 Live from Cube headquarters in Palo Alto, California. It's the Silicon Valley Friday Show with John Furrier. Okay, welcome to the Silicon Valley Friday Show. I'm John Furrier. We've got three great guests here talking in the next 30 minutes or so. On the top stories, most important stories here in Silicon Valley. And we've got Alan Cohen, return guest, guest host. Again, been multiple times. Great to see you. Pat Calhoun, entrepreneur and stealth. We'll find out who funded you. We'll dig into that. We'll get out of you. Of course, Tim Connors, venture capital is also an entrepreneur, started his own fund, pivot North VC. Only doing early stage, very successful. Guys, great to see you guys. So top news is the Raiders are moving to Las Vegas. The Oakland Raiders, they've moved before to LA. They've come back, you know, Al Davis is no longer around, but Vegas. What's your, I mean, you're a fan. As a season ticket holder, and I speak for all people who go to the parking lot and have our Sunday ritual there, is a dagger in the heart to the people of the Bay Area and the loyal, faithful Raider nation. I think it's possibly the worst move right up there, probably with Microsoft Bob. It's gonna be the Microsoft Bob moment for the NFL because you took the one of the most loyal, profitable sports franchises. And the Raiders, by the way, have 20,000 people who are on the waiting list for season tickets. Well, when we look back at history, it'll be the date, you know, the Raiders leaving the Bay Area will be the date of peak NFL. I think NFL, I think NFL with all the concussion issues that are legit, as well as all of the TV watching and viewership issues, millennials just aren't watching live sports. So ESPN's lost tons of subscribers. It's gonna impact my favorite set of sports was college sports, college football, as well. The next deals are gonna be lower priced than the current deals and the universities are gonna have to adjust to it. So what do you mean by that? Do you think the numbers are going up for rights for college or down? Yeah, the rights are locked in with an accelerator every year, but the viewership's going down on ESPN. Even on college. And even on college. ESPN's just losing subscribers. So I think Facebook Live actually is sitting in a really good position to come in as the savior. Do you think at Zuckerberg to kind of run in and try to buy the team and set up like Facebook Stadium, right? That would be awesome. And the commentants said like every time you score a play everybody goes like, right? Yeah, I mean, I love this conversation because it's what we do. We do live streaming. But this speaks to a generational shift that we see here in the front and center. I mean, Steve Jobs saw what the iPhone, over 10 years ago, a new generation, but now the media consumption, the expectation is different. We live, we grew up in a cable world. I remember when cable, oh my God, hundreds of channels, MTV, TBS Superstation, Atlanta Braids watching baseball from outside the region. MSG Network in New York. I mean, you got all of that awesome cable but no one watches cable anymore. That's it. And I think there's just way too much friction in it. You know, I do a bunch back at Notre Dame where I went undergrad and we have this thing called Watch ND which is a Notre Dame channel. And then we're also broadcasting on Facebook Live. We get three to seven X tune in on Facebook Live for the exact same content because every person that watches on Facebook Live has an opportunity to then like it and let their friends know about it. So I think we're going to see if I was running the Grammys or one of these live award shows, I would broadcast exclusively on Facebook Live and I think you'll have record tune in. You see in the Facebook has that tweak algorithm where you've got to get it on there and they're looking for longer form so then it kicks in your friend network and the people who like it and then it pops on their screen. You have all kinds of gamification tricks. Absolutely. And the issue right now, you know, cables tried for 20 years to get customized commercials but they've, you know, I think 8% of set top boxes can give you a customized commercial. Facebook, it's 100%. So Facebook's got this Facebook go to commercial button that they're in beta on. If everybody watching ESPN is watching on Facebook Live and they go to commercial and each of us sees an ad that's custom to us, the ad revenue goes through the roof. So subscription fees have been dominant in cable and ads have been sort of a nice adder. I think it can flip with Facebook Live. So this is Facebook's new beta feature where they're auto inserting commercials producers don't have to deal with inventory or programming. That's right. So if you have a half hour show and normally on cable TV there's eight minutes of commercials per half hour. You're not gonna, yeah. And you go to commercial. Well, with cable TV, everybody sees the same commercial. When you go to commercial on Facebook Live each viewer will see a custom commercial specific to them with all of their machine learning capabilities applied to it. So I think ad revenue per hour is going to go through the roof. And what's the impact of the content market? Tim, you and I have been following this for over 10 years. We know we've known each other. The media business certainly has changed a lot with cloud computing and all kinds of stuff that's now available. It's easy to get into the media business if you take a certain approach whether it's like what we've done with data driven and being more nimble and agile. There's a DevOps concept of content coming online. And it's about micro content sharing, multiple channels. I mean, most content producers from the old guard don't think that way. Publishers who they print magazines. And there's so much friction with all the other guys. I think you're in a good position, right? I'd love to see you launch a CNBC competitor on Facebook Live. Because I think you could drive a massive audience with that. Can we get him to fund it? Yeah, he's, we've been talking about it. I don't think we need any money. We could do a