Transcription
Think about how much of our job at YC has been decoding VC speak into English.
Yes.
Any words that aren't yes is a no, but like with all this like extra accutrants on the edges. If you get an email and it's like lots of words in it, that's a no.
Yes.
[Music] Hello, this is Dalton plus Michael and today we're going to talk about Standard Capital, the new fund by Dalton and PB. As a kind of 30 second preview, why don't you tell us a little bit about um how you decided to start this fund and why is it different?
I think to start with um as you know I give a lot of advice over the years as a YC partner on pivots.
Yes.
And one of the things I I try to do when giving someone advice about a pivot is I try to imagine of all ideas this person can work in the world where do they have the most unfair advantages? Where do they have the best network? Like I believe that every person has like a perfect idea for them and that my job is to try to pull out of any founder what their ideal idea is.
I have stolen that line.
Maybe a hundred times.
Yeah, maybe maybe a hundred times.
It's helpful especially in the sea of well I could do anything.
Yeah, there's there's too many choices. Too many choices.
But if you think about it this way, everyone has one really good idea. And so,
by the way, I love that too because it's kind of like in a really hard competition, you want to play games you're good at.
Yes.
And like the world is a really hard competition. It's like Yeah. Okay.
And so, so this is an idea that I crafted very specifically for this founding team, which is PB, myself, and Brian Berg.
Yes.
And kind of the idea is to take a lot of what makes YC work at the seed stage and apply it to the series A.
Um, the way I like to explain this is 20 years ago, I raised a seed round.
Yep.
And when I raised a seed round,
I had to get a lead investor.
Yep.
I had to get a priced round term sheet. Y I had to sell 25% of my company.
Yep.
I had to give up a board seat and it took seven months for a seed round.
For a seed round. And Michael, let me be honest.
It was a miracle. Like I'm I'm I'm so thankful.
No, I mean I really mean this.
Yeah.
Like when I think back I'm like how did I get that done?
Like I think I was just lucky or it was it was so hard.
Yes.
When you were doing it coming out of the 01
Yeah.
craziness.
Yeah.
It was a it was really hard and it was a it was basically a miracle that I got it done.
Yep.
And so when you compare that to today where there's YC anyone there the YC invented the safe.
Yes.
Um there's this really vibrant ecosystem of angel investors that are used to taking risks on on younger founders on technical founders. Like it's like totally different. And so a lot of my experience of raising a seed round not applicable not relevant in any way to founders.
Conversely I also raised a series 8 20 years ago and it was like I had to get warm interest to people. I put them in my CRM. I had to go on coffee dates to get to know people and go through this complic.
Oh, I love you know me. I love coffee with random investors.
Yeah.
That's like love that stuff.
Fill my calendar.
And and then the the crazy thing about the process that I remember and I'm sure this still stings you.
Yeah.
Is where you would spend all this time with people over weeks or months and they would like want to go out to dinner and be your best friend and talk about how great you were.
Yeah.
And then like, "Oh, you know, we're definitely coming in." And then they would like pass at the very end,
often silently.
They would ghost you.
Yes.
Um or they would be Yeah. They would be like, "Oh, this is just a preuncter. Like, we're definitely in." And then you would get like the very weird pass at the end after literally months of time and effort.
Yes.
And it was crushing and it was a huge time waste. And I felt horrible because I wasn't working on my startup when I was doing these fundraisers. I was instead said fundraising.
Well, and to that point, I was told like this was an important part of being a founder, but I'd always found it a little confusing.
Well, you weren't adding any value.
Yeah, my company was Yeah, my company was getting worse.
It's like, you know, here's a side quest and you need money, but like I feel like that was a bit of a lie. Like, oh, this side quest is going to help you with your gun. It's like,
yeah, no, it's going to get me money.
Part of why I liked YC is PG was the only person who was honest about this in his blog post which is like yeah fundraising is a waste of time don't do it like to do it as do it in as short of amount of time as possible. This is like core in the YC bible is this stuff.
Um, anyway so to complete the thought Michael that was all what I remember. Guess what?
It's the same now. Like all of the advice, all of my experience as a founder raising an A is precisely what I still hear as a YC group partner on what it's like to raise an A, which is like, yes, oh, you get this inbound from people and they act like they're they're really interested, but then you get into these really long complicated processes and most of the time
it's a lot of very complicated, flowery words, which mean no.
