All right everybody, welcome back to this week's start of our VC round table, which we call This Week in VC. We're building brands over here, trying to provide value to you. You would think that this week in VC round table is the round table that every investor wants to listen to, and sure, investors listen to it, but what I'm finding out is that founders are listening. They're like, 'Hmm, what are you guys thinking on the other side of the table?' Because we're trying to get work done, and I have three incredible active investors, in the game, in the arena, dare I say, and they're not only in the arena placing bets, but they're willing to talk about it. And that is my four-quadrant chart there, Sam. It's a willingness to talk and actually doing the job. Sometimes I find people who are doing the job of early-stage venture capitalist, etc., but they're unwilling to talk. Then I meet people, Sam, they're willing to talk but they're not writing checks.
It's a simple two. It's the four-quadrant. I didn't get an MBA. You have an MBA, Sam?
No. So, Sam, if they had just told us if you want to sound credible, just make a four-quadrant chart, I would have started a long time ago.
Well, Jason, I didn't get an MBA, but I unfortunately did work for a betting company for the first two years of my career, so I'm very familiar with making a quadrant chart.
Yes. And if you put a couple of those into the report, you're going to make a little extra chatter. As part of this, we're starting a new newsletter, This Week in VC, and Lon's writing it and leading the team. We're hiring two full-time writers. We're not poaching from The Information, don't worry, Sam. You got all those incredible writers over there. It's getting very sharp-elbowed now, tech journalism doing great. But it's called This Week in VC, and we're just, it's like one thing. I'm a big fan of editorial products being one thing. So all we're doing is going behind the deal. Every week we're going to go behind the deal. We're not going to try to break the news. Your bot's going to tell you about the breaking news. What we're going to do is just do a deep dive into what happened in that deal, who was involved in it, the mechanics, the due diligence, and you'll tell us if it's good or not. Go to thisweekinvc.substack.com.
All right, Lon. All right, Lon, introduce our incredible guests. I already tipped the cards here with one of my favorites, Sam Lessin. And we got to get some turns in this season. Sam, I got to get some turns in with you.
I mean, it's ski season. We'll see whether El Niño delivers or not.
I mean, it's either going to deliver a washout or we're all going to be firing off beacons and parachutes and.
It's not going to be the middle. It's like a binary outcome year.
It's crazy. And for people who don't understand, explain to them, Sam, what has got all of us on pins and needles in the community here.
Well, look, in the end, if you're a skier, you know it's an El Niño year because you're on OpenSnow where there's a new hot take on it every day. But no one can decide whether it's going to be a great season or a terrible season because you're going to get a lot of precipitation. The question is where does it fall and how much global warming do we have?
And what do the prediction markets say? You know, I was actually thinking, it's funny you mentioned that. I think there is definitely a business to be had in an options market specifically for consumers around skiing and snow. I mean, like the insurance thing, like how restaurants, people have done it, climate people. But I think specifically, if you told me, you could argue for the sake of the regulators that this is all about income smoothing for resorts, but really, it's degenerate gambling.
Degenerate gambling, right.
I mean, this is a great first topic. Go ahead.
You're already speaking with him from Slow Ventures. He's a general partner over there, also a columnist for The Information. Sam Lessin is joining us. Sam, thanks for being here. Also, we've got founding partner of Behind Genius Ventures, a pre-seed and seed venture capital firm that invests in technical storytellers, Paige Doherty is here. And finally, from Everywhere Ventures, she's the managing partner. They're a global pre-seed venture capital firm investing in companies working on money, health, and work. Jenny Fielding is joining us. There's your panel, Jase.
I mean, it's incredible. And just full disclosure, and this is a completely unnecessary disclosure, Jenny. I'm just disclosing this so I can basically let everybody know, not that I'm prone to do that, that I do have a business relationship with Polymarket. They do sponsor things I do, and their partners, and I am a shareholder. So, I just want to make sure that last part, that I'm a shareholder.
Fine. I'm a shareholder in Koshi. So.
Okay, so we just got to put it on the table. Sam, we both have epic runs going with these prediction markets, but we were starting before the intros there.
This is a really interesting idea. The original concept behind these prediction markets, I think it was Intrade was the original one at the end of Web 2.0, or maybe Web 2. The idea was, I think, you know, hey, you're the canonical example, you're a farmer, and you want to take a hedge against is it going to be a good season or a bad season. So you kind of bet against yourself having a good season so if you have a bad season, you make a little bit of money. In the skiing concept here, Sam, you and I booked Hokkaido or we're going in. We're going to be in, you know, Tahoe, whatever it is. And now we've dropped 20, 30 dime skis on this trip, or if it's backcountry, 40, 50 dime skis, and we need to get a little insurance on the other side, right?
