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I've been in some board meetings where the
person comes in and you're like, this person
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does not wanna be here.
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And if it really isn't a fit, as a founder, you
should go back to the firm and be like, hey,
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this person either doesn't show up or doesn't
seem that interested.
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I'd rather take a more junior person as a
learning experience who's excited about this
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than a more experienced person who doesn't
care.
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It's the week of July 7.
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Welcome to the Learning Corner, a Precursor
Ventures podcast.
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Welcome to the Learning Corner by Precursor.
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I'm Mia Farnam, and I'm joined by our GP and
managing partner, Charles Hudson, where we will
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be talking through the articles and Goodreads
that caught our team's attention over the past
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week.
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We took a break on the pod over a fourth of
July week, and we're really excited to jump
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into this week's topic.
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But before we do, I did wanna share a shameless
plug about our upcoming pre seed boot camp that
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Precursor Ventures is hosting on September 25
in New York City.
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It's a full day of programming for people who
are maybe early on in their startup journey or
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thinking about starting a company, and we bring
in early stage investors in our network,
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founders across our own portfolio, and
incredible lawyers who've made their entire
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careers supporting startups and a lot more.
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And it's application based, and we'll be
launching that at the end of the week on our
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website and social channels.
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So definitely be on the lookout for that.
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It's one of my favorite things that we do.
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This will be the third installment, but the
first one we've done in New York.
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And I really enjoy these because it's a chance
to spend a bunch of time with people and get to
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know them in a nontransactional, non pitch
format, which for me is very hard to do.
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So a lot of the alums of our boot camps in the
past have become friends.
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Some of them we funded.
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Some of them we've helped get funded by other
people.
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And so I'm excited to do this in New York.
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Be on the lookout for that.
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Let's get into it.
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Following the news that Eric Paley, cofounder
of Founder Collective, has been appointed
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secretary of the executive office of economic
development for Massachusetts.
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Our first topic is written by Eric's longtime
partner, Micah Rosenblum, who shared thoughtful
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reflection on a frequently occurring dynamic in
venture.
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It's the adopting parent investor.
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When a key investor or board member transitions
off a company, whether for retirement, a new
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role, or life changes, it can leave founders in
a vulnerable spot.
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Micah unpacks how stepping into an inherited
investor relationship isn't just about capital.
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It's about continuity, trust, and honoring the
history that's already been built.
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He offers principles for doing this well,
including being up front about your newness,
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committing fully to the roles, so cutting down
on revolving doors, and avoiding the trap of
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trying to be a one to one replacement.
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If you are in venture, you know this adopting
parent investor concept happens frequently.
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Having seen boards across 450 plus companies
across five funds, Charles, curious what your
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thoughts are here after reading it.
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I read this and I thought it was the best
articulation of this that I've seen to date.
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And I've experienced it from literally every
dimension possible.
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When I had my last startup, we had a partner
transition out of the firm that had led our
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seed round.
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And we got replaced with someone else who is a
friend, who I love and adore, but knew nothing
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about what we were building.
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Like, we were building a games company, and
games was not this person's domain of
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expertise.
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The person had never been to a board meeting,
and he did his very best to be a champion and
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an advocate.
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So I I've I've seen it from a founder
experience.
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We've had some folks depart precursor, and I've
inherited portfolio companies and have tried to
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figure out a way to be helpful with those
companies without, again, to Micah's point,
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trying to replicate who the people are who made
the investment because they're them and and I'm
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me.
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And I've also been on boards where, like, a new
person shows up from another firm and you're
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like, well, how's this gonna work?
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And I think probably in the most challenging of
all, a very close friend of mine who I was
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involved with passed away and one of his
partners had to step in.
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And I think this is becoming a much more common
issue and venture because it used to be people
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didn't really leave firms and people didn't get
fired, pushed out, asked to leave, decide to
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leave, whatever.
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There just wasn't that much turnover.
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And now we're in a world where I think there's
just a lot more turnover in venture.
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And, you know, rules I used to give people were
just like, oh, if you have the managing partner
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and founder of the firm on your board, you're
probably safe.
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That person's not going anywhere as we just saw
with NFDG.
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Even the managing partners of the firm can
leave, and with some of the firm breakups we've
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seen, that's not safe.
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So one thing I've noticed is a lot of the firms
that plan to be around for a long time and have
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capacity to do so, I think have started
staffing a one plus one model, where there's a
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primary person on the board or primary point
person, but there's somebody else who's the
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number two chair who's around and familiar with
the company.
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If anything were to happen to the primary
person, there is in fact somebody up to speed.
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This is really hard to do though if you're a
small seed firm and you're maxed out on board
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capacity and maybe only have two partners.
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You're like, look, we can't have every partner
and every deal.
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But I do think it's more important than ever to
think about what you're gonna do.
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And I think the one thing that Micah said of
all the things that I think is really important
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is don't try to be the person you replaced.
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Just come in and be yourself.
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And also just recognize that it's probably a
big deal for the founder to lose their
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advocate.
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I have a founder in our portfolio where the
person she chose a firm literally to work with
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one very specific partner, and that partner
left.
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And the founder was devastated and said, what
do I do?
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I said, well, you should go to that firm and
pick whoever you're most excited about working
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with because I'm sure they wanna keep you
happy.
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And this is a window for you to say, this is
what would keep me happy.
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And she ended up picking somebody who she's
been really happy with.
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But I think this is gonna become a recurring
problem.
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I have a feeling this is a post that people are
gonna reference pretty often.
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And especially in this time of an increase on
secondaries where maybe your switch off the
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board is happening a little bit sooner.
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I feel like for early stage investors,
especially when you come super, super early,
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you come off boards or you join in on companies
before boards are even created.
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But the fact that you could possibly jump out
of the journey earlier on than maybe founders
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had anticipated is a new one entirely.
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But it doesn't break the relationship in a 100%
capacity level.
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And I feel like you can speak to that being the
first check-in for companies that are now at
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series d and have exited and beyond.
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Also, have people who've left their firm but
are still close to the company Yeah.
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And still provide some level.
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It's interesting.
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When I left Unicorn, I had a handful of
companies where I was still their primary
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contact.
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They didn't need very much But just from a
continuity of relationship standpoint, I think
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that's the best of all worlds if people have
the capacity.
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And obviously, if you've taken a political
office, there's not really any way to be a
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venture partner to the side.
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That probably doesn't work.
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But I think wherever possible, always I try to
think what's in the best interest of the
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entrepreneur.
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And oftentimes, it's some ramp down with your
original person while you're ramping up with
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your new person is the best if you can swing
it, but you can always swing it.
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Right.
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And then along with not trying to be the person
that came before you from a one to one ratio, I
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think Micah said another valuable piece of
advice was displaying your newness rather than
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pretending expertise.
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I know that a lot of investors in this space,
that's kind of like their favorite thing to do,
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pretend expertise, but I actually find in these
scenarios, it's the most harmful thing that you
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could do.
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I think we've all been on it on the other side
when an investor comes in and just blurts all
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these things that they assume about your
business without having built that relationship
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prior, and that's actually quite harmful and
disruptive for founders.
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And I think not all of the catch up needs to
happen in the board meeting.
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Yeah.
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But I do think whenever I've been new, I've
been like, how can I show up to the board
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meeting with the most context?
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Sometimes looking at the old board materials is
helpful.
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Sometimes talking to the current board members
or outgoing, like, hey, what are the big issues
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at the company?
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Oh, the VP of marketing, the VP of sales, or So
you have some context, but look, it's
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inevitable that there will be things that the
board has discussed before that will strike you
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for the first time, and I've always used this
disclaimer.
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It's entirely possible that you guys have
talked about this before, and I assure you over
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time there'll be fewer of these.
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But why are we doing x y and z thing and not a
b and c thing?
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And I've always been surprised.
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Sometimes people are like, well, you know, we
did talk about that two years ago, but it's
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probably worth revisiting Yeah.
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Because things have changed, or the world's
different, or here's some new piece of
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information that we didn't have at the time.
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And so I do think sometimes being new with
fresh eyes is actually helpful and allows you
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to provide context in a way that someone who's
been doing it for a while won't or can't.
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And I find for even folks who maybe are the
more junior replacement for somebody who came
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before you on a board, the most valuable piece
of advice that I think I got from another
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managing partner at a different fund was the
best set of skills you can develop early on in
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those boards is being like a very active
listener.
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You don't need to make a splash and create a
whole host of seven different ideas that you
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have for the roadmap of the company.
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I agree.
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Any recommendations, Charles, for founders on
navigating this that you already haven't
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provided?
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I do think it always good to find out who's
going to be the person taking over.
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Two things, what's their baseline knowledge of
the business?
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And candidly, what's their baseline level of
interest?
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Not to use a Curb Your Enthusiasm reference,
but sometimes these things get foisted on
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people.
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And it's not fun when I've been in some board
meetings where the person comes in and you're
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like, this person does not wanna be here.
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Yeah.
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This person drew the straw that they had to
take this board seat and like, their body
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language from day one is such that my firm is
making me do this.
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And if it really isn't a fit, as a founder, you
should go back to the firm and be like, hey,
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this person either doesn't show up or doesn't
seem that interested.
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I'd rather take a more junior person as a
learning experience who's excited about this
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than a more experienced person who doesn't
care.
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And so I'd say, if the first match really is a
misf ire, don't be shy about going back to the
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firm.
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Also, everyone else on board who's remaining
there is probably knows that too.
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Mhmm.
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Yeah.
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Our next topic is a recent episode from the
peel with Turner Novak featuring Samir Khaji,
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co founder and CEO of Allocate, where they have
a conversation for more than an hour about all
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types of happenings across the venture
landscape.
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They break down the current shifts across the
VC industry, walk through the importance of
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entry price in this era of secondaries,
advancement provided by AI that SaaS companies
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should have a strong pulse on and a lot more.
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They talked a little bit about Allocate, which
is the company Sameer created to transform the
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private market investing experience by building
a curated, managed marketplace for financial
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advisors to have exposure and access to private
market investing opportunities.