little bit of a deal right here, yeah. With Facebook monetizing all your ad revenue. We love giving Facebook all our cash. But it'll be interesting, right? Because you get, you know. They have a distribution. The key is the distribution. They have distribution. They have ubiquitous distribution, right? On every device. Distribution and viral distribution. And they have monetization. Well, we've been talking about, we're going to partner on that, Tim. So something we've been talking about that for, back in the podcasting days, doing a CNBC kind of thing. But now it's easier to get in the market and look at us here. So, okay. So the media business exchange was cited about that. Let's talk about the exciting sex appeal of augmented intelligence or artificial intelligence or alternative investments. AI is the hottest thing on the planet. And I still don't even know what it is. I went to a computer science degree and AI was less programming, object-oriented and then neural networks was more, more, you can get your arms around a neural network concept, which we did. Machine learning is obviously pretty specific. It's been around with neural networks since the 80s. There's a post that I shared on my Facebook feed called AI Misinformation Epidemic, written by this UCSD professor, now going to Carnegie Mellon, or I think he's going to go work for Amazon, I think was mentioned. Jacob, that was named something against that last name. His point is, the hype of AI is at an all-time high. I was at an IBM show, I saw one on stage, a CEO of a company saying, our new AI technology allows us to do, and he said something not profound. It was like, that's just basically predictive analytics for ad placements, like, how is that AI? Like, so guys, your thoughts on this, because you have a lot of AI washing going on, certainly clouds reel, machine learning's reel. Pat, you've been doing machine learning at ServiceNow and now your new venture. You've been doing it for a while. What's your thoughts on this? Alan and I, we worked together back in the early 2000s, and we had a startup that basically did machine learning for Wi-Fi, right? And then after that, did machine learning for security. And I think the term AI, I don't understand it either. So, I understand machine learning, I understand what that actually means, and I know how to apply it. AI to me is a mystery. Well, I mean, it's interesting, I was driving with a friend yesterday, and we were in, I know we're in Silicon Valley, showed this going to sound like the dumb comment, we're in this Tesla and put it into autonomous mode, and the car's driving 80 miles an hour, and is that artificial intelligence, or is it a bunch of algorithms taking inputs from sensors and making decisions? That's machine learning, right, effectively, right? So, I think the hype crossover between machine learning, which is kind of, I don't know, 60 years of computer science, or longer if you go back to Pythagoras, right? And the AI part is, the AI part is, I kind of like, it's the frosting, and the machine learning applied is actually the cake, and I think that's what people are kind of working their way through. With that said, look, there is a lot of data available in the world, and parsing and making valuable judgments, not just for, you know, like Joe's house of pancakes or Reineke Muffler on your Facebook feed, but those kinds of things are very attractive, every business, Illumio does that, right? We use machine learning to make decisions on whether your security policies should change, right, based on algorithms, based on stream processing. So, I think it's a great way to get funded, right? Or try to get funded, you throw the word AI and everything you do. How many AI, which is the UC? Oh my gosh, you're single one. You're single one. I just want to let you know that Illumio is the leading AI segmentation player in the market. It was Zachary Lipton, who was the guy who wrote it, and a great guy worth following, and so, but the point is, I mean, I don't, I'm not out to kill, I mean, I love the AI hype, because I think AI gives a mental model for people to see what they can't see in Internet of Things or some of these like, you know, narrow tech nuances, right? Internet of Things, what the hell does that mean, right? But you say to someone, a Tesla going 80 miles an hour, you go, oh my god, that's magic. So I think AI's got this magical vibe to it that gives a face to machine learning and some of the hard, under the hood stuff. Right, but for me, machine learning is, you're going to put the car on the highway, and based on historical data, based on algorithms that we've actually designed, the car is going to make sure that it doesn't do anything stupid. AI is, you just drop the car and let's see what happens. I'm not quite there yet. Well, I asked the IBM guy, when I was at the big, one of the fellows at the show, we were just out with IBM, I said, don't you think AI's a little bit bullshit, but nothing I'm complaining, is it promotes software and gets people excited. Yes, you've over it. And he goes, and he goes, he said, no, call it augmented intelligence. Now, I think that's your point. I think if you say, that's augmenting my driving experience with software, I'd buy that as a stricter definition, but I mean, come on, you can't complain about AI. You've been on a plane lately, the pilot's not flying at it. What's flying the plane, right? Software's flying the plane, right? Which is talking to a bunch of systems on the ground and seeing a bunch of planes around it. I think the interesting thing, the dark side of this that actually has kind of popped up is the concept of whether machines are taking jobs. And I think a lot of the hype around AI are people, I think it was Carl's Jr. this week. I'm not a big Carl's Jr. person, but I read it somewhere that within three years they're gonna have robots, I guess, making the hamburgers. And maybe they will, maybe they won't. It doesn't really matter. But so I think people are wondering, is there a next generation of software and systems that will provide, one, better set of decision making toward analytic