you could probably go and replicate that. And so, you know, you know, our oneliner at founders respond is competition is for losers. And so, you know, I think I was a loser for investing. Um, the chat were saying this wasn't spicy enough.

And you just delivered, Deli, so thank you.

Um, now, you know, if you take, you know, sort of two Stanford grads and $200 million and tell them, hey, I need you to go replicate this manufacturing facility and go start building a bunch of, you know, sort of satellites, re-entry vehicles, you know, bioreactors that can actually survive the environment of space.

um most you know sort of Stanford grads you know can't go you know ask GPT how to go do that and so I haven't really faced significant competition irrespective of the fact that you know all things space factories are thought to be you know sort of the hot new thing to be clear we use captions here on clips we enjoy the captions app we thank for making it possible and subsidizing our and there is a y there is a y a varta-esque yc company so they're coming for you Indian varta I think will be a little bit less competitive than you know Indian captions.

Also, if you're the caption CEO and you know founders fund is trying to invest in your next round, please still let us do that. Helpful counterpoint for me. Delian, you were um you you were correct that it was getting it was getting too friendly of a debate.

Um I did want to make sure I could I could pin this one on you. If you can recite the equation for return on invested capital, I will victory to you and I will donate $5,000 to a charity of your choice. Oh, let's go hopefully he's got Cluey running. Exactly. Exactly.

My like, you know, equivalent for Everett will be if you can explain, you know, basically why you can't create microgravity down here on Earth. I will also donate $5,000 to a charity of your choice.

But I don't think you have, you know, I may not have the, you know, basic understanding of business physics, but you don't have basic understanding of physics. And one's more important about understanding the universe around you. Okay. I mean, I'm I'm pretty fixated on the 2035 Midas list.

That's really kind of the the final that's been on the brink yet or I forget whether or not you've made it up there. Taking shots. Not even on the brink yet. You know, Marie joins you know KP after you and she beat you. Laughing me. It's okay. It's okay.

Uh eventually we're going to we're going to bring back the extra names in Kleiner Perkins. It used to be Kleiner Perkins Coughfield buyers. It's going to be Kleiner Perkins Randall Brasswell. Eventually once we're working on it we're working on it. We're pitching it. Uh where where should we go next?

Jordy, I guess uh Everett, how are you how quickly like how much should people be fixated on the cost per token with these frontier models over the next six months? Like how how long can can uh venture capital sort of like backs stop these uh chained losses?

Yeah, I think that the the way to delineate um the the whole so so obviously like I think there was this um kind of consensus narrative that like every you know 12 to 18 months token costs were going down an order of magnitude and I think that did hold for a while.

I think what you've seen now is like actually for frontier models that's started to peter out a bit and like pricing is actually started it's still going down.

it's not going down nearly as much as it as it used to um when when like when when we were kind of in in the in the like the meat of the curve of of capability improvements on Frontier LLMs um uh in terms of of pricing curve.

So I think that the way that you want to delineate it is like there's a certain like what I always tell everyone is that like there hasn't been a chat GPT query since GPT4 that like my mom hasn't been able to ask and have it answered by the model.

Uh so there's like the mom test of models where like there's a growing subset of tasks like economic or knowledge tasks that the models are tasked to do that no longer need frontier intelligence and when you're not on the frontier um either through open source or just the like the the the cheapening and distilling of of older models like the price still falls off a cliff.

Sure. And there's going to be a very very large set of tasks that models do that are not on the frontier and those are going to continue to get dirt cheap.

actually think that at the frontier you're probably going to see continued price decreases on a per token basis but nowhere near what you saw before which was like this this order of magnitude decrease on a very regular cadence.

Uh and so I think I think for for like depending on the company it's going to depend on one if you've actually built a company that has enough power where you have pricing power where you can price above the the kind of marginal token um price from the actual model providers.

And then two, like how much of your inference actually needs to be at the frontier? Like how much of your inference can be an older model that's much much cheaper versus how much do you need to do on on the actual frontier.

I think that's what you're seeing like you know everyone loves to talk about cursor and Chris P over at Pace Capital had this really great um kind of like mini essay I think only like last night or a couple nights ago and he talked about like no one knows if Cursor has power yet because you know coders and developers um they're very very like they're taste makers.

are very good at understanding the quality of the models and how much inference they're getting and there's a lot of price sensitivity for them because they have a really good understanding of how much inference they're getting.