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Samir and Turner talk about what Allocate got
right on the platform that other private market
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aggregators have gotten wrong.
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So wanted your perspective on that from a fund
manager perspective first.
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I'm a huge fan of Samir and and Hannah.
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As they know, Samir was, I think, the first
person to ever make meaningful family office
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intros to me when I was starting fund one.
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I remember, you know, RIP First Republic.
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But I remember going to his office at First
Republic and sitting down with him and going
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over my deck.
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And his first ask wasn't, let me set you up
with a bank account.
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His first ask was, let me get you in front of a
few family offices who I think would be
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interested in your pitch.
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And he's always had this spirit of giving in a
way that it's beneficial for both the person
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he's helping and the person he's introducing.
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So I hope he and Hannah and the team continue
to be a positive force for the ecosystem.
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I really like this episode.
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I don't always listen to things north of an
hour.
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It's a big ask.
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But in this case, I really did feel like there
were a lot of really important things that got
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discussed.
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One was, if you're a fund manager and you're
struggling with positioning and marketing your
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fund, I really encourage you to listen to the
middle chunk of this episode because a lot of
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the wisdom that Samir drops in this episode is
about how to position and market yourself as a
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fund manager.
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And ironically, some of it is directly saying
do this, don't do this.
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But some of it's also just talking about how
they positioned Allocate.
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And I think one of the big things they
understood was to have a product that works for
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the RIA and Family Office Channel.
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You need really awesome funds on the platform,
but you also have to think about what are the
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problems that those folks are trying to solve.
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As somebody who's begrudgingly or maybe
accidentally become an LP in over 40 funds,
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00:11:40,329 --> 00:11:45,049
including mine, I have 50 different portal
logins I have to go to to find my k ones and
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00:11:45,049 --> 00:11:45,610
financial.
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00:11:45,610 --> 00:11:49,129
There are all these challenges that they've
solved, but I think they worked backwards from
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if we were gonna make this available to many
more people, what would we have to solve?
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00:11:52,605 --> 00:11:55,965
I think the other thing that I really liked
about this episode is something that, you know,
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00:11:55,965 --> 00:11:57,004
we're doing internally.
228
00:11:57,004 --> 00:12:00,445
Samir is playing with a lot of AI tools
directly himself.
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And I just I think everybody should be doing
this because otherwise, one of two things can
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happen.
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00:12:06,059 --> 00:12:10,620
You can become overly cynical because you use
chat GPT once and it hallucinated and you're
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like, none of the stuff works.
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00:12:12,139 --> 00:12:16,620
Or you just read the headlines and you're like,
oh AI is perfect and beautiful and magical and
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I'm not gonna have a job in awhile.
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00:12:18,235 --> 00:12:22,475
And I think the answer is most of this stuff
works well enough for you to see that it's
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gonna be a big deal in the future, but a lot of
it still requires supervision.
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00:12:26,554 --> 00:12:32,315
And I just thought Samir, I think, knows maybe
more about the world of FOs and RIAs and how
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00:12:32,315 --> 00:12:34,570
they're thinking about venture as an asset
class.
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00:12:34,570 --> 00:12:38,330
And there's just a ton of wisdom in, you know,
everything from how do those folks really think
240
00:12:38,330 --> 00:12:39,289
about big firms?
241
00:12:39,289 --> 00:12:41,049
How do they think about portfolio construction?
242
00:12:41,049 --> 00:12:45,129
And then the thing that's hard to get, how do
the clients of the people who are on allocate
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00:12:45,129 --> 00:12:46,009
think about venture?
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00:12:46,009 --> 00:12:49,924
And so I just thought it was a a really great
conversation, and if you have time, it's well
245
00:12:49,924 --> 00:12:52,245
worth a listen, and he's got a lot of really
good insights.
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00:12:52,245 --> 00:12:58,085
Going back to your AI comment, I think a lot of
my LP friends are maybe a little bit wary about
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00:12:58,085 --> 00:13:01,924
using AI tools themselves or spending time
learning about them, and I think that's the
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most valuable thing you can do because I assume
that when you're getting pitched by fund
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00:13:05,360 --> 00:13:09,039
managers, they're gonna tell you about all
these different bespoke AI tooling that they
250
00:13:09,039 --> 00:13:10,159
built across the fund.
251
00:13:10,159 --> 00:13:13,919
And it all sounds really wonderful and unique,
but if you take a look under the hood and if
252
00:13:13,919 --> 00:13:17,120
you did a little bit more research on your own,
you would know that it's quite similar to what
253
00:13:17,120 --> 00:13:18,799
five other funds down the street are doing.
254
00:13:18,799 --> 00:13:23,144
And so I think that's the biggest benefit of
actually making sure that you're getting smart
255
00:13:23,144 --> 00:13:25,225
on those things as well as the space is
evolving.
256
00:13:25,225 --> 00:13:25,945
I think so.
257
00:13:25,945 --> 00:13:30,424
And I think the other thing that I'll say is I
do think one part of the interview I really
258
00:13:30,424 --> 00:13:33,144
like, similar is like, look, I think a lot
about, well, what are the many roles that
259
00:13:33,144 --> 00:13:35,049
Cambridge Associates fulfills.
260
00:13:35,049 --> 00:13:37,929
One is vetting fund managers on behalf of other
people.
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00:13:38,009 --> 00:13:42,089
And having spent time with Samir, I really
think they have a point of view that I agree
262
00:13:42,089 --> 00:13:45,289
with, which is they want people to be
successful in venture.
263
00:13:45,289 --> 00:13:47,850
They want people to put money into the category
and get money back.
264
00:13:47,850 --> 00:13:49,850
But to do that, you have to invest in good
funds.
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00:13:50,095 --> 00:13:53,855
And somebody's gotta help you figure out what
the good funds look like.
266
00:13:53,855 --> 00:13:57,934
And my fear is always that we'll meet down in
the offices and they'll tell me they're in a
267
00:13:57,934 --> 00:13:58,414
bunch of funds.
268
00:13:58,414 --> 00:14:00,575
And I'm like, well, I know none of those funds
have performed.
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00:14:00,575 --> 00:14:04,095
And that is gonna color your viewpoint on
whether a venture's a good asset class.
270
00:14:04,329 --> 00:14:07,850
So I think having somebody who can also be a
bit of an arbiter of quality is really
271
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important.
272
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I talk about this a lot, of just having
somebody who can kind of bridge and share a
273
00:14:12,089 --> 00:14:16,570
little bit more color on what's out there in
the market for LPs to help make that decision,
274
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I think is something that Yeah.
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00:14:17,929 --> 00:14:19,574
Amazing up across the ecosystem.
276
00:14:19,574 --> 00:14:24,054
A conversation thread that they both had was on
the importance of timing the market from a
277
00:14:24,054 --> 00:14:27,414
selling standpoint for early stage investors
looking to get liquidity from a secondary
278
00:14:27,414 --> 00:14:27,574
opportunity.
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00:14:27,574 --> 00:14:33,149
A really good quote I heard was something along
the lines of, you can't control the exit price,
280
00:14:33,149 --> 00:14:35,629
but you absolutely can control the entry price.
281
00:14:35,709 --> 00:14:38,830
So the price that you come in on from an
initial truck running standpoint.
282
00:14:38,909 --> 00:14:45,549
How do we marry that concept and discipline
with sky high valuations of companies raising
283
00:14:45,549 --> 00:14:46,750
money across AI today?
284
00:14:46,750 --> 00:14:50,024
And I know we've had a lot of internal
conversations around, like, now with this AI
285
00:14:50,024 --> 00:14:50,824
talent war.
286
00:14:50,824 --> 00:14:55,865
I think a lot of interesting investments that
maybe aren't as wonderful as they would have
287
00:14:55,865 --> 00:14:59,625
thought they would be are gonna get bailed out
because there are people who are willing to put
288
00:14:59,625 --> 00:15:01,544
money to buy the talent themselves.
289
00:15:01,544 --> 00:15:03,625
So, like, how do you detangle all of this?
290
00:15:03,750 --> 00:15:07,269
A long time ago, someone told me not every good
company is a good investment.
291
00:15:07,269 --> 00:15:09,029
And so, I think about that a lot.
292
00:15:09,029 --> 00:15:11,429
I think the other thing that's it depends on
where you land.
293
00:15:11,429 --> 00:15:14,549
You know, we talked before about the Venkat
piece, which is like, hey, if you really
294
00:15:14,549 --> 00:15:21,404
believe we're going to a world where exit scale
for the winners is an order of magnitude or two
295
00:15:21,404 --> 00:15:26,845
larger than what we previously believed, you
can pay an order of magnitude or two, maybe not
296
00:15:26,845 --> 00:15:31,004
three, as we're seeing in some cases, on the
entry price provided that you get into winners.
297
00:15:31,169 --> 00:15:34,850
I talked to one LP who was like, look, what
matters is the scale of the winners.
298
00:15:34,850 --> 00:15:39,809
If you lose your money on a $50,000,000 entry
price or on a $5,000,000 entry price, it
299
00:15:39,809 --> 00:15:42,289
doesn't matter to me because you still lost
your money.
300
00:15:42,289 --> 00:15:47,009
Unless somehow the company sold in such a way
that you would have made money at 5, but
301
00:15:46,634 --> 00:15:47,595
couldn't at 50.
302
00:15:47,595 --> 00:15:52,794
But I just think you can't use the pricing
outcomes for the outliers to determine the
303
00:15:52,794 --> 00:15:53,434
average.
304
00:15:53,514 --> 00:15:57,195
And so I think what's happening now is I see
companies that are getting priced in such a way
305
00:15:57,195 --> 00:16:00,794
where I'm like, as a seed fund, okay, that's a
$100,000,000 post.
306
00:16:01,129 --> 00:16:07,049
So that needs to be a $10,000,000,000 company
to make the underwriting work for you.