So, first, I mean, I always love markets because I'm like a nerd who read too much Hayek in college. Like, Hayek is my favorite, and you know, Friedrich Hayek's whole thing is markets are information machines. Don't screw with markets because the world's way too complicated for anyone to understand. So you need a pure machine, so you need a bidding system. You need a way you can place financial bids in order to understand what the hell's going on in the world, right? So I think the real key of Polymarket, Kalshi, etc., is there should be a market in everything because that's actually how you can pump information through the world, understand what's going on, right? You know, then the insurance and the hedging, like, look, yes, there's been a thousand takes on this. I've always wanted this. I don't know about you, but to me, what I always wanted was imagine a flight from San Francisco which says, okay, you booked the ticket for a Friday or for a Wednesday, and you say, 'We're just going to go where the snow's best.' I don't care where we go. Like, what does it matter to me? Right. Powder chasing. Pure powder chasing. And like literally, if you could fill a whole airplane with skiers and just say, 'Where are you going?' It's like, 'I don't care.' Right. We go wherever the snow's best and you just go. So there's like all sorts of fun takes, but it is a fun thing where you're like, to your point, you're locking in. We have a ski home in Wyoming. Like, you're making commitments to places, but then you want to be able to, you want some flexibility in that system or at least a hedge of some sort.
Paige, I know you're on your third fund now or are you doing the second? You're going into the third.
My third fund. Yeah, we just started investing out of it.
Congratulations. That's awesome. I just thought, you know, like if you're a first-time investor, like you're on your first one. Imagine if we could be like, you raise your first $10 million micro fund and then you bet a million dollars that you're going to return under 2x or something, and you get 7 to 1 odds, and you can kind of fill in, you kind of bet against yourself hitting the hurdle.
And wait, that would be crazy.
It's like when I go to Knicks games, this is how degenerate I am. I went to like the finals games. I'm like, I'm paying a lot of money for these seats and I'm like, let's make it even more exciting. I'm going to bet the cost of the seats. So I started betting the cost of the seats on the Knicks postseason, which my seats are not cheap. I won every time.
Did I? I went to like 11 of the 16 wins or 10 of the 16 wins? They didn't lose once.
But it's a little dark to bet against your own pond.
I didn't bet against myself. I bet for the Knicks to win, so I was doubling down.
It's funny. I actually, like, I'm not a gambler on these types of things. And I'll tell you why, Jason. I'm not sure if you feel the same way, but to me, I look at this and I'm like, one, I'm a professional gambler. Like, this is literally what I do financially. So it's not, like, I spend all of my time gambling on long odds, interesting, weird things. And so I don't get incremental enjoyment from it. Two, when you kind of look at the dollar, I have a problem with just the amount of money I'm willing to bet is not enough to emotionally move the needle for me.
And so, as a result, it just seems stupid. You know what I mean? Like, that's kind of the way I look at it. It's like, you could make it a system where you're betting a meaningful enough amount of money that you feel something, but it doesn't register on this.
I can help you with this. This is a dosing issue. This is a dosing issue. I will say, I know we're going to talk about it later, but the last bet I did place, I did put a bet down recently, was I went to the LA premiere of the Nathan Fielder movie, which I've now seen twice. And I did walk out and put money on it for Best Picture, which was a great long-odds thing.
What is that? I'll pull up Polymarket for the long odds of that.
Okay, Jenny, are you experiencing moments of gambling and desire to get additional juice, as we say in the business, when you're not betting on hitting a one, you know, one of your portfolio companies hitting 2x or 200x to make up for the ones that return zero x, which is 80%?
Well, unfortunately, I live in New York, which I think has argued that these sites are unlicensed gambling operations.
How dare they? No. Okay. You have enough action. You're getting enough action. You don't just go to New Jersey like everyone else to do it. You just got to take the PATH train. Just get on the PATH train, zip over there, and just sit on a bench on the other side in Hoboken, place your bets, and then come back. This is incredible.
I guess I'm old enough to remember the credit default swap meltdown. So I do have a little PTSD on that.
You know who I got into this? Lonny, my news reader. Lon, the professional news leader. Looks like Mandy Patinkin over there. Look at Greg. Um, by the way, he now is placing bets. He's in the group chat. He's like, 'I was thinking Andor and uh, maybe.'
Listen to me. I called Sinners winning Best Cinematography at the Oscars like so early last year. I like 5xed my money on that one. And then I told you John Malkovich is going to win Best Actor this year. No one believed me. It's already up. He's in like the 40%s now.
Okay, before we do anything else and I lose any more bets I could place, I'm going to take my Plaud out. It's on the back of my phone. I'm a back of the phone kind of guy because I like to put it on the table when I'm taking meetings. Hey, can you mind if I take some notes here? But for ski season, I wear the pin that you see Lon wearing. I wear the pin the whole day because sometimes I go out on my own. That's rule number one of skiing. Don't go out on your own. I do that two out of three days. But I stay on piste mostly when I'm skiing alone. And I talk to myself like a lunatic. I stop. I have a little piece of whatever energy bar, Sam, and then I talk. Wow, I got a great idea. Boom, boom, boom. Then I come back, end of the day, separate sinks. I'm all set.
But then do you, like, is your skiing pre-tax then? Is that your plan?
I think I'm working. Yes, I think I'm working. I mean, if there was a way for me, yeah, if we became, hold on a second here, Sam. If we became investors in OpenSnow. OpenSnow is like $50 a year, and it's a bunch of meteorologists, and you can sort it by like whatever you have your ticket, you know, your Ikon or your Epic. But most importantly, you can just sort the snow by three to five days. So you just look like, 'Hey, three to five days out, five to 10 days out. What's it looking like in terms of snow?' Oh, and like, that's how I wound up going into Japan so many times because I would just put it there and they'd be like, 'Yeah, Japan's the one through 14.' And then, well, we'll talk about Alaska and Canada and, you know, somewhere in Europe. And I was like, 'Konichiwa, mother, I'm going to Japan.' If we own 20% of OpenSnow and we did market research.