Yes.
Yes.
Think about how much of our job at YC has been decoding VC speak into English.
Yes.
And and again, I tell the
it's always yes and no.
Yes.
That's to tell the audience if it's not any words that aren't yes is a no, but like with all this like extra accutrants on the edges. Okay. Like if there's lots of word if you get an email and it's like lots of words in it, that's a no.
Yes.
It's so funny cuz it's like a plate full of garnishes.
Yes.
And just like a no in the middle of it. There's just a no in the plate. But they serve me this inc. Why would they spend so much time? They must be really interested.
Like no, I don't. That's just a no. That's just a regular no.
So yeah. So the process is still awkwardly slash maybe needlessly painful.
Look, if we want to humanize the investors on the other side of the table, this is just how it's always been done. So I would I would I would argue it's I don't think they're evil.
Yeah. Yeah.
But I'm use the word awkward. It's the process that has been the process since the 1980s. And so when you know Steve Jobs was raising money for Apple computer, this is the same process
that he used in the 1980s.
Um, well let's and like let's absolve them. VCs have to go to other investors to raise money.
Precisely.
And so needless to say, it's a little bit easier especially if you don't have a stellar track record to just say I'm doing it like almost you want to do something different. That's like the worst thing you could do.
Yeah.
Um, especially in an asset class that seems like it's working and blah blah blah blah.
Yeah.
And so that's the context which is look we saw what made YC work. Uh PB was was at the second demo day as an angel investor.
We should probably introduce PB a little bit more.
You should say who PB is.
Yeah. Yeah. So uh PB Paul Buhight. Um, I often tell founders that Paul Buhight gave both of my startups the single most important pieces of advice, which is crazy because it was like, you know, it was like infinite value creating the first time and then like I still remember the second time being like, wait, I think he might have just did it again.
Like what are you like what is happening?
He just drops truth truths on you, Michael. Just dropping a truth bomb.
Bang. So, um, Paul was a very early employee of of Google.
23. He was number 23.
23. Um, he was an angel investor in a lot of companies, uh, Twitch and Social Cam included.
I always respected his his style. He he, you know, he's not going to hold your hand and give you like eight hugs and be like, "Oh, how do you feel today about the experience of a startup?" He's not going to do that. But like when you give him a problem, there's like an 85% chance he will give you a better solution than you're going to come up with. And like he's been doing it for like 20 years. Like
Yeah.
I mean, it's one of those things when you meet someone that's really smart, you can just tell that they're just offering with more horsepower. Like whatever's going on.
Yes. Yes.
He's he's got a lot of horsepower up there. And so if you can kind of direct them the right way, you're going to get a you're going to get a nugget. And like you know, it turns out companies don't need like a hundred nuggets.
No.
So So to make it explicit, right? So one for Twitch, like PB inspired us to build our own video server built on top of FFmpeg, which meant that we were running our own video streaming software, which meant that our structural costs for streaming live video were 10x lower than our competitors back then. This is in the days before video ads. So, it was very hard to run a video company. And that was the difference. Like that's I mean, if you're watching live video on Twitch, like PB was the one who told Kyle,
go do that.
Let's not get going for that.
Yeah.
And and then second, um for Social Cam, we had this incredible run where we got about 30 million downloads in three months. And um PB was basically the one who told us how to kind of measure our viral loops so we could optimize it. And the second time I was wower like he said something and we were like no that's wrong PB. And then he's like have you tried it? And then I was like damn it P. Like that's when it clicked I was like you know like
he got you like you we haven't tried it cuz we're dumb. And then we tried it and and it worked. I don't want to go into details, but um it was always very interesting because like I would always think about the what I would call the PBPG continuum. Like I think founders, you know, we tell them not to shop for advice, but I think they always shop for advice. You go to different people for different things. I always feel like you go to PB to feel better about your startup. Oh PG PG, sorry. Yeah. To feel better about like you you think it's this, but it could be this, right?
And you'd be like, ah, it could be. [ __ ] yeah.