307
00:16:07,129 --> 00:16:11,289
The $10,000,000,000 companies certainly exist,
but there's not that many of them in the
308
00:16:11,289 --> 00:16:12,169
private markets.
309
00:16:12,169 --> 00:16:16,250
And the ones that are supported by, for the
most part, by real revenue and product.
310
00:16:16,250 --> 00:16:20,825
And a lot of these companies are being assigned
very high valuations with very little evidence
311
00:16:20,825 --> 00:16:22,745
of what they're gonna build on the other side.
312
00:16:22,745 --> 00:16:24,985
And so I find it hard under our model.
313
00:16:24,985 --> 00:16:26,664
We're a sub $100,000,000 fund.
314
00:16:26,664 --> 00:16:28,424
I think entry price really matters.
315
00:16:28,424 --> 00:16:32,419
And, you know, there's 10 or 15% of the time
when we're gonna stretch and do something at
316
00:16:32,419 --> 00:16:36,980
north of 20 and south of 50, but I wouldn't
want to build our entire fund with those entry
317
00:16:36,980 --> 00:16:37,299
price.
318
00:16:37,299 --> 00:16:39,699
And at the same time, yeah, have friends who
that's all they do.
319
00:16:39,699 --> 00:16:42,899
They're like, I just want things at 30 to 50,
and I wanna buy 10%.
320
00:16:42,899 --> 00:16:47,024
And I think these are truly exceptional special
companies that are gonna be worth billions or
321
00:16:47,024 --> 00:16:50,784
tens of billions of dollars, and I just think
it's a different that's a very different way to
322
00:16:50,784 --> 00:16:51,184
invest.
323
00:16:51,184 --> 00:16:56,865
Well, our last topic is a piece published by
Emergence Capital, co written by Jake Zaper,
324
00:16:56,945 --> 00:17:02,470
Josh Bloom, and Madhavan Ramanujam discussing
the art of pricing software.
325
00:17:02,549 --> 00:17:07,190
The piece delves into the most frequently asked
question today, how should I price my AI
326
00:17:07,190 --> 00:17:07,750
product?
327
00:17:07,750 --> 00:17:10,470
We've talked about the many different models on
the podcast.
328
00:17:10,630 --> 00:17:13,829
See, usage, outcome based, hybrid.
329
00:17:13,830 --> 00:17:17,910
And throughout the piece, the authors do a
really great job of outlining what has changed
330
00:17:17,805 --> 00:17:20,125
about pricing in this evolving AI landscape.
331
00:17:20,125 --> 00:17:24,445
The piece highlights three fundamental shifts
that are affecting software pricing as it
332
00:17:24,445 --> 00:17:25,805
pertains to AI.
333
00:17:25,805 --> 00:17:29,005
One, AI enables true outcomes based pricing.
334
00:17:29,005 --> 00:17:31,404
Two, AI taps labor budgets.
335
00:17:31,869 --> 00:17:35,309
And three, LLM usage adds a completely new cost
dynamic.
336
00:17:35,309 --> 00:17:39,390
There are great tips for founders on how to
begin exploring how much to charge for your AI
337
00:17:39,390 --> 00:17:43,230
product along with great summaries on the
current and future state of AI pricing.
338
00:17:43,230 --> 00:17:47,724
Ultimately, the piece concludes with a quote,
the companies that define the AI era will be
339
00:17:47,724 --> 00:17:51,164
those that align their pricing with the value
they create.
340
00:17:51,325 --> 00:17:55,164
We've had a few different conversations about
AI pricing on the podcast.
341
00:17:55,164 --> 00:17:57,484
So I wanted to get your thoughts here first.
342
00:17:57,484 --> 00:18:02,710
And also, what are some palpable differences in
talking points here that hadn't existed maybe
343
00:18:02,710 --> 00:18:04,950
in 2024 about the same topic?
344
00:18:04,950 --> 00:18:08,230
I really like this piece because I thought it
was something I could hand a founder and say,
345
00:18:08,230 --> 00:18:09,109
here's a framework.
346
00:18:09,109 --> 00:18:12,470
You should figure out what kind of business
you're building, and this will give you some
347
00:18:12,470 --> 00:18:14,710
tips as to maybe what's possible for you.
348
00:18:14,710 --> 00:18:20,134
I think the biggest difference between 2024 and
now is we actually have live contact, the old
349
00:18:20,134 --> 00:18:23,414
Mike Tyson analogy about everybody having a
plan to get punched in the mouth.
350
00:18:23,414 --> 00:18:27,015
Everyone's like, oh, customers are gonna want
usage based pricing or customers are gonna want
351
00:18:27,015 --> 00:18:29,230
this or sell the service, not the software.
352
00:18:29,230 --> 00:18:33,069
These were largely theoretical arguments in
2024.
353
00:18:33,069 --> 00:18:36,029
And I think now the answer to me seems to be it
depends.
354
00:18:36,029 --> 00:18:39,470
As in it depends on the service you're
providing, it depends on what your customer
355
00:18:39,470 --> 00:18:40,109
wants to buy.
356
00:18:40,109 --> 00:18:45,044
It also depends on is this an experimental
budget, or is this a production real budget?
357
00:18:45,044 --> 00:18:49,605
And my sense is we don't know how this is all
gonna play out because this is all happening in
358
00:18:49,605 --> 00:18:55,125
a world where customers have historically had
some aversion to usage based pricing because
359
00:18:55,125 --> 00:18:56,325
it's hard to budget.
360
00:18:56,325 --> 00:18:58,950
And also the more of the product you use, more
the you pay.
361
00:18:58,950 --> 00:19:01,509
There's some things like payments where it's
just it's embedded.
362
00:19:01,509 --> 00:19:06,309
And I think we also have a legacy of per seat
pricing for SaaS and a bunch of vendors who are
363
00:19:06,309 --> 00:19:08,230
sort of very familiar with that kind of
pricing.
364
00:19:08,230 --> 00:19:12,549
And then I think as the merchants folks
mentioned, the LLM usage is this like drag
365
00:19:12,789 --> 00:19:12,869
Yeah.
366
00:19:13,015 --> 00:19:14,134
Which is a different element.
367
00:19:14,134 --> 00:19:16,934
Cloud, the marginal cost was was pretty low.
368
00:19:16,934 --> 00:19:19,815
And with LLMs today at least, the bill can get
quite large.
369
00:19:19,815 --> 00:19:22,615
You know, if you're really banging on Cursor,
the bill can get big.
370
00:19:22,615 --> 00:19:25,414
My hunch is that this is gonna continue to
evolve.
371
00:19:25,414 --> 00:19:29,690
I think some of these things, tapping labor
budgets, sound great, but sometimes the person
372
00:19:29,690 --> 00:19:33,049
who has the labor budget and the person who
have the software budget are not the same
373
00:19:33,049 --> 00:19:33,609
person.
374
00:19:33,769 --> 00:19:34,009
Yeah.
375
00:19:34,009 --> 00:19:37,210
And so how do you even deal with the internal
silos at companies?
376
00:19:37,210 --> 00:19:40,970
And the outcomes thing, to me, is very
interesting, but what's an outcome worth
377
00:19:40,970 --> 00:19:44,305
depends seems to me to depend a lot on the
company and their customers.
378
00:19:44,305 --> 00:19:48,224
So to me, I read this as this is a very good
framework for figuring out a starting point if
379
00:19:48,224 --> 00:19:51,984
you're a software provider, but we're all gonna
have to learn together over the next couple of
380
00:19:52,144 --> 00:19:54,704
and I I wouldn't be surprised if there is no
dominant model.
381
00:19:55,039 --> 00:19:58,880
But if in the end, we end up with for different
products, there's a slightly different way that
382
00:19:58,880 --> 00:19:59,599
people pay for it.
383
00:19:59,599 --> 00:20:02,159
But within product categories, there's some
standardization.
384
00:20:02,240 --> 00:20:02,480
Yeah.
385
00:20:02,480 --> 00:20:06,480
It's really clear right now when they shared a
really great graphic about where AI product
386
00:20:06,480 --> 00:20:08,880
pricing was twelve months ago and where it is
today.
387
00:20:08,880 --> 00:20:09,919
Clearly, we're still mixed.
388
00:20:10,024 --> 00:20:12,264
Think twelve months ago, it looked like 29%.
389
00:20:12,264 --> 00:20:14,424
We're leveraging a flat fee subscription
pricing Yeah.
390
00:20:14,505 --> 00:20:16,504
And 27% were doing hybrid.
391
00:20:16,505 --> 00:20:23,099
Fast forward to today, 6% are continuing with
that flat fee model, and 41% are leveraging a
392
00:20:23,099 --> 00:20:24,059
hybrid pricing model.
393
00:20:24,059 --> 00:20:26,859
So to your point, we still don't know, but we
know it's a mix.
394
00:20:26,859 --> 00:20:29,180
Or we're at least that's what we're testing
out.
395
00:20:29,180 --> 00:20:33,900
And I'm guessing that a bunch of those people
who gave people a flat fee realized they were
396
00:20:33,900 --> 00:20:36,299
paying more for compute than they were getting
in revenue.
397
00:20:36,605 --> 00:20:41,484
We can't let people just have either unlimited
or we've set the tiers wrong, this was actually
398
00:20:41,484 --> 00:20:45,805
costing us way too much to run this service,
and we kinda can't allow that to happen.
399
00:20:45,805 --> 00:20:47,325
Last question for you.
400
00:20:47,325 --> 00:20:51,850
They walk through using the acceptable,
expensive, and prohibitively expensive
401
00:20:51,850 --> 00:20:55,450
framework to determine where willingness to pay
lands for AI products.
402
00:20:55,450 --> 00:21:00,170
One of our portcos, Superhuman, leveraged this
technique to price the product, which obviously
403
00:21:00,170 --> 00:21:01,065
has successful.
404
00:21:01,065 --> 00:21:02,904
They just had a recent exit over the weekend.
405
00:21:02,904 --> 00:21:08,345
How does this technique take form when perhaps
customers don't really have a gauge as to what
406
00:21:08,345 --> 00:21:09,704
they're actually buying?
