Shake-ups at Silicon Valley's Biggest VC Firms

[00:00:00] Hi, I'm Eric Newcomer.

[00:00:02] And I am Madeline Rennbarger.

[00:00:03] And this is the Newcomer Podcast.

[00:00:09] Each week, Eric and I discuss the VC deals and the drama that went down.

[00:00:14] Let's do it. Here we go.

[00:00:16] Let's dive in.

[00:00:18] We're back after a little hiatus.

[00:00:20] Yeah, you're back.

[00:00:21] I'm back. Yes, Eric's been working.

[00:00:24] That's true. Yes.

[00:00:25] Eric's been very busy recording multiple podcasts while I've been away.

[00:00:28] I'm making Madeline steer the ship now.

[00:00:31] So we're on a new experiment.

[00:00:34] I'm just here along for the ride.

[00:00:36] Oh my gosh. Hardly.

[00:00:38] Well, happy to be back.

[00:00:40] It's been... I had a good little break, you know,

[00:00:42] got to have a little Thanksgiving long weekend.

[00:00:45] But here we are.

[00:00:46] This episode is presented by Brex,

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[00:01:25] We start with deals, right?

[00:01:27] What's your favorite deal this week?

[00:01:29] Tense Torrent, which builds chips and open-source software

[00:01:33] to power AI companies.

[00:01:34] They do have an office also in my hometown of Austin, Texas.

[00:01:38] So shout out an Austin company.

[00:01:39] Yes.

[00:01:40] Bias and media.

[00:01:40] How do these get picked?

[00:01:42] Oh, Austin deals get preference.

[00:01:44] No, no, no.

[00:01:46] $693 million, though.

[00:01:48] That's pretty big.

[00:01:49] It's a pretty sizable round.

[00:01:51] It's a Series D, and what I found really interesting about it

[00:01:53] was the participation from Jeff Bezos jumping into the chip game.

[00:01:59] We have to have all of our tech leaders making an AI chip play right now,

[00:02:03] so it sounds like among many,

[00:02:05] this perhaps is a really big bet by Bezos Expeditions.

[00:02:07] They weren't the lead.

[00:02:08] The lead in the deal was the South Korean technology firms,

[00:02:12] AFW Partners and Samsung Securities.

[00:02:14] LG Technology Ventures also joined the round.

[00:02:16] So a lot of corporate backing with this one.

[00:02:18] You know, I'm always excited to see Silicon investing in real technology.

[00:02:22] I mean, who isn't going to cheer for America getting its act together in chips?

[00:02:27] Silicon Valley investing in Silicon?

[00:02:29] Exactly.

[00:02:30] It's what we were born to do.

[00:02:31] And, you know, obviously the rise of NVIDIA,

[00:02:35] it goes without saying, has got everybody excited.

[00:02:38] It also goes without saying that this is a very hard category to get right.

[00:02:43] Sure, venture capitalists think in long time horizons,

[00:02:47] but still I think they want payback in 10 years ideally,

[00:02:51] and chip companies can take quite some time.

[00:02:55] So I don't know.

[00:02:56] If I was maximizing return as a venture capitalist,

[00:02:59] I don't know that I'd be deploying into these chip companies.

[00:03:03] But, you know, as someone who stands to benefit from the technology in,

[00:03:08] you know, 20 years,

[00:03:10] certainly happy that people are spending their money this way.

[00:03:14] I mean, also it does, you know,

[00:03:16] ring true that a lot of these investors in this round

[00:03:18] aren't necessarily traditional venture capitalists, right?

[00:03:20] Like they are, but they're wings of corporate, you know, entities.

[00:03:23] So that's a big theme of the moment,

[00:03:25] that these big companies honestly can invest more,

[00:03:28] pay higher prices because they see a strategic interest.

[00:03:32] You know, if it helps them diversify away from NVIDIA

[00:03:36] and create more pricing competition,

[00:03:40] even if it just creates sort of pressure on NVIDIA

[00:03:42] to sort of watch out for potential competitors on the horizon,

[00:03:46] that could be good for some of these investors.

[00:03:49] Well, it could also, for sure.

[00:03:50] And then, you know, within their own AI development,

[00:03:52] it could benefit them to have a close relationship

[00:03:55] with a chip provider, right?

[00:03:56] In this time where costs are coming down,

[00:03:59] but they're still pretty high.

