Big VCs Don’t Care Unless You’re in Their Top 5% - Michal Rokosz, Inovo Venture Partners - EP#118

MichalEP: I was at Food Panda. We were worse operationally than quite a few businesses we competed with, but we had more money. And if I have like five times more money and I'm 20% less efficient, I'm still gonna win. First international VC that I've had on the shows is Michael Rokosh. He is a partner at Innovo. Before he was writing checks, he was an operator. He was managing director at Food Panda and COO at Bookseat. At Innovo, he has invested in more than 25 companies. Many gone on to raise follow-on. From some of the most well-respected venture funds in the world. Like the market has gotten crazy and I feel like we are definitely in like a 2021 bubble again. What do you think from your sea are we in a bubble right now? I would say this time is different. Guest today is Michael Rokosh. He is a partner at Innovo, the Warsaw-based seed fund that has become one of the leading early stage investors in Central and Eastern Europe. Before he was writing checks, he was an operator. He was managing director at Food Panda and COO at Booksea. At Innovo, he has invested in more than 25 companies, many which have gone on to raise follow-ons from some of the most well-respected venture funds in the world. He has watched his region change. from copying proven playbooks to producing globally competitive AI companies. I've done a number of angel investments alongside Michael and Innovo, and I can say that they are the go-to fund in their region. And more importantly, for their founders, they really hustle to help them. Michael Rokosh, welcome to Not Another CEO podcast. Hey David, pleasure to be here. Thank you for doing this with me. first international vc that I've had on the show. So I I was chasing you to do this for a long time. So thank you. Glad we finally made it. Okay. First question right out of the gates, what is the one thing that you look for in the companies that you invest in? The one thing for the founders, the companies that you invest in. I think like we look at something exceptional in the founders. And there's not one thing. I need something where I can tell This person is absolutely outlier, absolutely unique. And what what does that look like? Give me an example of what that looks like. It can be his academic track record. It can be his first business at age of seven, eight. it can be his phenomenal achievement within a corporate he was working. Or it can be some kind of passion or approach or what he delivered that's like completely different and better than than what I saw. Yeah. How long before meeting someone for the first time and getting that that exact thing? Like how long does it take you to to get that about them? Counterintuitively, it's very, very fast. Like it's sometimes within the first five minutes of a of a discussion or within like a very short window, I kind of you know, calibrate whether I'm already on the I'm excited level, or is it like somebody who's like within this like general population so to say I I something that I tell founders when when I have people pitch me even I I'd say great great founders, great companies, so many of them start right at their company without giving their backstory. How do they even end up here? And what you just said to me is actually also what I look for when I make the angel investments is I I care about their company, but at the stage that we're investing, I care about the person more and and so many times they just skip. They they they're like, they're they're not gonna care about this thing, this thing that I did, when in reality, those are the things that I think set them apart. Yeah. Like I'll I'll just give you an example. We recently had an offset for our founders and th they had a pitching training. And one of the founders was and when I was like at high school, I did some coding Olympiads. And we're like, Can you be more specific? And it turns out he won one of the most competitive Olympiads where the previous winners were founders of OpenAI. It's like and he's like, Yeah, you know, I won some Olympiads, like another day in the office. That's like sometimes people cannot tell that. But then again, if you cannot tell that, if you cannot articulate why you are exceptional, like you know, if you are about to build a global company, you're gonna need to raise a ton of money. And you're gonna need to get like five, ten, whatever number of funding rounds, and basically somebody who's good at selling himself and the business is likely gonna do better than somebody who's like even very strong on execution, but is Terrible at selling this business because at some point of time and you know, I was at Foot Panda, we were worse operationally than quite a few businesses we competed with, but we had more money. And if I have like five times more money and I'm twenty percent less efficient, I'm still gonna win. I think that is such an important point. I think that a lot of founders that don't sell themselves the way you're describing. I I'm working with one literally right now and it he feels the imposter syndrome so much, even though he's really good. But exact he he can't it's hard for him to tell someone, I'm gonna go I am a great I'm great and I did