407
00:21:09,784 --> 00:21:13,704
I know we harp on this a lot, but I'm finding
that customers on the enterprise side are
408
00:21:13,704 --> 00:21:18,039
oftentimes disappointed with the ROI for some
of AI product purchases, especially over the
409
00:21:18,039 --> 00:21:18,679
past year.
410
00:21:18,679 --> 00:21:22,359
So how do we continuously evolve in educating
them and pricing correctly?
411
00:21:22,359 --> 00:21:27,079
I seem to find most AI products I encounter
today, this is a broad generalization, are
412
00:21:27,079 --> 00:21:30,119
either dramatically underpriced or way
overpriced.
413
00:21:30,394 --> 00:21:31,914
There's a couple things I use.
414
00:21:31,914 --> 00:21:34,154
I use a transcription product called Whisperer.
415
00:21:34,154 --> 00:21:35,034
I'm not an investor.
416
00:21:35,034 --> 00:21:37,434
Whisperer feels like maybe about right.
417
00:21:37,434 --> 00:21:41,994
I just think the intuition here is good because
I think most startup founders, if I were to
418
00:21:41,994 --> 00:21:46,650
generalize, underprice their product because
they don't want price to be a reason that early
419
00:21:46,650 --> 00:21:47,929
customers say no.
420
00:21:48,009 --> 00:21:50,890
And they end up making the product too cheap.
421
00:21:50,890 --> 00:21:55,769
And if you just say instead, we're gonna anchor
our pricing on something that feels like it
422
00:21:55,769 --> 00:21:59,609
will cause the person to pause and think about
it, but where they will still ultimately say
423
00:21:59,609 --> 00:22:00,890
yes, that's a better instinct.
424
00:22:01,184 --> 00:22:01,904
Yeah.
425
00:22:01,904 --> 00:22:04,065
Like not being able to test the willingness to
pay.
426
00:22:04,065 --> 00:22:06,625
And I have a list of them in my head and I'm
not gonna name them on the podcast.
427
00:22:06,625 --> 00:22:14,840
But like, I'm using them all for literally $0,
if not less $9 a month, and it has not changed
428
00:22:14,840 --> 00:22:17,400
since I started using it nine months ago.
429
00:22:17,640 --> 00:22:23,000
And also, think the problem is if you don't
change the price in a specific period of time,
430
00:22:23,000 --> 00:22:25,880
there are other tools that have jumped into the
space also.
431
00:22:25,880 --> 00:22:31,315
So instead of me deciding to increase what I
pay for the product, maybe I will just go for
432
00:22:31,315 --> 00:22:31,954
something else.
433
00:22:31,954 --> 00:22:35,555
I think it's interesting that ChatGPT is $20,
but so is Claude.
434
00:22:35,555 --> 00:22:37,474
ChatGPT Pro is 200.
435
00:22:37,474 --> 00:22:41,075
You know, sometimes the person who goes first
sort of sets the reference price.
436
00:22:41,539 --> 00:22:45,380
By the way, the pricing work that the forty
nine Palms folks have done is really good for
437
00:22:45,380 --> 00:22:46,579
people who are looking for tips.
438
00:22:46,579 --> 00:22:47,940
I I think those guys are excellent.
439
00:22:47,940 --> 00:22:53,140
But ChatGPT has told me that general purpose
access to an LLM for a base paid level should
440
00:22:53,140 --> 00:22:53,940
be around $20.
441
00:22:54,065 --> 00:22:54,545
Yeah.
442
00:22:54,545 --> 00:22:55,664
Why why $20?
443
00:22:55,664 --> 00:22:56,704
Because they made it $20.
444
00:22:56,704 --> 00:22:57,105
I don't know.
445
00:22:57,105 --> 00:22:57,904
Because they made it $20.
446
00:22:57,904 --> 00:22:59,984
If they made it $10, that'd be my reference
price.
447
00:22:59,984 --> 00:23:02,464
And now someone wanted me to pay $50 for their
LLM.
448
00:23:02,464 --> 00:23:05,505
Be like, mean, Chetch, EBT, and Anthropic are
both $20 a month.
449
00:23:05,505 --> 00:23:07,744
Like, why are you two and a half times as
expensive?
450
00:23:07,744 --> 00:23:08,625
That doesn't make any sense.
451
00:23:09,070 --> 00:23:12,990
It's all gonna be handholding customers also on
the enterprise side of educating them what's
452
00:23:12,990 --> 00:23:16,670
available that other folks don't offer, and
that's what kind of warrants the price
453
00:23:16,670 --> 00:23:18,349
increase, but I don't know how long that's
gonna take.
454
00:23:18,349 --> 00:23:19,950
Well, we are all out of time today.
455
00:23:19,950 --> 00:23:21,845
Thank you, Charles, for joining in.
456
00:23:21,845 --> 00:23:23,445
Thank you to our listeners for jumping in.
457
00:23:23,445 --> 00:23:27,045
Please like and subscribe, and we will talk
with you all next week.
458
00:23:27,045 --> 00:23:27,765
Thank you.
459
00:23:27,765 --> 00:23:28,244
Bye.
460
00:23:28,244 --> 00:23:28,565
Bye.
461
00:23:28,565 --> 00:23:29,285
Bye, everyone.
00:00:00,000 --> 00:00:03,040
I've been in some board meetings where the
person comes in and you're like, this person
2
00:00:03,040 --> 00:00:04,719
does not wanna be here.
3
00:00:04,719 --> 00:00:08,320
And if it really isn't a fit, as a founder, you
should go back to the firm and be like, hey,
4
00:00:08,320 --> 00:00:11,439
this person either doesn't show up or doesn't
seem that interested.
5
00:00:11,439 --> 00:00:15,985
I'd rather take a more junior person as a
learning experience who's excited about this
6
00:00:15,985 --> 00:00:18,464
than a more experienced person who doesn't
care.
7
00:00:18,625 --> 00:00:21,024
It's the week of July 7.
8
00:00:21,105 --> 00:00:24,304
Welcome to the Learning Corner, a Precursor
Ventures podcast.
9
00:00:28,550 --> 00:00:30,710
Welcome to the Learning Corner by Precursor.
10
00:00:30,710 --> 00:00:35,909
I'm Mia Farnam, and I'm joined by our GP and
managing partner, Charles Hudson, where we will
11
00:00:35,909 --> 00:00:40,229
be talking through the articles and Goodreads
that caught our team's attention over the past
12
00:00:40,234 --> 00:00:40,875
week.
13
00:00:40,954 --> 00:00:45,434
We took a break on the pod over a fourth of
July week, and we're really excited to jump
14
00:00:45,434 --> 00:00:46,554
into this week's topic.
15
00:00:46,554 --> 00:00:52,234
But before we do, I did wanna share a shameless
plug about our upcoming pre seed boot camp that
16
00:00:52,234 --> 00:00:55,960
Precursor Ventures is hosting on September 25
in New York City.
17
00:00:55,960 --> 00:01:01,159
It's a full day of programming for people who
are maybe early on in their startup journey or
18
00:01:01,159 --> 00:01:05,319
thinking about starting a company, and we bring
in early stage investors in our network,
19
00:01:05,495 --> 00:01:09,974
founders across our own portfolio, and
incredible lawyers who've made their entire
20
00:01:09,974 --> 00:01:12,454
careers supporting startups and a lot more.
21
00:01:12,454 --> 00:01:17,015
And it's application based, and we'll be
launching that at the end of the week on our
22
00:01:17,015 --> 00:01:18,775
website and social channels.
23
00:01:18,900 --> 00:01:20,980
So definitely be on the lookout for that.
24
00:01:20,980 --> 00:01:23,060
It's one of my favorite things that we do.
25
00:01:23,060 --> 00:01:26,579
This will be the third installment, but the
first one we've done in New York.
26
00:01:26,739 --> 00:01:32,385
And I really enjoy these because it's a chance
to spend a bunch of time with people and get to
27
00:01:32,385 --> 00:01:37,104
know them in a nontransactional, non pitch
format, which for me is very hard to do.
28
00:01:37,104 --> 00:01:41,584
So a lot of the alums of our boot camps in the
past have become friends.
29
00:01:41,584 --> 00:01:42,625
Some of them we funded.
30
00:01:42,625 --> 00:01:44,305
Some of them we've helped get funded by other
people.
31
00:01:44,305 --> 00:01:46,064
And so I'm excited to do this in New York.
32
00:01:46,310 --> 00:01:47,350
Be on the lookout for that.
33
00:01:47,350 --> 00:01:48,709
Let's get into it.
34
00:01:48,710 --> 00:01:53,109
Following the news that Eric Paley, cofounder
of Founder Collective, has been appointed
35
00:01:53,109 --> 00:01:57,030
secretary of the executive office of economic
development for Massachusetts.
36
00:01:57,030 --> 00:02:02,365
Our first topic is written by Eric's longtime
partner, Micah Rosenblum, who shared thoughtful
37
00:02:02,365 --> 00:02:05,484
reflection on a frequently occurring dynamic in
venture.
38
00:02:05,484 --> 00:02:07,805
It's the adopting parent investor.
39
00:02:07,805 --> 00:02:12,764
When a key investor or board member transitions
off a company, whether for retirement, a new
40
00:02:12,764 --> 00:02:17,200
role, or life changes, it can leave founders in
a vulnerable spot.
41
00:02:17,200 --> 00:02:22,879
Micah unpacks how stepping into an inherited
investor relationship isn't just about capital.
42
00:02:22,879 --> 00:02:26,800
It's about continuity, trust, and honoring the
history that's already been built.
43
00:02:26,800 --> 00:02:31,844
He offers principles for doing this well,
including being up front about your newness,
44
00:02:31,844 --> 00:02:36,485
committing fully to the roles, so cutting down
on revolving doors, and avoiding the trap of
45
00:02:36,485 --> 00:02:39,525
trying to be a one to one replacement.
