514. AI's Effect on the Demand Curve, Investing in Durable Barriers, Large Cap vs. Small Cap Seed Deals, and Building an Internal AI Machine (Mark Peter Davis)

**Nick Moran** (0:00)
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Now on to the episode.

**SPEAKER_2** (0:24)
Welcome to the podcast about Venture Capital, where investors and founders alike can learn how VCs make decisions and reach conviction. Your host is Nick Moran, and this is The Full Ratchet.

**Nick Moran** (0:40)
Mark Peter Davis joins us today from New York City. He's the founder and managing partner at Interplay, a seed and Series A stage venture firm, studio and multifamily office. Before founding Interplay, Mark was an investor at Primary.
His investments include Coinbase, Warby Parker, Jack Pocket and Olly, amongst many others. Mark, welcome back.

**Mark Peter Davis** (1:05)
Thanks for having me.

**Nick Moran** (1:07)
It's been a decade, my man. It's been a long time.

**Mark Peter Davis** (1:09)
It's crazy. It's crazy. Did we get old?

**SPEAKER_2** (1:12)
Did that happen?

**Nick Moran** (1:14)
Well, you don't look a day older, but I've aged 20 years.

**SPEAKER_2** (1:16)
Yeah, you're looking pretty good too. We're survived.

**Nick Moran** (1:20)
All right, so it's been a decade back then. I mean, it was a fun episode. You gave me a lot of good advice in the early days. Pre-fund one, amazing.
But back then, you argued that venture firms should build companies, not just fund them. You had a bunch of interesting takes. What I'm curious to hear to start off today is sort of what's changed most about your approach to venture in the past 10 years.

**Mark Peter Davis** (1:47)
It's a broad question in a good way. So the firm has evolved. We now have effectively five divisions that are kind of at the forefront. Core piece, still venture investing. We're typically doing early stage checks into super high growth companies around the US. We're based in New York, but we invest across the country. Part two is we have an accelerator. We work with a very small number, typically three to five a year, of pre-seed or seed stage companies that have really unique narratives and potential. We get operationally involved. We call this an accelerator because there's not really a better name for the category. Internally, we refer to it as becoming an interim co-founder. One of our partners actually embeds in the company for six months. The goal is to take as much friction out.
It's not a class program. It's mono, we mono company and interplay person and we're in it. The goal is to have a high success rate versus a high volume of companies through. That's gone really well. Part three is we have a studio.
In the studio, we are starting companies de novo completely from scratch.
We're in a way in our third thesis with that. The first thesis was service companies for startups. I started doing that at the end of 2011
We launched a bunch of companies through that cycle. Now we're also doing American dynamism companies and AI application layer companies.
Four is we have a secondaries practice now. We're helping to transact in that market. Five, if you do all this for long enough, it necessitates a family office. We have a multi-family office where we're stewarding capital for currently 14 ultra-ultra-high net worth families, and we're helping them manage their full book, top to bottom, full service operation. So those are the five pieces, and as per the name, they all have interactions with each other in very healthy and productive ways, and that's what we've been doing.

**Nick Moran** (3:57)
Unbelievable. So I suspect you've had to put together some platform and structure around this. Do you have, what, like a GP, an MD, a GM running each of these practices, or how have you structured it?

**Mark Peter Davis** (4:11)
Yeah, we're eight partner, we're eight partners currently, and so essentially each of the business lines has, and there's no hierarchy in the partners really, except for, I guess, me, but each of the business lines is a partner that's focused exclusively on that model, and then there's three of us that kind of support across, and in addition to that, we've built out a tech function and an operations function that support all five of them. So there's some scale advantages built into this that have allowed us to really streamline and build forward. I think as far as I can tell in all the conversations I've had kind of coffee and lunch with other GPs and other folks, I think we are on the absolute frontier of AI integrations.