outcomes. And number two, do things to make it cheaper. I mean, that's effectively really what people are talking about. I mean, Carl's Jr. would be like, 79 cents a burger now, or a bit more, just go up. But if you can build cars using robots, I think flipping a burger should be doable. Yeah, I think it should be pretty doable, but you don't need a lot of AI to do that, do you? I think IBM did the industry a great service by putting this cognitive marketing effort around teaching people that machines could actually help them do their jobs better. It's, you know, whatever you call it, it's working. Most of it is really basic supervised learning, statistical analysis where you've got massive amounts of digital training data, and you apply that against it. Yeah, and I think they were genius with Watson, because what they did was Watson wasn't actually this most epic set of algorithms. They used it as a marketing front end, and then made it libraries for other innovations. So if you came to IBM Watson, you tapped into natural language processing and other stuff, but it wasn't a silver bullet by itself. They used it in Catholic, then it became marketing, became cognitive. They're doing the same with blockchain, too, by the way. They're saying, hey, we're not going to be so Bitcoin. They're using blockchain as a Watson-esque-like move to say, blockchain can disrupt supply chain. Watson can disrupt federated identity. So they're creating a new model around their cloud, hopefully to give them an advantage. So I'm a skeptic, I'm a huge fan of AI and machine learning, and that's working. I'm on the skeptical end of blockchain. I think it's a technology looking for a problem to solve. Databases, databases are so performant. They're more performant than you need now, right? You're a skeptic in the sense of it's hype or unviable, or it requires an ecosystem to execute? I just don't think it's necessary. The kind of things people are trying to solve with blockchain. It all sounded good with Bitcoin, right? Decentralizing everything. Well, then everybody realized you needed audits and regulations and everything else. And so centralized databases are so performant now. You don't really need distributed blockchain, in my opinion. So I'd rather have a, I'd rather solve a real problem rather than I think that it's, you know, it's a whizzy technology, but I don't think, I think it's going to disappoint on the market opportunity. Well, this brings up the security thing I was going to waive. We'll get to the computer science thing on that thread with schools. But the security aspect's interesting with blockchain, but we were talking before we came on that the WikiLeaks announced the CIA tool that came out that they released that showed how to hack into the Cisco networks. This is huge, by the way. Even Cisco didn't even know about it. Cisco redeployed all their engineers literally overnight to try to figure out what the hell the CIA had for a hacking tool. So WikiLeaks just puts it out there. Here's the tool to hack Cisco networks. This is, this is craterable opportunity for networks. It's the crumble. Well, it's a shit storm. It's a shit storm, but it shows kind of kind of two, I think, biases. One, when you have 20 year old systems in a contemporary world, not everything is going to stand up. I also think that there's been an over rotation on what we call in cyber is offensive versus defensive. So people have not really, as the perimeter dissolved as things like Amazon arise, and we started really pushing your computing into the cloud, people didn't rethink their kind of prevention strategy, right? A lot of most of the focus and investment in cyber today is on detecting things. And when you miss on detecting, you have the shit storm that you talked about. So, yeah. But this is the point of Tim being skeptical blockchain, which I would agree with, but I also would counter that by saying, potentially, if you think outside the box, I'm like, hey, screw Cisco routers. I'm just going to now deploy a blockchain component to have full federated ledger on all access devices. So you can encrypt requests end to end and ultimately say, hey, or is that, Pat, you're shaking your head. You think that's fantasy? Pat, just say it. If you think it's fantasy, just say it. Yeah, we've been trying to figure out how to solve that problem for so many years, and yet, look at today, people are still passing a lot of unencrypted traffic, so I'm not quite there yet. Who the hell is going to solve the network problem? It's a nightmare. AWS, Amazon, Amazon and Google and Microsoft are going to solve it. Do you think the big cloud players at scale? Because they have so much data and so many different companies running on it, they can detect better than a company can on their own. I think it's going to be clear. I think it's going to be a big push, a further push. Shift to public cloud is happening in a big way, but I think it's going to be accelerated as people realize that AWS is more secure than anything you can run in your own firewall. I want to push back a little on Tim, so I actually do believe that they do have incredible capabilities, but I think there's a myth of detection, because the issue is that if you rely completely on detection, when something bad happens, you're basically screwed and this is how the bad stuff, I mean, if you work in a hospital, you wouldn't go from patient to patient without washing your hands or putting on a pair of rubber gloves. You wouldn't do that. So there is a kind of forensic hygiene that comes through prevention systems that people don't do in today's dynamic distributed and hybrid world, and the systems haven't really risen to do that, and there's two factors, one, they haven't done it, and then the second one is that enterprise software just kind of sucks, right? Meaning that the experience that people have to use systems is actually, I think, one of the biggest inhibitors to using actually good security technologies, I'll give you an example. So you were just talking a second ago about, not just blockchain, but you're talking about machine learning, you're