Thanks, PG. I'm great. PG thinks it can be this. Like maybe it can be right. Amazing, right? PB would not give you any of those vibes. Like he'd be real with you. It's like I remember with Social Cam, he was like, "I will never use your product." That was the first thing he said. I would never use your product and I've never told my friends to use your product. And then he he gave us the thing that made the thing worth actual money.
Um, and so PB was always like, "Give them your hardest problem."
Yeah.
And so the fact that you're you're getting to work with him and I would say honestly the fact that his talents are going to be used on companies that are a little further along when you know your hardest problem is not like oh how do I get my first user like yeah what did this investor say and like
that's pretty powerful and he was also known as somewhat of a savant in YC interviews too which is which is
a great interview
kind of um most of us who've been around for a while blur learned like our tricks. I remember being in the interview room with PB and like Idis was like I'm not going to say anything.
Yeah.
Just let him let him cook. Let him just going to watch this. I feel out of my depth.
Yeah.
So, no. So, I mean that's in that's incredible. And then you've got your old co-founder joining as well.
Brian was, you know, the CTO of IEM and he was the CTO of my second company, Mix Me Lab. So, we ran a company together for over a decade.
Yes.
And, you know, when I started YC, I introduced him to Patrick Hollison.
Okay.
Um, he became employee 70 at Stripe and he's been an engineer there the whole time um writing code you know he was reporting to the CTO of Stripe
but wait Dalton you're starting a VC fund
why would you need some like why you know we all know that you need to get Microsoft 365
Microsoft Teams
I've been having to use a lot of Microsoft Teams recently man it's not good
it's one package and what why do you need a software developer
Well, I mean, look, we saw what made YC great, which is at its core is it was a software company created by a person that loved software and didn't love people. Just kidding. Didn't love hiring a bunch of people is a nicer way to say it. Didn't love like a whole bunch of human process,
especially for things that software was good at.
Yeah. So, he would every time there was a problem at YC, PG would build software for it. And a lot of the software that we worked on for all these years can all be traced back to software that PG wrote.
Yes.
And so I think we're heavily inspired of of of having software at the very center of things.
Okay.
Yeah. I think that's such an interesting point. Like only in hindsight do I really appreciate how different it was at YC and how often we asked how can software help us?
Mhm.
And like coming out of a startup that felt like a very natural question. But talking to other investors I've realized that is one of the most unnatural questions. Like how can software help us? Well, we need to hire these young people so they can scout investors. We need lawyers. We need
a lot of investors build side projects and they're vibe coding. There's a lot of vibe coding going on now.
Yeah.
But it's core, you know, if what you're doing is you have you have an email inbox that comes with warm intros and it's sending you pitch decks.
That's not super softwareentric. Like I people have been trying to send me pitch decks and I'm like no thank you
because I'm still trained to read YC applications, right? Like we're all trained to see the the information in a very specific format and we're very good at it because all in the same format when I have to parse information of a pitch deck, it's really hard.
I think one of the funny things is like y'all are unpacking so many things where I feel like this awkward process has been created around series A is it's not obvious it makes the series A investors lives easier either.
Well, I think so much of of the classical series A investor is relationship based and reputation based where a lot of what they do is they have people they trust.
Yep.
And they trust the people that they trust to tell them who to give money to. And that's kind of the business. Again, that's not a great, you know, but that's at the end of the day, that's the that's the business.
It's just sad. Like when I hear that, it's sad because it's like, you know, for better or for worse, especially in a lot of these kind of shotgun processes, like these people don't know each other that well.
No.
And then it's no big deal. They're just gonna be on your board and they can fire you, right?
No big deal. Oh, you're you're you're just meeting a stranger and maybe they invest and then they fire you someday. Oh, yeah. That's a I'm being facicious again, but look, it's closer to the truth than not.
We have a lot of secret stories that we can never tell that we learned uh at YC around bad board members.
Yeah.
And um what was that quote? Not, this is not my quote, but I remember a founder being like, "Look, a board member is either a plus one, a zero, or a minus one. There's only a handful of plus ones in the whole world, so try to get a zero. Go for zero. Try to get a zero board member." And like, if you can get a zero, then at least you don't have the minus ones. That wasn't a joke either when that when that founder was telling the story.
It's it's so hard cuz I think that like I don't blame founders for believing that boards can help. What I do wish is that I wish there was a way for a founder to kind of be in one public board meeting.