all these amazing things. And to your point about the coding Olympia, the the person just probably has low ego and to them it's like I'm not gonna go and pound my chest. But to your point when it comes to this game, specifically fundraising, you're competing with a lot of other people who are pounding their chest and and and you have a short you just said it, five minutes. Fi five minutes. And that y every VC I talk to, five minutes, ten minutes, the num no one's telling me thirty minutes. No one's telling everyone is saying these short one person said two minutes. Like you have that much time to stand out. Mm-hmm. And I think it's sometimes, you know, these are the stories like I had a guy once, it was actually on the recruiting side, who had a story that he worked at some amusement park and there was a broken carousel, and the producer told them they eat a week to send like one pin that was missing. So he basically jumped into the car, drove all night, bought this pin somewhere and brought it back and the carousel was working the next day. And I mean this is kind of it's a silly story, yeah, but this kind of shows you you have the The agency, you have this different attitude that when something needs to be done, you just get it done. Yeah. And and when you hear this kind of story, you're like immediately interested in a in a person. Like it's like, this guy actually has what it takes to to get the tough stuff done. Yeah. Yeah, I think I think you know, you we we've talked you and I we we one of the deals that we did together, that also my children did, first angel investment for them was was nanogram. and when you introduced me to the founders, I mean, it was it was that. It was actually everything within the first five minutes, and they were good at telling their backstory and their experience with Roblox and you know, doing all that. That that for me was a great example of the backstory and the expertise and the something unique and and actually in their case something unique especially to what they're building. Like that was within five I don't know anything about mobile game. I I know literally nothing, you know, but it didn't matter because you talk to them and you're well, they definitely know what they're doing and they definitely have a unique backstory. And so I I I you've introduced me to a number of founders where when I meet them I can see that that's the pattern that you're kind of looking for. To your point, you know, the person who had the business at seven, eight years old. And you know, they're talk they're 20-something, they're on their third company, you know. And it's it's it I can see that that pattern. I think the the one thing I remember from my first call with Albert, the the founder of Nanogram, he was he did some kind of program in his primary school when he was selling Lego figures that he painted himself and these were like collectibles. So he kind of made this market. I I don't remember the details, it was like super interesting. But and then when you speak with all the founders, they had entrepreneurial like achievements, like building the community, building the games which made a lot of money, etc., when they were in their early teens. Yeah. So that's that's exactly and my my colleagues in the fan make fun that this is like my type of founder. It's basically, you know, it's your third business when you're twenty. but that's that's very often the case. That's not the only case I do, but that's really very often the case. Yeah. what what is it for you in terms so so now you have this, you want you see this about the founder, you understand that. How long from that first five minutes where you're now kind of locked in to actually making an investment? Like what what does that period of time look like for you? So I would say on average it's around two weeks and we had cases where it was like forty eight hours, but this was mostly driven by like very competitive and quick processes. And I think it's not wise to do it for both sides, because you can have great impression on one call and and then they can have also great impression of me. But then there are other people in the fonts, like it's worth to see what type of value you can deliver, like what type of introductions you can actually make. And also for me to get feedback from my network that my judgment was kind of consistent. And you know, in in our font we call it like wisdom of the crowd. It's basically If I love the founder and my two partners and one of our advisors have the same feeling, it's probably a go. Yeah. And and there is very low likelihood that like three or four people will will be mistaken. if we can do it quickly, within a week, and all the other things make sense, then then it's totally doable. And the other point is, you know, today no Our top performing company right now from from our from our recent fund is called Victor.com. Yeah. They got to fifty million dollars. Great product. Great product. In like seven months. Yeah. Amazing product. Like you know, my productivity increased a lot thanks to thanks to Victor. And you know, when we invested, they were building a different product. So I'd have spent. Yeah, yeah, they were building a fixer competitor. So What we saw was amazing team that their product was