talking about all this data. There's an enormous amount of data that has to be parsed, right? It is mind-boggling, and we're still counting on people to do things. Well, the machines have to fill in the gaps. Well, the machines have to be operated by people, and at the end of the day, I mean, even the machines, I was talking to guys at Facebook, and the fact that the amount of data that they're streaming on their platform is so massive that they have to write algorithms to protect the algorithms, the algorithms, because there's so much that they're missing that they have to use the math to statistically figure out what they might miss, because they can't even do the streaming in real time. But you have a person operating software, right? And people are kind of the weak link in the chain, and from a security point of view, and they have really lousy experience using most software today, and if you're going to have that bad experience, the concept that you're going to do to write things from a security point of view are going to be weak, and in general, just people have, I mean, Pat, you know a little bit about this, right? I mean, people are not bad. So, Pat, Tim says Amazon is going to be great, but I would agree with him, by the way, I think at scale, you have a new set of data that's just going to give you, like the night vision goggles with respect to security, things you never seen before, but to get back down to the plumbing problems we have today that you brought up, the plumbers out there, the ones to put into patches, that's old school. Very old school. And I've heard the phrase in Silicon Valley, the plumbers are turning into machinists, to your point. Pushing buttons. Do you buy that, and if that's the case, what is the job of those machinists in the network now? Yeah, I think people pushing buttons is yesterday's world, I don't think that's correct. So they're not plumbers anymore? No, I think you don't need plumbers anymore. So the machinists are gone? No, I think the whole concept of plumbing itself can actually be automated, and we're seeing a lot of that happening everywhere. Whether it's in infrastructure, whether it's in software, it's actually, it's just happening. So I don't think, I think button pushing is 10-year-old, sort of 10-year-old technology, but there's a lot of it that still exists out there. Whether it's in infrastructure, or whether it's in software. Pat Calhoun is an entrepreneur. While you're here in the hot seat, you raise the seed round, share. Series A. Series A, sorry, Series A. He's a famous entrepreneur, so he can step right now. Yeah. That's all the same to me. First round of funding in, who's the investor? First on, I guess that's the first time I actually say this publicly, so it's General Catalyst, so talk to you. Steve Herrod. Steve Herrod, exactly. All right, Steve Herrod, great guy. Congratulations, former CTO of VMware, one of our CUBE alumnus, of course, happy to see that. How much did you guys put, they put in? They put in eight million. No, that's a Series A, that's legit. Yeah, no, that was, it was a two-legit-quit. That's legit. That's not ever since off. That's legit. You have board meetings with that kind of cash. Yeah. And we were oversubscribed, so back to your problem. We were like, we had to say no. Your fund has been very successful of been watching you start Pivot North for multiple years now, went out on your own as an entrepreneur, was originally, we're going to stand up with Greg Stanz who's been here on the show before. You're now on your own, you're on your third fund? Yeah, just close fund three, just close fund three. Yeah, it's a lot of fun. The entire VC ecosystem has really been rebooted over the last six, seven years. So my fund model is identical to what Sequoia's was 20 years ago. So Sequoia used to write the first check in a founder with two, three, four people in a room. They'd write a million dollar check for 20% of the company, and then they'd march shoulder to shoulder with that entrepreneur from beginning till IPO. Back in 99, 2000, as sort of the money started flooding into Venture, the former real early stage guys shifted up to writing series A checks and then writing series B checks, and then 0708 with Facebook and it shifted up to writing series CDE. That got pretty frothy. So Angels took that, those seed rounds for a while. Now there's about, there's probably 300 GPs doing seed. There's probably 35 that I think are really, really high quality guys. And so nearly every entrepreneur who's not famous, if you're famous, you skip right past the seed, go straight to an A. Unless you want someone like you that's been there as good advocate and partner. But I think if you look at every, I think every deal, every great deal where it's not a multi-repeat time founder, I think we'll be back by this new class of micro VCs and the LPs are happy, the LPs are eager to come in. And you're also feeding your feeder network as well for the big guys that is a trust relationship. Talk about the dynamic when you started in your micro VC or it's called Superangel back in there that kind of rebranded it called micro VC because you only have like 25 million in the fund. The world's changed. I remember we had a conversation when you first started, you were like, well, look at the generational shift of who's in the firms and you've seen kind of a flushing of some of the talent. Yeah, I think over the years. What's different now? It's really interesting. If you look at all those of us who are running micro VC firms, most of us apprenticed in other Sandhill Road firms first and then spun out, Greg, same thing. So in the seed stage, all of us have experience being inside of a high growth startup ourselves. Operating wise, we've seen it before. We've got the recipe. And then we've apprenticed long enough to be able to know how to coach at the same time. Did you miss Snapchat? I did not do Snapchat. I did not. Did you look at it? I didn't. I didn't. That was a big, I was the big homerun. But is there a next Snapchat? You got a Sequoia model, which by the way is a successful formula. You're now competing with