[00:04:00] You know, I feel like we can't skip over the other big chip news,

[00:04:05] which is that, you know,

[00:04:06] Google revealed this sort of massive jump

[00:04:09] in its Willow quantum computing effort.

[00:04:13] Pretty amazing.

[00:04:14] I mean, they're saying,

[00:04:16] and there are, you know,

[00:04:17] a lot of claims in quantum computing are made,

[00:04:19] and then we have to see over time.

[00:04:21] But they're basically saying that this thing is so fast

[00:04:24] that it helps stand up the idea that there are multiverses,

[00:04:27] because how could it possibly compute that quickly in our single universe,

[00:04:33] which is quite the bold claim from Google press release.

[00:04:38] So certainly interested to see.

[00:04:40] I know.

[00:04:41] It's unbelievable.

[00:04:43] Like, I feel like with this claim that this chip company is proving the multiverse theory,

[00:04:50] quite an exciting statement to make,

[00:04:52] especially if you want to prove your value as being,

[00:04:54] you know, a technological innovator, you know.

[00:04:56] Oh, by the way, we just solved the multiverse theory.

[00:04:58] And, you know, a lot of big promises in quantum.

[00:05:01] I've covered companies like Rigetti.

[00:05:04] There is a bunch of money from Andrews and Horowitz.

[00:05:05] And I think we're going to have more in the newsletter later this week on the theme,

[00:05:09] and maybe we'll pick it up on the podcast next week.

[00:05:12] But again, it's sort of exciting, but it's unclear if we should be.

[00:05:17] I think really my take is it's unclear if we should be excited about the world this will produce in 10 years or 20 years, right?

[00:05:24] Like, it's still going to take a while for this technology to really filter through.

[00:05:28] I believe that it's going to have an impact at some point.

[00:05:32] It's just like, oh, should I start fantasizing about quantum breaking Bitcoin in 10 years or in 20 years?

[00:05:39] You know, and I think that's that's so hard to know.

[00:05:42] Yeah. And the level of compute, of course, is very exciting and something that I'm sure a lot of

[00:05:46] AI investors looking for more and more would, you know, be thrilled about if it came around anytime soon.

[00:05:52] But with quantum, it's kind of a long game.

[00:05:54] So these quantum chips, you know, they do very particular things.

[00:05:57] They're good at stuff that sort of replicates quantum dynamics in the universe.

[00:06:01] But I mean, I think the exciting thing in the Google announcement is that they say as their system gets bigger,

[00:06:07] it makes fewer errors.

[00:06:09] And traditionally in quantum, the bigger they get, the more errors.

[00:06:12] And that's that's not a path to exponential growth that tech loves.

[00:06:16] So if you can improve the quality as you get bigger, that has portends actual significant improvements.

[00:06:24] Absolutely.

[00:06:25] Moving on to our main story this week, lots of partners have been moving around at some of the tier one venture funds.

[00:06:31] There was the big light speed consumer refocus.

[00:06:34] Two of the main consumer partners, Alex Tosig and Nicole Quinn, are stepping back and no longer as investment partners.

[00:06:42] And Tosig, who led the firm's consumer practice before, and now the new consumer investors are

[00:06:47] Bejel Samaya, Michael Migliano, Morris Bayer Lentz, Faraz Fatemi and Nikita Beer,

[00:06:53] who are some big names within the light speed family.

[00:06:56] But it is definitely a shift around.

[00:06:58] In some ways, I'm sympathetic.

[00:06:59] It was just like a hard time to get consumer investing right over the past decade.

[00:07:04] There weren't a lot of wins.

[00:07:06] In retrospect, you know, the best you could have done was invest in OpenAI probably and see ChatGBT.

[00:07:12] But of course, many of the early investors in OpenAI weren't investing necessarily on a consumer adoption thesis.

[00:07:20] And it was much more they have cool technology and were bullish about the space.

[00:07:24] So a hard one.

[00:07:24] Yeah, a lot of the OpenAI investors weren't inherently consumer investors.

[00:07:28] They were, you know, technical investors or generalist investors that found that company really promising.

[00:07:32] And as that becomes the big consumer bet of the moment, where else is there room right now?

[00:07:38] We haven't seen one.

[00:07:39] You know, the biggest social consumer company is TikTok, which is largely Chinese.

[00:07:44] Obviously, there are some musically investors who have stakes and late stage American investors who bet on that.

