In this episode of 20vc, host Harry Stebbings interviews Vince Hanks, an investing partner at Thrive Capital, who led Thrive's investment in OpenAI's latest funding round. Vince discusses the transformative potential of AI, emphasizing how it's changing the way companies operate and its impact on software. He reflects on the importance of customer empathy and understanding the nuances of business building. Vince also shares insights on his journey from Goldman Sachs to Tiger Global and then Thrive, where he learned the craft of venture investing and the value of maintaining a learning curve. The conversation touches on the rapid adoption of AI, the competitive landscape, and the role of regulation. Vince highlights OpenAI's proactive approach to regulation, security, and safety, and the importance of infrastructure in supporting AI scalability. Despite the high valuation of OpenAI at $29 billion, Vince and his team at Thrive decided to invest, banking on the exponential growth and transformative nature of AI technology.
"Company after company, I think OpenAI is quickly figuring out the cost curve. They have done a lot in the open source community on regulation, security and safety. I think they're being pretty proactive."
This quote highlights the speaker's admiration for OpenAI's impact on the cost structure and its contributions to important aspects like security and regulation within the open source community.
"Led the financing for Thrive capital in OpenAI's latest round, Vince Hanks."
The quote introduces Vince Hanks as the lead financier for OpenAI's latest funding round through Thrive Capital, establishing his significance in the investment community.
"Sauna is an aipowered learning and knowledge sharing platform." "Marketer Hire is a talent platform to hire expert marketers on demand."
These quotes describe the services offered by Sauna and Marketer Hire, emphasizing their AI capabilities and the efficiency of the hiring process for marketers.
"After doing that for about 18 months, I ended up wanting to do something different. And I got staffed on Flipkart, which is this ecommerce business in India."
The quote explains Vince's career transition from working on large corporate transactions to focusing on an e-commerce business in India, which eventually led to his involvement with Tiger Global.
"But what's interesting is when you contrast that to what we do at thrive and how Josh has built the firm."
The quote contrasts the financial approach at Tiger Global with the more founder-centric approach at Thrive, highlighting the different investment philosophies.
"But over time, I've realized your friends, your spouse, your coworkers, the people you're around and so forth, all of those folks, you can compound your learning curves together."
This quote reflects Vince's realization that personal and professional growth can be amplified through the collective learning experiences of those around him.
"Trust with founders is actually just being very predictable."
The quote emphasizes the importance of predictability in building trust with founders, suggesting that clear and consistent behavior fosters trust in professional relationships.
"Things are never as good as they seemed, and they're never as bad as they appeared."
This quote serves as a reminder to maintain perspective during both good and bad times, suggesting that neither extreme is usually as extreme as it seems.
"This is the question I think every investor is probably asking themselves right now."
The quote captures the uncertainty and excitement in the investment community regarding the potential and hype surrounding AI as the next big thing.## Hype Cycles and AI Primitives
"And so we ask ourselves, what's the core primitives of AI? We don't know them all today, but we can try to figure out what some of them are and we can really try to understand products and there's obvious benefits to those things today."
This quote emphasizes the importance of understanding the foundational elements of AI technology to identify its benefits and applications in various fields.
"And we looked at each other, we're like, wow, the way companies are going to get changed is going to be incredible. Software is going to look so much different."
This quote captures the moment of realization about the transformative impact AI technology, like that of OpenAI, could have on the future of software.
"But the technology, if you really think about it, and the zeitgeist it's captured it, is of that elk of the transformation it can have of the world."
This quote discusses the difficulty in precisely estimating TAM for emerging technologies, emphasizing the importance of understanding the broader impact and potential for transformation.
"I don't think I would characterize OpenAI as one model to rule them all."
This quote clarifies the speaker's view that OpenAI's strategy is not solely focused on a single dominant model, but also includes contributions to the open-source community.
"That is not about commoditization model, that's about ecosystem and the kind of classic things that make great businesses in."
This quote suggests that the long-term value and edge of an AI company like OpenAI will come from the strength and versatility of its surrounding ecosystem, not just the AI model itself.
"I think it's hard to be dismissive of these companies. If you think about where the best talent in AI is right now."
This quote acknowledges the competitive threat posed by big tech companies in the AI space, highlighting their concentration of AI talent and potential to innovate.## Speed and Execution in Startups vs. Big Companies
"Microsoft 200,000 person company. They've shipped AI in Bing, AI in PowerPoint. They're rolling out of the other products. Adobe's got the content creation in their product already..."