Dave McClure's out there spraying and praying and then you got the spraying that's a zillion deals, 500 deals or more. How do you differentiate about some of those Y combinators? And by the way, Paul Martino's made a great business with Bullpen Capital. As those guys lose their cash, they go into a zombie mode and some of them are arbitrageable down the road. I think we're heading into the post steroid era of venture. I think people for a while thought that more money was good and bigger rounds were better and unicornization was a positive thing. In reality, look at Amazon. Amazon went public at a 438 million pre-evaluation that worked out just fine for everybody. With my fund, if I buy 20% of company for a million dollars, I'll do typically my prerata on the A round. And then if you're frugal and you get the unit economics working on the seed round, then all your scaling money is actually going to scaling not to figure it out. You can get to 100 million revenue on fairly minor amounts of capital. And for a while people thought going small was going slow. It's actually going small goes faster. So. Being small to think big. That's it. I've got competitors to my companies. I got one that we're close to 200 million in revenue and we've consumed 20 million of equity. And we've got competitors that have consumed 200 million of equity. So we're growing faster than they are with one-tenth of capital. Because if you focus, if you keep the capital light early, you can get the unit economics working and then scale. And so I think we're going to see a lot more. What do we expect to see from some of these other trends that steroid era? What's the consequence? What's the impact? Are there dead bodies? Not literally. Silicon Valley shows coming out. We always talk about it on our show. This season four is supposed to be pretty hot. But is there going to be carnage? Is there going to be? There's going to be a lot of carnage. What are we going to be seeing on the carnage? What kind of like? Yeah. What's floating down the river. They're going to die slowly, I think. So if you look at history, and I'm a big fan of data, some of the late stage VC's price zero risk in a company that hits 100 million revenue getting to 500 million revenue. And you look at the pricing of some of these rounds that assumes there's no risk that a company that's on top getting to 100 is going to be there at 500. In reality, only about one in three companies that hit 100 ever hit 500. So if you forego and exit at 100 million and decide to wait for the 500 million revenue exit, two out of three are going to go from winners to losers. And that risk is not priced into the market right now. So I think we're seeing it. We're going to see a shift of that. And you can go through the unicorns and pick out one in three that's a phenomenal company. Two out of three that are going to struggle. And so you're going to see some big, you're going to see some big write-offs in the next handful of years. And you're going to also see a bunch of companies that are kind of not growing, but shrinking, but can't get public and can't get liquid. And they're going to be kind of stuck. You know, it's just, I'm on the other side of that, Tim. And it's, you know, I think the challenge is when you, no matter how efficient, you should always be efficient with capital, right? I mean, that's not the same as being frugal. It's about being smart with money. That's right. The big challenge that always is, is there a real market there for your product? And how quickly can you get it? And how quickly can you realize it? Because if you're not really growing pretty dramatically in the beginning, it's pretty tough to get there. I mean, I'm on my fourth start. Well, if you're in a decent market, we just have the conversation yesterday with a company that got 90 million from NEA. They clearly have a market that's developing so they need to gas to go to market. They have a viable product. So their build-out strategy and the venture architecture is a little bit different. There's another company that's in an adjacent space that's nascent. They have to kind of wait so they're kind of on the edge. If they spend, they go to a cul-de-sac of buyers, right? There's nothing there. So they know if they speed up. I was in one of those bubble startups in 2001, right? That was building this huge router with 3G markets, consumed a lot of capitals, except there was no iPhone and there was no 3G market, right? So we're all in front of us. Damn, miss it by three years. So we figured out, like Verizon could put one router on the East Coast, one on the West Coast, maybe have a reserve and that was our TAM for the United States. It's kind of hard to feed 125 people on a business like that. So I still think the, you know, people like, you know, Mark, I'm interested in the concept of product market fit, but people don't actually think, you know, product market acceptance fit. Well, that's a TAMT. He's told us we'll market. Yeah, I call it. I agree. I call it product market channel fit. Yeah. I see lots of companies with product market fit in theory where the customer loves what you got, but you just can't get it to them profitably. I mean, the good indication is like people will over-rotate on sales and marketing investment. I'm marketing right way too early and under invest in engineering. And that's why you see very early in some of these things that, you know, they've been, they've really been buying their revenue with sales and marketing. And that is just not a great model. Cause if that's your model, you probably don't really have a defensible technology. Actually, Alan, I'm just, I'm just reminded you were talking about your first startup, but even. Which when Pat bailed me out, yeah, exactly. But even. How many stars have you done? How many stars have you done? Oh, I'm on my second one. So, but I do remember in the early days we were pitching VCs for airspace and the feedback we got back was, who needs Wi-Fi? There's plenty of internet out there. That was before Centrino came out, right? Exactly, exactly. So, I mean, sometimes there's opportunities and people