https://youtu.be/LTOrzCeJfQQ https://anchor.fm/s/4fa795b4/podcast/rss?vc Cas Piancey and Bennett Tomlin are joined by Travis Kimmel to discuss the purpose and role of venture capital. This podcast was recorded on May 9th, 2024. Where to fi…
00:00:05:06 - 00:00:11:06 Cas Piancey Welcome back everyone. I am Cas Piancey. I'm joined, as usual by my partner in crime, Mr. Bennett Tomlin. How are you.
00:00:11:06 - 00:00:12:12 Bennett Tomlin Today? I'm doing well. How are you?
00:00:12:12 - 00:00:26:13 Cas Piancey Guess I'm doing. I'm doing good. I'm hoping my internet stays. okay today, because we have a very special guest, Travis Kimmel, CEO of a startup. we've had him on previously, one of our favorite guests. How are you, Travis?
00:00:26:16 - 00:00:27:18 Travis Kimmel I'm doing great. How are y'all.
00:00:27:18 - 00:00:37:16 Cas Piancey Doing? awesome. We're we're here to discuss venture capital with you, which is a topic that we bring up pretty regularly with a lot of animus.
00:00:37:16 - 00:00:57:08 Travis Kimmel Usually to me, the arc is sort of like, you know, there was like a lot of things like just sort of capitalism generally. There is this original intent around it that's really good. Like, I'm a, you know, I'm a capitalist myself, like, and I believe in it. And yet you look at the way that it is that it has been playing out lately.
00:00:57:10 - 00:01:11:17 Travis Kimmel and there are still a lot of other it's complex because there are a lot of people doing that sort of, you know, healthy capitalism. And then there's a lot of like weird regulatory capture stuff that goes on as well. So I think, you know, certainly open to talk about history. You may know more about it than I have.
00:01:11:17 - 00:01:29:13 Travis Kimmel I mean, I've read a few books on it, but, I think that the we're at this weird place with venture capital where it is, it has sort of escaped containment. So for a while, you know, we had this like it was very much a Silicon Valley thing. And I think some of the best venture capitalists still there.
00:01:29:13 - 00:01:51:16 Travis Kimmel And, and in New York, it's on the coasts. And I think the, the way the adventure has escaped containment is really strange because now they all have media companies, right? So like if we think, I mean, we could sort of just get into it here. Yeah. You think about like if we think about like venture capital, the effect of having a large megaphone around a certain aesthetic that works really well.
00:01:51:17 - 00:02:09:18 Travis Kimmel What is that aesthetic, that aesthetic? It is growth companies. Growth companies are a little weird. And you have to be a little a little broken to try to go make one say from experience because it's like it's really hard and there's a lot of risk and there's a lot of risk on the entrepreneur side, more so than on the venture side, because they're building like a proper portfolio.
00:02:09:20 - 00:02:32:09 Travis Kimmel and so what you one of the things you want to look for in, in funding these companies is zealots. So it's a, it's a little bit of a zealot culture. Right. So to my mind there's this strange thing where like a messiah culture inside of a little company that's doing something incredibly hard. It's like kind of fine because it gets you through the really hard times where you're not sure you're going to make it.
00:02:32:11 - 00:02:39:21 Travis Kimmel But then the distribution of messiah culture generally into gen pop is like, I don't know if we want that.
00:02:39:23 - 00:03:02:14 Cas Piancey Well, like, this is interesting to me because this this brings up to me when I get into the history of Silicon Valley and venture capital, because in my in my opinion, venture capital started in Silicon Valley. So, Fairchild Semiconductors is known as the initial venture. Like, as we know, venture capital today. Like that was when it happened.
00:03:02:17 - 00:03:26:00 Cas Piancey For anyone that doesn't know, they like, really got integrated chips, started and chose to use silicon, and they were known as the Traitorous eight. They left Shockley and formed their own company. So there is a little bit of a few things that I think about. It's still being involved in. So in Silicon Valley and venture capital today, which are a bunch of people screwing over someone to start their own thing.
00:03:26:02 - 00:03:37:00 Cas Piancey and also what you're talking about, which was a zealotry, but is zealotry in relation to wanting to innovate in the fastest way possible? Passionate.
00:03:37:04 - 00:03:37:14 Travis Kimmel Yeah.
00:03:37:19 - 00:03:41:18 Cas Piancey And I don't think that that is the goal in venture capital anymore.
00:03:41:21 - 00:04:05:15 Travis Kimmel I think it's in there. It may not be, you know, this the single goal or even the median goal, but it's still around. And I think there's a couple of there's a couple things that sound that one, that pattern of like innovation at all costs. works really well in software. It's one of the reasons I like staying in like, software because software is a little it's a little easier to, like, innovate at all costs.
00:04:05:17 - 00:04:21:02 Travis Kimmel when the downside of screwing up is, like, the site goes out and people don't have the SaaS product, you're selling them, it does not really. There's nothing really like violent about that. You know, it's sort of there's like a little bit of a broken promise and you got to make that up to the customer and you got to try to prevent that.
00:04:21:02 - 00:04:45:09 Travis Kimmel But you can move very quickly and be like kind of safe a lot of times with software products. And then when that same ethos gets translated into other domains as venture expands outwards. So like Theranos is a great example that everybody sort of loves to talk about here, like move quickly and break things. When you're dealing with medtech, it's just not clear that that's a lean startup type of problem.
00:04:45:11 - 00:05:04:12 Travis Kimmel And I think, you know, any time we try to take this into another industry where now we're dealing with like, yeah, I think you see a lot of the drama around Tesla here, right? Like, okay, let's just ship something before it's ready and then keep it or anything like, cool. That's great. Unless it's the thing driving my car and then, like, I kind of want to be a late adopter there.
00:05:04:14 - 00:05:27:08 Bennett Tomlin See, I, I started laughing there when you brought up Tesla because you were talking about how this move fast and break things type of model kind of works in software, but it doesn't work. Is you ahead in other domains. And I was going to talk about how software is eating everything, as they like to say. In the example it was just about to bring up, was it autonomous vehicles being distributed perhaps before their time?
00:05:27:10 - 00:05:29:09 Bennett Tomlin And then you jumped right to there.
00:05:29:11 - 00:05:45:04 Travis Kimmel Yeah. And I think, you know, you saw you see this in the packaging of other products as well. I get I make it this example a little wrong, but it's directional right before the latest Boeing thing. There's some other Boeing thing where they had like they were selling these planes and they had like different tiers, almost like SaaS pricing.
00:05:45:04 - 00:05:56:22 Travis Kimmel So you got like the basic model and then you have the mid tier model and you could sort of buy whatever, whatever autopilot control system and like it turns out you kind of needed the mid tier one. If you didn't want the plane to sort of fall out of the sky.
00:05:57:00 - 00:05:57:15 Bennett Tomlin Right.
00:05:57:17 - 00:06:23:13 Travis Kimmel And I'm just not sure we want to apply these lessons. They come from this sort of like blast scaling ethos around software where where I think it's safe to do that if you're if you're mindful of the externalities and they're not, there's no actual damage other than like the app being unavailable. But as soon as this stuff starts to get distributed, as like the way the business is done by people with these large megaphones, that's where you run into some real issues.
00:06:23:16 - 00:06:51:16 Bennett Tomlin And I think that's a really interesting angle that we actually talked about a little bit on here way back in one of our very first episode, tech episode 8 or 9 or something we were talking about when Coinbase was launching their media business, and compared it to some of indie scene Andreessen Horowitz, his efforts in the media landscape with kind of that same conclusion that entrepreneurial success requires an unusual type of person in an unusual type of circumstances.
00:06:51:18 - 00:07:27:10 Bennett Tomlin The type of success that is created there generally is not going to replicate broadly or across other circumstances or other types of people, but there was a tendency to use these stories to make it seem in these media projects, like it did generalize more than it did. And then there was a second thing that you would see these media companies sometimes do, which would be to take kind of unsuccessful examples or ones that didn't seem like they were likely to actually lead to the same kind of massive entrepreneurial success, but matched up against previous successes.