[00:07:50] But a hard one for sort of Lightspeed venture capitalists.

[00:07:54] I mean, I don't know that this is sort of a total failure, though.

[00:07:59] You know, I didn't think Lightspeed really focused on the deals these partners had done.

[00:08:04] And more of the announcement really focused on building Lightspeed's reputation in consumer.

[00:08:11] Obviously, you know, Lightspeed's probably most famous consumer deal was its investment in Snap, which was led by Jeremy Liu, who stepped back without a totally satisfactory reason.

[00:08:23] I know he traveled the world for a year.

[00:08:26] The reporter and he wants to know.

[00:08:28] Yeah, you know, but yeah, I mean, I think, you know, Bejul is either the Airburn or the guy in charge at Lightspeed now, clearly across a lot of the funds.

[00:08:41] I don't you know, they brought him in from India to take on a big role at Lightspeed.

[00:08:45] So I don't think he's just he's certainly not just doing consumer.

[00:08:48] So that that name is across the fund.

[00:08:50] I think Michael Mignano is a key figure here and certainly deploying aggressively in AI.

[00:08:55] And obviously the sort of headline here is that they're sort of transitioning new guard investors who are branding around AI.

[00:09:04] Absolutely.

[00:09:05] Lightspeed, I feel like also hasn't come up as much in discussions around this, you know, big AI boom.

[00:09:10] They have some bets, but it feels like they're really pushing now in this sector.

[00:09:14] And maybe with this consumer revamp, they can get into more promising deals going forward.

[00:09:20] In terms of other partner news, perhaps the biggest news, of course, was Brian Singerman is transitioning to the role of partner emeritus over at Founders Fund.

[00:09:29] He has been there over 16 years.

[00:09:32] It's a pretty big step back for the firm as someone who could have been a contender to take over post-Peter, although, you know, it's still very, very much Peter's firm.

[00:09:41] If you talk to the partners there, they will always emphasize that that's true.

[00:09:44] Yeah, he's, you know, an iconic member of the firm, one of their core general partners.

[00:09:49] His investment in StemCentrics was a big returner for the fund, I think, was around, you know, Airbnb and some of the growth stage deals.

[00:09:57] You know, he talked about in his sort of letter saying he was stepping back about how he joined just as they were considering investment in SpaceX and has been involved in a lot of the strategy around Founders Fund investing over his time at the firm and certainly a core player there.

[00:10:17] He's one of the GPs that has left this year.

[00:10:19] But of course, we started the year out with Keith Raboi returning back to Coastal Ventures as managing director.

[00:10:25] We clearly don't know all the internal dynamics at Founders Fund, right?

[00:10:30] I mean, it's like Peter Thiel is obviously very key to the strategy, but how much is he doing day to day?

[00:10:37] Like the Keith fallout or whatever it was, his decision to go back to Coastal Ventures, I think is not totally satisfactorily explained.

[00:10:47] And it is.

[00:10:48] Absolutely.

[00:10:49] I mean, it's funny how small the firm is.

[00:10:53] Yeah, for a firm of its size, compared to, you know, an Andreessen Horowitz or even a Sequoia, it's really not that many GPs.

[00:11:01] It's a pretty lean team.

[00:11:03] And they've managed to get into some of these huge deals.

[00:11:06] Obviously, some are not incubations, but founded by partners like Anderil, obviously, is in the news a lot lately.

[00:11:13] It's a big success.

[00:11:13] But they've seen, you know, this year it's been feels like almost a transitional time for them.

[00:11:18] Key players, Napoleon Ta, who's super behind the scenes, but is a sort of classic growth stage investor.

[00:11:24] I think very involved in like the Rippling investment.

[00:11:29] You know, then obviously Trey Stevens, who you've written about, who's a co-founder of Anderil and what executive chairman.

[00:11:35] And then Lauren Gross is their chief operating officer who plays a huge role in steering the company internally.

[00:11:42] Yeah, those three.

[00:11:43] And Peter, am I missing anybody else who you think sort of key to the firm right now?

[00:11:47] I mean, I think that those are really the top brass there.

[00:11:50] There's, you know, been some reporting that Trey may be taking on more of an active role in the upcoming Trump administration.

[00:11:56] He was up for, you know, he was in talks reportedly for deputy secretary of defense, although that went to Steven Feinberg.

[00:12:05] So that's not his role.