Yeah. Can't you just own 1% of OpenSnow and do the same thing?
Okay, sure. I'm just trying to think, you know.
He's thinking big, Sam. He's thinking big.
Oh, wait. No. If we clone our own OpenSnow. And then we start selling and then we... This is a.
Think of the losses you could generate.
Oh my, that's so great. This is when you know you spent way too much time thinking about finance and taxes.
If you want to have great ideas like this on the slopes, capture it all on your Plaud and send it to your team. Check it out at plaud.ai/twist and use the code twist to get 10% off. You could put that money right into your OpenSnow clone that you're going to use for tax purposes.
Take that 10% and you could put it on. You can see everything.
You could put it on. You can see everything. For Best Picture, 19% on Polymarket right now, Jason.
For Best Picture, not for Best Stock. Hold on. Best Doc, it's got to be 95. Yeah, it's best in the Best Doc. It's in second place on the Best Picture list.
The Odyssey, which to be clear, a documentary has never been nominated for Best Picture, so that's probably over.
Yeah, The Odyssey is currently your number one. Oh, this is a documentary. It's got 73% of the Best Documentary vote.
I'm still putting 10 dimes on that.
No Other Land is the Palestinian, the, it's like Israeli soldiers talking about Palestine. That's even the Academy Awards are not woke and stupid enough to not give...
We'll see. It says 25% chance that that's not right, Jason. That's exactly what Hayek would tell you, is that the Academy has a 25% chance of exactly being that.
Oh god, I'm trying to think of how woke they are. It's... So wait, No Other Land is about Gaza? Is No Other Land about Gaza?
No Other Land is number two. Yeah, that's the one made by an Israeli-Palestinian duo, and it's about interviews with IDF soldiers where they talk about the horror.
So here's what, this is actually quite a conundrum here in terms of betting. This is where gamblers have to start thinking about it in their twisted, crazy, insane Los Angeles Westside, Malibu, Santa Monica version of the world. Which do they want to virtue signal more? They hate tech people... or the conflict in the Middle East? Where do they want to make their statement?
But I don't think the Elizabeth Holmes thing isn't... I mean, it's not about tech.
I know. I'm thinking in their mind, human condition.
I agree. It's about Theranos, and then it just becomes like light.
Wait, Paige and Jenny, have you seen it or no? Oh, yeah. Okay. Jenny, have you? Oh my god. Yeah, we all saw it. So wait a second. What are they doing? Why don't we just make this number one here? We're here. We're here. We all saw it in the first five days. I love it. I saw it on Saturday. This is fantastic. Let's make this number one.
I mean, my big question is, can Elizabeth Holmes win Best Actress?
Okay. And fair warning, we're going to do spoilers for... Come at 10. So somebody set the countdown clock. 10 minutes. In 10 minutes, we'll be off this. If it winds up being 14, just take out 12 there and use Chris Williamson's voice clone on 11 Labs to replace me with his voice in Northern England voice saying it's 14 minutes. So 14 minutes.
You got to do that H instead of H. H. Yes.
Most of the top AI models out there from the biggest labs can handle your jobs. We all know that. But for savvy founders, what actually determines your speed and your spend, very important, is the infrastructure running underneath those models, not the models themselves. If you want to stay fast and have speed on your side while keeping your costs in check so you don't run out of runway for your startup, it's time to look at DigitalOcean's inference engine. DigitalOcean's entire cloud platform was built from scratch for AI tasks, so you get a real noticeable jump in performance without piecing together a patchwork from dozens of vendors. It's easy peasy lemon squeezy. It's not complicated, and you're not going to get hit with massive unpredictable invoices at the end of each month. Man, the token shock is real. And DigitalOcean is already running many of the best and most prominent AI apps, including Hippocratic AI. Everybody is using DigitalOcean's inference engine. If you want to understand what building on a true AI-native platform looks like, go to do.co/twist. Start building on DigitalOcean's AI-native cloud today and cut your AI workload costs by up to 50%. That's do.co/twist.
Okay, Jenny.
I mean, is it really a documentary? Because you know, if you've seen it, it's really like a docu-drama, right? Because the whole second half. So, I mean, there could be an argument.
All right. So here's my question. Here's my question. What was the best, funniest, most impactful, just scene, or moment you can't stop thinking about from the film, excluding full frontal nudity scenes. So excluding any full frontal nudity, you cannot pick that, that part is crazy.
I would argue that we all, we all agree.
So Sam, I saw Sam was going to go for it. I'm preempting the joke. You cannot pick it as number one, you can pick it as number two. Jenny, you're filibustering here. What is the moment in the film?
I think we all agree it's the Who's on First. I agree. I mean, that's the scene that will be remembered from the film, but it's kind of like a mid answer because it's like everyone agrees.
That's a consensus answer.
It's so good though. Don't call me mid.
I think it's really good. I'm not saying you're mid. It's an incredible scene. I'm just saying like.