46
00:02:39,844 --> 00:02:45,139
If you are in venture, you know this adopting
parent investor concept happens frequently.
47
00:02:45,219 --> 00:02:50,819
Having seen boards across 450 plus companies
across five funds, Charles, curious what your
48
00:02:50,819 --> 00:02:52,099
thoughts are here after reading it.
49
00:02:52,099 --> 00:02:56,955
I read this and I thought it was the best
articulation of this that I've seen to date.
50
00:02:56,955 --> 00:03:00,474
And I've experienced it from literally every
dimension possible.
51
00:03:00,474 --> 00:03:04,955
When I had my last startup, we had a partner
transition out of the firm that had led our
52
00:03:04,955 --> 00:03:05,594
seed round.
53
00:03:05,594 --> 00:03:10,715
And we got replaced with someone else who is a
friend, who I love and adore, but knew nothing
54
00:03:10,715 --> 00:03:12,040
about what we were building.
55
00:03:12,040 --> 00:03:15,240
Like, we were building a games company, and
games was not this person's domain of
56
00:03:15,240 --> 00:03:15,800
expertise.
57
00:03:15,800 --> 00:03:20,280
The person had never been to a board meeting,
and he did his very best to be a champion and
58
00:03:20,280 --> 00:03:21,159
an advocate.
59
00:03:21,159 --> 00:03:23,159
So I I've I've seen it from a founder
experience.
60
00:03:23,159 --> 00:03:28,685
We've had some folks depart precursor, and I've
inherited portfolio companies and have tried to
61
00:03:28,685 --> 00:03:31,885
figure out a way to be helpful with those
companies without, again, to Micah's point,
62
00:03:31,885 --> 00:03:36,044
trying to replicate who the people are who made
the investment because they're them and and I'm
63
00:03:36,044 --> 00:03:36,365
me.
64
00:03:36,365 --> 00:03:40,125
And I've also been on boards where, like, a new
person shows up from another firm and you're
65
00:03:40,125 --> 00:03:41,485
like, well, how's this gonna work?
66
00:03:41,485 --> 00:03:45,459
And I think probably in the most challenging of
all, a very close friend of mine who I was
67
00:03:45,459 --> 00:03:48,819
involved with passed away and one of his
partners had to step in.
68
00:03:48,819 --> 00:03:53,780
And I think this is becoming a much more common
issue and venture because it used to be people
69
00:03:53,780 --> 00:03:59,164
didn't really leave firms and people didn't get
fired, pushed out, asked to leave, decide to
70
00:03:59,164 --> 00:03:59,805
leave, whatever.
71
00:03:59,805 --> 00:04:01,485
There just wasn't that much turnover.
72
00:04:01,564 --> 00:04:05,485
And now we're in a world where I think there's
just a lot more turnover in venture.
73
00:04:05,485 --> 00:04:09,324
And, you know, rules I used to give people were
just like, oh, if you have the managing partner
74
00:04:09,324 --> 00:04:11,989
and founder of the firm on your board, you're
probably safe.
75
00:04:11,989 --> 00:04:15,189
That person's not going anywhere as we just saw
with NFDG.
76
00:04:15,189 --> 00:04:18,870
Even the managing partners of the firm can
leave, and with some of the firm breakups we've
77
00:04:18,870 --> 00:04:19,990
seen, that's not safe.
78
00:04:19,990 --> 00:04:24,709
So one thing I've noticed is a lot of the firms
that plan to be around for a long time and have
79
00:04:24,345 --> 00:04:29,144
capacity to do so, I think have started
staffing a one plus one model, where there's a
80
00:04:29,144 --> 00:04:34,024
primary person on the board or primary point
person, but there's somebody else who's the
81
00:04:34,024 --> 00:04:37,144
number two chair who's around and familiar with
the company.
82
00:04:37,144 --> 00:04:41,750
If anything were to happen to the primary
person, there is in fact somebody up to speed.
83
00:04:41,750 --> 00:04:45,350
This is really hard to do though if you're a
small seed firm and you're maxed out on board
84
00:04:45,350 --> 00:04:47,270
capacity and maybe only have two partners.
85
00:04:47,270 --> 00:04:49,589
You're like, look, we can't have every partner
and every deal.
86
00:04:49,589 --> 00:04:53,475
But I do think it's more important than ever to
think about what you're gonna do.
87
00:04:53,475 --> 00:04:56,675
And I think the one thing that Micah said of
all the things that I think is really important
88
00:04:56,675 --> 00:04:58,995
is don't try to be the person you replaced.
89
00:04:59,475 --> 00:05:00,995
Just come in and be yourself.
90
00:05:00,995 --> 00:05:05,475
And also just recognize that it's probably a
big deal for the founder to lose their
91
00:05:05,475 --> 00:05:05,795
advocate.
92
00:05:06,100 --> 00:05:10,259
I have a founder in our portfolio where the
person she chose a firm literally to work with
93
00:05:10,259 --> 00:05:13,300
one very specific partner, and that partner
left.
94
00:05:13,300 --> 00:05:15,939
And the founder was devastated and said, what
do I do?
95
00:05:15,939 --> 00:05:19,779
I said, well, you should go to that firm and
pick whoever you're most excited about working
96
00:05:19,779 --> 00:05:22,235
with because I'm sure they wanna keep you
happy.
97
00:05:22,235 --> 00:05:25,115
And this is a window for you to say, this is
what would keep me happy.
98
00:05:25,115 --> 00:05:27,675
And she ended up picking somebody who she's
been really happy with.
99
00:05:27,675 --> 00:05:29,995
But I think this is gonna become a recurring
problem.
100
00:05:29,995 --> 00:05:32,955
I have a feeling this is a post that people are
gonna reference pretty often.
101
00:05:32,955 --> 00:05:38,060
And especially in this time of an increase on
secondaries where maybe your switch off the
102
00:05:38,060 --> 00:05:39,659
board is happening a little bit sooner.
103
00:05:39,659 --> 00:05:42,860
I feel like for early stage investors,
especially when you come super, super early,
104
00:05:42,860 --> 00:05:46,219
you come off boards or you join in on companies
before boards are even created.
105
00:05:46,219 --> 00:05:50,154
But the fact that you could possibly jump out
of the journey earlier on than maybe founders
106
00:05:50,154 --> 00:05:52,394
had anticipated is a new one entirely.
107
00:05:52,394 --> 00:05:56,475
But it doesn't break the relationship in a 100%
capacity level.
108
00:05:56,475 --> 00:06:00,954
And I feel like you can speak to that being the
first check-in for companies that are now at
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00:06:00,300 --> 00:06:02,139
series d and have exited and beyond.
110
00:06:02,139 --> 00:06:06,459
Also, have people who've left their firm but
are still close to the company Yeah.
111
00:06:06,459 --> 00:06:07,819
And still provide some level.
112
00:06:07,819 --> 00:06:08,379
It's interesting.
113
00:06:08,379 --> 00:06:12,539
When I left Unicorn, I had a handful of
companies where I was still their primary
114
00:06:12,539 --> 00:06:13,019
contact.
115
00:06:13,019 --> 00:06:17,584
They didn't need very much But just from a
continuity of relationship standpoint, I think
116
00:06:17,584 --> 00:06:20,305
that's the best of all worlds if people have
the capacity.
117
00:06:20,305 --> 00:06:23,824
And obviously, if you've taken a political
office, there's not really any way to be a
118
00:06:23,824 --> 00:06:25,024
venture partner to the side.
119
00:06:25,024 --> 00:06:25,904
That probably doesn't work.
120
00:06:25,904 --> 00:06:29,889
But I think wherever possible, always I try to
think what's in the best interest of the
121
00:06:29,889 --> 00:06:30,689
entrepreneur.
122
00:06:30,769 --> 00:06:35,089
And oftentimes, it's some ramp down with your
original person while you're ramping up with
123
00:06:35,089 --> 00:06:38,129
your new person is the best if you can swing
it, but you can always swing it.
124
00:06:38,129 --> 00:06:38,529
Right.
125
00:06:38,529 --> 00:06:44,275
And then along with not trying to be the person
that came before you from a one to one ratio, I
126
00:06:44,275 --> 00:06:48,115
think Micah said another valuable piece of
advice was displaying your newness rather than
127
00:06:48,115 --> 00:06:49,795
pretending expertise.
128
00:06:50,035 --> 00:06:54,194
I know that a lot of investors in this space,
that's kind of like their favorite thing to do,
129
00:06:54,300 --> 00:06:58,300
pretend expertise, but I actually find in these
scenarios, it's the most harmful thing that you
130
00:06:58,300 --> 00:06:58,699
could do.
131
00:06:58,699 --> 00:07:02,539
I think we've all been on it on the other side
when an investor comes in and just blurts all
132
00:07:02,539 --> 00:07:06,379
these things that they assume about your
business without having built that relationship
133
00:07:06,379 --> 00:07:09,979
prior, and that's actually quite harmful and
disruptive for founders.
134
00:07:10,235 --> 00:07:14,074
And I think not all of the catch up needs to
happen in the board meeting.
135
00:07:14,074 --> 00:07:14,235
Yeah.
136
00:07:14,235 --> 00:07:17,435
But I do think whenever I've been new, I've
been like, how can I show up to the board
137
00:07:17,435 --> 00:07:19,194
meeting with the most context?
138
00:07:19,194 --> 00:07:21,595
Sometimes looking at the old board materials is
helpful.
139
00:07:21,595 --> 00:07:25,849
Sometimes talking to the current board members
or outgoing, like, hey, what are the big issues
140
00:07:25,849 --> 00:07:26,490
at the company?
141
00:07:26,490 --> 00:07:30,089
Oh, the VP of marketing, the VP of sales, or So
you have some context, but look, it's
142
00:07:30,089 --> 00:07:33,930
inevitable that there will be things that the
board has discussed before that will strike you
143
00:07:33,930 --> 00:07:36,329
for the first time, and I've always used this
disclaimer.