better than Fixer, but Fixer was first to the market. Yeah. And they launched Victor like half a year after our investment. so you can spend a month analyzing the the market. Yeah. And then it doesn't make sense. Yeah. We had a case of a founder that I really understood the market well. I had some doubts whether the opportunity is big enough. I liked him a lot. And when I had a call with him, when I really wanted to discuss that we're interested, he told me, Look, me, I'm gonna be honest. I'm killing this project in a week. It's like too small of an opportunity. And it was actually even a better signal for me that he's like really hungry to like find something that can be big. And his logic was I'm twenty five, I have ten years to build something big. Like if I'm gonna get stuck at this business, I'm I'm not gonna achieve that. Yeah. And all the time I spent on analyzing the market, client interviews, etc., was effectively wasted. Yeah. So the reason we do that is to validate whether what the founder is doing about the market is doing correctly. So whether he's doing right job, whether his market discovery, client discovery is good quality, or is he doing a shitty job just good at pitching? Have you ever gone back and correlated the amount of time you spent making decision you know, d deciding on a company and then the success of that? So that's actually quite funny. We had a strategic offside this summer and we took like last two or three years. And I'm the one who on one hand in the fund has the shortest average time to commit, but the longest time on sitting on the companies. So the I tend and that that's my problem to spend a lot of time on the companies that I see something interesting but they're not there and then eventually passing on them. So we're pushing ourselves right now that you either are able to take the decision in two weeks, or it means you're not excited enough or the company is not good enough to to invest in if you if you cannot do it in this two weeks window. but the the interesting thing was when we d looked at the portfolio and the time to invest, there were In most cases the companies we invested in very quickly performed better. we had two exceptions, but these exceptions was not us taking time to take our decision. It was the founders being convinced to take our money. So in Victor it took like two or three months, but we were pretty pretty fast to take like our decision. And we had like one another case where we were almost like immediately decided and and the founder Needed some time to to decide whether he wants to do around. What what is it that you I mean, I have met a lot of your founders. I've I've presented your founder day. what is it that they see in you? Like what are you pitching them as your value add to them? so we are a fund that's focusing on the Central Eastern Europe region. And what we can say is like Look, first of all, we know your context. Even if you're like a diaspora living in New York or in SF, maybe someday you're gonna build an R D center in in Warsaw, you have like amazing talent at a quarter of a price. we know how like your context, we know how you like to work, and we're the same. Like when our support is needed, we're gonna get our job done. if our support is not needed We're not gonna come and just show off, okay, we're here, we'll give you some strategic advice, etc. And we have quite a few companies where we have multiple US co investors, we still do the most introductions to potential clients in the US. or or potential candidates to to get hired. And I think that's something when they call the other the other founders they hear. And it really works. Yeah. Like we very much force them to speak to at least one or two of our founders. And I think that's the basic part of the due diligence the founders should do of of on investor. Just call three or four founders that get backing from from the fund. Yeah. I I well I I said in the intro and I I meant it sincerely. I mean, I see the way that you when you when you're talking to a company, even frankly in some cases before you even invest. in the company and you're sending them to me, you're sending them to other people, you're asking us to meet with them, give advice, you know, give you the the feedback like and and I think I think founders feel that. You know, I I I say this a lot of times with the funds like yours, which is also a startup, quote unquote startup, you know, there you have a different energy than the established fund that's, you know, on this fifth iteration of their team, you know, and they've they've been around and they have the big name and they have all that and they're multi stage and they're multi region and they're multi like you you guys really I feel, I feel at least in in the in the way that I see it with your founders, like you're hustling for them like you work at the company. We totally do. And it's basically, you know, if you're a founder and let's assume you have a termship from Andreessen and from Inovo. Obviously Andreasen is gonna help you with the brand and with the hires, but then you're gonna be it's very hard for you to be in the top five percent of what Andresen has. Yeah. So and we're gonna fight for you like there's no tomorrow. Yeah, because very likely like