VC10X - VENTURE CAPITAL PODCAST
Venture Capitalists (VCs) & Angel Investors share their investing thesis, screening process, value-add, exits, and more. Hosted by Prashant Choubey (@ChoubeySahab)
Dave is a General Partner at Vibecap. Previously Dave worked at Facebook for 10 years in a product role where he learned from the best in the business.
Dave’s story and why he started Vibecap?
So, pretty much right out of undergrad, I started working at Facebook, actually in customer support, which does not exist anymore. I was employee 180. This was 2007, was there until 2017. Got to see going from 10 million users to 3 billion users. Got to see from 180 employees to 50,000 employees and learned a lot in the process with some of the smartest, most ambitious people in the world.
After Facebook, I did a start-up in the social audio space from like 2018 to early 2020. This was before Clubhouse, so we were a little bit too early for the market. And I'd always done some investing, a couple of angel checks a year, but nothing really that intense. Just some friend’s, companies, the right opportunities when they came up. And then in 2020, COVID hit. And at the same time I was trying to figure out what I wanted to do next. Everyone was at home lockdown due to COVID, and I started to see all this volatility in society, which was really just an uptick of the volatility in society that had been trending upward since really 2015 and started to dive in a little bit deeper.
There was COVID, there were the riots in the United States, you see some of the volatility with the Ukraine War, the wars in Ethiopia, and supply chain issues. And really we think that this is just the beginning of volatility in the world over the next ten or so years.
Investment Thesis at Vibecap
Our thesis is that the systems that are in place, that have been in place for the past 50, 60 years post World War II are eroding and are not able to sustain the needs of the world in 2022.
These are things like traditional media, traditional finance, traditional government, education, healthcare. And I think depending on where you are in the world, most of these systems, you probably have a pretty low affability towards where you do not enjoy interacting with these things and the people that are involved in them.
So Vibecap’s thesis is really what are the technologies that are hitting the inflection points of their exponential curves and where are they going to impact the traditional structures and systems of society such that they can provide the greatest impact and the greatest returns.
Web3, AI and Deep Science.
These technologies are the ones that we think are going to drive the most impact. It's not exclusive in the sense of, hey, you're not building in web three AI or Deep Science, but you agree with our macro point of view and you've identified a key power structure that is eroding, but you're building a mobile app that is in the consumer space. We still are open to exploring and investing if it's really a deep insight. But what we found is that generally people that are building into these spaces are the ones that share our macro views.
Investing amid volatility
For people who are investing at the precedent seed stages, you can't plug numbers into a spreadsheet, it's very hard to project. Hey, this was the revenue last year because a lot of times the company didn't exist last year. This will be the revenue in a year, two years, three years. So what we look for is what are the key components of any system, what are the atomic units? And those are the people. So who are the founders? What is their approach to the process of building a startup? Do they have a growth mindset? For anybody who's done a startup, you know that things are not going to go the way that you plan them to be. Everybody has a plan until they get punched in the face is what Mike Tyson said. And building a startup and interacting with users in the market is like getting punched in the face every day.
So we look for can the founders. One, of course they need to have the technical expertise if they're building into a particular area. Two, they need to be able to understand the landscape of the market and have a good distribution strategy. But really it comes down to are these the people that we could see building for ten years to 100 billion dollar company?
And two, are they the type of people that can identify their own strengths and weaknesses. Are these the people or sets of people that are going to be the leaders to grow themselves and their relationship with their co-founders and their company in tandem with growing the product and the company?
Key focus areas in Web3 for Vibecap
Two main areas, one in particular, more broadly, regenerative finance, and more specifically, decentralized science. Regenerative finance is really the current state of capitalism, if you call it capitalism. It's more of an oligarchy. It's very extractive from communities and the people that it interacts with.
Regenerative finance is built more around a cyclical system that benefits everyone participating in these markets, as opposed to there's an entrenched upper class and an oppressed lower class and you're extracting the resources from the communities and the people and the environment. So one is regenerative finance and using crypto economic primitives to build these types of systems that benefit everyone participating in the markets.