144
00:07:36,329 --> 00:07:40,285
It's entirely possible that you guys have
talked about this before, and I assure you over
145
00:07:40,285 --> 00:07:41,644
time there'll be fewer of these.
146
00:07:41,644 --> 00:07:44,605
But why are we doing x y and z thing and not a
b and c thing?
147
00:07:44,605 --> 00:07:45,644
And I've always been surprised.
148
00:07:45,644 --> 00:07:48,845
Sometimes people are like, well, you know, we
did talk about that two years ago, but it's
149
00:07:48,845 --> 00:07:50,220
probably worth revisiting Yeah.
150
00:07:50,220 --> 00:07:54,060
Because things have changed, or the world's
different, or here's some new piece of
151
00:07:54,060 --> 00:07:55,819
information that we didn't have at the time.
152
00:07:55,819 --> 00:07:59,980
And so I do think sometimes being new with
fresh eyes is actually helpful and allows you
153
00:07:59,980 --> 00:08:03,980
to provide context in a way that someone who's
been doing it for a while won't or can't.
154
00:08:04,175 --> 00:08:09,535
And I find for even folks who maybe are the
more junior replacement for somebody who came
155
00:08:09,535 --> 00:08:13,055
before you on a board, the most valuable piece
of advice that I think I got from another
156
00:08:13,055 --> 00:08:16,495
managing partner at a different fund was the
best set of skills you can develop early on in
157
00:08:16,495 --> 00:08:18,175
those boards is being like a very active
listener.
158
00:08:18,209 --> 00:08:21,970
You don't need to make a splash and create a
whole host of seven different ideas that you
159
00:08:21,970 --> 00:08:23,410
have for the roadmap of the company.
160
00:08:23,410 --> 00:08:23,889
I agree.
161
00:08:23,889 --> 00:08:27,569
Any recommendations, Charles, for founders on
navigating this that you already haven't
162
00:08:27,569 --> 00:08:27,970
provided?
163
00:08:27,970 --> 00:08:33,009
I do think it always good to find out who's
going to be the person taking over.
164
00:08:33,254 --> 00:08:36,054
Two things, what's their baseline knowledge of
the business?
165
00:08:36,054 --> 00:08:39,095
And candidly, what's their baseline level of
interest?
166
00:08:39,174 --> 00:08:43,254
Not to use a Curb Your Enthusiasm reference,
but sometimes these things get foisted on
167
00:08:43,254 --> 00:08:43,735
people.
168
00:08:43,894 --> 00:08:47,929
And it's not fun when I've been in some board
meetings where the person comes in and you're
169
00:08:47,929 --> 00:08:50,410
like, this person does not wanna be here.
170
00:08:50,410 --> 00:08:50,649
Yeah.
171
00:08:50,649 --> 00:08:54,889
This person drew the straw that they had to
take this board seat and like, their body
172
00:08:54,889 --> 00:08:58,570
language from day one is such that my firm is
making me do this.
173
00:08:58,570 --> 00:09:02,205
And if it really isn't a fit, as a founder, you
should go back to the firm and be like, hey,
174
00:09:02,205 --> 00:09:05,245
this person either doesn't show up or doesn't
seem that interested.
175
00:09:05,245 --> 00:09:09,884
I'd rather take a more junior person as a
learning experience who's excited about this
176
00:09:09,884 --> 00:09:12,125
than a more experienced person who doesn't
care.
177
00:09:12,125 --> 00:09:16,580
And so I'd say, if the first match really is a
misf ire, don't be shy about going back to the
178
00:09:16,580 --> 00:09:16,899
firm.
179
00:09:16,899 --> 00:09:20,820
Also, everyone else on board who's remaining
there is probably knows that too.
180
00:09:20,820 --> 00:09:21,379
Mhmm.
181
00:09:21,379 --> 00:09:21,779
Yeah.
182
00:09:21,779 --> 00:09:27,059
Our next topic is a recent episode from the
peel with Turner Novak featuring Samir Khaji,
183
00:09:27,059 --> 00:09:32,424
co founder and CEO of Allocate, where they have
a conversation for more than an hour about all
184
00:09:32,424 --> 00:09:34,584
types of happenings across the venture
landscape.
185
00:09:34,584 --> 00:09:38,584
They break down the current shifts across the
VC industry, walk through the importance of
186
00:09:38,584 --> 00:09:43,440
entry price in this era of secondaries,
advancement provided by AI that SaaS companies
187
00:09:43,440 --> 00:09:46,399
should have a strong pulse on and a lot more.
188
00:09:46,639 --> 00:09:50,879
They talked a little bit about Allocate, which
is the company Sameer created to transform the
189
00:09:50,879 --> 00:09:56,384
private market investing experience by building
a curated, managed marketplace for financial
190
00:09:56,384 --> 00:10:00,384
advisors to have exposure and access to private
market investing opportunities.
191
00:10:00,384 --> 00:10:05,745
Samir and Turner talk about what Allocate got
right on the platform that other private market
192
00:10:05,745 --> 00:10:07,904
aggregators have gotten wrong.
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00:10:07,904 --> 00:10:11,345
So wanted your perspective on that from a fund
manager perspective first.
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I'm a huge fan of Samir and and Hannah.
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As they know, Samir was, I think, the first
person to ever make meaningful family office
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intros to me when I was starting fund one.
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I remember, you know, RIP First Republic.
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But I remember going to his office at First
Republic and sitting down with him and going
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over my deck.
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And his first ask wasn't, let me set you up
with a bank account.
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His first ask was, let me get you in front of a
few family offices who I think would be
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interested in your pitch.
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And he's always had this spirit of giving in a
way that it's beneficial for both the person
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he's helping and the person he's introducing.
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So I hope he and Hannah and the team continue
to be a positive force for the ecosystem.
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I really like this episode.
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I don't always listen to things north of an
hour.
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It's a big ask.
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00:10:54,365 --> 00:10:59,404
But in this case, I really did feel like there
were a lot of really important things that got
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discussed.
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00:11:00,284 --> 00:11:05,404
One was, if you're a fund manager and you're
struggling with positioning and marketing your
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fund, I really encourage you to listen to the
middle chunk of this episode because a lot of
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the wisdom that Samir drops in this episode is
about how to position and market yourself as a
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fund manager.
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00:11:16,299 --> 00:11:20,059
And ironically, some of it is directly saying
do this, don't do this.
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But some of it's also just talking about how
they positioned Allocate.
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00:11:23,179 --> 00:11:26,394
And I think one of the big things they
understood was to have a product that works for
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00:11:26,394 --> 00:11:28,315
the RIA and Family Office Channel.
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You need really awesome funds on the platform,
but you also have to think about what are the
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00:11:32,315 --> 00:11:34,475
problems that those folks are trying to solve.
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As somebody who's begrudgingly or maybe
accidentally become an LP in over 40 funds,
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00:11:40,329 --> 00:11:45,049
including mine, I have 50 different portal
logins I have to go to to find my k ones and
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00:11:45,049 --> 00:11:45,610
financial.
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There are all these challenges that they've
solved, but I think they worked backwards from
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00:11:49,129 --> 00:11:52,605
if we were gonna make this available to many
more people, what would we have to solve?
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00:11:52,605 --> 00:11:55,965
I think the other thing that I really liked
about this episode is something that, you know,
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00:11:55,965 --> 00:11:57,004
we're doing internally.
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Samir is playing with a lot of AI tools
directly himself.
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And I just I think everybody should be doing
this because otherwise, one of two things can
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happen.
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00:12:06,059 --> 00:12:10,620
You can become overly cynical because you use
chat GPT once and it hallucinated and you're
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like, none of the stuff works.
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00:12:12,139 --> 00:12:16,620
Or you just read the headlines and you're like,
oh AI is perfect and beautiful and magical and
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I'm not gonna have a job in awhile.
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00:12:18,235 --> 00:12:22,475
And I think the answer is most of this stuff
works well enough for you to see that it's
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00:12:22,475 --> 00:12:26,554
gonna be a big deal in the future, but a lot of
it still requires supervision.
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00:12:26,554 --> 00:12:32,315
And I just thought Samir, I think, knows maybe
more about the world of FOs and RIAs and how
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00:12:32,315 --> 00:12:34,570
they're thinking about venture as an asset
class.
239
00:12:34,570 --> 00:12:38,330
And there's just a ton of wisdom in, you know,
everything from how do those folks really think
240
00:12:38,330 --> 00:12:39,289
about big firms?
241
00:12:39,289 --> 00:12:41,049
How do they think about portfolio construction?
242
00:12:41,049 --> 00:12:45,129
And then the thing that's hard to get, how do
the clients of the people who are on allocate
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00:12:45,129 --> 00:12:46,009
think about venture?
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00:12:46,009 --> 00:12:49,924
And so I just thought it was a a really great
conversation, and if you have time, it's well
245
00:12:49,924 --> 00:12:52,245
worth a listen, and he's got a lot of really
good insights.
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00:12:52,245 --> 00:12:58,085
Going back to your AI comment, I think a lot of
my LP friends are maybe a little bit wary about
247
00:12:58,085 --> 00:13:01,924
using AI tools themselves or spending time
learning about them, and I think that's the
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00:13:01,924 --> 00:13:05,360
most valuable thing you can do because I assume
that when you're getting pitched by fund
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00:13:05,360 --> 00:13:09,039
managers, they're gonna tell you about all
these different bespoke AI tooling that they
250
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built across the fund.
251
00:13:10,159 --> 00:13:13,919
And it all sounds really wonderful and unique,
but if you take a look under the hood and if
252
00:13:13,919 --> 00:13:17,120
you did a little bit more research on your own,
you would know that it's quite similar to what
253
00:13:17,120 --> 00:13:18,799
five other funds down the street are doing.
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00:13:18,799 --> 00:13:23,144
And so I think that's the biggest benefit of
actually making sure that you're getting smart
255
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on those things as well as the space is
evolving.
256
00:13:25,225 --> 00:13:25,945
I think so.