Yeah.
Well, for context, Michael, you're on the board of Reddit.
Yeah.
Reddit on the board of Dropbox.
Yeah.
And like I just wish I could bring them into one meeting and then be like, well, this is like this is like this is like if this is winning, like what are you going to have? And if this isn't winning, what are you going to have?
But let's be clear, everyone's searching for an oracle. If you present anything in an Oracle-l like shape, well, the board will make phone calls for you. We'll recruit your executives with it. Um, and it's just so sad when people realize like there's no Oracle. Like you just kind of have to figure [ __ ] out.
Yeah.
They don't have the answers.
No.
No. Yeah. Yeah.
The best Oracle could do is probably tell you don't quit.
Yeah.
That's true. That is actually the best advice is keep going.
Yeah.
Keep going. Tomorrow will only be as painful or less painful as today most of the time.
Yeah, that's actually really good advice, you know.
Okay, so you're starting this new fund.
Yeah. So, let me just tell you the actual features. That seems because we're we're dance around. Let me here's the features.
How is it different?
Number one, you're going to apply on our website. We're creating an application process just like we had at YC, which has been the thing I've been, you know, working on all these years.
Yes.
And so, you won't need a warm intro. You don't. It'll just be a website. Anyone in the world can apply.
Put yourself in the mindset. We've seen founders invest easily a month in creating a deck, editing a deck, releasing a deck, and the deck is bad. So, it's like, hey, I shouldn't say I'm basically often the first draft of decks we see could use some improvement. How's that a
is that an really bad
but and it's not for lack of effort. Decks are hard.
Decks are hard.
Decks are hard. And this isn't like the job which is like making your users Yeah. better off.
Yeah.
So, how long should it take to fund an application?
Hour or two. Yeah. Just like you know for a lot of the YC people that get into YC, they spend like an hour on the sometimes less.
How many founders have you talked to? They're like I applied the day of the deadline 15 minutes before the deadline came due and then we got in. Especially for YC that's so early stage, right? For some extent there is a little bit of less is more.
Yeah. like like there is a little bit of like if this is early stage and you have a 50-page deck like what what could you it's pretty much all down.
Um, okay so one there'll be an application great and so the whole point is to have the time cost to a founder to be minimal.
Yes.
So the downside is minimal.
Yes.
You know no one will know you applied. You spend an hour or two filling out the application and then the upside is great, you get money fast.
Yeah. Okay. Okay.
Here, here's some of the other features. Number two, the reason it's called standard capital is that we're creating a standard series A term sheet.
YC created the safe and it's just on our website.
Whoa. Whoa. So, I don't have to spend $250,000 with my lawyers.
Well, they might still try to bill you.
I'm But what's cool is you can just anyone in the world can go look at the safe document.
Yeah.
and know what the terms are before you talk to any investors before anyone applies to Standard Capital. They can just go read our our term sheet. They can read our terms.
I love that.
Isn't that cool? And so you'll know exactly what the deal is before you apply instead of it being this opaque thing where they show you the terms at the very end of the process after you've said yes.
Well, that's the crazy thing. It's like they show you like some terms in the term sheet.
Yeah. And then because obviously as a founder you've had time to go to law school, they show you this like huge document that's full of like things that they've spent a lot of time thinking about and you haven't and you're at the end of the process. So what are you going to do? Tell them no.
Yeah. Like you have no leverage.
You already signed.
It's like it's awkward. It's time consuming and stressful and and no one benefits but I guess the lawyers benefit but other than that like no one really enjoys that process. So so again it's called standard capital because it's the standard series term sheet. The term sheet will be on the website. You can see it before you apply.
The other thing that's super cool, yes, is that the standard deal will be for 10% of the company.
Yes.
U for our lead check. And then the founder as part of the application will choose their price of how much money they want to raise from us in exchange for 10%.
So picture a text box where you can type in six yeah $6 million in exchange for 10% of the company. And that's just part of the application. You're just filling it out. you're like, "Okay, six, you know, seven."
How often have we sat down with a founder and they've said, "Well, I think I need this much money, but should I ask for this much money so that they can do this? And then if I ask for a smaller amount, then I get multiple people bid and the and it's this [ __ ] like
it's used car sales. It's it's like it's a used car thing. It's like going to the market and bartering at the flea market.