Okay, I think my favorite scene was Amanda and Billy duking it out. He's insulting her. She's insulting him. Nathan's just sitting there like, Nathan. Paige, she looked in the camera in a creepy way like Fielder does. I was like, I can't believe this is happening. And then the whole theater gasped when he was like, yeah, of course I have power of attorney. Like, I can do whatever I want. I can speak for her. I was like, whoa.
I got to say, wine mom Amanda, is peak Amanda. Like, she gets three glasses of chardonnay in her and she is off the reservation.
The scene or the line that he said that I took some notes as I was watching it was like, 'I have vengeance in my heart.' I was like, whoa. There's a... that was crazy.
There is one like that. It's kind of a subtle moment, but I think it's very significant when Amanda's there. She's with Nathan and Billy when Elizabeth calls them from prison. And Amanda goes, 'Did you know I was going to be here?' And Elizabeth goes, 'I don't know if I knew. I don't know.' And it's like, 'What is that? How do you not know if you knew something like that?' She's taking this to a next.
I feel like she didn't know, because I feel like Nathan, it was like, how would that have been coordinated for her to know? But it was also such a funny moment because Amanda in that moment was like, 'Oh my gosh, like you're so wonderful.' And it was just like this moment where it transformed from Elizabeth being like a character in her head that she was playing to like, 'Oh my gosh, I'm actually speaking to the mother of these children who I'm sitting here with her family.' That was like.
So I've actually seen the film twice now because I went to the LA premiere last minute when a friend I think who was involved in the movie messaged me, thinking I could never possibly make it, and said, 'Hey, I have an extra ticket,' and I hopped on a plane and I was there for it. And I got to say hi to Nathan after and kind of hear his talk track. And then I saw it again this weekend with friends. I'll give a different answer. I love the scene towards the very end where they're sitting down in front of the fireplace and they're trying to figure out what the one word was and the one word change because the thing like it's a really interesting story. There's an incredible ride. Nathan's amazing. I think honestly though, when it comes to how do you think about the human condition, what you can and can't know, an untrustworthy narrator and perspective, it's just an incredibly brilliant film. Like, it's not even about Theranos in my mind. Like, it's about something much more. And I just.
I think it's about the human, you know, my best analogy was, you guys remember, hilariously, at least Paige I think is too young for this. But Jason, you're an old man like me. Like, you remember the movie The Usual Suspects? Kaiser? Classic movie. To me, this was the same story, right? It's the story of an untrustworthy narrator, right? It's the story of the human condition where you don't really ever know what someone else has in their head. The limits of knowledge, the limits of the human experience.
The elusiveness of truth. Yes.
The elusive, and this is like a fact. And like, for what it's worth, just for fun, bridge this completely unnecessarily to our Hayekian prediction market thing. Yeah, right. Which is like, it's basically all about what can and can't you know in reality, right? In a lot of ways. And markets are one way to try to like meet each other and understand reality. This is like a hugely brilliant commentary on the unknowability of humans. And I just absolutely loved it. But to me, it's like the funniest commentary I've seen online is people who are like, I've seen people on Twitter be incensed, like, 'Nathan, this movie is terrible. Nathan's a totally untrustworthy narrator.' And you're like.
Lon, you are my cinephile. I always loved having Lon around for the last 20 years just to chew the fat over films. Did you have... and you've been adjacent to and in fact in the technology industry and around entrepreneurs incessantly, sure. What's your moment? I'll even let you go to your moment or two. And please not the full frontal moment. If that's in your top two, I just, to me, I was like, why does this... I'm confounded why am I going to an R-rated documentary? What's going to happen in this film? Yeah, it can't be for language. No, it just was because of another reason.
Well, one thing that really stood out as a Nathan fan was the moment that he and Amanda go to the Delmar house, like they go back there. I feel like that moment, I knew where it was going. I was like, 'Oh my god, he's going to Fielder-method this. He's going to like figure out, recreate.'
Explain Fielder method for people who don't know.
That's from the show, the HBO show he did, The Rehearsal, where he has actors follow around real people and just study them intensely for days to learn everything about like how they behave and what they do, and then he creates like real-life simulations with those actors trying to as closely as they can recreate the person that they followed around for a few days, whether it was a janitor, you know, a person working at a smoothie place, or Elizabeth Holmes or whatever. And so he's sort of doing that again here where he brings actors together, Amanda Seyfried and Christopher Abbott to play Billy. And he sort of recreates these moments he couldn't capture on camera with the actors to try to dig into the truth a little deeper. And once I figured out that's where it was going, it's such a brilliant idea, a way to bring together the comedy he's done in the past with this new concept. In that moment, I was just like, this is a great movie. This is a perfect use. But also, to just pivot off of what Sam was saying, I think we're sort of living in this post-truth moment right now. They bring up Charlie Kirk during the movie, who's a perfect example of that. Like, you're.
They brought him up when the Billy Evans, her husband, and I think it's confirmed that they're married. I hear people saying they're partners, married, whatever. He says, 'Why do you think I carry a gun every day?' My friend was at a screening with Billy Evans, and he said that Billy Evans was sitting in front of him. My friend and the two people sitting next to him looked at each other. Billy Evans going to go postal in the theater? He was like, 'Oh my god, Billy Evans is in...' But they were in Austin where everybody has a gun in the movie theater. So.