[00:12:07] And so we'll remain to see if, you know, he still has some role over there, if he's, you know, full time over at Founders Fund.

[00:12:12] And, you know, already wears so many hats.

[00:12:15] He has multiple full time jobs.

[00:12:17] But, you know, on the one hand, Founders Fund encourages people to sort of go, you know, work in companies, start companies.

[00:12:26] Encourages them to start companies while still being full time partners.

[00:12:29] Tealverse wants to be very influential in the Trump administration.

[00:12:33] So a lot of these moves aren't in opposition to the Worker Founders Fund, but are sort of aligned with what Teal and others want to achieve.

[00:12:42] They have had some false starts.

[00:12:44] I mean, Ryan Peterson, the founder of Flexport, joined the firm and then decided to go back to run Flexport.

[00:12:52] And so he's, you know, a venture partner or something, but not the GP that he was supposed to be.

[00:12:57] And then Sam Blonde, who'd, you know, been a big sales guy at Rippling, or sorry, who'd been a big sales.

[00:13:03] I know him from the Zenefits world, honestly.

[00:13:05] I forget what he did after that.

[00:13:06] But Sam Blonde, who went and worked for Founders Fund, stepped away.

[00:13:11] So they haven't necessarily been able to find the next, like, iconic GP.

[00:13:17] And so it'll be interesting to see if they make an effort to bring in somebody or elevate somebody.

[00:13:22] Oh, and like Lee Marie and Everett, both sort of more junior partners, went to Kleiner Perkins.

[00:13:28] Big fans of both of them.

[00:13:29] And so that was sort of interesting that, you know, they didn't, that Founders Fund didn't try to make that work.

[00:13:35] So we'll see who they, how they fill these gaps.

[00:13:39] Also, you know, Delian's still very involved on the team, very vocal online.

[00:13:45] Well, he's not his bomb threat.

[00:13:47] I was going to say, oh, you know, and the old Delian would be like, if we got one little nuance not to his liking, he would have tweaked us on Twitter.

[00:13:54] But maybe not so much anymore.

[00:13:57] Even with these big moves, what's your overall sense about where Founders Fund is, you know, standing within the VC and larger political ecosystem right now?

[00:14:07] I mean, can't be a better time for the brand, right?

[00:14:10] I mean, the original sort of Trump supporting firm, you know, while there's this sort of contentious history with Elon around PayPal, Founders Fund came in and supported SpaceX when Elon really needed it.

[00:14:24] So Founders Fund has that great relationship with Elon when he's ascendant, seems very culturally relevant and well positioned.

[00:14:32] You know, send us the returns.

[00:14:34] My senses they're good.

[00:14:35] Would love, would love to see them.

[00:14:36] So, yeah, I think great for Founders Fund.

[00:14:39] Certainly interesting, you know, one of the bigger themes in venture is, you know, Andreessen, General Catalyst, Lightspeed becoming these sort of mega funds.

[00:14:48] And so we see the shakeups there.

[00:14:50] But it's sort of, you know, a lot of the partners moving around work fundamentally for somebody above them.

[00:14:56] You know, we saw Michelle Volz leave Andreessen Horowitz.

[00:15:01] Christina Shen has left.

[00:15:04] Shriram left, who'd been consumer and then crypto.

[00:15:08] And, you know, it's like Mark and Ben's firm fundamentally.

[00:15:12] And so, you know, it's sort of like personnel moves.

[00:15:14] And I think, you know, with Founders Fund, it's Peter's firm.

[00:15:17] But it's more, you know, it's a smaller firm.

[00:15:20] So every GP matters more.

[00:15:22] And so, you know, it's interesting when they come and go.

[00:15:25] Whereas the Lightspeed, you know, General Catalyst, you know, is expressly calling itself a company now.

[00:15:31] Right.

[00:15:32] So when they make moves, it's sort of like, yeah, companies that big, you know, change.

[00:15:37] Yeah.

[00:15:38] So it's just it's just interesting.

[00:15:40] You know, the Lightspeed thing is a classic sort of corporate reshuffle, whereas Founders Fund is small enough that sort of all the particular sort of interpersonal dynamics are pretty interesting.

[00:15:50] Especially given, you know, its size, like you mentioned, relative to sort of these these other mega funds.

[00:15:55] It's really not that big compared to, you know, a GC, which is making moves much more similar to private equity these days.

[00:16:01] Right.

[00:16:02] With, you know, buying a hospital.