are just not aware of it. But I think it's important. What's the need for AI, you know? But I think what's important is that you actually have a solid business model. And sometimes I see some of these startups and they just don't quite understand how they're going to get there from here. Yeah, and it's, you know, we try to prove out the unit economics. We try to get the channel working on the first million dollars. And so it always stuns me when a company like has raised 130 million and it still hasn't figured it out, right? It's just, it's so wasteful. Or these freemiums and. Yeah, it's like someday we'll. Exactly, someday we'll get there. Right now we're focused on. You have to go to market, you have to figure it out. But this is the point about you making Tim, I think this is kind of where I'm seeing the two connections on the heavily funded and the more optimized ones where you're looking at companies that have cloud dynamic as well as market, Tim, go to market execution. That's right. So some companies build it, go big or go home is the big bomb throwing. We've got that discussion on theCUBE where, okay. You know, you can do both. You know, you could, well, you could be gorilla and hide in the shadows. You scale up with cloud for instance. I mean, this cloud is a wonderful thing. You could just jam. If you get a Tim, this is the key. Your point I like is you go with the total adjustable market that is actually real and growing, then it's a function of do you hit it or not? That's right. That's right. And that's why I think, you know, you know, I think, you know, Jeff, I think Bezos got it right. You know, he talks about these two pizza teams, right? If a team takes more than two pizzas, you know, divide differently. You know, my teams that have three, four, five, six people way outperform the teams that are too big too early. So like I've got a company that I actually think does real AI, right? It's, you know, probably the first that does real AI. It's called Kendi, K-Y-N-D-I. And they kind of do what IBM Watson claims to do, but doesn't yet. So they can take in 100,000 documents and become a subject matter expert on it in 60 seconds. It's real AI, like the first, I think, of all of these companies. Can they write that to a blog post for SiliconANGLE? We can translate some of our Wikibon research into English. You know, there's a company where we, we on purpose kept the team super small. And we've gotten to Series B, Milestones. So we'll start raising our Series B here shortly. And we've, you know, we've consumed 3 million a capital and we've have competitors that have raised 150. And we got more tech than they do. I mean, I agree with Tim. When I met the, the alumio founders, Andrew and PJ, right? They were unfunded for eight months, but they were building the company. So by the way, when they finally got the A round, they were well long. They already had talked to, you know, 40 customers. Well, they were pros too. They knew what they were walking into because they were repeat entrepreneurs. They knew they wanted to have. No, they were first time entrepreneurs. Yeah, both of them. But they, you know, they're not young programmers though. They're senior people. No, they're senior people, but you know, there's this phrase like, you know, you got to punish the grapes if you want to have great wine. And I think there's a little of that sometimes when you're building a company, like a little bit of hardship and forcing you to ask those hard questions. The worst thing you can do is I think if somebody, if they, if they're not sure what they're doing is a pile of money and they write a product requirements document over a bottle of wine and then try to take out a market. Well, the bubble that's bursting now in the Bay Area certainly is that I'm a programmer. I have an idea. Fund me. That is my, is that pretty accurate? Tim, is that pretty much over now? Or is it more, give me the proof points. Yeah, I think we're blessed now. We just have this opportunity, or I call it the recipe. If somebody's been, been through a high growth startup before they don't necessarily have to have been the founder, but if they've been a key player in a high growth startup, I call it the recipe. If you have investors with the recipe, funding founders with the recipe, things, things go really well. So I think some of the sort of visitor. Playbook or recipe kind of thing. Yeah, so, you know, it's one of those things. It's like, if you've been through a high growth startup. You get the game. You don't need to describe, you know, if somebody's been through it, you don't need to describe it to them, and if they've never been through it, it's impossible, you know, the old quote, right? There's just so much you learn by being through a high growth startup as an operator, that if your VC doesn't have it, it's gonna be a nightmare. All right. If your founder doesn't have it, it's that much more work. So every once in a while I'll back somebody who's just an incredible technologist, but doesn't have the recipe yet, but then you surround them with the rest of the team has the recipe. We're here with Tim Connors, Pat Cohen, and Alan Cohen here on the Silicon Valley Friday show. Final question before I get to my secret question that I've been holding back. What are people missing in Silicon Valley right now? Go down, each of you like, take a minute to explain something profound around what are people missing about Silicon Valley right now? Commentary color, is it, you know, we're going back to old school where things are moving out of the system, new things are happening. I don't know if I've said this on your show, but I'm gonna jump on this, John, first. I actually think that we have kind of a lack of social connection, and I'll give you a really interesting observation. So I've never worked in Seattle, but I've watched what kind of like Microsoft people do when they got out of their jobs and their senators, their foundation starters, they're doing things. We have a really intense culture focus on winning and competing, building, and financial rewards, and we're not putting up, let's say, as