Um, and so no one really knows I think no one can definitively say whether a lot of those types of companies have actual power with their users or if they're just drawn to an interface for frontier models or not.

And so I think that's what everyone needs to be looking out for is those two things like do you actually have power? Like will people give you margin above the marginal cost of tokens?

And then two like do we even need the frontier uh inference for the vast majority of your product or is that is there a lot that you can offload to cheaper models?

Yeah, I mean I guess your counter you know sort of there ever is that um you know a majority of what the foundation models are providing in terms of you know sort of value to their end users is starting to be um you know sort of uh obiated by the like you know historical generation even some of the ones that are you know sort of open source.

that would seem to imply that where value is acrewing and where you'd expect like the highest revenue growth wouldn't necessarily be at the foundation layer, but you'd see it more at the application layer since those folks can squat models out.

But like in reality, that's like literally just not what actually is happening. Like if you look at which companies are, you know, sort of fastest on you revenue growth, user growth, etc. , it is the foundation model companies.

It seems like a part of it is that they also have, you know, sort of the most pricing power where yes, you know, your mom, you know, uses GPT4, but like she's not the one that's necessarily paying like, you know, a hundred, a,000, $10,000 per month versus the true frontier capabilities on like, you know, AI coding, the prousers, the one that actually do care about, you know, maybe your mom is fine with 115 IQ model and that's like fine for the rest of her life because she's just like not asking it that diff difficult of questions versus the people that actually are willing to, you know, pay are the ones that actually do care about the 140, 160 60 180 IQ.

Again, maybe at some point that gets, you know, should commoditize as well.

But my sort of counter to you would be you've made this argument that seems to imply, hey, you know, things will acrue to the AI application layer, which if I understand your guys' portfolio is largely where you guys invested, but in reality, that's not what's played out.

The like places that have captured the most, you know, revenue growth, the most market share have been the ones that are actually pushing the true frontier, you know, of the, you know, technology forward. And so, so far, at least in the last 18 months, your thesis is not playing out at all.

Well, to to be clear the isn't isn't it somewhat widely understood that Anthropic has negative gross margins as well?

So it's it's not like they're they're doing like EB's point was that you want to invest in these companies that have the you know seven powers and like you know in the you know days of like Uber you know Door Dash etc that did end up translating the most power then the foundation model labs maybe then the application layer we'll see how much power develops in the application layer but Ev let we'll let you respond.

Oh yeah, I was going to say that that um basically what Deian said was just wrong because even though it even though like if you if you if you think about okay like let's take like whatever open AI and anthropics recently reported revenue run rate is the majority of all of that or at least the plurality of all of that is chat GPT and chat GBPT even though it is served by a foundation model company is an application it is a consumer subscription that has an immense amount of power it has an immense amount of branding um like you know it is the only it is like the first billion plus user consumer application that's been developed by a new company in a really long time.

Um, and so I think that um, like you could put whatever models you wanted through chat GPT at this point and it would not knock it off of its perch. I think that is power. Like you could you could run cloud 3 sonnet through chatgpt and I guarantee people like the average user wouldn't actually know the difference.

Um, and like that to me is power. And just because the foundation model companies are producing apps themselves doesn't mean that it's not the application layer that it's uh that that is accuring the value. Okay.

Then my question is, you know, you've got, you know, opening eye with the best possible consumer application layer. You've got Enthropic that like shifted over to positive gross margins and those margins are expanding and yet clinvesting into either of those foundation model, you know, companies. Why?

Uh I cannot comment on our current investment activities. Okay. Uh gears can do you like making money or do you like you know all the competition? Can you comment on on Donald Boat? Have either of you bought anything for Donald Boat, the notorious ebeggger on X. com, the everything app?

Look, my little brother, you know, uh, you know, played the Uno reverse card and tried to get Donald Boat to buy him something. So, smart, you know, contrarian nature. Let's talk about uh revenue quality because I think that you guys run into this in your respective domains every single day.