you're gonna be the important company for for that that Point is an important point also. I'm I these points are the things that I I want founders to hear because these are the things where they're like, my God, but I have this great brand and I have this great, you know, this person. And I tell them they're unless you are literally like you in the top five percent, they don't care. Like for a fund of that size, it it literally doesn't matter. I see it with some of the funds that I've worked with in the past that friends of mine work with. And if their company starts to take off, you even see partners that aren't even even involved in the company. They're like, Can I come to board meetings? Can I come? And then they don't even want to come to your board meeting because you're in the 50 percentile, you know? But the one that's in the top five, there's like 47 people in the board meeting just so they can say they touch the company in some in some way, you know? And and I I I I think as of I think I understand why that's the case. I'm not saying I agree with it, but I think I understand why that's the case at those types of funds. But but people feel like the brand is like they're gonna somehow you you get Andreessen and now you're successful, like just because of that, you know, versus like the the investor is one piece one piece of that puzzle. No, I mean obviously if you are supposed to hire somebody for like VP sales position and he's backed by Andreessen, he's more likely to join than than when he's backed by Novlov. And and and it opens a couple of doors for potentially some enterprise clients where They need some kind of validation that the company is serious and it's not gonna go out of business. which actually it's a question mark whether a big fan is is actually helpful in in this matter. And then, you know, some people think okay, they're multi stage. If I gonna do well, then they're gonna give me more money. But if you're gonna do well, everybody will give you money. Exactly, exactly. It's like I actually don't think enterprise customers know who's invested in most of the companies they buy from. That's that's something I hear from people and I don't I am even as a small company, most enterprises, like if you're selling to the mar the IT guy, he doesn't know who back, he doesn't care. Like he he's not paying attention to that stuff, you know. I think maybe if you're talking about multi million dollar deals and you're selling to big, big, big enterprise, you know, like and you're selling to the CIO, maybe, maybe. But even then, I I don't know if they know who backs you. But I I agree with what you're saying. I I'm curious, you know, your region Can you talk a little bit about the region? Because when we've talked, I I do feel like it's undergone a pretty big change, especially last two, three years. I don't I don't know if it's the AI kind of revolution that's doing, I don't know if it's just time, but can you talk about maybe the region as you've seen it as an operator now as an to an investor? Really? So can we look at the whole decade that that I was in? Because I think When when I joined there was no venture capital and basically most of the like great companies that were built were were built like for private money and then going to like local stock exchange, etc. not no VC financing. And you had amazing companies being built that won like local markets. Like we have Allegro, which is like an Amazon for Poland, with like fifty percent of Polish e-commerce. It's a huge company, IPO, Like worth over 10 billion. Then we have Inpost, which was the logistical backbone for Poland that was like built in 10 or 15 years. They're probably the best, most technologically advanced logistical company in the world. They invented these parcel lockers. Now they are rolling out throughout Europe. and in the last like decade, we started having the companies that were building in the SAS market, but basically not inventing something very new, but rather replicating the models that existed. So the big successes were like GroupAprasu, which is a job marketplace, where Doc Planner, which is basically a marketplace for doctors, was Booksey, which is a marketplace for beauty, which was basically after the booking.com and and the food and like the most obvious markets were done, you could have attacked the the other markets where where no clear leader was. And These are like businesses worth like billions of dollars, like also Prep Lee, the marketplace for for tutors from our portfolio, or bold like amazing company like doing better in Europe than than Uber. And something that changed in the in the last few years, like first of all, if you look at open AI, like key engineers, the founding engineers, like a third of them were coming from our region, like mostly from Poland. And then if you look at this like coding Olympiads or computer science Olympiads, we have the biggest like per capita number of medalists. So we have a lot of smart people on the like mathematical side. And these are the people who are very important if you wanna build in AI. So they used to historically go to like Google's or Jane Streets or hedge funds and and so on or continued a career at the university. Now they saw you can actually solve a more