257
00:13:25,945 --> 00:13:30,424
And I think the other thing that I'll say is I
do think one part of the interview I really
258
00:13:30,424 --> 00:13:33,144
like, similar is like, look, I think a lot
about, well, what are the many roles that
259
00:13:33,144 --> 00:13:35,049
Cambridge Associates fulfills.
260
00:13:35,049 --> 00:13:37,929
One is vetting fund managers on behalf of other
people.
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00:13:38,009 --> 00:13:42,089
And having spent time with Samir, I really
think they have a point of view that I agree
262
00:13:42,089 --> 00:13:45,289
with, which is they want people to be
successful in venture.
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00:13:45,289 --> 00:13:47,850
They want people to put money into the category
and get money back.
264
00:13:47,850 --> 00:13:49,850
But to do that, you have to invest in good
funds.
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00:13:50,095 --> 00:13:53,855
And somebody's gotta help you figure out what
the good funds look like.
266
00:13:53,855 --> 00:13:57,934
And my fear is always that we'll meet down in
the offices and they'll tell me they're in a
267
00:13:57,934 --> 00:13:58,414
bunch of funds.
268
00:13:58,414 --> 00:14:00,575
And I'm like, well, I know none of those funds
have performed.
269
00:14:00,575 --> 00:14:04,095
And that is gonna color your viewpoint on
whether a venture's a good asset class.
270
00:14:04,329 --> 00:14:07,850
So I think having somebody who can also be a
bit of an arbiter of quality is really
271
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important.
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I talk about this a lot, of just having
somebody who can kind of bridge and share a
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00:14:12,089 --> 00:14:16,570
little bit more color on what's out there in
the market for LPs to help make that decision,
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I think is something that Yeah.
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00:14:17,929 --> 00:14:19,574
Amazing up across the ecosystem.
276
00:14:19,574 --> 00:14:24,054
A conversation thread that they both had was on
the importance of timing the market from a
277
00:14:24,054 --> 00:14:27,414
selling standpoint for early stage investors
looking to get liquidity from a secondary
278
00:14:27,414 --> 00:14:27,574
opportunity.
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00:14:27,574 --> 00:14:33,149
A really good quote I heard was something along
the lines of, you can't control the exit price,
280
00:14:33,149 --> 00:14:35,629
but you absolutely can control the entry price.
281
00:14:35,709 --> 00:14:38,830
So the price that you come in on from an
initial truck running standpoint.
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00:14:38,909 --> 00:14:45,549
How do we marry that concept and discipline
with sky high valuations of companies raising
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00:14:45,549 --> 00:14:46,750
money across AI today?
284
00:14:46,750 --> 00:14:50,024
And I know we've had a lot of internal
conversations around, like, now with this AI
285
00:14:50,024 --> 00:14:50,824
talent war.
286
00:14:50,824 --> 00:14:55,865
I think a lot of interesting investments that
maybe aren't as wonderful as they would have
287
00:14:55,865 --> 00:14:59,625
thought they would be are gonna get bailed out
because there are people who are willing to put
288
00:14:59,625 --> 00:15:01,544
money to buy the talent themselves.
289
00:15:01,544 --> 00:15:03,625
So, like, how do you detangle all of this?
290
00:15:03,750 --> 00:15:07,269
A long time ago, someone told me not every good
company is a good investment.
291
00:15:07,269 --> 00:15:09,029
And so, I think about that a lot.
292
00:15:09,029 --> 00:15:11,429
I think the other thing that's it depends on
where you land.
293
00:15:11,429 --> 00:15:14,549
You know, we talked before about the Venkat
piece, which is like, hey, if you really
294
00:15:14,549 --> 00:15:21,404
believe we're going to a world where exit scale
for the winners is an order of magnitude or two
295
00:15:21,404 --> 00:15:26,845
larger than what we previously believed, you
can pay an order of magnitude or two, maybe not
296
00:15:26,845 --> 00:15:31,004
three, as we're seeing in some cases, on the
entry price provided that you get into winners.
297
00:15:31,169 --> 00:15:34,850
I talked to one LP who was like, look, what
matters is the scale of the winners.
298
00:15:34,850 --> 00:15:39,809
If you lose your money on a $50,000,000 entry
price or on a $5,000,000 entry price, it
299
00:15:39,809 --> 00:15:42,289
doesn't matter to me because you still lost
your money.
300
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Unless somehow the company sold in such a way
that you would have made money at 5, but
301
00:15:46,634 --> 00:15:47,595
couldn't at 50.
302
00:15:47,595 --> 00:15:52,794
But I just think you can't use the pricing
outcomes for the outliers to determine the
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average.
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00:15:53,514 --> 00:15:57,195
And so I think what's happening now is I see
companies that are getting priced in such a way
305
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where I'm like, as a seed fund, okay, that's a
$100,000,000 post.
306
00:16:01,129 --> 00:16:07,049
So that needs to be a $10,000,000,000 company
to make the underwriting work for you.
307
00:16:07,129 --> 00:16:11,289
The $10,000,000,000 companies certainly exist,
but there's not that many of them in the
308
00:16:11,289 --> 00:16:12,169
private markets.
309
00:16:12,169 --> 00:16:16,250
And the ones that are supported by, for the
most part, by real revenue and product.
310
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And a lot of these companies are being assigned
very high valuations with very little evidence
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00:16:20,825 --> 00:16:22,745
of what they're gonna build on the other side.
312
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And so I find it hard under our model.
313
00:16:24,985 --> 00:16:26,664
We're a sub $100,000,000 fund.
314
00:16:26,664 --> 00:16:28,424
I think entry price really matters.
315
00:16:28,424 --> 00:16:32,419
And, you know, there's 10 or 15% of the time
when we're gonna stretch and do something at
316
00:16:32,419 --> 00:16:36,980
north of 20 and south of 50, but I wouldn't
want to build our entire fund with those entry
317
00:16:36,980 --> 00:16:37,299
price.
318
00:16:37,299 --> 00:16:39,699
And at the same time, yeah, have friends who
that's all they do.
319
00:16:39,699 --> 00:16:42,899
They're like, I just want things at 30 to 50,
and I wanna buy 10%.
320
00:16:42,899 --> 00:16:47,024
And I think these are truly exceptional special
companies that are gonna be worth billions or
321
00:16:47,024 --> 00:16:50,784
tens of billions of dollars, and I just think
it's a different that's a very different way to
322
00:16:50,784 --> 00:16:51,184
invest.
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00:16:51,184 --> 00:16:56,865
Well, our last topic is a piece published by
Emergence Capital, co written by Jake Zaper,
324
00:16:56,945 --> 00:17:02,470
Josh Bloom, and Madhavan Ramanujam discussing
the art of pricing software.
325
00:17:02,549 --> 00:17:07,190
The piece delves into the most frequently asked
question today, how should I price my AI
326
00:17:07,190 --> 00:17:07,750
product?
327
00:17:07,750 --> 00:17:10,470
We've talked about the many different models on
the podcast.
328
00:17:10,630 --> 00:17:13,829
See, usage, outcome based, hybrid.
329
00:17:13,830 --> 00:17:17,910
And throughout the piece, the authors do a
really great job of outlining what has changed
330
00:17:17,805 --> 00:17:20,125
about pricing in this evolving AI landscape.
331
00:17:20,125 --> 00:17:24,445
The piece highlights three fundamental shifts
that are affecting software pricing as it
332
00:17:24,445 --> 00:17:25,805
pertains to AI.
333
00:17:25,805 --> 00:17:29,005
One, AI enables true outcomes based pricing.
334
00:17:29,005 --> 00:17:31,404
Two, AI taps labor budgets.
335
00:17:31,869 --> 00:17:35,309
And three, LLM usage adds a completely new cost
dynamic.
336
00:17:35,309 --> 00:17:39,390
There are great tips for founders on how to
begin exploring how much to charge for your AI
337
00:17:39,390 --> 00:17:43,230
product along with great summaries on the
current and future state of AI pricing.
338
00:17:43,230 --> 00:17:47,724
Ultimately, the piece concludes with a quote,
the companies that define the AI era will be
339
00:17:47,724 --> 00:17:51,164
those that align their pricing with the value
they create.
340
00:17:51,325 --> 00:17:55,164
We've had a few different conversations about
AI pricing on the podcast.
341
00:17:55,164 --> 00:17:57,484
So I wanted to get your thoughts here first.
342
00:17:57,484 --> 00:18:02,710
And also, what are some palpable differences in
talking points here that hadn't existed maybe
343
00:18:02,710 --> 00:18:04,950
in 2024 about the same topic?
344
00:18:04,950 --> 00:18:08,230
I really like this piece because I thought it
was something I could hand a founder and say,
345
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here's a framework.
346
00:18:09,109 --> 00:18:12,470
You should figure out what kind of business
you're building, and this will give you some
347
00:18:12,470 --> 00:18:14,710
tips as to maybe what's possible for you.
348
00:18:14,710 --> 00:18:20,134
I think the biggest difference between 2024 and
now is we actually have live contact, the old
349
00:18:20,134 --> 00:18:23,414
Mike Tyson analogy about everybody having a
plan to get punched in the mouth.
350
00:18:23,414 --> 00:18:27,015
Everyone's like, oh, customers are gonna want
usage based pricing or customers are gonna want
351
00:18:27,015 --> 00:18:29,230
this or sell the service, not the software.
352
00:18:29,230 --> 00:18:33,069
These were largely theoretical arguments in
2024.
353
00:18:33,069 --> 00:18:36,029
And I think now the answer to me seems to be it
depends.
354
00:18:36,029 --> 00:18:39,470
As in it depends on the service you're
providing, it depends on what your customer
355
00:18:39,470 --> 00:18:40,109
wants to buy.
356
00:18:40,109 --> 00:18:45,044
It also depends on is this an experimental
budget, or is this a production real budget?
357
00:18:45,044 --> 00:18:49,605
And my sense is we don't know how this is all
gonna play out because this is all happening in
358
00:18:49,605 --> 00:18:55,125
a world where customers have historically had
some aversion to usage based pricing because
359
00:18:55,125 --> 00:18:56,325
it's hard to budget.