00:07:27:10 - 00:07:31:03 Bennett Tomlin And it's way there to like they wanted things that were done.
00:07:31:03 - 00:07:31:22 Travis Kimmel To make the case.
00:07:32:00 - 00:07:40:12 Bennett Tomlin Yeah, yeah, but the media effort they were doing was like part of their making the case that these other firms were like the big successes.
00:07:40:15 - 00:07:58:07 Travis Kimmel Yeah. I mean, it might be useful to talk through like a case of, you know, just laying the groundwork for what is venture capital today. To my mind, you're, you know, you get a pool of money, which is often, you know, like pension money or whatever. These like a large LPs. You pull this stuff together and then you go fund a cohort of companies.
00:07:58:09 - 00:08:20:06 Travis Kimmel And if you're investing early on. So like, let's just say the companies from inception, I mean, most of those are going to fail, just like outright. and so the model requires you to think about each of these bets almost the way you would a, a portfolio of options like they've got to have asymmetric upside. Their position has to be able to be had a 20, 30, 40 acts.
00:08:20:08 - 00:08:37:10 Travis Kimmel so you're only investing in stuff with was really Big Ten. This is why there's this obsession with market size. Like if you're going to invest in something with a small team, that portfolio, you're kind of wasting a bat. You know, out of ten, that's maybe 2 to 3 of those return like a double or 111 of those.
00:08:37:12 - 00:09:04:02 Travis Kimmel It makes your whole makes the whole thing makes all the rest of the ten and seven of them just like go to zero or some little like, acquired thing that really scopes out. VCs think about, what companies are investable. And then I think if you dig down one more step there into the into the operator side of it, you also want a business that is capable of, being a growth business, and that means it has to be structured such that the gross margins are super fat.
00:09:04:06 - 00:09:21:15 Travis Kimmel So you're talking like 80 plus percent gross margin. So like the beauty of software basically is in this growth model where, if I have if I stand up a web application and I want to sell to add a customer because almost nothing like there's a little bit of server costs there, but it's, you know, it's more or less free.
00:09:21:20 - 00:09:39:20 Travis Kimmel And so that's what defines these growth companies is you can then take all of this capital we have and use it on sales and marketing and further R&D. And you really just try to like grows fast in this aggressively as possible. Now the the failure pattern around venture is when you get a, a business that is sort of.
00:09:39:22 - 00:09:57:10 Travis Kimmel Yeah, I guess I mean, you are I use cooking the books because you all appreciate it, but the way that you categorize PnL, I mean, there's actually just a lot of discretion in there. So, sometimes what you'll see in the world where I'm from, which is like SAS software, is that the you have stuff that should be rolled into Cogs, which is cost of goods sold and it's not.
00:09:57:13 - 00:10:22:09 Travis Kimmel And so like, let's say you have all of this really you have a software product, but like nobody really knows how to use it. And so you, you stand up a CSM department, it's customer success. And they handle like renewals and they help onboard people. And if you if you unpack what the Customer Success Team is doing and you see that it's basically just like services, well now you're running a business, it's a little bit more like McKinsey or, you know, something like a consultants than you are a a software business.
00:10:22:14 - 00:10:44:09 Travis Kimmel So that's the pattern in B2B SaaS. But I think if you if you generalize that out and you look at like, you know, these people who are doing manufacturing or whatever, are they really like, can we really think of them as a tech company? Do these comparisons that you're that you alluded to here, like, do they really track, and are you going to get the kind of gross margins out of there that allow for this really rapid growth and a lot of control over the business's destiny?
00:10:44:12 - 00:11:02:08 Travis Kimmel And just to be to be clear and like net out, what control over destiny means is a euphemism, you know, that means that most of your costs are labor. And if the economy turns and your growth falls off, you have this. The lever you have is to cut labor. So it's like it's kind of a it's a fairly brutal model to really scale very rapidly.
00:11:02:08 - 00:11:13:22 Travis Kimmel And you see this in, in tech and it, it contributes to the sort of, short average tenure of tech staffers, but there's just not a lot of mutual loyalty there in the way that there might be in a manufacturing business.
00:11:14:03 - 00:11:34:22 Cas Piancey So to me, a lot of the things you're discussing right now are like, even as they are, are quite tenuous, for for venture capital, and the reason I say that is because of things like cryptocurrency, know, I don't mean this in a positive way. I want to be clear. Like, I'm not saying, oh, cryptocurrency is coming along and defeating venture capital.
00:11:34:22 - 00:11:59:02 Cas Piancey And it's good. I'm saying, this is a conversation I had with a lot of people. There's this new VC class, like A16z, Andreessen Horowitz, or I'm trying to like the a lot of the PayPal Mafia guys, you know, these types who are all into their they love cryptocurrency, but they love cryptocurrency. Not because it's innovative and changing things.
00:11:59:06 - 00:12:20:01 Cas Piancey It's because their vesting periods are shorter. It's because they can sell and dump on retail faster. It's because they don't have to wait for it to IPO. It's because like the reasons that they love it are for the greediest reasons. And I genuinely think that this is something that is going to help self-destruct part of venture capital.
00:12:20:03 - 00:12:58:04 Travis Kimmel It could I mean, my, there's sort of a I think we have to consider what role we want these various agents to play, right. Like, like for from my perspective, a venture capital is their job. Their mandate is to, like, take that money and get a return. And, you know, it's it's banter. And so if you create a, a sort of societal set of incentives where you can get liquidity in sort of a shadow public market very quickly, in some sense it makes sense to me that venture has gravitated toward that, like it is just sort of a, you know, it's it's like water flowing downhill.
00:12:58:08 - 00:13:29:02 Travis Kimmel And I don't know, when I, when I, when I rants about crypto, it's less about those specific players because I look at venture capitalists and I see this lovingly like there's sharks, you know, they're very you will get when you go in there as an entrepreneur, you'll get brutal feedback. And, and part of your job is to like take that feedback to be able to receive it, because it's often very direct and just sort of like in take it and, and react to that and like change your business so that it so that it is a little bit more, aggressive.
00:13:29:04 - 00:13:52:12 Travis Kimmel And so the idea that you have this set of fairly aggressive, upside oriented investors who very quickly notice that they could, you know, get liquidity faster and de-risk their entire investment in some sense, that's their mandate. And in some sense they're playing with like pension money. I agree that I don't think we want to see more and more of that in the world, but that is the probably a regulatory framework.
00:13:52:12 - 00:14:16:18 Cas Piancey Problem, right? I mean, yeah, maybe I guess so. Part of this for me, it gets back to exactly the beginning of our discussion where I was saying back in the early days of venture capital innovation was was put more. Maybe it wasn't completely the only problem. I think money is always the number one priority. But I do think that innovation was bigger priority back in the 1960s, 70s and early 80s, maybe.
00:14:16:20 - 00:14:40:06 Cas Piancey But like by the 80s, 90s, you have a complete transformation to like, okay, so money is the the only priority. And now we're at late game, you know, like not only is money the only priority, but like the fastest way possible or at the highest returns imaginable. And like it almost feels like a Ponzi scheme, like it doesn't.
00:14:40:09 - 00:15:02:03 Cas Piancey In fact, this is something this is something our. For what it's worth, our discussion with Mark Cuban did not go well. Let me say that it did not go the way we wanted it to. However, one of the things he said, I asked him if it's a I was like, is this a Ponzi? Is the investments, this kind of thing, this venture capital, all these seed rounds, etc.?
00:15:02:08 - 00:15:05:18 Cas Piancey Is this a punt? It sounds like a Ponzi scheme. And he's like, it is.
00:15:05:20 - 00:15:25:04 Travis Kimmel So I would take issue with that. I would take issue with that in that, the portfolio should be constructed in such a manner that it's not. Right. So, so if you're investing in companies and like a bunch of them go to zero, there are things in there that are Ponzi scheme like, but it should be de-risked by having a proper portfolio.