That's true. That's true. It's kind of... Yeah. Yeah. So I just feel like that's really the tension that it's about. It's like, well, you know, like everybody has a different opinion on Charlie Kirk and we're constantly arguing about it, but we're never going to get anywhere. You can't convince somebody else of your perspective, they can't convince you of theirs. There's no more objectivity. We all just have our own media bubbles and our own narratives that we accept. Obviously, like on All-In, I think Jason, you encounter this all the time. And I think that to me, that's what the movie was about. Like at a certain point, it's like you're faced with this choice of like give up or you're just going to obsess about this difference forever. And we all want to like put in front of somebody like, 'See your lie. Here's the truth. Look at the evidence.' You just like a Donald Trump or an Elizabeth Holmes just isn't going to accept that.
I tried to explain this when I did a little press tour where I went on the bull work and some other things, and I was like, gosh, let me explain to you how business works. You have a business objective, then you look at a problem, like say an administration, like say a regulator, and then you look at the possible solutions for solving regulations. And so when Tim Cook brings a gold bar or gives $25 million worth of Apple to build a ballroom, he's trying to solve a problem around the import of iPhones. And that is on the selection menu. He just picked what's the clearest path, and that path was $32 million, which is nothing compared to the cost of the gold bar plus the cost of this plus a little jet fuel to come to a couple of boondoggles and sit next to whoever. And it's very simple. Okay. I look at this in four parts. Obviously, Elizabeth Holmes is the principal character here. Or is it ostensibly the principal character? You can debate it actually.
Yeah. See, that's... it's almost correct. So with her, I had such a great, like, 'Oh, that encapsulates all my discussions for 30 years in technology, from when I was a journalist all the way to being an investor and podcaster in between,' which is the 'the device can run any test' conversation. The device can run any test. The platform can run any test. You just have to, like, in the machine have built the test, but the platform can run any test. Like, okay, yes, the car can drive itself.
Yeah, it can call the cloud. It can do the cartridge test if you've invented the cartridge test. Yeah.
And the car can drive itself. I've been hearing this since DARPA's like first challenge. The car can drive itself. Yes. The car drove itself. Now, in the first DARPA example, it drove itself into a ditch and exploded on fire. But the car drove itself. And now, is that fake it till you make it or complete delusion? But the fact that he was able to do that was the Who's on First discussion, right? So he has this discussion with her and he starts to go mad, like Abbott or Costello, who's trying to explain who's on each base, and Abbott's like, 'I don't get it.' Yeah. But Abbott is... she was Abbott. He's Costello, and she's making him lose his mind. 'Can you understand when you say the device can run any test, that means it could run all these tests?' And she's like, 'Well, I've never lied.' And it's like, okay. So that moment to me, I could just watch that over and over again. Sam, you were going to.
I would say there's two things on that. One is, it's easy to lose sight because the movie is so brilliant, the fact that she clearly very intentionally was lying her ass off, you know what I mean? Like, the movie is art, right, and the movie is incredible from that perspective. But if you go back to the record and some of the fun things that have been resurfacing, the absolutely batshit stuff she definitively said earlier in her career when she was doing it, like, it is. I think people will come away from this in a lot of ways very sympathetic to what's reality, and it's a very deep, interesting film. But I also think you got to go back to like the brass facts here, and there's plenty of them around, that she was making up insane stuff, right, and selling it, for sure. So like, she was absolutely.
That's what's interesting about the movie is he doesn't use those examples, right? Something just factual. This is not like a matter of interpreting. The military is using our... you could easily disprove that, and it's not a semantic thing about the word 'can.' And so, you know, it's kind of interesting.
But that moment is clearly the moment where she pitched Rupert Murdoch or some other old white guy investor, which is yeah, the platform can run any test. And Rupert Murdoch is like, 'Here's $100 million.' This other family office, 'Here's $100 million.' Joe Schultz, whoever, they're like, 'Of course, I'll join the board.' Nathan brings up, General Mattis, whoever. Yeah. They're all just like, 'Yeah, okay. We're in.' And as far as this week in venture capital is concerned, this is why due diligence matters. And somebody has to at some point use the product or pull. And we can go around the horn here and tell horror stories of due diligence where you find out, and we might as well just do it now and get it out of the way. The moment in due diligence when you have your Nathan Fielder moment, and the founder told you X, or the salesperson told you why, or the director of revenue said C in a board meeting, and then you find out what that actually meant. Like, this has been a maddening thing for me.
But I also think, Jason, that's true, but let's be the devil's advocate for a fun conversation. Look, I think we probably run about a 1% 'oops, it was fraud' rate at our fund. Sure. Right. I would say for sure, minimum.
Hilarious. We get, like, you know, prisoner number XYZ updates for some of these we invested in, they're trying to be like hyper fraudulent. Like, it just happens. And like, to me, the interesting thing that people bring up about this whole due diligence thing, right, especially at seed, is like, one, I think if you have no fraud in your portfolio, you're probably not being creative enough, not being aggressive, you're not saying yes enough. Correct. Two, it's like, you should have some fraud. There should be some fraud.
I think two and a half percent, just like credit cards. Yeah.