interesting problems when you join startups that are trying to build a meaningful tech breakthrough. And obviously, you know, we have 11 labs which in five years got to like 20 billion valuation, which it's the third most valuable company like founded by by Polish people. It's like only our national bank, it's like bigger. And it's like the third or or fourth like most valuable European tech company. It's amazing. It happened in like four or five years. And Now people see that. Yeah, now you can see, you know, you see all these early employees that their ASOP is worth now millions or tens of millions of dollars. and that's why people want to build more ambitious things. So now we see more and more companies that basically want to build the the next frontier of technology. Like Victor was Victor built the AI employee category, like anthropic followed. Yeah. It's not like we copied something or or whatsoever. Like we have Pathway that's building a post-transformer infrastructure. Like they're they're gonna reinvent potentially how all the models are are are done. like that's absolutely massive. Like Pathway is a case where they move to the Silicon Valley because of you need to be like close to the other labs in order to iterate more quickly. But also now on the physical AI and robotics space in Hungary, in Poland, you have a lot of tears that you cannot really compete with like Chinese on the hardware side, but on the software computer visual side you you actually can. And this is the next frontier. And the fun fact what I see is when we speak to these like brightest guys, they're like whatever is in software is boring. Now I'm thinking about physical AI. Yeah. Because in software it's gonna be grabbed like all the all the interesting bets are taken. so I want to make better on physical AA because this is actually exciting. Yeah. So I think we're gonna see a lot of great companies and actually more and more from our region will be like the first to category the category defining. Do you do you is the infrastructure as you and I have talked, I haven't been to Warsaw, I promise I'm coming, but is the infrastructure has do you feel it in the city? Like do you feel kind of this evolution of people because I feel at least for me, I I think that forever, Polish engineering, like people were coming to Poland, putting putting engineering, you know, teams there, all of that. but it it feels at least from afar, from the people I know there, the people you've introduced me to, there's like a different thing happening because it's not it's not just the engineering. It's all the other pieces as well. And it's the founder communities and there's the meetups and there's office space. Like I'm just curious, I haven't seen that evolution. I'm curious if that's something that's happening there. You know, I I used to live in Berlin. I came back to Poland like around ten years ago. And back then I think Warsaw was just a little bit behind for Berlin. Now I think it's it's like way ahead. And it's amazing place to do business. And you can see that by Polish people coming back, like if you look at a migration net to UK. It's actually in favor for Poland. So more people are moving back than going to the UK. And it's because of the interesting stuff you can do. Some people told me in London it's already done, you just execute the playbooks. In Poland, you can still build stuff. And then, you know, we recently had like top Palantir people willing not Polish people willing to move to Poland to actually build there. With more and more people from like Western European cities moving to Poland because of a availability of talent and the opportunities. That's like completely new. Like it hasn't been happening for the last years. And I think we're not making enough PR because if you look at the quality of life, you know, it's like in Warsaw a single girl can go to a party and come back at 2 a.m. at night walking and she will be safe. I don't think in most of the European cities and and and and some US cities it's it's like feasible. Yeah. so this is like this safety, cleanliness, and everything on the on the top level. it's really amazing. And you know, the fact that this city effectively was built within the last 20 years, everything is new. so it's really, really working. and then if you have good quality of life, people come there and then you have this amazing talent. Like Mistral recently opened their R and D center. Wonderful AI is building like a huge team. in Poland. And more and more of companies are are opening like offices in Poland. Tallinn and Estonia used to be a thing, but Vilnius recently is like crazy. Yeah. We had a year when we did like three investment in in Lithuania, but the amount of startups there is like really huge. And it's it's like interesting because there was one company called Kilo Health, which trained a lot of people who are very strong at user acquisition. And that's one of the competences you you need in startups. So then there are now A lot of startups who are able to hire people who have amazing experience in spending hundreds of thousands of dollars on paid marketing effectively. Yep. And thanks to that they take off quickly, they raise money and and the whole ecosystem is is growing very nicely. So for