Literally,
I don't the flea market's easy. You get the deal done that day. It's It's true. It's like such a weird awkward Again, I'm going to use that word awkward. It's a very awkward process to do a negotiation like it's like the olden times.
Yes.
Because founders always ask me, I don't know if they ask you this, but they're like, Dalton, what's the equation to determine our valuation? And I'm like, founder, I'm going to
It's like I'm telling them Santa Claus isn't real. Let me be real with you. There's no equation. Everyone just makes up numbers.
Yep.
And you make up a number and they make up a number. And you keep making up numbers till somehow there's an equilibrium and then the deal's done.
Yep.
And they're shocked. Founders are shocked to hear that's actually the science behind this stuff.
Well, isn't it, you know, 25 times forward estimated revenue.
Not at an early stage. When you're when you're a series,
whatever. Yeah.
Basically public company.
Yeah. But no, in the early stage, this stuff is all made up.
So that's I the reason why I think that's interesting as well is it reflects so much what we were telling founders at YC, which is like you set your own price.
Yeah.
So this is we're designing something that is legible to YC founders cuz at demo day we tell the founders set your cap. This is my cap. You tell investors the cap and they're either in or out.
Yes.
So do you see how this is extremely like intuitively like I'm I'm designing an intuitive process.
Yes.
For YC folks.
Yes.
Fill out an application standard term sheet.
Yep.
Name your own price.
Yep.
Um, we're going to have a quality of service where it'll tell you how many days before you get a firm yes or no from us.
That's that's impossible to do.
I know. How could you ever? There's vacations.
There's a hot deal you have to chase.
Yeah. Because imagine when you were founder, Michael, imagine if someone could actually promise you by what date that you would know they were confirmatively in or out. Even if they weren't, even if it's a no, what a gift to know where you stand versus just getting stretched out. Oh, I need one more meeting. Oh, I need to schedule the partner meeting. Oh, I need to do that. There's always these extra steps that get added at the very end. It's just so weird because like I'm gonna say if slash when this works and people tell the stories about how like people are gonna be like it never this isn't how it was. Delton you must be exaggerating like this is not like why how how did companies even happen if they had to go through this and sometimes I think like companies succeed despite this [ __ ]
Um, yes, that's a that's a good way to say this is a ne this has always been a necessary evil.
Yes, still is kind of a necessary evil, but there's some hair on the process and you know this is what founders like to talk about when they get together is like all their horror stories. God knows I have some.
I think it's been so interesting because I think oftent times I'll talk to a VC and they will say our process is amazing.
Y
and then I will be like I have talked to founders who've pitched your firm.
Yeah.
Um, there's one firm was like went to a partner meeting, full partnership meeting, no contact for two weeks. They were thinking about it. Like I know they weren't thinking about it.
But um, it's it's almost almost they're blind.
Yeah.
And like to lightly defend investors, I think that there's no upside for anyone ever telling you to your face they don't like your process and that they don't appreciate it. And so both sides want to preserve optionality because if you're a founder you're like I don't like you and I don't like your process and I'm mad at you. What I would never advise a founder to tell an investor that it's all downside and so I I genuinely think some of these folks aren't aware of how much psychic damage they inflict on people.
So here's the thing I let's say I'll give you that enough of these people were founders.
Yep.
They know those people know in their heart. I think the game is the game. And I'm And again, I'm sure there's people out there that are like, "Oh, well, the YC process frustrated me." What I would say about YC though,
yeah, is we always had a date we would tell you on the website when you applied where we would send you a no or a yes.
You know, it reminds me of this is a government aside. When Obama was running for president in08, one of the things that was said was that organizing the campaign was almost a test for how effective he would be as president. And I think that like the VC industry has kind of internalized this idea where it's like how you organize your fund raise and how you do these kind of like mind games is like a test on how good of a founder you're going to be. And I think that like that's maybe the idea I want to attack. Like I don't actually think that's true.
Um, and I think that, you know, and we've spoken about this at at YC, like perhaps as the need for capital reduces as AI becomes more and more powerful, I think that investors are going to have to kind of rethink this math cuz like if the need for capital halves and these processes stay this awkward, you know, I I'm working with a company that's doing $8 million in revenue and they're profitable and they're like, "Maybe we should raise a series A, maybe we shouldn't.