This quote highlights the rapid innovation and product development in large companies, which poses a challenge for startups that typically rely on speed as their competitive edge.
"The big question when investing in startups is will the incumbent acquire innovation before the startup acquires distribution."
This quote encapsulates the strategic consideration for investors in the startup landscape, particularly regarding how startups and incumbents compete and the timing of market entry and growth.
"I have to believe it's going to accrue mostly to the application layer."
The speaker expresses a belief that the application layer, which interacts directly with customers, will ultimately capture more value than the underlying infrastructure layer.
"You want extraordinary people in really great sandboxes, and those folks will be able to figure out how to pivot and adjust and iterate to take advantage of opportunity in this environment."
The speaker emphasizes the importance of investing in adaptable founders who can navigate rapidly changing markets and seize emerging opportunities.
"I think regulation will come to AI and it will be necessary."
This quote acknowledges the necessity of regulation in the AI industry and suggests that it should be developed in collaboration with those who are building the technology.
"The price here was high just on an absolute basis. It doesn't matter what company you're investing in at the prices that this round was done, you're talking about very upper echelon type outcomes to justify good returns."
The speaker reflects on the high valuation of an investment, acknowledging the need for exceptional outcomes to justify the investment based on the price paid.
"We have a culture where we support each other and we have a growth mindset and learn."
The quote emphasizes the team-based culture and learning mindset that facilitate making significant investment decisions collectively.## Psychological Safety at Thrive
"And being able to lean into that and not be afraid that if it goes wrong, we're going to get fired, or if it goes wrong, we're going to be pushed down in the firm. I think having that psychological safety that enables a firm to do it. And I think we have that at thrive."
The quote highlights the importance of psychological safety in the workplace, which encourages employees to take risks and innovate without the fear of being penalized for failures.
"The thing I've developed the most on in my investing mindset is this deep empathy for the customer, trying to really think deeply about not just what's the product and trying to write that down on paper, but really to understand how the business is going to get built and mapping those nuances to who the person is, what the product does, how does that manifest itself in the business?"
This quote emphasizes the speaker's shift towards a customer-centric approach in evaluating investments, considering how a business will grow and serve its customers effectively.
"The one that I think stands out the most to me, or at least comes back to me a bunch in my psyche, is when I was at Tiger, I flew out to Sydney and spent a bunch of time with the canva team in person... And so we shouldn't value this like a highly recurring software business. We should value it like a consumer subscription business."
This quote reflects on a specific investment error where the speaker failed to recognize the unique potential of Canva due to a rigid investment framework, leading to a missed opportunity.
"What a founder might be attracted to for me might be different than you, Harry might be different than the next investor that's listening to this podcast. And so you can't just apply someone else's style and say it's going to work for you and you're going to win."
The speaker underscores the importance of individual authenticity in the investment process and the need to create a personal connection with founders for successful outcomes.
"The short answer is just reading anything. I think for me, I like to try to subscribe to lots of different angles of reading."
This quote conveys the speaker's diverse and inclusive approach to content consumption, emphasizing the importance of a broad perspective in staying informed.
"One thing I've changed my mind on is you got to be more balanced about how much credit you give to the momentum of a company from the market environment versus the actual execution they're doing."
The speaker has shifted their view to acknowledge that both market conditions and company execution play roles in a company's success, advocating for a more balanced approach to evaluating performance.
"Crypto stands out. We talked about Peakmarketcap and I think Crypto's peak market cap for tokens was like 3 trillion, somewhat similar. The most iconic company that people talked about was a fraud."
This quote reflects on the volatile nature of the crypto market during the low interest rate period, highlighting the risks of speculation and the importance of due diligence in investing.
"The person that stands out that I've learned so much from is Eric Vishria... And he also just has a really great balanced perspective on being commercial and understanding how all of that works and interplays with the strategy of the company."
The quote reveals the speaker's admiration for Eric Vishria's skills and the impact Vishria has had on the speaker's approach to board involvement and strategy.
"Josh is an amazing person... And his priority of his family over everything else is so obvious when you spend time with him."
The speaker shares a lesson learned from Josh about the importance of maintaining personal priorities alongside professional success, highlighting the value of work-life balance.
"Hopefully we'll be talking about some amazing AI companies we invested in that created lots of value for us both... And so I hope if we talk again in five years, we're talking about those companies, we're talking about the people on our team and ultimately we're really excited about all that stuff."
This quote outlines the speaker's goals for the future, which include successful AI investments, team building, and maintaining a positive firm culture.