many museums. Like the original Robert Barron's also built all the museums, the opera houses, and all those things, and we're at a period of time that for us to mature as people, I think we actually build better businesses if we have a better tie to the community. And I don't want to use the phrase giving back, but actually thinking that the community you live in is not a place where you come to work or it's a place where you go shopping, but it's actually, you're actually part of that fabric, and I'm starting to see this. Are you saying that people flee the jurisdiction once they get their cash, like go to Nevada or Seattle where there's no statement? No, no, no, I actually think you have to put your money. Is that the issue, or is it more of, they just say, move to, hit the beach and don't give back? I think the issue is you got to put your time back into the community, and I think you've got to figure out what you can do. So you say Silicon Valley people don't, exactly, successful people aren't doing enough of that? I don't think there's enough of it. I think you see it in other, we're a major metropolitan area. We see it in other major areas. I grew up in New York. There was always that connection, right? New York's a great cross-section of the world. No matter how you made your money, whether you were shipping, you know, during the prohibition or whatever, they built museums, is that what you're saying? Yeah, I think there's an element, and I think what it does is you build better people, you build better institutions, you build better longevity when there's that kind of connectivity, and I think it's a period of time it's going to become a big issue for people. Well, we just did a show, last week we did a segment on the show, go around social change, and we head-lined AI, social change, booth at South by Southwest, right in the tail. The Cube did, and it was a home run. It stole the show. They thought a very virtual reality was going to be the steal the show at South by. It was AI and social good was a huge connector. So I think you're onto something with that, this whole notion. I can't stumble into it occasionally. There's a generation, I think, post-911 coming into the workforce that are like, hey, you know what, what are people, what are they worrying? All these old guys, girls, let's just do some social good. So either that's why you should probably fund those programmers or, I don't know what, how you say it, any other way. Brogals. Brogals for that, because I think it's, that's not what I'd say. So, But you just did. I just repeated what he said. And I can't recall. So, but I think that generation's going to want more of it. And if we, as the leaders, and Gray Hare in this industry, we're actually really going to be more into how to touch that. What are we missing in Silicon? What are people missing about Silicon Valley that they should know about? On the upswing, downswing? So what I'm actually, so it's really interesting. I get to work with a lot of engineers and with my new startup now, I've been interviewing a lot. And what I'm actually seeing is that there's this class of engineers that actually want to go work for consumer-based companies, right? Because they think it's cool. They think, well, consumer software is really, really cool. On the other hand, what consumer software doesn't do really well is scale. They don't really know how to get there from here. Or sometimes the business models don't really exist. And so, but on the other hand, you got the software engineers that actually understand the business model. So they actually want to go work for an enterprise software. And what I think, what I'm seeing, because I'm in the middle of it, I'm actually seeing the world's clash. I'm actually seeing consumer software people, enterprise software people, hanging up in the same bar, which you'd never see before. Because as far as that, we want to go hang out. Yeah, exactly. That's a great thing for everyone. So, and there's a huge- Well, enterprise is cool again, but it's not, it's hard to crack the code on the enterprise. But the problem with enterprise, and I talk to customers a lot, is that the bar on the enterprise side, they're looking at the past 10 years, 10, 15 years, and that's the bar. So as long as it doesn't suck as much as what 10 years was before, it's good. But I- That's a good opportunity for anybody. Exactly. Yeah. But I think the bar now is really consumer software. You need to look at consumer software. I was talking to a customer two weeks ago, and they spent two weeks, they had 15 people, two weeks on the road, training their employees on a particular piece of enterprise software. It's like, what's the last time you went through any form of training for anything on your phone? You mean like a software app? Yeah, exactly. And like, I'm gonna do that on my phone. And so I think the world is changing. Sounds like Lotus Notes back in the 90s. Unfortunately, it's happening today's software, so. So software basically still sucks in the enterprise. It still sucks in the enterprise. It's a huge opportunity there. Yeah. Tim, what are we missing? You see a lot too over the years. I mean, Silicon Valley, I mean, I said a couple of shows ago, it's got a big PR problem, certainly the Uber thing, you know, and I'm big, I think Silicon Valley's rocking. It always has been, and I think there's elite bubbles in New York and DC, and I think people tend to jump on the Silicon Valley and hate wagging these days. They hate us because they hate us. Well, there's not enough museums. We're gonna fix that. I'm gonna donate all his cash he made from this all start. Tim, what are we missing? What are people missing? Yeah, I think the picture. Well, I think there's, I think there's a, I totally agree with the sentiment of giving back and paying attention to the bottom 30, 40% of the population. I'm starting to see some interesting startups emerge to try to solve some of those problems. But I think Silicon Valley, as I agree, is just completely ignored the issue. And you can just look at it from Palo Alto to East Palo Alto, right, and the differential