00:15:25:04 - 00:15:43:15 Travis Kimmel Now when we see about crypto, I mean, we circle back to crypto and think about let's address the root cause of why we might not want this type of structure around. Right. Like let's look back at like wildcat banking and all this. And we tried this before. It's like this is new. So so I think the fear is not so much for, for me.
00:15:43:15 - 00:16:04:07 Travis Kimmel And this is not so much that, people are behaving badly like some percentage of people always behave badly, but it's more that the we are creating structures that seem to be unstable in a way that we might not like later. So if we take a bunch of capital and we funnel it into a sort of negative sum game, which I would argue that most crypto is, I think we would agree on that.
00:16:04:09 - 00:16:24:22 Travis Kimmel what will happen over time is that the capital coming in from these LPs, you know, initially it'll be awesome because like the, you know, initially these initial rounds like get a bunch of returns or whatever, but eventually that stuff is unstable and it falls over and and if it falls over, you destroy a bunch of capital in the capital will no longer come from these LPs to fund ongoing innovation.
00:16:25:02 - 00:16:48:04 Travis Kimmel And if I were, you know, I'm sort of like talking my book here as an entrepreneur. That's what worries me about tech. I think tech in the venture ecosystem are sort of like they're one unit like that capital ecosystem is a is a thing, is self-sustaining. You get these founders who have an exit. But I'm a second time founder, I've done some seed investments and that capital sort of goes back into some future innovation.
00:16:48:04 - 00:17:22:11 Travis Kimmel But when we when we shift to a psychology, we're like, it's just about the gains. And it's very risky, sort of, money transfer stuff, like it's not really accretive over time. That's super problematic because what'll eventually happen if we're right about this stuff and that it ends up being a negative sum game, is there'll be this big rinse and a lot of that money that they could have been sustainably accretive to the economy by investing in tech in super risky ventures, most of which fail, but which we found a way to bundle together and make like a pretty good uncorrelated return.
00:17:22:13 - 00:17:29:13 Travis Kimmel That's beautiful. Like I think venture capital is is beautiful done. Right. It's just it's one of the big growth engines of the American economy.
00:17:29:16 - 00:17:59:07 Bennett Tomlin I've been preparing today to piss Cass off by doing a defense of venture capital that went in kind of that same, direction, which is that, most venture capital investments go poorly. I think most venture funds return sub S&P 500 with like the few outliers carrying like the bulk of that market forward. And like even in the funds that return outsized returns, that's driven by like a small portion of companies inside of those.
00:17:59:09 - 00:18:27:05 Bennett Tomlin And if you assume that having a reasonable portion of new companies trying new things is a societal good, then coming up with a socially acceptable way for high capital, former entrepreneurs to gamble on which things might do well helps you get more of that type of thing in the world. however that that works by putting capital at risk, by having a chance of not having the return.
00:18:27:07 - 00:18:57:18 Bennett Tomlin And some of the problem Cass and I have had with the cryptocurrency investments that he was alluding to before, is that like by finding a way to exploit a group outside of the rich capital class? Like if A16z actually, let's not say A16z, let's say a hypothetical firm in California is able to get a 90% discount on a token they know is going to go on sale in two months or whatever, and then they immediately dump it on retail.
00:18:57:23 - 00:19:20:22 Bennett Tomlin The issue is that compared to like regular VC in my mind, is that they're not really at risk. The entire risk is shifted from the people who can bear the risk. The moneyed interest to the retail people buying the token. And it's like that level of move makes complete sense for their incentives, right? These venture capitalists want to make as much money as possible, as quickly as possible.
00:19:21:01 - 00:19:46:00 Bennett Tomlin But like you're kind of talking about there, it corrodes whatever societal role we believe venture capital or this form of investing can play. That makes it makes sense to me why Cass thinks that that would self-destruct venture capital. However, I don't know that capital is finding ways to make money for themselves quicker generally results in those capitalists destructing the.
00:19:46:01 - 00:20:07:22 Travis Kimmel Yes, I guess my to react to what you said there, I sort of agree that the structure is problematic and part of part of the reason this problem is again, like tech and venture. So share a culture like it's a it's a kind of a unified capital ecosystem. It's a unified culture. It's hacker culture. Right. And like we get in trouble for this stuff all the time.
00:20:07:23 - 00:20:30:04 Travis Kimmel It's just sort of, you know, we're like, we're like Napster kids, you know, we're like making jokes about you wouldn't download a car and we all laugh like, I don't care if I could. I it's that there's this ethos about it's a little anti-establishment. It's very like happens you're still alive and well. And now think about what happens when you take hacker culture into the realm of like, investments and VC.
00:20:30:06 - 00:20:49:13 Travis Kimmel They're going to find the exploits entrepreneurs or people who go out and they find the exploits. And, you know, we go, I saw those things up. and I think venture capitalists are going to find the exploits in a, in a regulatory environment. And it is in it. We should expect them to it's almost like a, a function they, they perform.
00:20:49:15 - 00:20:54:23 Travis Kimmel And then I think we should follow on and decide whether or not that's something we want to keep doing, like.
00:20:55:13 - 00:20:57:21 Bennett Tomlin devs if need to patch this exploit.
00:20:57:23 - 00:21:20:00 Travis Kimmel I think so I think like this is where I'm like, come on devs and the devs are basically people I who don't know what the hell is happening. And so we have a real problem here where the where the, the the devs are way out of sync with what's happening to my mind. And so I look at it, I think it's just like it's a fairly simple fix.
00:21:20:00 - 00:21:41:04 Travis Kimmel We just need to look at these things which are like public markets as defined by, you know, public investors who are able to invest in them without a bunch of accreditation stuff and then regulate them like public markets. And what we see is the is already the preemptive narrative pressure say, well, no, it's the accreditation that's wrong. And and I think that is very toxic.
00:21:41:04 - 00:22:01:16 Travis Kimmel Like to my mind, the accreditation is it's pretty good if you're going to invest in a hyper risky venture. I think you want to validate that the person making that decision can lose that money, because a VC fund will invest in 200 deals or something. And if you're an angel investor and you're not doing it professionally, you should start doing his part.
00:22:01:16 - 00:22:22:14 Travis Kimmel I mean, I have 3 or 4 angel investments, right? It is not a portfolio. It's not even rational. If fully recognize that. But they're sort of, you know, I, I, I like the entrepreneur. I like the idea. I think he goes somewhere and it's like there's a level of capital that's acceptable. So I think the attention that exists now is you've got this, you've got tech culture, which is doing its thing.
00:22:22:14 - 00:22:30:07 Travis Kimmel It's finding exploits and and society writ large, doesn't quite know how to handle that. And we see that in a lot of arenas right now.
00:22:30:08 - 00:22:59:03 Cas Piancey The only thing I'm I'm taking issue with here is this goes back to the very beginning again, or the historic significance of venture capital, where I don't think I've expressed this yet during this podcast. But to me, the beauty of early venture capital was that it was not. It was not everyone fighting each other, which I do think is like, this is a huge part of venture capital now where like, I'm trying to like, yeah, you're not going to.
00:22:59:06 - 00:23:25:17 Cas Piancey Yeah. If you're investing in Samsung, you're not going to be investing in Apple at the same time. Or maybe you are, I don't know. But like the idea is you want one to succeed and the other to fail. Like it is zero sum if not negative sum. and I don't think that that was necessarily the case early on because what you had was every you had government, academia and private capital working together to innovate.
00:23:25:22 - 00:23:47:07 Cas Piancey And like you could argue it's because we were at war. You could argue it like whatever the reasoning is, I don't know. But it to me, that was the reason that it worked so well that maybe I, I guess I haven't checked the data, but I would assume that there was probably a less return and less risk also.