Yeah.
And you know, especially if it seems high pain, especially if it seems maybe not likely to succeed or have negative reputational damage. Like if you go and raise and you fund raise fails, the VCs just tell each other. Like they basically just talk all day.
Yes.
About who's raising and what's going on.
Yes.
You kind of you actually take damage.
You do.
If you try to raise and it doesn't work.
Well, and we have to advise founders. It's like you got to go you got to go away for 6 months.
Yeah.
You can't do new [ __ ] and like
let's talk about community. So we you invested in the company.
So if you think about why YC really worked, you go look at the first batch that Justin was in.
Yep.
And that Sam Alman was in.
Yep.
And it was just like six companies.
Yep.
You know, and in with the benefit of hindsight, those were some of the most important people in the world.
Yep.
And those people had a good experience and they told other people about it.
Yep.
And that ultimately the reason someone wants to be a part of YC is to opt into being a part of the community and the other founders. It's not just the advice from the partners. That's only a small part of it. It's kind of like joining the club.
Yes.
And so the community aspect is the following. And this is, you know, kind of bold. Number one,
we're not going to take a board seat.
Yep.
Founders don't want someone who might fire them. It's weird to to be begging for money from someone that might fire you.
Yeah.
It's a very very awkward situation again. and you don't really have time to get to know them well. Certainly not to pressure test your relationship.
No.
And again, there's great board members out there. I'm just saying it's a it's a it's a tricky situation.
Yes.
And instead of just saying, well, we're not going to take board seats, whatever, we're actually going to create these subgroups, kind of like group office hours at YC, where the founders will bring them together once a quarter, so once every three months,
and they will present their their company metrics and their board update type things and their biggest problems to each other. And so, it's almost like this group therapy thing.
Um, you're very familiar with, I mean, a YC if anyone's a YC lum will be familiar with group office hours. Believe it or not, PB invented group office hours. I didn't know that until you told me that.
Um, and the idea is, look, man, let's be real. Who do you respect more? Other people operating companies or trenches?
In the trenches, they're actually dealing with problems in real time.
Um, or people who just kind of repeat stories they hear from other investors or what have you. It's it's tricky. And the way I think about this, man, is Zuck has infinite resources for Meta. He could get advice from anyone in the world. Think about it. He could call someone and get them on the board of Facebook.
Yep.
Who it is he choose to put on his board and how to get advice from.
Founders,
Tony from Door Dash,
Yep.
Brian from Airbnb, Drew from Dropbox,
are all directors of Facebook. And you know, we we know this from behind the scenes. That's actually who Zuck has been consulting with on how to run Facebook as well as the AI strategy. And who did he bring in to run the whole Facebook AI strategy?
You know, the founder.
Yeah. And and these are all YC people. These are all people that we know.
Yes.
And so I really think that that is just such hard proof that ultimately the best advice you're going to get from as a founder is from other founders and from peers that you respect. And so to the extent standard capital is about curating this peer group and creating a structured way for these peers to help each other.
Yeah.
I think it's actually just a better product. If we think of this in terms of a product, I want that wearing my founder hat. I want to be a part of that thing and I don't want a board member. You don't want a recently graduated MBA who's picking up their first couple companies while their VC firm is testing whether or not they're going to be good or not.
And again, those are very nice people and I like them and I would love them to
great people
help in some way, but come on.
As a founder, that's not who you're gunning for. Like,
yeah, like that's not your dream situation of who you want advice from.
You know, I remember Pedro from Brex came in to talk to the batch and and he said a version of this. He said, "I started accelerating so much more quickly when I stopped asking investors to summarize what they saw other great founders do. And I started to just ask those founders directly, what do they do?" Most people going to YC, they're coming out of college and they have a peer group that's like this. And then you just give them this peer group that's like, "Yeah, we all want to make the next Google."
Yeah.
That's different. Like, you know, like you you just upleveled everyone's ambition. We've talked about this for years. Like the same thing doesn't quite exist for later stage folks.
Think about it. We're curating the pure group of AI builders that have product market fit like right like that's the bar to get in to this is you have to have PMF.
Yeah.
That's like pretty cool. There's not you know that's a much
Yes.
