The return of the Consumer Gold Rush? What Chi-Hua Chien is betting on next

**Connie Loizos** (0:01)
Hi, I'm Connie Loizos.

**Alex Gove** (0:02)
And this is Alex Gove.

**Connie Loizos** (0:03)
And this is Strictly VC Download.
Hi, and welcome back to Strictly VC Download. This week, our guest is Chi-Hua Chien. Chi-Hua has spent more than two decades inside Silicon Valley's biggest bets, beginning his career as a young associate at Accel in the mid-2000s, where he was an early champion of the firm's investment in a scrappy Stanford startup called Facebook. He went on to a partnership at Kleiner Perkins before co-founding Goodwater Capital, a firm built entirely around consumer and prosumer technology, a focus that has made Goodwater an outlier and a venture landscape increasingly obsessed with AI infrastructure. In his conversation, Chi-Hua argues that the real opportunity in AI won't be captured by the infrastructure giants building models and chips, but by the application layer built on top of them, just as it played out in the PC, web, and mobile eras. He digs into why valuations are spiking so quickly. What's driving the new wave of hyper-personalization, entertainment, and health care startups? Why incumbents are now faster copycats than ever before? And why, after years of digital-only living, he sees a swing back toward real-world in-person experiences as one of the biggest opportunities in consumer tech. We really enjoyed talking to him. We hope you will enjoy the conversation, and we'll see you back here next week.
Well, Chi-Hua, so nice to talk to you. I just wanted to start off with something that's in the news. Well, two things, actually. One, what do you make of the VCs going after each other on social media?
Not just VCs, but founders going after VCs. So I guess the VC versus VC has been happening in recent years. You've got KOSLA fighting with Mark Andreessen. But I haven't seen founders come out in full force against VCs, or talking about their horror stories. And I was a little bit like, what's changed out there? Just curious what your thoughts were.

**Chi-Hua Chien** (2:10)
Well, I think it's part of the memification of everything, right? You're seeing what's happening in the political realm bleeding over into the business side. And it's probably also the sign of some peakiness in the market. Back in the 90s, there was a website called EFT Company, where you could log on as an entrepreneur and give your feedback on specific investors, by name, by firm, specific anecdotes.
This type of thing happens every now and again. And probably in the venture community, the reason that you're seeing some of these outspoken investors talking more publicly is because venture firms have largely vertically integrated. So the really big ones have enough capital that they're not necessarily looking for syndicate partners. They are investing in companies early and then adding more and more capital in later rounds from their own funds.
So there used to be the quorum or a tradition around wanting to preserve good relationships with other co-investors because you got to work with them as syndicate partners at different points along the line. As the firms have gotten bigger and vertically integrated, there's less of that need.

**Connie Loizos** (3:23)
OK, speaking of these firms that are vertically integrated, the other mini saga that just bubbled up over the weekend was the CEO of Mercure, Brendan Foody, underscoring that firms and he's called up Sequoia Capital specifically for doing this are becoming more comfortable with fast follow rounds, which means they invest a chunk of money at a particular valuation and a smaller amount at a higher valuation surrounded potentially by co-investors. And the higher valuation becomes sort of the headline valuation that everybody hears about even though really the bulk of the money was raised at a much lower valuation.
It's not illegal. I also don't really know how new this is or if outsiders were just sort of caught on to this a little bit more. But again, wondering what your thoughts are.

**Chi-Hua Chien** (4:10)
Yeah, I think it's been going on for quite some time. It's a maybe sharper illustration of the fact that the best companies raise successive rounds very quickly now. It used to be there's a year and a half to two years between rounds. Now there might only be three or six months between rounds and the valuations change really quickly. So you go from three or six months between rounds to three or six days between rounds and everything is getting compressed. It is also a function of the fact that valuations are being marketed very aggressively now as a way of demonstrating market leadership, attracting talent, potentially blocking out competition. All of those things are important in a highly competitive environment where these companies are growing very quickly. And so the companies that are raising capital the fastest are using their valuation as a way to signal early market leadership.