00:23:47:12 - 00:24:11:06 Cas Piancey But also like, yeah, you had people straight out of college at Stanford getting jobs. You had them working for Lockheed, you had them working for, you know, government contractors you had, but also Fairchild. You had them working for a bunch of different people. You had a bunch of options. Everyone was working together, and now everyone is not working together and everyone is pushing for someone else's failure.
00:24:11:08 - 00:24:16:19 Cas Piancey And again, this is like, I don't know how sustainable all these trends are.
00:24:16:22 - 00:24:37:17 Travis Kimmel Well, if you think about it. So this is this thing in software called Conway's Law. It is this observation that a product the world will begin to mirror the org structure that created it. It's fascinating. So I think there's something sort of analogous here, which is that if you, you know, in the good old days of venture capital that were being nostalgic about nostalgia always has an element of like rose colored glasses.
00:24:37:17 - 00:24:56:08 Travis Kimmel But this role that, you know, the venture capital we want, where it's a little more, it's more a more competition. I think part of that is that if you got if you have an ecosystem that is pursuing huge high tech stuff, there is just kind of room for everybody. Like what you're basically betting on. You're trying to ride this wave of disruption.
00:24:56:13 - 00:25:19:23 Travis Kimmel You know, you hear about disruption on it. Disruption is sort of like when, you know, I don't know, personal computing was right. So the cloud is a good disruptive example. Right. So you have all this. You have these legacy providers. So we're doing software installs and a cloud provider comes along is like, man I can make way better software and I can build it on multi-tenant architecture and I can get it to people, you know, a day after they buy instead of after a month long install.
00:25:20:00 - 00:25:47:22 Travis Kimmel And so all the people who are creating these cloud companies, they don't really feel like they're the maybe they're competitors in strict sense, but there's enough room for everybody to play. Now, if you are, the more you get into, properly killing and an idea that already exists to just sort of replace it with something, that's not really accretive to the customer and doesn't really lower the overall unit economics tech should be deflationary, right?
00:25:48:00 - 00:26:17:05 Travis Kimmel We should make everything cheaper. But the more you get into something where you're doing the sort of, is it is it, you know, these models like Uber or Lyft where it's like, is that really tech or is it just sort of labor regulation arbitrage? I don't think we know yet. You know, I think those things you get a little bit they get a little bit stranger and I think that the it changes the competitive dynamic because it's no longer a bunch of people building the future, which is this huge open field that we can all go saying a piece of.
00:26:17:07 - 00:26:24:18 Travis Kimmel And now it's like, no, we actually have to like, you know, get rid of the taxi union in New York to grow. That's just like, that's a little weird.
00:26:24:23 - 00:26:51:12 Cas Piancey I guess it's interesting to me. Like what? You're what you're talking about here. Because a friend of mine, I was talking to a friend of mine about this topic just because I was trying to prepare myself for this discussion. And one of the things my friend said to me that gave me pause was that, for instance, in China, like they want to push EVs, they want to have, WeChat, where like on on WeChat, right?
00:26:51:14 - 00:27:18:12 Cas Piancey They do everything on WeChat. It's every single thing is down WeChat. and we have nothing like that here in America. And the way they got WeChat, whether we like it or not here in America, like, I'm not suggesting we do need a WeChat. Maybe we don't. but the reason they have that and the reason they have such insane EV production right now and solar production and all this stuff is because the government has told them this is what we are going to pursue.
00:27:18:12 - 00:27:35:12 Cas Piancey We're going to work with you on this. We're going to support you on it. We're going to subsidize it. Let's do this. And then they do it. And that gave me pause because I was like, damn, maybe that is a good point in that that is more of what I want to see when I talk about venture capital.
00:27:35:14 - 00:27:56:22 Cas Piancey Maybe it is that I do kind of want to see venture capital sponsored companies and stuff trying to land government contracts with the innovation that they're building and getting support from the government like they used to, which is things like, you know, you brought up Theranos earlier. I mean, that's a terrible example because they they did try to get government sponsorships and subsidies and stuff.
00:27:57:00 - 00:28:13:14 Cas Piancey but I like it would be great to see the government push this tech and this innovation and instead of fighting it. But I think that they're fighting it for good reason. Like the there is no cooperation from anyone anymore, you know. Yeah.
00:28:13:14 - 00:28:35:11 Travis Kimmel I mean, you know, first off, I note that, people that, you know, there are companies out there that are getting large government grants and they're in the public. But, you know, Tesla got a ton of grants. I think that there is there is government money flowing toward a bunch of these initiatives. There's government money flowing towards, you know, rooftop solar.
00:28:35:13 - 00:28:56:13 Travis Kimmel there is there is a fair bit of that. what tends, the problem there is that, it changes the competitive dynamic in that part of what you have to get good at can be the front. You have to get good at competing on this sort of like politicking. And so there's a there's an open question for me about whether we want to, to do it that way or not.
00:28:56:14 - 00:29:18:08 Travis Kimmel Like, yeah, I'm gonna, I'm going to convert you from central planning to like, Adam Smith capitalism here in this book. I think that there are there are pros and cons that you can call on to each of these approaches. At the end of the day, Americans, we sort of seem to prefer that our centralization comes in the form of corporatism, which I find hilarious, that we don't even really see that.
00:29:18:10 - 00:29:36:18 Travis Kimmel And that can also be problematic. You get these titanic companies that like, let's take health insurance. I love taking on health insurance. Yeah, these huge companies, they yeah, they get very established. And then they create a sort of regulatory wave. That means that the incumbents always win because it's just impossible to get through those hurdles when you're small.
00:29:36:20 - 00:29:58:10 Travis Kimmel And to me, that is that is how we experience the downside of central planning influence. Right. Like that is sort of us not doing a great job at capitalism in some sense. And I generally find those structures to be distasteful because of their downstream externalities. But of course, I'm an American. I'm sort of wired to think of it that way.
00:29:58:10 - 00:30:14:10 Travis Kimmel And so when I, when I think about like, yeah, China has WeChat. But, you know, is that what I want here? Is that what I like? Do I want the initiative to be driven in that way? And is that better now? The downside of the way we do it is that it's sort of what we're complaining about here.
00:30:14:10 - 00:30:35:15 Travis Kimmel Great Americans also do not like proactive regulation. We just don't like that we would prefer that the regulatory motion be a little bit more like, let the thing get big, let it fall over. And then you come by and sweep up and it puts people in jail and, and, you know, after the fact, you come in and you do a little bit of mop up so that people know that we don't do that anymore.
00:30:35:17 - 00:30:55:19 Travis Kimmel And there is a story about why? Because this big thing fell over. I kind of favor that, frankly, you know, we've we've all been inundated with a culture that reinforces that, like we have is the mythology around like Precogs and Precogs and thought crime. That's very American. It's woven pretty deeply into our our understanding of how the economy works.
00:30:55:19 - 00:31:12:18 Travis Kimmel And I it's hard for me to break out of that conceptually because I think that the this, the externalities of top down dictates can just be really bad and make a lot of people feel a loss of agency and that is I just value that more. I guess at the end of.
00:31:12:18 - 00:31:37:12 Bennett Tomlin The day, one thing I keep kind of thinking about in coming back to during this conversation is like you talked about how a certain portion of venture capital investments are kind of a regulation dodge at this point. And like we can look at something like, oh, Uber, Airbnb or the like, kind of classic examples of certain types of regulation dodges billed as tech companies.
00:31:37:14 - 00:32:13:14 Bennett Tomlin And you talked about how like the venture capital firms having their own megaphones in the form of these media companies or sympathetic individuals who collaborate with these venture capital firms to help them, like, promote their messages and stuff, kind of amplifies some of the negative effects of the type of person venture capital tends to attract. And I think the other kind of wrinkle that makes this even more complicated is the, the goal of many venture capitalists and venture capital firms to also influence the regulations they're trying to, like, take advantage of dodging.
00:32:13:16 - 00:32:35:04 Bennett Tomlin Right, is like that. We said the devs should come in and patch these exploits they're taking advantage of and things like that. But there is a lot of the capital being invested from these firms that make their money from the Dodge, trying to ensure that those things don't get patched, or that they continue to have these exploitable spaces.