360
00:18:56,325 --> 00:18:58,950
And also the more of the product you use, more
the you pay.
361
00:18:58,950 --> 00:19:01,509
There's some things like payments where it's
just it's embedded.
362
00:19:01,509 --> 00:19:06,309
And I think we also have a legacy of per seat
pricing for SaaS and a bunch of vendors who are
363
00:19:06,309 --> 00:19:08,230
sort of very familiar with that kind of
pricing.
364
00:19:08,230 --> 00:19:12,549
And then I think as the merchants folks
mentioned, the LLM usage is this like drag
365
00:19:12,789 --> 00:19:12,869
Yeah.
366
00:19:13,015 --> 00:19:14,134
Which is a different element.
367
00:19:14,134 --> 00:19:16,934
Cloud, the marginal cost was was pretty low.
368
00:19:16,934 --> 00:19:19,815
And with LLMs today at least, the bill can get
quite large.
369
00:19:19,815 --> 00:19:22,615
You know, if you're really banging on Cursor,
the bill can get big.
370
00:19:22,615 --> 00:19:25,414
My hunch is that this is gonna continue to
evolve.
371
00:19:25,414 --> 00:19:29,690
I think some of these things, tapping labor
budgets, sound great, but sometimes the person
372
00:19:29,690 --> 00:19:33,049
who has the labor budget and the person who
have the software budget are not the same
373
00:19:33,049 --> 00:19:33,609
person.
374
00:19:33,769 --> 00:19:34,009
Yeah.
375
00:19:34,009 --> 00:19:37,210
And so how do you even deal with the internal
silos at companies?
376
00:19:37,210 --> 00:19:40,970
And the outcomes thing, to me, is very
interesting, but what's an outcome worth
377
00:19:40,970 --> 00:19:44,305
depends seems to me to depend a lot on the
company and their customers.
378
00:19:44,305 --> 00:19:48,224
So to me, I read this as this is a very good
framework for figuring out a starting point if
379
00:19:48,224 --> 00:19:51,984
you're a software provider, but we're all gonna
have to learn together over the next couple of
380
00:19:52,144 --> 00:19:54,704
and I I wouldn't be surprised if there is no
dominant model.
381
00:19:55,039 --> 00:19:58,880
But if in the end, we end up with for different
products, there's a slightly different way that
382
00:19:58,880 --> 00:19:59,599
people pay for it.
383
00:19:59,599 --> 00:20:02,159
But within product categories, there's some
standardization.
384
00:20:02,240 --> 00:20:02,480
Yeah.
385
00:20:02,480 --> 00:20:06,480
It's really clear right now when they shared a
really great graphic about where AI product
386
00:20:06,480 --> 00:20:08,880
pricing was twelve months ago and where it is
today.
387
00:20:08,880 --> 00:20:09,919
Clearly, we're still mixed.
388
00:20:10,024 --> 00:20:12,264
Think twelve months ago, it looked like 29%.
389
00:20:12,264 --> 00:20:14,424
We're leveraging a flat fee subscription
pricing Yeah.
390
00:20:14,505 --> 00:20:16,504
And 27% were doing hybrid.
391
00:20:16,505 --> 00:20:23,099
Fast forward to today, 6% are continuing with
that flat fee model, and 41% are leveraging a
392
00:20:23,099 --> 00:20:24,059
hybrid pricing model.
393
00:20:24,059 --> 00:20:26,859
So to your point, we still don't know, but we
know it's a mix.
394
00:20:26,859 --> 00:20:29,180
Or we're at least that's what we're testing
out.
395
00:20:29,180 --> 00:20:33,900
And I'm guessing that a bunch of those people
who gave people a flat fee realized they were
396
00:20:33,900 --> 00:20:36,299
paying more for compute than they were getting
in revenue.
397
00:20:36,605 --> 00:20:41,484
We can't let people just have either unlimited
or we've set the tiers wrong, this was actually
398
00:20:41,484 --> 00:20:45,805
costing us way too much to run this service,
and we kinda can't allow that to happen.
399
00:20:45,805 --> 00:20:47,325
Last question for you.
400
00:20:47,325 --> 00:20:51,850
They walk through using the acceptable,
expensive, and prohibitively expensive
401
00:20:51,850 --> 00:20:55,450
framework to determine where willingness to pay
lands for AI products.
402
00:20:55,450 --> 00:21:00,170
One of our portcos, Superhuman, leveraged this
technique to price the product, which obviously
403
00:21:00,170 --> 00:21:01,065
has successful.
404
00:21:01,065 --> 00:21:02,904
They just had a recent exit over the weekend.
405
00:21:02,904 --> 00:21:08,345
How does this technique take form when perhaps
customers don't really have a gauge as to what
406
00:21:08,345 --> 00:21:09,704
they're actually buying?
407
00:21:09,784 --> 00:21:13,704
I know we harp on this a lot, but I'm finding
that customers on the enterprise side are
408
00:21:13,704 --> 00:21:18,039
oftentimes disappointed with the ROI for some
of AI product purchases, especially over the
409
00:21:18,039 --> 00:21:18,679
past year.
410
00:21:18,679 --> 00:21:22,359
So how do we continuously evolve in educating
them and pricing correctly?
411
00:21:22,359 --> 00:21:27,079
I seem to find most AI products I encounter
today, this is a broad generalization, are
412
00:21:27,079 --> 00:21:30,119
either dramatically underpriced or way
overpriced.
413
00:21:30,394 --> 00:21:31,914
There's a couple things I use.
414
00:21:31,914 --> 00:21:34,154
I use a transcription product called Whisperer.
415
00:21:34,154 --> 00:21:35,034
I'm not an investor.
416
00:21:35,034 --> 00:21:37,434
Whisperer feels like maybe about right.
417
00:21:37,434 --> 00:21:41,994
I just think the intuition here is good because
I think most startup founders, if I were to
418
00:21:41,994 --> 00:21:46,650
generalize, underprice their product because
they don't want price to be a reason that early
419
00:21:46,650 --> 00:21:47,929
customers say no.
420
00:21:48,009 --> 00:21:50,890
And they end up making the product too cheap.
421
00:21:50,890 --> 00:21:55,769
And if you just say instead, we're gonna anchor
our pricing on something that feels like it
422
00:21:55,769 --> 00:21:59,609
will cause the person to pause and think about
it, but where they will still ultimately say
423
00:21:59,609 --> 00:22:00,890
yes, that's a better instinct.
424
00:22:01,184 --> 00:22:01,904
Yeah.
425
00:22:01,904 --> 00:22:04,065
Like not being able to test the willingness to
pay.
426
00:22:04,065 --> 00:22:06,625
And I have a list of them in my head and I'm
not gonna name them on the podcast.
427
00:22:06,625 --> 00:22:14,840
But like, I'm using them all for literally $0,
if not less $9 a month, and it has not changed
428
00:22:14,840 --> 00:22:17,400
since I started using it nine months ago.
429
00:22:17,640 --> 00:22:23,000
And also, think the problem is if you don't
change the price in a specific period of time,
430
00:22:23,000 --> 00:22:25,880
there are other tools that have jumped into the
space also.
431
00:22:25,880 --> 00:22:31,315
So instead of me deciding to increase what I
pay for the product, maybe I will just go for
432
00:22:31,315 --> 00:22:31,954
something else.
433
00:22:31,954 --> 00:22:35,555
I think it's interesting that ChatGPT is $20,
but so is Claude.
434
00:22:35,555 --> 00:22:37,474
ChatGPT Pro is 200.
435
00:22:37,474 --> 00:22:41,075
You know, sometimes the person who goes first
sort of sets the reference price.
436
00:22:41,539 --> 00:22:45,380
By the way, the pricing work that the forty
nine Palms folks have done is really good for
437
00:22:45,380 --> 00:22:46,579
people who are looking for tips.
438
00:22:46,579 --> 00:22:47,940
I I think those guys are excellent.
439
00:22:47,940 --> 00:22:53,140
But ChatGPT has told me that general purpose
access to an LLM for a base paid level should
440
00:22:53,140 --> 00:22:53,940
be around $20.
441
00:22:54,065 --> 00:22:54,545
Yeah.
442
00:22:54,545 --> 00:22:55,664
Why why $20?
443
00:22:55,664 --> 00:22:56,704
Because they made it $20.
444
00:22:56,704 --> 00:22:57,105
I don't know.
445
00:22:57,105 --> 00:22:57,904
Because they made it $20.
446
00:22:57,904 --> 00:22:59,984
If they made it $10, that'd be my reference
price.
447
00:22:59,984 --> 00:23:02,464
And now someone wanted me to pay $50 for their
LLM.
448
00:23:02,464 --> 00:23:05,505
Be like, mean, Chetch, EBT, and Anthropic are
both $20 a month.
449
00:23:05,505 --> 00:23:07,744
Like, why are you two and a half times as
expensive?
450
00:23:07,744 --> 00:23:08,625
That doesn't make any sense.
451
00:23:09,070 --> 00:23:12,990
It's all gonna be handholding customers also on
the enterprise side of educating them what's
452
00:23:12,990 --> 00:23:16,670
available that other folks don't offer, and
that's what kind of warrants the price
453
00:23:16,670 --> 00:23:18,349
increase, but I don't know how long that's
gonna take.
454
00:23:18,349 --> 00:23:19,950
Well, we are all out of time today.
455
00:23:19,950 --> 00:23:21,845
Thank you, Charles, for joining in.
456
00:23:21,845 --> 00:23:23,445
Thank you to our listeners for jumping in.
457
00:23:23,445 --> 00:23:27,045
Please like and subscribe, and we will talk
with you all next week.
458
00:23:27,045 --> 00:23:27,765
Thank you.
459
00:23:27,765 --> 00:23:28,244
Bye.
460
00:23:28,244 --> 00:23:28,565
Bye.
461
00:23:28,565 --> 00:23:29,285
Bye, everyone.
