All Things VC

Mori: The Company Making Food Stay Fresher for Longer

Mori is a biotech startup that makes food last twice as long.  Whether it’s fruits, vegetables, meat, or seafood, Mori extends the consumption timeframe for nearly all foods. How do they do it? Well, here’s how they describe it on their website, which I encourage you to check out: “Our simple ingredients unravel the power of silk protein. From the farm to the shelf, our water-based protective layer is easily integrated at any wash step or station. Mori Silk is food protection technology that slows the natural spoiling process from many points in the supply chain.”  Tune in to hear all the social, climate, and economic impacts of a technological breakthrough like this and why landing a $300 million contract from Whole Foods isn't crazy. More All Things VC: * If you want to read along this podcast, you can check out All Things VC on Substack [https://allthingsvc.substack.com/] * If you want to watch clips of this episode and many others, you can check out All Things VC on YouTube [https://www.youtube.com/channel/UC_bS1W9O8jpTE6gG9wss1rg/]

#023 Founders Fund

Founders Fund is likely the most non-consensus VC firm in the industry. Sequoia founder Don Valentine said to target big markets; Peter Thiel said to target small markets. Jeff Jordan says he likes competitive deals as a signal of future success; Brian Singerman says if a deal is competitive, then it’s too late to invest in that industry.  The list goes on and on, but in this essay, I’m going to elaborate on some of the truly unique principles of Founders Fund that, truthfully, I find to be the way venture capital and startup investing should be. Today, we’ll cover: 1. Why to Target Small Markets 2. Why Competition is for Losers 3. Why Invest in Market Creators  4. Why all Investments need Supreme Conviction 5. Why Founders Fund’s Firm Building Thesis is How Venture Capital Should be  I have several quotes from key partners at the firm that emphasize why Founders Fund is drastically different than any VC firm you’ve studied, but one you probably will learn the most from.  But first, who is Founders Fund? Founders Fund was founded in 2005 by Peter Thiel of PayPal fame, Sean Parker of Napster and Facebook fame (Justin Timberlake), Luke Nosek, and Ken Howery, both also of PayPal fame. Founders Fund essentially pioneered the “VCs as former founders” movement that is so prevalent today. Their guiding principle was to treat founders with the respect they deserve by ensuring them that they were in charge and never felt threatened by the VCs at Founders Fund, backed by a vow never to oust a founder. In 2005, these principles were very contrarian to the industry.  Their remarkable portfolio consists of SpaceX, Palantir, Stripe, Anduril, Facebook, Airbnb, Nubank, Rippling, Affirm, Ramp, Flexport, Spotify, and many more multi-billion-dollar companies.  Therefore, I encourage you to pay attention when reading about their investment theses because, clearly, they’ve had some remarkable success in practice.  More All Things VC: * If you want to read along this podcast, you can check out All Things VC on Substack [https://allthingsvc.substack.com/] * If you want to watch clips of this episode and many others, you can check out All Things VC on YouTube [https://www.youtube.com/channel/UC_bS1W9O8jpTE6gG9wss1rg/]

#022 Why Construction-Oriented AI Robotics Are One of the Best Use Cases for AI

Last week, I talked about how an investor would analyze a startup building something completely new with high technical risk and low market risk. [https://open.spotify.com/episode/43km7sopOLDL561f08oBHX] That company was Loyal, which makes dog life-longevity drugs. From a market perspective, it is one of the most no-brainer investments if they can pull off the tech, which obviously is a huge challenge.  It got me thinking: what are some potential startups where a company can create something new that may be very technically challenging but with minimal risk from a market standpoint that makes a current process either much better or much cheaper?  I closed the essay by saying I’m not sure Figure AI qualifies as a low-market risk company since many other startups and large companies are going after humanoid robots. I do, however, think intelligent robots will be highly prevalent in our world in the coming decades, so I thought about where intelligent robots could best be applied to enhance our world while being financially worthwhile for an investor.  For some reason, perhaps due to my Pittsburgh upbringing or the fact that I just read (and loved) Last Train to Paradise, my mind went right to automated bridge inspection and repair robots. Exciting right?! I’ll get more into why I chose bridges later. For context, the government currently spends nearly $3b every two years on bridge inspection, despite the push for annual or semi-annual inspections, so there’s a need for greater efficiency there. Additionally, the government spends almost $15 billion a year on bridge repair, while estimates say there is currently about $125 billion in bridge repair spending needed to repair all of America’s bridges currently in poor condition.  So there’s certainly a market, and the current solution, human labor, is not getting the job done.  Perfect equation for disruption! I’m talking about companies that create robots that don’t just inspect the physical object but repair the object as well. Sell the work. Construction and AI seem to be one of the best applications for selling the work, and bridge repair is a good place to start.  Is that easy to build? I have no idea, but probably not! Can someone build it? Probably eventually! Is it worth building if you can? Definitely! More All Things VC: * If you want to read along this podcast, you can check out All Things VC on Substack [https://allthingsvc.substack.com/] * If you want to watch clips of this episode and many others, you can check out All Things VC on YouTube [https://www.youtube.com/channel/UC_bS1W9O8jpTE6gG9wss1rg/]