Yeah. So just accept that. And then two, it's like due diligence. Like, there are things where like the reason it's unfundable, right, or the number is super cheap, is because it is incredibly hard to diligence. And actually, if you think about dollars deployed versus return potential, you want to make not stupid decisions. But I actually think it's like overstated to be like, 'Oh well, like, you know, you just didn't do your homework.' I think it scales with the size of check, right? At a 25k channel, which we write 25k checks, you should base it on the individual and how they present.
Well, it's just math. Like, you can't afford that much due diligence if you're writing a $100,000 check. Correct. If you're writing a hundred million or billion dollar check, you can't afford to not do it.
And the thing that's interesting about that right goes like, seed is designed to mostly light money on fire and sometimes make a lot of money. Historically, growth was designed to like don't lose money and make less money.
Yeah, we need the 1x locked.
The thing that gets weird and has gotten weird is one is the upper limit on what people's imaginations has been released, right? All of a sudden you have these numbers which sound big on paper, right? But the asymmetry, people are pretending it's like C. I mean, that was the thing with the people writing $100 million checks that were effectively seed checks, and they got M&A. And like, that's the confusion I think comes up with this. Odo is the all-in-one management software that brings everything you need into one easy-to-use platform, and founders already know it's going to save a lot of their valuable time. But I want to spend just a few minutes exploring one of these real apps with you that you get access to when you sign up for Odo. Let's check out Odo Discuss. This is where Odo brings together all of your text conversations, your voice notes, your documents, and any other updates you have into one easy-to-scan dashboard. No more deep-dive searches trying to find the specific message you remember reading the other day, or flipping between 18 tabs to make sure every member of the team is up to date. Nope. Odo helps you record and transcribe meetings and calls right in your sidebar, with results automatically updated once they're ready. Yes, Odo Discuss is built into the platform. So if you're still cobbling together your back office across five different apps, get started today at odo.com/twist, and your first app is free. That's the right price. That's odo.com/twist. Give it a shot.
All right. Go ahead, Paige. What's your view here on the due diligence?
Diligence in relation to this first moment of my four moments that we can learn from by making the connection between what we do for a living and this incredible piece of cinema. Diligence is the first stop. Paige, you're early in your career. You're under 10 years. Have you had a moment of abject terror, fear, frustration in the diligence window?
Um, I mean, I think the thing I keep going back to is what I learned in computer science is like there are no dumb questions. So, if you as an investor are like that doesn't sound right and this might be a super dumb question and I'm going to ask it very simply and I might ask it multiple times if I don't get a clear answer. That's always what I go back to in diligence is continuing to ask those questions that may feel weird or obvious and seeing how someone responds is the approach that I've taken.
Any moments of fraud just without saying the name of the company obviously or whether it's an investment or not.
The name of it or... yeah.
Sam, you want to name something?
I'm happy to give an example, not say the name, but I think when it happens especially at the early stage, you know, we're all investing in founders and it's happened to me once. I've invested in 350 companies, it's only been once that I know, and it was because I just fundamentally had such a belief and conviction in this founder, right? And that I overlook things I shouldn't have overlooked. So such as you overlook $100 million check, um, I did not do enough reference checks on this person because I had such a great chemistry with him and I really wanted to believe, right? And I had... we did some references and we heard some things and you know, a bad reference doesn't mean we don't write the check. So we kind of weighed in eyes wide open, but I should have done a couple extra calls, but I just had developed so much conviction. Now, to your point, it was like a $50k check. So that's very different than a $100 million check. But I think what everyone kind of gets wrong is we all do this in our lives and our firms, like, if we're actually being honest, when you want to get a deal through, when you want to believe, you sometimes overlook...
You suspend disbelief. Yes, of course. You suspend disbelief. I'll name names because it's fun.
We've been involved in three cases that I remember to be quite fraudulent where there are people in jail. One was a company that hilariously was, this is my favorite one because it's so ironic. It was a company that was doing Uber for on-demand background checks. So the Uber for background check company ended up being fraudulent. I was like this is too good, right?
We're operating in the trust-based economy.
The second one was the poop you bought company that like triple-billed insurance on your poop sampling. And then the third is actually a very famous one actually because it's been all over the news, which was the JP Morgan fake customers one, which was...
Yep. Charlie Javice. And here's the funny thing about all three of those. When I think about them in terms of things you can check or not check, I'm sure for two and at least for one other, they were small checks we put in alongside VCs we love and trusted effectively. Yes. And so it was one of those things where like talk about the diligence. The diligence was we love these people. They think this founder is great. They're doing it and we're side-caring it and coming along for the ride.
You're drafting on their diligence. You're doing...
And on one hand the easy thing to say is 'do your own homework, you stupid people.' Sure, we can get into all that. But I don't know. I think the reality is it's a market. There's a lot going on. Relationships matter a lot. Will the next time that person sends me a deal, I probably check a little bit more? Yeah. But it's not, I think it's a more complicated system. It's not so black and white like most things. I can tell you by interviews I've done. I had Trevor Milton on the program famously of the trucking company and it was very clear there were a couple of moments that were incongruous and those moments got played at his trial. Now he's since gotten a pardon.
And that was obviously completely valid and completely vindicates him on all of the shenanigans that were proven in court. This is the most valid part in that's ever been paid for, bought and paid for. If it was in fact bought and paid.