00:32:35:08 - 00:32:56:15 Bennett Tomlin And so then when you end up with, like the moneyed interests, like making the investment, promoting the investment through their own megaphones and then investing so much of their own money, like both directly from the venture capital firms and then having like their portfolio firms also do lobbying as well to like, influence the regulation of those investments in in those firms.
00:32:56:17 - 00:33:24:07 Bennett Tomlin I think you end up in a place where, like each of those things exponentiate the potential, like power and influence of the like, venture capitalist and increases the risk of deleterious societal consequences when the venture capitalists like, make mistakes, as they occasionally do. Yeah. And like that dynamic is hard for me to solve in my head.
00:33:24:09 - 00:33:43:14 Travis Kimmel Yeah. I think, you know, for for me, I just sort of bite the bullet, which is I think regulatory capture is bad. But even if my industry is the one doing it, I just think it's sort of bad. Like we we should, you know, we should not do it. Because what happens is, you know, for some it's anti-capitalist, like, it's just anti-capitalist.
00:33:43:14 - 00:34:15:05 Travis Kimmel And I like capitalism. I think that what you want is these little like the, the good version of regulation would allow sort of, startups to come along and challenge stuff and like do things a little differently, which you see an example that you see it in, like, you know, some, some labor law stuff, like nobody really looks at you until you're 50 people, and it's just because they don't want you to have to comply as a small company with a bunch of like, nickel, dime regulatory stuff like me, they're not going to hunt you to see whether you're allocating overtime properly or there's a bunch of weird little stuff in there.
00:34:15:05 - 00:34:34:05 Travis Kimmel And then you get to 50 people. They're like, okay, now you're like an employer and you got to play by the rules. I think that's a fairly healthy structure. I think the the challenge is that any time in, in a society, you get a concentration of power that bands together and just throws its weight around, it doesn't really tend to work for the whole.
00:34:34:05 - 00:35:11:00 Travis Kimmel And this is this is the thing that Americans don't like about central planning in our mythology. And I think we are we are curiously, myopic about that when it comes to the private sector. But I'm a huge fan of the private sector. But I would like to see, you know, dozens of little companies all competing, not sort of this, these large conglomerates that band together and like, act almost like a corporate version of a reunion and when you take the, the already powerful corporation and then you aggregate that into a ball, or all of these companies are sort of forming this, this economic phalanx.
00:35:11:02 - 00:35:31:15 Travis Kimmel I'm just not sure that's good for us. Yeah. I think that it's more it's more this it's for me, it starts conceptually with this idea of how do we feel about concentration of power over time. And I and for me, the answer there is like, the reason I like capitalism is it's sort of not that it's in favor of smaller, you know, localism and all that.
00:35:31:15 - 00:35:52:20 Travis Kimmel So that variant of capitalism and then the second layer is like, how honest do we want to be about that in light of our other values? And how should we go about enforcing that? And this is where it gets really challenging, because the government is a large concentration of power, and it is positioned against this increasingly self aggregating private sector concentration.
00:35:52:22 - 00:36:18:10 Travis Kimmel and I just don't know that we have an answer for that as a society yet. Personally, I like the idea that the private sector should be this much more distributed, higher agency environment. Like it's similar to why I mean, you guys did a great episode on community banking is similar to why I like the idea of having a lot of community banks, because, you know, I can go down the street here and and talk to my local bank and they can underwrite me for a house because I've lived through my whole life.
00:36:18:12 - 00:36:27:02 Travis Kimmel They kind of know me. they know the house. They know the neighborhood that that you're just never going to be able to underwrite with that level of finesse through Zillow.
00:36:27:04 - 00:36:51:10 Cas Piancey You know, I mean, I think a large part of what you you're talking about not liking, feel free to stop me if I'm wrong, but a large part of what you're discussing, not liking about venture capital, is this regulatory arbitrage, regulatory capture. But I would I've been thinking about regulatory capture and arbitrage like a lot lately. And it's really interesting to me because obviously this does not just affect tech or even finance for that matter.
00:36:51:10 - 00:37:18:12 Cas Piancey Right? Like, oh sure, there's regulatory capture at the SEC and, and, and the CFTC or whatever. But like let's talk about the FAA and the NTSB and let's let's go into, all of these regulators who are so the Cfpb like these, these regulators don't have or they do have a concentration of power. They do not utilize that power to help the retail consumer.
00:37:18:16 - 00:37:48:15 Cas Piancey And one of the only regulators, I guess, I don't I don't know if this I think this is the right term. One of the only regulators that I can think of that hasn't suffered from arbitrage or capture, and this is not a big one, is like the DMV where where like everyone can agree that you need rules and regulations to be allowed to go onto the road with a with like a two ton metallic thing that's going 60 miles an hour.
00:37:48:19 - 00:38:10:02 Cas Piancey Like you need to be able to be certified for that. We all agree on it and the rules of getting your driver's license. We all accept that and no one's trying to like, drastically change it. Nobody wants to be like, actually, I would like to privatize the DMV. Like nobody is talking about that stuff, right? This is a regulator that we all can agree on is doing a good job.
00:38:10:04 - 00:38:13:22 Cas Piancey Why can't we do that for other regulators?
00:38:14:00 - 00:38:15:04 Bennett Tomlin Well, we should we should.
00:38:15:04 - 00:38:35:09 Travis Kimmel Do a little more nuanced here about what we mean by regulatory capture. So if we if we take at face value by theory here that Americans like regulation in arrears, meaning we like the thing to fall over and then we the those come in there like, all right. And nobody do this again I don't think we want proactive action on the part of regulators.
00:38:35:09 - 00:38:54:18 Travis Kimmel And in fact, I think that is one of the signs that regulatory capture is sort of creeping in is this proactive thing. And second, I think we want if we're going with that structure where things get to a certain size, they fall over. I think it is when things get to a certain size and we don't let them fall over that, that we run into the moral hazard stuff.
00:38:54:23 - 00:39:17:19 Travis Kimmel So let's take it outside of tech again and look at, you know, more of the mortgage crisis that happened in oh eight. Right? Okay. So we've got this country where like, oh, you know, everybody wants affordable housing, houses start to become more affordable. And we're like, whoa, okay. We don't want that. We don't we want this to be more affordable, like conceptually, but we don't want them to be cheaper because everybody's so levered up that that would actually ruin the mortgage industry.
00:39:17:21 - 00:39:40:10 Travis Kimmel and so what you have is you have a bunch of you have a bunch of like, underwriters and bankers who are holding this debt on their books and stuff, who when the system gets so big that it starts to collapse in on itself, approach the regulators to save them, and they make very compelling arguments. Right. They're like, oh, well, you know, the IRA, this is what will happen to the average household.
00:39:40:12 - 00:40:01:10 Travis Kimmel There are people are storing their savings in their homes. And like those arguments are they're good arguments. but it's very challenging for us to both have a society that does this regulation in arrears thing and also dive in and not let these large incumbents fall when it's time for that to happen. You know, like I think we've we got to pick a path there.
00:40:01:10 - 00:40:27:00 Travis Kimmel And my path is my my preferred path is the creative destruction thing. Just because I, you know, I'm going to commit to the bit. On being a catalyst here. I think it works pretty well. And I think a lot of the problems that we're running into that people ascribe to, failures of capitalism are really actually more of this thing where we're not allowing capitalism to do, to do it's sort of organic motion enough.
00:40:27:02 - 00:40:43:06 Travis Kimmel I mean, it's it's amazing to me that you'll see our politicians going on to, you know, go on Twitter and they're like, oh, we got to build more houses to make it more affordable. I'm like, well, how about we stop making the decision that a housing? Housing is an investment is something that we're going to support as a society.
00:40:43:08 - 00:40:49:12 Travis Kimmel But that seems weird because what's that's going to do is attract a ton of investment money into housing and run the prices of housing.