Just like in AI, you can have low quality revenue like that might be the explo explosion of like consumer uh prompt to app uh activity, you know, might not be the highest quality re revenue.

Meanwhile, on the hard tech side, if somebody gets like a random like cber or like experimental gets like experimental budget from some branch of the military and it's like a a fine, you know, fixed length contract, it's not necessarily the right strategy to slap like a 50x revenue multiple on it.

So, like what's your view on on both of those? Um, and then I want to talk about if we we should get into if uh if accounting rules even matter at this point. Yeah, for sure. Yeah, I mean in hardware land we think about this all the time of like there's clear differences in quality of revenue.

Everything from like you know defense you know program of record you have to value that very differently than even like a $50 million you know SBIR.

And so it has been interesting to see a bunch of investors coming into this field where I think there's a lot of um pre-existing 10 years of rules around software of like what you know healthy revenue looks like rule 40 there's all these things that like you know even if you're somewhat unsophisticated infinite blog post when you look at that in the world of like hardware and defense you know sort of investing or aerospace there aren't like infinite blog posts for people to study and so I admit that I'm sometimes amazed when I watch people come in even for I should never you know sort of trash my own portfolio but sometimes even my own portfolio companies I watch people invest into them and I'm like wow like you just have a deep underappreciation for just like how long this company has until gross margin flips to like positive how long it's going to be until they're actually you know sort of ready to you know go scale revenue even if it on the back end it might be attractive it may be years and years for them to you know sort of get there and so u yeah I I see huge variation on that and then mostly what I end up you know sort of seeing is people just come in and like slap a 10 to I even saw 100x rev rate multiple on this like hardware company recently and I was like holy [ __ ] Wow, people like not having IR for a long time.

Yeah, I think um so Delian's uh hero and close mentor Bill Gurley had an essay a long time ago called the 10x revenue club and I think it's like a good abstraction for kind of like tech revenue quality and like what makes up revenue quality and it's things like you know how durable is the revenue like if you sign a customer are they going to stay for a year 20 years um you know how much contribution profit is going to come off of that revenue stream over time um all the basics and I think you can like take those same building blocks and apply it to AI I think there's several things that are worse uh for AI than at least than than relative to SAS for now.

So generally gross like gross margins are lower which means contribution profit coming off is lower. Um I actually think that like depending on the category you could have customers that are more sticky or less sticky.

Like I know the meme is that everything's experimental run rate and none of these customers are actually sticky. I think we see something very very different uh among the the our group of portfolio companies.

I think that the biggest lever that didn't exist in SAS that exists in AI that could be a huge call option boon for the revenue quality of AI is the actual contract sizes as people start to eat into potential labor budgets.

I know this is like still kind of like inning one and inning two and it's also like a little bit of a meme where everyone's like oh it's going to replace labor and labor's 10 times SAS and it hasn't really happened yet but I think if you look at some of these coding tools and you look at something like cloud code that is the first place where you can really actually say like no this is replacing the labor that a developer would do and it is paid for on like a metered consumption basis and the monetization numbers we're hearing around developers using cloud code are pretty crazy in terms of like wow that's like you're paying like onetenth of like a developer's full-in cost to a company on on an annualized basis for this product.

And so I think that the like the the thing to watch is like durability of revenue plus the amount of actual revenue that a customer can give you. And I think that you're going to end up or the amount of gross profit that a customer can contribute over time.

And I do think as some customers crack these agentic products that look and monetize more like labor, um AI revenue could actually exceed the quality of SAS revenue just because you're getting so much more gross profit per customer or or like customer relationship than you would on the SAS side.

Even though there are clearly things that are worse about AI revenue at at this current point in time than there are about SAS revenue. Dylan, how do you think about the uh the the moral imperative of of a venture capitalist to invest in positive sum versus zero sum markets?

This idea that you know you're re-industrializing America. You're saving the west versus moving chips around you personally uh ver versus moving chips around the poker table. Taking uh taking from some legacy, you know, web 1. 0 0 company and putting it into an AI company.

Uh what what's your what's your thinking and argument there? Is is is uh a a a market beating ROIC all that you need?