for B2C, Villness is is amazing hub. So now so there's all this money flowing in, we see all the valuations, they're they're I would say they're not as crazy there as they are in the US or in the Valley or whatever. but regardless, all like the market has gotten crazy and and I feel like we are definitely in like a 2021 bubble again. I I think that some of the deals, you know, 75 million of revenue and 20, you know, 10 billion dollar valuation. And you know, it feels like the you know, the Miro days and 17 billion valuation on a hundred million of of ARR back then, then they get sold for 1.2 billion when they're doing 600 million. of ARR however many years later. I fear that. Do you think what do you think from your C are we in a bubble right now? I would say this time is different. that's the best quote for a stock investor. But what I see differently versus twenty twenty one is like right now you actually can see the exponential outcomes. So never before have you seen a company that can get to a billion in ARR in two years. Yeah. Like Hicksfield has grown it's an founder from Uzbekistan. He grew from one million to one billion in eighteen months. Yeah. And when you think about it, if you see him at twenty, getting from a million in like a quarter, and you might say paying a billion valuation would be crazy. Yeah. But if somebody is on such exponential trajectory, he's gonna pay that off. Yeah. If you look back at people who backed anthropic free revenue. You probably would think they paid crazy amount of of money. Now they are heroes. And then if you make ten such bets, you're gonna end up with a couple that in hindsight will look foolish. Yeah. But Miro was a bet that it's gonna be a generational company. Like it was on under 33. It ended up not being this, but they got to six hundred million. I know. I think they actually did from a revenue perspective. You know It's an amazing company. I 600 million. That's an amazing company, amazing product, amazing company. Just the outcome. Yeah. So and people who invested there will get their money back. Yeah, they're not losing money. Yeah, because they have liquidation preference. So it's not a bad deal for them, but it's not a you know, I also have a couple of companies where I invested. The companies like tripled in revenue, grew profitable, and I'm selling them with like a slight profit, like 10 20% profit. Yeah. So you might say, I really overpaid. By my bet was this company are gonna grow ten to twenty X. This bet didn't work. But you know, in venture, you basically have one or two companies that will return your whole fund. You're looking for this. So it's kind of if you're paying a five hundred million valuation, it doesn't mean this company is worth five hundred million. Yeah. If you look at the the the Victorcom case again. Like Axel paid like four hundred million, yeah, when the company had like ten million in revenue. You would say they were crazy, yeah? But then they have fifty million today, three months post investment, they paid less than ten times ARR. Yeah. Right. That's quite decent. Yeah. But what you said what you said there, I think about, you know, one two companies, you know, returning one company returning the fund many times over. I think back to the founder, because again I I speaking to the founder, I think this goes back to what we started this whole thing around storytelling, because when you're in front of the investor, the only thing they're gauging is whether your company I think you tell me if I'm wrong, they're gauging whether your company is going to be the company that returns the fund. And if there is no if if they can't squint and see that your company is going to return the fund multiple times over. They're not investing. Like that's not their their business, right? I th I think this is again, this literally goes back to the beginning of this conversation, which is you have the founders who are like, I have impossi I can't say that I'm gonna do that. How am I gonna do build that kind of company, a billion of revenue in 18 months? That sounds impossible. But the thing is is that that is happening, actually. Real companies are doing that. And if they don't if an investor doesn't feel like you could be that, could be that. Well. why would they make that bet? I mean it it's i they need it to be one of is it I don't know that I when I talk to investors, even when I've interviewed them, a lot of them are like, don't founders know that? And I'm like, I don't I think you're giving too much credit. You know, first time founder who's not in this business, it it you don't fully understand the dynamics on the other side of the table. A D? I mean you need to understand to what type of font you're talking to. Yeah. Because there are if you have a smaller font, they need like a smaller outcome. So some people have more like private equity mindset and they are happy with a 10x outcome that's like fairly safer. And and there are such funds, yeah. I think specifically now in segments like AI rollups, for example, or if there is still a marketplace to be built, people look at it, okay, that's actually a business case that may n might not like return my fund, but will very likely do a a very high return on what I invest. But then The problem for