00:40:49:14 - 00:41:13:12 Cas Piancey I hear you. I hear your criticisms here, but I also look at it and go, like, isn't the endgame for capitalism like essentially the tokenization of, like, everything should be constantly going up in value and making everyone money isn't like like, I know that's not I, that isn't what capitalism means, but I but I do, I like I'm just saying that the, the concept is to always like the let the free market speak.
00:41:13:12 - 00:41:36:15 Cas Piancey And if you're going to let the free market speak, the best thing you can try to do is find little things to make the market in. You're like it advantage you. Now, I, I understand that you shouldn't be able to make the market advantage you in a purely capitalistic society, but like that is we don't live in a utopia.
00:41:36:18 - 00:42:02:08 Cas Piancey You cannot have a purely capitalistic society, and therefore there are going to be market inefficiencies and there's going to be like you, like you're saying people want rules and regulations behind them, but then not always. And, like we we see a Ponzi scheme and like, you don't want the proliferation of Ponzi schemes and the free market to decide which Ponzi scheme gets to live or die like we we don't think I'm going.
00:42:02:08 - 00:42:05:18 Travis Kimmel To I'm going to come off very pedantic in this whole thing, but whatever, it's kind.
00:42:05:18 - 00:42:06:16 Cas Piancey Of I've got no.
00:42:06:20 - 00:42:24:20 Travis Kimmel So let's just talk about the free market thing for a second. There is this sort of, toxic hyper libertarian variant of that, which is basically, I think, just the Hobbesian state of nature. Right? Like, I don't know, whatever rant. Just so I think we, we, I think we have to reject that, and say that what is the market?
00:42:24:20 - 00:42:47:06 Travis Kimmel What is the free market? The free market is the economic activity that happens within the boundaries of the rule of law that we have constructed and continue to evolve. And I'm a believer in that. I'm a believer in the rule of law and the boundaries that we have set forth. The free market is the is the action of all those little agents within that system, within that game that we've set up, which has well-defined rules.
00:42:47:06 - 00:43:06:18 Travis Kimmel And we we largely want them within those defined rules that are defined in advance. Right. And we have the laws written and all that stuff. we want them to be able to move very freely now, occasionally. What'll happen is someone will find a hole in the game, like, you know, like you're playing by imagine you're playing monopoly and somebody finds like an infinite money glitch within the rules.
00:43:06:18 - 00:43:33:23 Travis Kimmel And and what do you do? You're like, okay, well, we can either stop playing this game because it's not fun when people play like that and super lame. Or we can just like patch the rules and we we end up passing rules a lot is basically what the justice system does. So I think the, I think the, the, the challenge around these conversations about like free market absolutism, free market absolutism would say, wow, that infinite money, which was a part of the rules when we started playing.
00:43:34:01 - 00:43:57:02 Travis Kimmel And so therefore I don't think I should get in trouble for it. And you see this this is some time back into do you see this a lot in crypto, right. Like code is law and all this other stuff. I was sort of following the constraints of the system and it's like, yeah, that's fine. but one of the, overlays on the system as defined rigidly by law is also don't hurt people.
00:43:57:08 - 00:44:16:00 Travis Kimmel And like, you should kind of know that too. And there is a level at which you can be held accountable for knowingly hurting people. And then we we come back and we we define the rules of the game after people get hurt such that that's a little bit more explicit, just as a courtesy to our future selves and for posterity.
00:44:16:01 - 00:44:36:10 Travis Kimmel And for me, that is, you read Adam Smith like he talks about some of this stuff. That is the free market. The Founding Fathers had this idea about, you know, an evolving structure of of how society works. It wasn't just this, sort of, you know, they sat down at the is that the Green Dragon was the name of the tag is probably the name of the tavern or some tavern.
00:44:36:10 - 00:45:01:23 Travis Kimmel Oh, yeah. Yeah, yeah, yeah, yeah. They sit down there like we solved it, you know, after eight pints or whatever. They're all in their 20s. They're like, we did it. We created the perfect society. They have self-awareness to literally not do that and talk about how they're not doing that. And so I think we just sort of have to reject the rhetoric of, of the free market absolutists who will say things like, we should let the free market to stand and be like, that's what the free market is, man.
00:45:02:00 - 00:45:20:17 Travis Kimmel Like the free market is. It's a set of rules, that we have defined to the best of our ability, to create a society that incentivizes people to like, you know, innovate and all this other stuff. And occasionally people will figure out a way to break those rules. And then we got patch it, and that is also part of the free market.
00:45:20:17 - 00:45:31:22 Bennett Tomlin So having said all that, Travis, why do you think that most of the public venture capitalists that we end up hearing from are such reprehensible people?
00:45:32:00 - 00:45:55:06 Travis Kimmel Okay, so first of all, I don't I just I just think there's a lot of loud voices out there that are, they're sort of advocating, ideas that are not in keeping with that, that more nuance free market ism. Like, you know, I read Peter Thiel 0 to 1 is a it's an interesting take, like there's some value to be derived from it, especially if you're in business.
00:45:55:06 - 00:46:14:05 Travis Kimmel I think ultimately I, I, I reject the idea that monopolies are the goal, for reasons we've already talked about. And I sort of reject that entire line of thinking like, what I want is to be, I think, the right way to approach ventures like be fast and be first and have that define your destiny, to just sort of a constant competition.
00:46:14:05 - 00:46:29:09 Travis Kimmel If you want to be out market first, you want to have six month lead on your fast followers, and you just want to push, push, push. And that speed is what the money's for. When people invest in you, it's not to like ladder pull and try to like snipe people who are coming, who are nipping at your heels.
00:46:29:09 - 00:46:47:09 Travis Kimmel I just like don't believe in any of that. And so when I when I hear people advocating for those types of beliefs, as you're well aware on Twitter and more recently on threads, I just kind of, I got to speak and say like, that's not that's not divine. That's not the society we want. I think there are VCs that do a good job of that.
00:46:47:11 - 00:47:10:06 Travis Kimmel You know, I mean, you know, Logan Bartlett did a great job. He saw the crypto stuff come in. He's like, yeah, I don't really know what's like discussing stuff on the merits. My direct experience with a lot of VCs is a little more early stage, so that these Titans who are running a $5 billion fund as much as it is, the the like up close and personal VCs who are doing like seed investing and series A and series B, stuff.
00:47:10:06 - 00:47:27:09 Cas Piancey Like I know that there was it was mostly a joke what Bennett was saying. But I do want to I do want to actually say that, like, I, I hear your I hear your response to that, Travis. And I'm like that makes sense. Of course. Like there's thousands of venture capitalists, like we're we're talking about.
00:47:27:15 - 00:47:29:01 Bennett Tomlin At least.
00:47:29:03 - 00:47:54:15 Cas Piancey There's there's thousands for sure. Like across the globe, there are thousands and thousands of of venture capitalists, no doubt about it. But like the idea, I think there's validity to what Bennett is saying, like the loudest ones are the biggest, worst motherfuckers ever. Or all of them, you know, like almost all of them. The ones who are hyper, hyper loud, the all in crew, a16z folks and their partners.
00:47:54:15 - 00:48:20:12 Cas Piancey And like, those are the ones who are front facing venture capital. They're the ones who are defining how venture capital is perceived publicly by the regulators, by Congress, who you're talking about, like, we don't want these people deciding like they're 85. They shouldn't be talking about tech. They don't know what the fuck they're talking about. I agree. And yet, like when you have the worst people causing like bank runs and shit, like, how do you counter that?
00:48:20:12 - 00:48:32:08 Cas Piancey You know, like how do you change the public perception of what venture capital is and, and, you know, like that is why that's why I have such animus for venture capital. It is because of those guys.
00:48:32:10 - 00:48:58:14 Travis Kimmel Well, it's because C you're capitalist, you're against the concentration of power and its deleterious side effects. I really do that to me. I try to fit this stuff into some, you know, some way I can think about things that is coherent across the chaos that is happening in society. and I think it's just, you know, American culture at least, tends to be happier when there's like more opportunity.