Two is decentralized science and decentralized science is really around, hey, how do you measure progress of a society? It's really around what is the scientific progress that they can make and the speed with which they can perform the scientific method. Now, for anyone who's been involved in science or done research or tried to read a paper, you realize how broken the system is. The researchers don't get paid for their work. They have to pay the journals to publish into the journals and then the journals charge readers to read the papers and do not give any of that money back to the scientists. There's also perverse incentives around what gets funded. If you have a disease that only 10,000 people in the world have, good luck getting people to do research on your disease.
So again, taking crypto economic primitives, composing it such that you can solve some of these problems to remove the friction and start to hit an inflection point of, hey, let's say there are, you know, 10,000 scientific papers or 100,000 scientific papers published every year. How can we ten x 100 x thousand x that? So that the rate of scientific progress affects everyone in a way that's just as well as increasing the rate of the scientific method across the entire world and society.
Thoughts on AI
AI can be almost spiritual if you think about it deeply enough. There's a great Tim Urban writes the blog Waitbutwhy and he has a great piece that he put out in 2015 called The AI Revolution or something. There are two parts, and the most startling image in that blog post is it's a series of steps. And a mouse is on a certain step of intelligence. And then there's a dog, which is two steps above that. And then there's a monkey, which is two steps above that. And then there's a human, which is two steps above that. What happens when a computer is two steps above humans? What happens when a computer is 2000 steps above humans? So you get like goosebumps and you're like, oh, holy shit, we can't even fathom.
Our brains are limited to thinking about what this type of superintelligence might be able to do. Now, I think we're still 20 to 25 years away from that. Although maybe these predictions are getting shorter in their time frames. The way I like to think about it, I grew up playing a lot of video games. I still play video games when I have time. Now, if anyone has played video games, you recognize that feeling of this is something that I can't do in real life. I can't jump 100ft into the air. I can't have a suit of invulnerability and jump through fire. AI is kind of like these power ups in video games where it gives you if you say Steve Jobs said computers are bicycles for the mind.
I like to think that AI is like an Iron Man suit for the mind, where it provides you with these it turns you into a superhero, basically all the places where places and spaces where humans are not great. And we're great at a lot of things. Social interactions, recognizing human faces, using our bodies to twist and contort tools. But we're pretty bad at stuff like math more generally and working with large sets of numbers and thinking about large systems.
AI provides if we can come together and work with AI provides us with the ability to tame those pieces of the universe that human brains are not good at, to our level of what we're good at, of what human brains are good at, and even beyond. So I'm very excited to I think everyone who's played video games has the experience of, hey, that's really awesome. I get to be Kratos in God of War. I get to be a superhuman shooter in Call of Duty modern warfare, I get to jump 15ft in the air playing Super Mario brothers. AI could give us that potential.
And you're already seeing it with, hey, I have this superpower. I can type in anything I want a ginger cat floating through space eating an ice cream cone, and I'll get 14 pictures of it in under 30 seconds. That's awesome. To me, that's a superpower
Rapid Fire round
What are the sectors and regions you invest in?
We are region agnostic. Silicon Valley is now on the Internet, so you can email us from anywhere in the world. And the sectors that we invest in are Web3, AI, and Deep Science, which is the ability to manipulate atoms with software, genomics, robotics, out of manufacturing space, those types of things.
What stage do you typically invest in?
Pre-seed & seed. Typical check size between 250-500K. For our newest fund 2.
Where can founders apply?
Just send an email to vibes@vibecap co. That's our general purpose email. We do take a look at all cold email submissions. Would love it if you could include either a deck or a memo, as well as how much you're raising at what stage and what valuation you're raising at. And then we've invested in people who've called outreach before, so feel free to shoot us an email.
Where can our listeners follow you?
Just twitter at Dave Goldblatt. Also @vibe_cap. And then feel free to DM me. My DMs are open.
We're a 560C fund. So if you are an accredited investor and you want to talk about maybe getting an allocation in our fund too, which we just started fundraising for, we just had our first close, we do have some allocation open. Feel free to email, reach out to me on Twitter or LinkedIn, and we're more than happy to send over our investor materials and have a conversation, see if it's the right fit.