Nikola was it. But you know, this is the one that famously pushed the car down the road. And I'm, you know, there's eight ways to Sunday that he is innocent. But you know, I found a hack for this. I have an associates-in-training program. We train people to be associates. And you know, it doesn't pay particularly well, but you learn a heck of a lot and you get quick...
You get quick advances in your career.
And so I have extra capacity at the diligence phase. So what I do is we tell people even at the seed stage, 'This is the diligence process. Here's a module on how you can learn about it. Now these things don't apply to you because obviously you don't have 12 months of P&Ls and you don't have three years of taxes, but you have been around so you should have filed your taxes last year. Did you?' And we just say, 'Yes, send us the tax return. Send us the top level of your bank statements, whatever it is.' And we say we're doing this not because any of these are going to necessarily kill the deal. We just want to train you. It's a training thing on diligence and we'll try to get 30, 40, 50% through what you will experience at series D. So at least you know how to make a diligence folder. And it almost never results in us not making the $25k or $125k bet. Okay. Second...
Not really. But you can build software to do it where, because the biggest part of it is asking for the doc, asking for these 10 docs, getting seven, then asking for eight, nine and ten, then getting nine or getting half of nine, then getting ten, then getting eight but I misunderstood what eight was. And it's that back and forth on the last three things and that's when you start going into Columbo mode because I always tell everybody, 'What's not in the packet? Credit card statements aren't in there.' And I'm like, 'Guess what? This person's been flying first class and bringing their spouse with them and they put their apartment on there. They're paying for their apartment with venture dollars.'
That reminds me of the good old 'Barbarians at the Gate' story. You know, this is one of the most famous stories in...
A great HBO series, great book.
With RJR and Nabisco where they kept doing the work and there was this person flying on the RJR and Nabisco planes all over the country, RMU, and they couldn't figure out who RMU was. He wasn't a director or whatever. Turned out to be the dog.
They were flying the dog around.
The CEO's dog around was Arm Mut.
All right, so insert Chris Williams here. We're still gonna keep talking about this movie and how it relates to venture capital. I have a feeling this tape over the whole show a lot. My second moment.
Is a Billy Evans moment. And you could just do all the Billy Evans moments. And I met Billy a number of times. Freeberg interviewed him at the All-In Summit, which has now started to go viral. And this is a joint Nathan Fielder/Billy Evans. Elizabeth Holmes is making scrambled eggs as if she's got a handicap and is in some way mentally deficient. I've never seen a more performative, inadequate scrambling of eggs.
Wow. So, this is fascinating. So, you're taking Elizabeth, you're taking Billy's side that she needed to have the eggs taken away from her.
I would not have approached it like Billy.
I'm in a relationship. I have a 20-year-plus marriage. We're 20 years as of this summer. So, I understand that when one spouse and a partner has a note for the other partner, you got to pick your battles here. There's times to give a note, times to not get...
But she's scrambling the eggs in a way that would never actually scramble the eggs. Like these eggs are not being scrambled properly. This is an improper scramble of the eggs. And there's a note to be given here. But instead of giving the note, 'Oh, do you want me? This is how I do it. Oh, honey. You know, I worked at a restaurant and they showed me a way to scramble the eggs three times faster and they come out so much better. If you want to learn it, it's kind of mind-blowing.' You got to present it in the proper way rather than just grab...
Billy Evans just grabs the bowl from her hands and starts doing it.
And then Nathan Fielder calls them out on it.
And now you're like, 'Wait a second.'
And I don't know what minute that was, Lon. Was that 15 minutes into...
It's not very far in. It's when you're first getting to meet them and see them together. Yeah.
So, I'm seeing this and it is triggering so many things. Because I'm like, number one, this is a trap. She's passively-aggressively scrambling those eggs.
He whips them out of her. You have to be in a relationship for more than 10 or 20 years to understand. He's now falling for the trap, ripping them out. And then Nathan Fielder decides this is no longer a documentary. I'm in this relationship. It's a throuple.
It's a thropple right now.
It's a... and that's what it was. The romantic undertones between Elizabeth Holmes and Nathan Fielder and the flirtation between Elizabeth Holmes and Amanda...
All of these things were incredibly palpable if you were paying attention. There was sexual tension between all of these parties and then you start to say, 'Wait a second, what is the nexus going on here?' Nathan and...
Is pulling people into interesting relationships with everybody. Everybody is a target of her being inadequate and needing some help, getting the help right in any number of ways from Amanda or 'I trust you, Nathan. Will you jump in the water with me? Will you go in there? Will you take the plunge?' So, this was a sociopathic moment realized on all parties.
Yeah, I love this tweet. Pull it up, Jacob. This is what 4DX does in the theater when Billy is beating the eggs.
I don't... maybe I'm over-indexing and projecting into this, but Jenny, you were nodding. But when I bring up this moment, did you notice this? And did you notice also the relationship? And maybe this speaks to her charisma and why she was able to raise hundreds of millions of dollars without ever showing the product, which is the charisma of the founder, which you talked about yourself. You fell for, we all do. Did you feel that she was creating these moments to get people to attach and help her, that she maybe wasn't able to get something done and she needed some help?
100%. I mean, that's the clearest message that I got was this was a huge manipulation and I thought she did a brilliant job and should get the Oscar because this is totally antithetical to any other images that you've seen, videos that you've seen of her or anything that you've read or heard and it's all to evoke empathy for her. And I think she did a great job.