00:48:58:17 - 00:49:20:13 Travis Kimmel We like that. And the more you get these, these entrenched power bases, the more challenging it is for us to find those little pockets. I don't I don't think it's limited to venture. I think your critiques are I think you're pretty fair. I mean, I'm here to sort of advocate for the the venture capitals that I've met who are like, not doing that, who are still funding our industry and funding innovation.
00:49:20:14 - 00:49:41:06 Travis Kimmel I'm like, I staunch ally of theirs, despite being brought up by my father to never trust a banker working working with Vanguard, that good venture has sort of brought me around on that. Like, I think there are financiers out there that help, help run everything and help run my, you know, my life wouldn't be the same because you have to fund these startups every summer, sort of.
00:49:41:06 - 00:50:01:01 Travis Kimmel Is this like capital hole that you then have to, like, climb out of? We wouldn't have the cool stuff we have without venture, but without the venture model. Now, I think, in addition to that, we need to look at a bunch of stuff like politics, term limits, people to just get into a chair and sit there until they're sort of 50 years writing legislation.
00:50:01:01 - 00:50:18:11 Travis Kimmel Yeah, I'm like, I don't know about that, that maybe we should mix it up a little more. And, you know, one of the things that's really fascinating on the venture front is the more there's been a bunch of studies around sizing farms, venture is healthier for itself when you stay within a certain fund band that is like suburban.
00:50:18:13 - 00:50:45:10 Travis Kimmel So when you raise a fund, that is I mean, I haven't looked at the numbers in a few years, so I don't want to throw something out there. But when you the optimal venture fund is actually smaller, like half a billion or something, and then you go out of that stuff, those funds outperform by a lot. And so I think that the, the way to counter this is a combination of just like bringing awareness to the fact that these monster funds, their incentives change so that they're more about the care of the 2% care, the gap than the 20% upside.
00:50:45:10 - 00:51:07:20 Travis Kimmel And that's a little weird. And like maybe as an LP, you should think about not putting your money in that and instead spreading it around to a bunch of smaller funds. And I think the the cure for a lot of the stuff we're facing is this return to, like the original idea of behind localism, the original idea behind localism was not like going out to shop over there and buy their food, and they're getting it all from Sysco.
00:51:08:00 - 00:51:33:15 Travis Kimmel You know, like the hope is that they're also buying locally and what you really want to do is spread the economic activity across the country so that it's more robust. And I think you also want to do that in venture. I think what you want to see is that LPs allocating to these smaller funds that are more profitable, they don't have an incentive to go build a monster megaphone, so they can just claim 2% off of, you know, multi-billion dollar funds and stuff.
00:51:33:16 - 00:51:34:20 Travis Kimmel To me, that's why.
00:51:34:22 - 00:51:56:12 Cas Piancey It's so funny, because again, that goes right back to this, where it's like, I know I'm essentially taking the, I don't know, anti-capitalist stance or something like, I am not I'm not anti-capitalist, I don't like, I don't I as much as I, I have animus for the loudest venture capitalists. I don't hate the idea of venture capital. And when I go back to the early parts of venture capital, it it is look, it's localism.
00:51:56:12 - 00:52:23:21 Cas Piancey It's what you're talking about, right? Like you're we're we have, Fairchild Semiconductor in Mountain View, California, working with students at Stanford and Berkeley, who are getting generous, like general contracts, like getting contracts from, the government through Lockheed Martin or whoever. Right. And academia is working with private cab. They're all working together to do something. And that is that is localism.
00:52:23:21 - 00:52:47:15 Cas Piancey That is like they're all building something better together. and they're yeah, they're keeping it in their, in their club, so to speak. But the club is large and it gives us things like DARPA and Arpa and the internet. and that's what I like. I don't know, you know, again, going back to what you're saying is Lyft and Uber a huge leap in innovation like DARPA and Arpa?
00:52:47:17 - 00:52:56:10 Cas Piancey Like, no, it isn't like I think it's easy to say no to that. And if that's most of the innovate, sorry. Go ahead. Bennett.
00:52:56:12 - 00:53:17:03 Bennett Tomlin I just want to interject though in casting go like and how much of that were like which direction is the arrow of causation running here. Right. Because didn't like the Department of Defense initially creating DARPA kind of create the like set of contracts that the initial group of kind of the Bunker Hill companies were competing for and stuff like that.
00:53:17:05 - 00:53:36:18 Bennett Tomlin And so like it was like the direction wasn't like venture capital funded these things, these things that created dirt, but which opened then the internet. It was that the Doe project was created, which set up these contracts, which then companies wanted to compete for, for companies to compete for those they needed funding to get like projects off the ground.
00:53:36:18 - 00:53:56:11 Bennett Tomlin Things started, things like that. And so like the arrow there went from like the, the Department of Defense creating this government contracting project, basically this collection of kind of ambiguous and large dollar amount, government contracts is essentially kind of what it was led to. Then the rest of the stuff coming afterwards.
00:53:56:17 - 00:54:18:18 Cas Piancey I mean, I think and I think that's right. Like, I do think that's not as uncommon as we might think it is. Right. Like I do think, here's a simple one, that it doesn't have the same large scale effects, that the internet does, but like drones, obviously, that was a military contract from the very beginning. But now that has been utilized by people to do all kinds of things.
00:54:18:18 - 00:54:35:17 Cas Piancey And some of it is great. Some of it is like, oh, you can scan the land and figure out like the proper place to put certain things, or like there is actual great use cases for something like drones. Also, they're murdering people. So like, I like it. It's, you know, I get it.
00:54:35:21 - 00:54:54:03 Bennett Tomlin I guess that's kind of my worry. I worry that if you set that up as like the desirable version of venture capital, then the thing meant to inherit it is Anduril. And Palantir, right, is like the modern Silicon Valley funded companies which are competing for government contracts from the Department of Defense. Right?
00:54:54:05 - 00:55:31:06 Travis Kimmel Yeah. I think that, you know my way with this topic, and a lot of times I just circle back to this idea that what we what we want is a less incumbent centric economy. Like, that's the fix. The fix is not so much just to, to, you know, steer away from capitalism. Like, I actually just think that's absurd and, you know, continue to fight anybody on the internet who suggests, but I, I, and I, and I don't know that we and I don't know that we want to even put this albatross around ventures that but we still want to call out the, the sort of like pro pro oligarch whatevers these like neo oligarchs
00:55:31:06 - 00:55:50:05 Travis Kimmel who just think like like, you know, it's take all the power. I think it's important to push back. Yeah. That's also a societal duty there. and I think part of this ties back into another one of my, you know, pet topics. It's just sort of like the way that we conduct everything from monetary policy to, to to legislation.
00:55:50:05 - 00:55:56:09 Travis Kimmel Like it just needs to be a little less incumbent centric. And what that means is we have to be okay with incumbents taking losses.
00:55:56:11 - 00:56:20:08 Cas Piancey But I do want to push back on that. Just on to, I guess on two levels. So one, I know I, I personally am all for having term limits and stuff like that, but when it comes to people who are pro free market, they say, why would you take away someone's ability to vote for whoever they want? Like, if I want to vote for the same guy to be senator for two and a half decades, that is my right.
00:56:20:08 - 00:56:49:16 Cas Piancey That's my God given right or whatever. so I want to put that out there. But I also want to say this, that when it comes to business or finance or whatever, I don't actually have a huge issue with the concept of incumbency. Right. Like, the best example I can do for this is actually a restaurant, because for me, I when I worked in restaurants, what I hated about it was I would go to these small restaurants that were well known or popular bakeries, and they would be starting out.
00:56:49:16 - 00:57:16:16 Cas Piancey They'd be in their first year or 2 or 3 of of getting going. And they're like, we got to grow. We got to go. Got it. Open up a second, third, fourth restaurant. And I'm like, why stop, stop. You're already making money. You have enough employees. Stop. You're good. And in places like Paris or Oslo when I went and visited them years ago, you have one patisserie or, you know, bakery that's been around for 350 years.