the founders is, you know, my colleague is doing a million in revenue and he got like whatever, fifty million valuation. Why I should also aim for the same. But if his ceiling is like ten times lower, he's not gonna get this type of valuation because then the math won't work and you need to understand the game you're playing. And I think the founders that do, then they can play the fundraising really, really well. And there's another point. It's not only that I need to believe that this company will be the generational company. I need to believe that the guys that are investing at series A will actually be excited about this case as well. Yeah. So I kind of know and feel what they're looking at, which markets they find attractive, what metrics they will need to hit. And so my job is kind of to figure out okay, does it have the generational potential? If yes, is Like what is their plan sellable for series A so they can raise the next twenty million for the next round? Because if it's not and this is the paradox we discussed on it a little bit, like the best bets are contrarian, but if you're contrarian and nobody will give them money in a year from now for series A, even if you're right, they're just gonna fail. So it ends up being a type of consensus play, but It's probably the only play you can you can play today. Like you need to get these companies that will target the big and obvious markets that are like crazy competitive and will just outperform others. And like you s I mean, I I think there's a lot of conversation going on about this. I've been saying it for a long time. The moat the moat is kind of quickly going away, any moat. And actually, unfortunately, to build these generational companies, capital is moat. I mean, you know, that that Like you s you said that before, and I think that it sucks to say that because it kind of you know, you wanna talk and especially me, like how do we run the company the best way? How do we do this? How do we do this? And there's some level where it's just if you're twenty percent less operationally efficient or effective, but you have five times more money, the money most likely is gonna win out, you know. and and I think that that's you can also subsidize. I mean, we're seeing this with I mean, we're seeing this with so many companies today. You can also subsidize all the customer acquisition, all the usage. You know, you can run like many of the coding agents at negative gross margin. I mean, which sounds absurd, but you can run at negative gross margin, you know, for a long time. I think the food delivery companies, right? I mean, that's what they were running at. How did DoorDash end up being the one left standing? They just out lasted everyone else with like, you know, losing money every order until everyone else just couldn't do it anymore. You know, I think that that's what I feel. But I think if you look at it now, like Bessemer has did this nice classification of the supernova type of companies that are getting to like hundred million in one and a half year, and they can be gross margin negative. And it's like you have twenty four hours, yeah, and and you can only do limited number of things. So now imagine there are two founders. One will optimize his model usage to have good economics. The other will just grab the market like crazy, losing money on every customer. Yeah. And in a year from now, founder A has a good gross margin and one thousand customers. Founder B is losing money on every client, but he has one hundred thousand clients and he's able to hire five people to solve this problem. Yeah. And the fact he burned like ten million on inference doesn't matter in the long run, because he's the one that that won. Yeah. And also I think right now distribution is becoming in mode. Like you need to have You need to be able to build like world class tech and and be really great, great at it, but you need to be able to do world class distribution. And then the question is like what economics are acceptable. And I think some of the most aggressive companies have an approach that they can actually run on a like a return on ads spent of zero on a on a lifetime basis. Because they're like, if we are able to win this customer, our competitors will not win them. And then you know you will Develop additional products, etc. etc. Yeah, you might optimize the models and and so on. Yeah. And then you know, once you are ahead of them, you will have this scale advantage. You will be able to hire people who will optimize like routing to cheaper models, or maybe like some additional use cases, or you will have actually time to think about optimizing pricing and so on. I think this is definitely happening. I mean, right? This is the Uber Lyft story. This is the right now I think in the legal AI space this is definitely happening. you know, and you see it just doesn't matter. There's only so many law firms in the world. So if Harvey, Lagora, whatever they have to pay to acquire the customer, to your point it's a good point. You make a good point of whatever it costs, that law firm is probably not going to the other one, you know, if I get them locked in. You know, it's it's so anyway, yeah, it's an interesting It's a scary, you're literally like that's like the true like rocket