Yeah, I you know I think uh Peter always reminds us like you know our number one job is deliver returns for our LPS and so I actually tend to not try to you know sort of overly moralize when like analyzing the things that I want to you know sort of invest into for sure when it comes into like policy and I'm in DC and I like need to you know sort of report to you know the security council that you know Bill Gurley is a you know sort of a Chinese spy and like the investments that he's making should probably be banned from the United States.

Yeah, for sure. There I have, you know, sort of moral imperatives and things that influence that may end up, you know, shifting ROIC, right?

Um, so, you know, but when it comes to, you know, like which literal investments are we making, I think of it as just like, yeah, you just have to, you know, sort of make the, you know, sort of best possible investments irrespective of, you know, sort of moral imperatives.

But in some ways, I tend to think it turns out actually if you, you know, go too immoral, um, then that ends up, you know, sort of affecting ROIC.

So um you know maybe and the last thing that I would at least you know sort of you know close on you know for my you know sort of question you know for everit um is um you know uh one of the upsides of founders fund is you know we're very um you know sort of you know um let's say uh non-entralized distributed you know not many you know sort of rules which you know ever for some reason you sort of chose to leave and so I know nowadays everything that he says publicly you know probably you know five comms people and five compliance people that need to you know sort of approve it and so my only request to is, you know, so blink twice if somebody's, you know, got a gun behind the camera threatening to shoot you if you ever say anything that, you know, goes off Chris.

Just uh that's all you got to tell us, brother. Yeah, let it let us know. Hey, our wonderful marketing partner Ally is is is behind the camera with a green and red paddle, and she hasn't the red paddle yet. So, that's great. Victory. Well, thank you both. Last question.

Are you worried about Uncle Sam potentially having sharp elbows now that we're hearing about Intel? Yeah. the federal government taking a stake in Intel. Any any concerns about him going down the stack into the into the early stage game competing for those seed and in series A allocations?

Look, if Trump Capital wants to uh, you know, sort of mark up some of the uh, you know, re-industrialization companies, I'm all for it, baby. Cheap cost of capital. You're all for it. Yeah, I'll say I'll say two things.

I would say one, I think that the EV of like the enterprise value of Founders Fund probably 3xed the night that that Trump got elected. So, I don't I don't think Delion would complain about that.

And then two, just as as a parting gift, Dian, um you know, I think this conversation's been great and it's made me realize why you want to build factories in space because your math on Earth doesn't make any sense. Well, thank you both for joining. This is You're both good sports. We'll have to do this again.

I think it might be a draw. We'll have to have you both back soon. Thanks so much for hopping on. Great stuff. We'll see you guys later. Cheers. Let me tell you about ramp. com. Time is money. Save both. Easy to use corporate cards, bill payment, accounting, and a whole lot more. Do accounting rules matter?

Yes, they do. And you can enforce accounting rules on ramp. com all in one place. Go to ramp. com. That was that was beautiful. Two two former colleagues barely holding back from saying things that uh they would ultimately regret, but they did. They did a good job. They um it was I like the debate format.

We should definitely dance more of those. I think that was a lot of fun. I think the chat enjoyed it. Uh the my my my favorite rude comment in here. Oh, we got Andrew Reed in the chat. Ever versus Dellion who can grow the most average beard. Oh my god. Thank you for watching, Andrew.

Uh let us know when you've selected an opponent and and we'll have you on the show to debate someone. Uh yeah, I think we need to we need to get the Holy Trinity. Uh yes. Yes.

If you're if you're new to TBPN, the holy trinity is of course the three venture capital firms that have done a seed deal in a now hyperscaler or now mag7 company. So that is Sequoia Capital Founders Fund with uh Meta originally Facebook and Kleiner Perkins of course.

Uh and so the holy trinity are the three most storied venture capital firms in the valley much like the three uh famous watch brands the holy trinity uh vashron constanton pek philipe and admar pig of course uh over in Switzerland um if you enjoy this stream and you want to make your own stream get on reream one live stream 30 plus destinations multiream and reach your audience wherever they are uh if you're the backbone of your company and you're doing the launch uh streaming is the way to do it.

Uh you don't have to try to poach Ben or anyone else on our team. Just go to reream. It's fantastic. Check it out. Um anyway, uh going back to uh the Death Star, the vague post, we're one week out from GPT5. Uh how have how's your GPT5