00:57:16:19 - 00:57:38:20 Cas Piancey There aren't 12 of them. There's one. And that is like, I am fine with that. That's great. You have culture, you have history. You have one bakery that's had all this time. They're fine, but I don't want one Amazon for 150 years. You know that that is where incumbency gets to be when it gets into oligarchy is the problem.
00:57:38:20 - 00:57:42:11 Cas Piancey It's not incumbency itself. That is the issue, I guess is what I'm saying.
00:57:42:12 - 00:58:01:08 Travis Kimmel That's incumbency around power, you know. And you can always plays into that. Yeah I mean in in an ideal world, we, we run a society where like we try a lot of different stuff and, and then over time and like you're only getting, you know, people only have so many ideas, right. It's we get into their like 30s and 40s, so you get kind of typecast.
00:58:01:14 - 00:58:23:17 Travis Kimmel So then we've got, you know, and then we just limp, sit in that chair until the end of time. Like, you know what, we're going to get out of them. And so, you know, this is this idea of, I have a right to vote for who I want. I'm not even sure that that is. I mean, to me, it's it's almost a pure straw man when people say stuff like that because, you know, you look at the the presidential candidates we've got now and I'm like, how did those get to be the candidates?
00:58:23:22 - 00:58:42:17 Travis Kimmel Like what the I'll tell you, I'll tell you who I want to run and stuff is, you know, it's not them. Like, let's just get some let's just, let's get somebody in there who's like, fresh, like, just have some fresh ideas. Let's put it up to, like, I just think it's a myth, this idea that we get to, select whatever we want.
00:58:42:17 - 00:58:45:00 Travis Kimmel So stuff like that, I think we just reject it.
00:58:45:01 - 00:59:07:15 Cas Piancey Part of my issue with even like the presidential, like the two party system is a problem for me. Just because I'm like, it's almost a it's like a fallacy that's been concocted against ourselves that we are convinced is absolute, even though very explicitly you can always vote for whoever you want, actually. Right. You always can. You always can.
00:59:07:17 - 00:59:35:06 Cas Piancey Like anyone over the age of 35, you can vote for them to be president. Technically, right. But like we've decided that that means there's two people that you can vote for. Well, three, you can vote or the brain worm. You can vote for a brain worm or two individuals. but yeah, like I do. But I do think that it it's unfortunate because it's a self-perpetuating system like, oh, well, then there's two parties and therefore there's always two parties and there's nothing we can do about it.
00:59:35:06 - 00:59:36:23 Cas Piancey I like, I don't know.
00:59:37:01 - 00:59:55:01 Travis Kimmel I think the two party system can, can even be, can work. Well, you know, I would point the finger here more again off on a tangent I love tangents. Point the finger here more at like, when you think about in aggregate from a societal perspective, who are the power and money incumbents and like, they're the boomers.
00:59:55:01 - 01:00:13:06 Travis Kimmel You know, I got nothing against boomers generally. I like to sort of talk shit about them. Spot. but they those are the people who are sitting in all these chairs and they're making a bunch of decisions that are very like pro incumbent, right? Like, we can't let the housing prices fall. We can't. And then you look around and like, what's now?
01:00:13:06 - 01:00:45:13 Travis Kimmel What's the problem? Well, millennials and below are like, how are we going to live where we live. And then the boomers turn around like, well, you can't live at home. Yeah. Like so there's a we're preventing the sort of turn churn in the economy around housing that happens when people get rents because they make bad decisions. And now that we have the the up and comers who, like, can't really get a toehold in the economy because the, the entirety of the legislative body is dominated by social, political or economic, how are you in frame it incumbents like and they just got this life.
01:00:45:13 - 01:01:07:17 Travis Kimmel It's a real it's a real demographic challenge in some ways, which I think will eventually clear here. But when we as we look across the effects and like diagnosed society, I'm very wary of, I'm very aware of like the anything that ends with like ergo we must return to free market absolutism or ergo, you know, capitalism doesn't work.
01:01:07:17 - 01:01:13:18 Travis Kimmel I'm like, I don't really think so. I think what we have to do is really just like, clear out the Deadwood. And it's been a very long time since we did that.
01:01:13:18 - 01:01:22:07 Bennett Tomlin As any libertarian who's like telling you, Adam Smith didn't go far enough is probably not being particularly serious and you can probably ignore them.
01:01:22:09 - 01:01:38:21 Travis Kimmel Oh, they probably, read Adam Smith. I mean, like, you can go. Yeah. I mean, my favorite thing is just go pull quotes from Adam Smith and be like, okay, talk to me about this. Yeah. You know, reasonable boundaries are on around the game of the economy like that. It's just like that. There's not you can't find an intellectual tradition that was arguing against that.
01:01:38:21 - 01:01:40:03 Travis Kimmel You can misrepresent one.
01:01:40:05 - 01:01:44:17 Bennett Tomlin I don't know. I've got some Ayn Rand books behind me if you want.
01:01:44:19 - 01:01:46:05 Travis Kimmel Yeah. Every random.
01:01:46:08 - 01:01:47:23 Cas Piancey Six. It wasn't enough, Bennet?
01:01:48:02 - 01:01:50:19 Bennett Tomlin Well, I mean, I'll probably read them again at some point. Man.
01:01:50:21 - 01:01:54:04 Cas Piancey Why do you hate yourself so much? What's wrong with you?
01:01:54:06 - 01:01:58:10 Bennett Tomlin I got lots of twisted things. Deeply fascinating.
01:01:58:12 - 01:02:06:14 Cas Piancey You don't need to read and rant again. So, Yeah. Do you have. Do you have anything else you want to you want to throw out there, Bennet or Travis, I guess.
01:02:06:14 - 01:02:27:21 Travis Kimmel My my my parting words here would be like, with it, you know, as we as we take back to the rough streets of the internet here. But our, tweeting or whatever we're doing, like, I think there is, there's sort of this dual mandate, much like the fed. And the dual mandate is basically like when you see this stuff that is feels kind of corrosive, you know, you got to go after it.
01:02:28:00 - 01:02:50:06 Travis Kimmel But I think the the other side of that is, it's just important to avoid condemning the superstructure that that actor lives within. Like, you know, there are there are I mean, there are sort of entrepreneurs out there misbehaving, you know, and I'm a sort of entrepreneur and I'm like, okay, well, I think we got to talk about this misbehavior because it's, you know, we kind of got to police our own here a little bit.
01:02:50:06 - 01:03:11:03 Travis Kimmel But it doesn't really mean that, like startup entrepreneurship is a, is a is a bad thing. And I think if anything, we're getting we have the extremism of sort of social media. Echo chambers has this tendency to lead us down these little, these little sort of mind tunnels where we end up concluding, like, that entire institution needs to go.
01:03:11:05 - 01:03:31:01 Travis Kimmel I guess my call to action is like, let's stop doing that. Let's keep talking about the the stuff that we don't want and how we need to like, you know, keep improving the rules of the game so that it works for everybody. but but condemning these like an entire school of thought, even libertarianism at the end of the day has some good stuff in there.
01:03:32:13 - 01:03:36:21 Bennett Tomlin And and labs, though Huberman lab is we can condemn that institution.
01:03:36:23 - 01:03:40:06 Travis Kimmel That's why that guy became the main character pretty quick.
01:03:40:12 - 01:03:53:23 Cas Piancey All right. Well, awesome. Yeah, I think that's a good, nuanced note to go out on. And. Yeah, I if anyone wants to follow Travis, I guess he's spending more time on threads these days. So, are you at Colorado, Trav there as well?
01:03:53:23 - 01:04:07:08 Travis Kimmel Yes. Of course. Travis, I finally got my handle over there. And for some on platform, it's pretty good. I think there's, it's a little bit of a little bit of a different group over there and so on Twitter. Like when we leave.
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