ship that could burn and go up in flames, but if it doesn't, you're going to the moon. You know, it's like you're running really close to the something happens in the macro world, something happens and and you're doing that. You have to either continue to be able to sustain doing that or you you you you're kind of you you know, you're playing with fire a little bit. But but all the companies that we think about, the supernovas, seems like they're all doing that. But I think, you know, from the founder perspective, you're entering a very like, let's assume you're going to decide whether you wanna join this race, and it's basically if you're not winning there, you're screwed. Like you're gonna have a tough time. And you know, if you're not at this like top trajectory, your gross margin is negative, you're not growing as fast as you assumed, you're not gonna raise more money, you're not gonna even have a chance to make the unit economics work. Like you're you you're going out yeah in in like two three years. And you know, I I actually have a workshop with some hackathon winners tomorrow, whether it makes more sense to bootstrap or to do VC. There are a few people who say that expected value of your stake as a founder statistically is higher if you bootstrap. Because of so many fail cases in the VC. And you know if you have like Miro was a good case, but I think Airtable was the the liquidation preference stack was close to what the the final price was. In the end, I think founders are gonna do well, otherwise they wouldn't do the deal. But they're not gonna do so well. But I recently see, you know, especially now in the times of AI, you can raise very little, like do the seat strapping, like raise like a million, get to a company with 10 million ARR, like 50% EBITDA margin. And everybody should be happy, especially the founder. And you know, very often I I recently the founder who's like targeting a niche of like one thousand businesses in Poland, yeah, and he's like, No, nobody serious is gonna attack this. And it's like a clear niche, yeah. And I'm gonna grab like twenty percent of this market and it's gonna like be a great passive income going forward. Like this component is gonna be maintained with just a few hours of of my engagement. So you know when you're starting a company, it's it's kind of the the niche segment place with very limited funding might be a good idea for like you as a founder personally, unless you really wanna build a generational company. Yeah, if you want, come to me. what do you what do you think what do you think that founders don't understand about your job or being a VC in general? I think a lot of founders believe they should show profitability in the plan, which is something I don't like. I think their perspective that, hey, we already see that there are some people that might want to buy us is a good signal that we will have an exit. But for us an exit at like fifty million quickly is it it it's a backup, not not a scenario we want. And I think a lot of founders think like my job is to come Evaluate whether it's a good business, like almost like passing the test. Yeah. And my job is actually about finding the anomalies. Yeah. It's not a logical business. It's like you need to like the the companies that really break out that become decorns are anomalies. Yeah, that's not a a regular course of action. So basically the question is like if this is a guy that's like very strong and is doing everything kind of by the book and executing well why would these like standard inputs give non standard outputs yeah so that might actually be I want people who can show they're doing something in a different way. Why I'm I feel like in in all the conversations you and I have had you love being an investor. Feels like that. why? I'm not smart enough to be founder, so you know, I have great pleasure to to work with with these people. And you know, we I don't have my hoodie, but we have on our merch like we love founders and we really do. And I think it's basically Meeting this person who believes he can change the world and then seeing them making it happen and being somebody who can help them with one or two roadblocks on the way is like very, very fulfilling. And from the very non-romantic standpoint, if you look at it, if you're a founder and you have like two percent chance of hitting this dream company generational output, in ninety-eight percent of you will be 90% of the cases he will be screwed. Yeah. If I have 50 sad bats, like unless I do city job, I should have one, two or three cases that will go really, really well. And obviously my economical output from this will be worse than this one founder, but it will be good enough. Great way to end this. Thank you so much for doing this with me. I really enjoy it and and and I've enjoyed getting to know you and your companies and everything. So Thank you for doing this with me. David, like thanks a lot. And also you know, thanks for all the support and insight you've shared with the companies. It's like if somebody is coming to New York, that's probably the best address to to knock on the door. if you can only make it into his busy calendar. Thank you so much for those of you listening. 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