E438: Will Robbins on Elon Musk, AI & the Future of Silicon Valley

Will Robbins (0:00)

In a world where it's so easy and cheap to go build software and get to product market fit, where you need almost no money to spend on tokens, to write your code for you, the only thing standing between you and a fully featured product is no longer a year of engineer time, it's 50 billion tokens. If you look at the average unicorn startup, the profile looks something like some 40-something old executives, spins out, builds a company in the domain they know about. But if you wait these companies by market cap, it's a very different story.

If you look at the college and grad school dropouts, you get Facebook, you get Google, you get Airbnb, you get Stripe, you get so many others.

David Weisburd (0:33)

You're not looking for somebody with the right product or right market, you're looking for something else. What exactly are you looking for? Before we start recording, you told me that VC brands no longer matter. What did you mean by that?

Will Robbins (0:45)

There's a great irony today that I see, which within the Valley, people obsess over the relative hierarchies of different venture brands. How does Sequoia compare to Kleiner Perkins? How does your index compare to Bessemer?

To me, I find that funny because if you pull a person off the street here in New York City, they've never heard of any venture fund and they don't really care. So in a world where talent and capital access is the most important thing for a startup, then maybe which venture firm you work with matters more. But in a world where software is largely a solved problem with AI, the cost of company building have fallen so precipitously. If a distribution and real world trust network are the main constraints to AI and software percolating into the real economy, it's unclear if there's any venture brand that has a real edge there. We see a lot of firms building executive education centers where you can go pull people to a conference room and tell them all the cool things that their competitors and peers are doing with software and of course the portfolio companies of these firms. I think that works well, but the trust and the reputation doesn't transfer over. I'll give you an example. We had a portfolio company, did the first check at my last firm, Contre, about five or six years ago. They raised money from a bunch of investors, they scaled up, and they sell to insurance companies.

There's one advisor who has been, sorry to throw the other VCs under the bus, but I'm the same bucket. This one advisor who was formerly a senior executive at the US Medicaid program has been more helpful to this company than all the VCs combined. This is just one guy who had a small number of advisor shares. Why is that? It's because the government and because the insurance companies know who these Medicaid leaders are, and Medicare leaders are. They don't know who the VCs are, right? To me, this is a kind of a shocking revelation in such a large part of our economy, that the whole healthcare world can't really go pick and choose what tech solutions to use because there's just no legibility to it all.

David Weisburd (2:34)

Me and my business partner Curtis were talking about this curse of knowledge, where you forget how much you know and how insider your world perception is. Most people in the United States not only don't even know who Scott Besson is, but don't even know the position of Treasury Secretary, what it does and all these things that to me and you seems very obvious. But just to steal man your argument, arguably the number one thing that a startup needs to get right is talent. Being this talent magnet, Elon Musk famously is the best talent magnet of our generation. That's in many ways a secret sauce of how he's able to build these companies.

Don't you need the VC brands to build out the right talent early on, especially before the company itself has a brand?

Will Robbins (3:16)

I think the frontier for these companies is elsewhere now. There's a couple of reasons for that. One is that there are so many rounds being done. It used to be that five years ago, if you had a tier one brand go lead you around, you'd have a TechCrunch article, it'd have your three hours of dominance on the Twitter timeline. Everybody would read the article and talk about it and say, did we see this company that this firm led around into? But nowadays, again, industry is so mature. It's a good jungle where you see a different high profile series A announced twice a day, seemingly. So there's an inherent dilution effect through nobody's fault, but it still creates a fuzziness to the signal if there's 300 companies that all have the same signals that you do. So you can debate whether or not the brands have diluted, you can debate whether or not it's not table stakes for founders trying to go attract talent and capital and so on. But regardless, I think we can agree that's just not enough, and that the real frontier has to be either a highly differentiated unique brand, and by the way, this is why a lot of the solo capitalists have been so prominent recently and that Dylan Field is like a more unique name, is a kind of Figma CEO founder type brand than a firm.