I felt it. I mean, I'm wondering about Sam Balwani.
We have no Balwani. There's no Balwani here, Sam. There's no Balwani in the story, but does Sam Balwani have these moments of getting pulled in to help Elizabeth kind of cross the chasm?
Look, I think that so at the LA premiere, they did a little Q&A afterwards where Nathan was talking and what he basically said was one of the most interesting things about the film is there's a small crew of them that were doing it in the house the whole time and they would go home every night after kind of having done it. And the most interesting part was they would try to compare notes on what they thought they had just seen, and no one working on the film agreed. Like the whole interesting part was they would go home and talk about the day and talk about their film and they would all have completely different interpretations of...
Rashomon. It was Rashomon.
This the Rashomon effect. They all saw an event and they could not get alignment on what just happened that day in the documentary. And again, I don't think that's speaking out of school because it was a reasonably public setting after, but to me that's like the whole story. Like this is not, again, it's not about Elizabeth Holmes. It's funny, I actually don't have the same interpretation, but that's the brilliance of the whole thing, right? And that's why again, I think the biggest argument you could make is that this is not at all a documentary. It's just an incredible movie, right, is the way I would put it.
I think the most interesting thing I noticed is when you talk about Elizabeth's magnetism to pull people in to help her, is at the end of the movie, Amanda asked Nathan like, 'Oh, are you leaving things out that Elizabeth said?' And even in a way that they ended up editing the film together, you can kind of see like Nathan really warms to and cares about Elizabeth. And I feel like that comes through in the way this story was portrayed. And almost like, I guess, you kind of think Billy's the villain until the end where it's like, 'Oh, you know, they relinquish profits on this movie.' And so you're kind of, I feel like I was just left wondering it was almost like how Nathan's feelings developed over the film.
Do you think he felt for her or do you think that's him being an actor and a performance artist?
It's like a romantic... I don't... I didn't interpret it in a romantic way. It's just like more to Sam's point of like the human condition. Like you spend a lot of time with someone and you come to care for them. You get sucked in, which is like... Yeah. Which is like a very... It was just like very complicated.
So I thought her question was so good though.
It was like right on the nose.
I that was my Amanda moment. My Amanda moment was getting called out there. Um, and then my Billy Evans moment was a subtle one, and there's so many Billy Evans moments in this thing, you almost wonder if it's the Billy Evans story.
There's that one part where he's like, 'Oh, now we're using lasers.' And then you cut to his license plate, and it just says 'LASERS'.
What a cut. Incredible. When he's... this is like a funny random moment when he shows empathy to Nathan, that he understands what he's experiencing in his frustration with trying to understand Elizabeth, and he's now in this throuple because it was very clearly turning into a throuple.
This was very much throuple dynamics, which I know nothing about. But if I was in a throuple, this is my imaginary one, which is two of the people who are dealing with the alpha are going to commiserate. Right? So Elizabeth's the alpha here. And he's like, 'I know what you're thinking.' And Nathan snaps. He's like, 'No, you don't.' I was like, 'Oh my god, this is throuple dynamics. I know what you're experiencing with the other person in this triangle.' And he's like, 'No, you don't know.' And I was like, 'Oh, the triangle is moving in all different directions.' I felt this was a love story in many ways.
There's just... it was very romantic what was happening around this set, awkward moment right before she goes to prison where Nathan is like, 'Do you want me to leave you two alone so you can be intimate? It's your last time.' And they don't. It's like awkward.
Yeah. It's like very awkward. Nobody's really saying anything. And then later...
But I think that was the point. They were leaving it out there for him to say, 'I think we all should maybe have a last moment together.'
And then Billy and I will carry on while you're in prison.
But then later, I don't know what's going on. Then later, Billy feels the need to overcompensate because he has that whole 'actually it's been 900. I've been keeping track of exactly the days since we've had sex. It's been 900.'
Yeah. So, there's so much going on. There's so much. We got one final one here and then I'm sure you have a very good question, Lon, just cinema-wise that you could pose to us, but...
What is the outcome now for Elizabeth Holmes, who will be in a halfway house next year, I understand...
And then will be shortly thereafter out of... because she's been in jail for 5 years, I think something in that range. She had an 11-year sentence. They cut like half the sentence or a third of it because Trump did a thing for white-collar criminals like...
Or for to get people who are nonviolent out of jail faster. Okay, fair enough. And then there's like a couple of years you can do if you're a good citizen at a halfway house. And I don't know exactly how that works, but I think you have to be there.
The movie is in late 2023. That's when she goes in. And then the two years later part would be like mid 2025, late 2025. So that would... Yeah, it's been like three years, maybe a little over three years she's been in jail. That makes no sense. Then I think she's going to do three years in the halfway house and then you got six years of 11 years served. I think that's what's gonna happen. But Balwani is gonna get out. He's gonna have a lot to say. I don't know if he's going to get Roger... not Roger Moore, Michael Moore. Sorry, Michael Moore. The other Moore.
Michael Moore does his version of 'The Inventor'. But what happens now? What happens now, Jessica, with...
What is the redemption arc for Elizabeth Holmes post coming out of jail? Because she's obviously starting another company...