there. And what's been interesting to me, watching the politics, I grew up back in Indiana, right? So Facebook's algorithm is like thrashing, because half of my friends are in Indiana, and half are in California. The two are- Now you're getting to my secret questions, coming up next. Right, the worlds apart. I've been, maybe I'll challenge Silicon Valley a little bit in that I'm surprised I haven't seen more, where right now we're just throwing money at both sides of the political aisle. And we've come up with technology standards like 4G, that worldwide standards to put a smartphone in everybody's pocket. We certainly can figure out healthcare. No, I agree. But we're not gonna solve it by taking selfies, this side taking selfies with Hillary, and this side taking selfies with Trump, and throwing money at- I haven't seen one selfie with Trump, it's from Silicon Valley. So if you find that- I grew up in Indiana, I've seen lots of them. But I think we can, if we come together and look at the way we've set standards with IEEE and web standards, why can't we come together and figure out how to solve healthcare and some of these big issues? Why can't we simulate the economy? We can simulate weather and hurricanes and passive hurricanes. Why can't we simulate what the implication of Trumpcare or Obamacare is gonna be, so we're not experimenting on humans? Yeah, this is exactly what Jeff Frick and I talked about. Well, this is the thing, this thing in this for a second, this is things in the whole political thing, which we don't wanna talk about, but there's a tech angle to this. And by the way, the audience who's sponsored this, I get Facebook feeds go crazy when I write, talk about politics. Half say, don't do it, that's the other half say, but this is the point. They treat Obamacare repeal, or fixing it, whatever you wanna call it, as a one and done thing. If you take agile development and take a tan of a computer science approach, say, hey, let's get the data. Let's instrument the numbers. Has anyone looked at the data? Has anyone instrumented healthcare? Has anyone done a simulation? Let's run a black souls algorithm up in the cloud of zillion Amazon computers. Yeah, and we have to build it. Then you can roll it out and then have iteration. So why not do a bill that says, checkpoint every six months, a scrum of Congress. That's it. And everybody's bringing up, hey, AI's gonna take jobs and we need to go to Universal Basic Income, right? Last time I checked just handing people money didn't necessarily work very well, right? In sending them to work and amplifying hours that they work would be a better system, I think. But we have two billion people living in public. Why can't we simulate what the economic response is gonna be? We can predict how many iPhones they're gonna sell with pretty good accuracy. Why can't we predict how people are gonna respond to different incentive systems? And then simulate it out 10 years and help these poor, these congressmen wanna do the right thing, right? But imagine being Paul Ryan's chief of staff and trying to come up in 90 days with a healthcare bill, right? It's impossible. But we should be able to help in Silicon Valley. We've solved every other problem. Why can't we solve some of these big political problems? There should be a funding for that. I mean, then the outcome should be you get the contract and you can be the platform for it. Yeah, I mean, I'd love to see Zuckerberg put with the Chan Zuckerberg Initiative. Put 100 million of that into a founder with the recipe to go build a simulation engine to simulate everything that's coming out of Washington and pick what you want. You want a balanced budget with lower rates of poverty. What should the policies be? You can roll some game theory out on whether we drop the nukes on North Korea and see how the impact there would be. I mean, you can do all kinds of crazy stuff. I mean, take the deficit down. I mean, look at all. I mean, just it's a huge numbers game. I don't know. Yeah. Okay. What's your thoughts on this? You're quiet and you got something to say. Well, you know, so look, I'm married to a cardiac nurse practitioner, right? So we talk about healthcare a lot and you know, we watched the rise of the insurance. It actually was changed my wife out of working in medicine, right? Because she spent more time doing insurance paperwork than treating patients. I think that, and I think Tim was on this, I think we need kind of science-based outcomes and not hyperbole-based outcomes to dealing with healthcare because it's a really important issue and it's not something that if you don't have expertise in it that you can just throw out your opinions. But I think, I like what he said about standards. Actually, Pat's a big standards walker. Roanke's written lots of standards. And you know, and if you think about what he just said is that when you work in a standards body in technology, you have the most ruthless competitors in technology find something that they can get together on and come out with it, right? And then after it's out there, they're gonna kind of destroy each other to go win because of the economic battle. They understand the mutual benefit of the standard. You know, but they watch, it's actually, yes, they see the entire industry move forward, right? And I think, and that's why I was probably hinting a little bit at the social fabric because when you have social fabric, you actually have currency to work with people and when all you have is economic warfare, you don't have that currency. Well, guys, thanks for spending the time on this look-alike Friday show. Tim Connors, Pat Calhoun, Alan Cohen. Alan's such a guest. We're thinking about calling it the FC, the Furrier Cohen on SV. Well, I wouldn't take my option from that. I'm gonna put it into the FC fund for rehabilitation of East Palo Alto. Tim wants me to do the CNBC for on the internet. Guys, great company, you got an adventure capitalist, you got entrepreneurs and experienced folks all here. Great, great conversation. Thanks for watching the Silicon Valley Friday show here in Palo Alto. Thanks for watching.