#021 Loyal: Your Best Friend's (and Investor's) Favorite Company + How to Analyze a High-Technical Risk, Low-Market Risk Startup

Something I really appreciate about humanity is our openness to a good debate. We often see this in business. For example, in my last episode, some could say Wal-Mart’s cheapest pricing strategy prevented mom-and-pop general stores from being able to compete and wiped out many small businesses. On the other hand, I would say the cheapest prices model benefitted consumers most, which a free market optimizes for. As a result, more specialty mom-and-pop stores arose to counter-position themselves and compete, which also benefitted consumers. My point is that these claims can be argued. Loyal is perhaps the first company where I refuse to hear any argument that isn’t regarding how great this company is for the world.  Loyal is developing a safe and non-abusive longevity drug for dogs that will extend their lives by another year or two. How can you not root for this company?! That’s an incredible mission that everyone can get behind.  The largest dog breeds typically only live 8-10 years, medium 10-12, and smaller dogs a little longer. Dog owners know these pets can feel like family members, so how short their lives are is awful.  The three big questions facing Loyal now and in the future in investors minds are: 1. How much of their drug can they sell while in the conditionally approved stage? 2. Will they be FDA-approved? If not, the company may die or lose to a competitor.  3. If they are FDA-approved, how long will their monopoly continue?  All of these questions are extremely speculative for an outsider like me and, basically, anyone without direct connections to the company because no one outside the company knows how complex their drug is.  What I think is more interesting at the moment, or at least what I can write about, is how a seed-stage investor may have analyzed this company. After all, if Loyal successfully proves they can increase the lifespan of dogs, they will have a short-term monopoly on that market and likely generate significant cash flow. On the other hand, there were many places where their research could’ve failed, and Loyal could’ve gone out of business.  Therefore, this episode will include several scenario analyses that a seed-stage investor may have built when considering investing in Loyal back when it was just an idea. Throughout the episode, I frequently reference my YouTube video or Subtack post to view the analyses. You can find those links here: YouTube: https://youtu.be/AH2G4g7bHGY Substack: https://allthingsvc.substack.com/

#020 Would You Have Invested in Walmart in 1962?

You may be surprised that a podcast that discusses venture capital and startups decided to do a post on Sam Walton, who started his first company in the 1950s, and Walmart, one of the most bloated and uninteresting businesses today.  In 1962, however, Walmart was just a plucky discounting store in Bentonville, Arkansas, a town of less than 5,000 people, that innovated its way to go from $0 in sales to $26 billion in sales in 1990. No company at the time grew at even close to the rate that Walmart did, and no company in the world was more valuable because of it.  Sam Walton’s autobiography, Made in America, is a timeless manual for entrepreneurs building in any industry in the 1990s, the 2020s, or even the 2050s regarding how to start and scale a business. If you’re hesitant to believe me, you will after you listen to this podcast. If you think it won’t be worth it, well, Jeff Bezos [https://www.bookforum.com/print/2004/a-look-at-jeff-bezos-s-relentless-drive-to-master-all-phases-of-web-commerce-12479] credits this book with inspiring him to get into retail and took many lessons from Sam Walton to build Amazon into the juggernaut it is today.  Today, I’m not only going to discuss what made Sam Walton and the early days of Walmart so exceptional, but I’m also going to analyze why I would invest in Walmart in 1962 when Sam Walton opened the first store. Walmart wasn’t his first venture; in fact, it was his third, and he showed exceptional signs of entrepreneurial excellence prior to founding the company we all know today.  In this episode, I’m going to describe the key traits of Sam Walton as an entrepreneur and his vision and operating principles for Walmart as to why I’d invest while relating it to many examples in today’s startup environment because, as I said, these lessons are still highly relevant today. Then, I’ll discuss some ROI scenarios of investing in Walmart at the founding moment before concluding with ten rules for running a business straight from Mr. Walton himself, which I argue are the only pieces of business advice you need to know. More All Things VC: * If you want to read along this podcast, you can check out All Things VC on Substack [https://allthingsvc.substack.com/] * If you want to watch clips of this episode and many others, you can check out All Things VC on YouTube [https://www.youtube.com/channel/UC_bS1W9O8jpTE6gG9wss1rg/]