That's a much more rare thing because think about how many of the really successful folks we know they don't even have they have their peer group in the batch but they're all people are at different levels of success. Okay, this is like, wow, these people are all on my level. I think that's pretty powerful. And again, I'm super excited that we get to to to power this for people.
You know, a lot of times when I have conversations with investors, I think that they overvalue the money they're giving and they overvalue their personal advice. What I like about this is like you're creating a structure where you're almost forced to not overvalue those. Like you're almost forced to create value not in those areas.
Exactly. Yeah, we're happy to give advice, but this is the the value prop is not we we're the best advice givers. That's not the value prop at all.
No.
Right. No. And the value prop isn't like oh like the company with the biggest check always win cuz it's [ __ ] never true.
The other thing I feel like we learned from YC is PG is deeply anti-zero thinking.
Mhm.
And so the zero sum way to think about startups is there's only one good startup that started every year.
Yeah.
And that if you don't fund that one startup, you're bad.
Yes.
And he had real issues of skepticism around Y Combinator when he started it because they were like, "Oh, you're just going to fund all the bad startups."
Great model.
This doesn't make this makes this is the worst idea. Like a lot of people were like, "You should just give up, man. You're going to build a baseball team with all the worst baseball player. Like you're selecting for bad companies. Are you nuts? Okay. Seriously. And again, that really was the the public perception around it. And his point, which he's written about a lot, is that there could be more success in the world and there is not a fixed amount of successful startups.
Yes.
And there's not a fixed amount of wealth and there's not a fixed amount of growth. And that in fact, these things feed on each other. And that by funding lots of startups and funding a lot of talent.
Yes.
The net effect would be have more you know abundance in the world more growth in the world more successful startups and he was right.
Yes.
Cuz it's not like if if PG wouldn't have funded those early companies they would have gone on to work without YC. Many of them wouldn't have like been companies. Twitch like none. Reddit wouldn't exist in like there's not an parallel universe where they didn't do YC and some other investor funded those companies.
Yeah.
With this kind of nonzero sum thinking, we need more software companies.
Yes.
So, so my thesis is that there's going to be a lot more big companies than there ever were. Not one or two a year. There's going to be more.
Yes.
My thesis is also I think that a lot of the VC firms will be fine and that us funding more great founders. YC didn't kill the rest of the start because basically I think us funding more great founders is going to create more abundance and wealth in the world and this isn't zero sum thinking and it's actually disappointing how zero sum thinking is is pervaded um a lot of this industry you know especially cuz like you're not you're not seeing something profound like like like this kind of positive some thinking is why tech exists literally why this stuff works And so I think it's so awesome.
Yes.
To be able to to basically get more people funded and to have them have a really fast process. And I don't think that mean I don't think that necessarily means that every there's going to be negative side effects to to other folks. I think it's just going to be great.
So this thing's kicking off. Um, I think the last thing that I loved when you described this to me is like any software startup, this is the MVP, but you know, we got to get out there and figure out what needs to be built next. And I think that's kind of the exciting thing is that I remember we always used to say at YC, we want to try to earn our 7% every year. And so we trying to make the product better.
Yeah.
And we did every year.
It was a lot better. I mean, I think we could objectively.
Um, and so I love that you're kind of bringing your stat spirit into this.
Exactly. Because think because think about it, we're using the AI tools themselves to write the code to power this thing.
Yeah.
We are intentionally trying to use AI in every decision we make. I don't know. We're we're like treating ourselves as guinea pigs to kind of create an organization of the future and how we operate and to be self similar with our own portfolio companies.
It's how you would do this if you were operating in the new technology paradigm. You liked software.
Yeah.
Yeah. And you liked founders.
Yeah.
Which all dovtails back to the original point which is of all things I could work on like of the entire universe. What should I be doing to give myself advice to give myself office hours?
This is pretty much it. And this in and same with PB and same with Brian.
It's on the nose. So, um, as a last thing, how do they how do people find you?
standardcap.com. Uh, probably there'll be a link next to this video when we talk about it. And
there you go.
There'll just be an application and it'll all be documented and super transparent.
Okay. And the first 10 people who apply get 10 million bucks each for Michael.
I like what you did there, Dalton. Great chat. All right. Appreciate it. Thanks, Michael.
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