[00:16:04] They don't want you to use that phrase.

[00:16:06] But, you know, no.

[00:16:06] Say yes.

[00:16:07] Not P.E.

[00:16:08] Not P.E.

[00:16:09] At all.

[00:16:10] Investment company.

[00:16:10] Founders Fund is clearly going to have a lot of influence in this incoming Trump administration.

[00:16:15] But based on some conversations I was overhearing at DealBook last week, it does seem like there's some other tech players, whether it be Jeff Bezos, Sam Altman, who are, you know, casting out a proverbial olive branch going forward, too.

[00:16:29] Right.

[00:16:30] Trying to find their footing in a Trump administration that maybe they either didn't anticipate or not well positioned for.

[00:16:38] It seems, you know, I think just in one part, I think Jeff Bezos clarifying that he was proud to have not endorsed a candidate during the Washington Post debacle that we all remember from a few weeks ago.

[00:16:50] I'm sure that will serve him quite well, honestly, going forward.

[00:16:54] But maybe savvy business decision.

[00:16:55] But from a paper decision, the timing, we discussed it already in the newsletter as well.

[00:17:00] But it was fresh to hear him, you know, double down on stage last week.

[00:17:05] We also had, you know, Sam Altman having total faith in Elon Musk and his close connections to this incoming conversation.

[00:17:13] Yeah, I think to touch on both those things, you know, like we had Sam Altman and Jeff Bezos, I think both sort of, you know, wish casting or being like, Elon's not going to use his relationship with Trump to hurt us, even though like Blue Origin is, you know, competing directly with SpaceX.

[00:17:33] And Elon's been pretty rude about Blue Origin.

[00:17:36] I think Sam Altman is being, you know, very optimistic or putting on a very optimistic face.

[00:17:41] I would say that Trump will be friendly to open AI when, you know, Elon is literally suing open AI, thinks they shouldn't be able to become a for profit company and, you know, is all in on his XAI competition.

[00:17:58] So who knows what's inside of Sam and Jeff's heart of hearts and whether they really believe that Trump is going to be fair to them and Elon is going to be fair to them or if this is sort of hopeful, you know, wishing for the best ahead of the administration taking over.

[00:18:15] Well, let's not forget also Google Sundar Pichai was also on stage and he has some, you know, interests that directly compete with Elon Musk world as well with, you know, Waymo and their investment into Waymo and self-driving.

[00:18:30] Right. And Sundar was the one when he called Trump.

[00:18:33] I think Elon was like in the room. It's like you can't even get to Trump without you supervising your call, you know, which is which is just brutal.

[00:18:43] I mean, the editorial thing with Jeff Bezos, just you mentioned that and I can't help but way.

[00:18:48] And I have such conflicting points of view, you know, as the head of the newcomer editorial board.

[00:18:54] What are your thoughts?

[00:18:54] I'm very happy to run a media company where the publisher, owner, editor in chief is the same person.

[00:19:01] So we don't have this weird sort of incoherence between sort of the editorial outlook of the publication and the ownership.

[00:19:10] I mean, I think, you know, it's antithetical, though, to the brand that The Washington Post has built up for the owner to be meddling an opinion.

[00:19:19] And certainly the way he did it right before the election.

[00:19:23] Well, I guess tactically smart for Jeff Bezos was a big blemish, you know, for The Washington Post.

[00:19:30] And to some degree, it sort of signifies that Jeff Bezos has, you know, much bigger priorities than protecting, you know, the Washington Post brand among sort of the media elite.

[00:19:41] Right. But but yeah, still still think it was a bad decision, but certainly looking tactically savvy in a world where Trump won.

[00:19:51] And he can sort of show that is a way that he was trying to stay preemptively friendly to Trump.

[00:19:58] And, you know, it'll cut him some good points, potentially with, you know, Elon Musk, too, in his Department of Government Efficiency and his voice in the president's ear.

[00:20:06] Chips, Trump and venture capital.

[00:20:08] We've covered it all.

[00:20:09] You know, those are I feel like some of the big hits.

[00:20:13] I'm sure we'll be talking more about, you know, Jeff Bezos, Sundar Pichai, Sam Altman cozying up to Trump and trying to navigate Elon much more on the podcast.

[00:20:23] And then, yeah, excited to be back talking about chips more next week as we look through the history of quantum startups.

[00:20:34] See you next week.

[00:20:36] See ya.