VC: Your First VC Meeting Will Be Agent-to-Agent | Auren Hoffman (Flex Capital)

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Auren Hoffman (Flex Capital) joins the GTMnow podcast to share some of the most contrarian takes in tech today, from why AI moats are gone, to why your next VC meeting will be with a bot, to why AI is secretly going to trigger a baby boom.

Auren Hoffman is the founder of Flex Capital, SafeGraph, and LiveRamp. He’s an early backer of Replit, Perplexity, Rippling, Vercel, Coinbase, Chime, and AppLovin.

Discussed in this episode

Why Auren runs 500+ AI agents to source deals, and what that means for founders raising capital
The “agent-to-agent” meeting prediction: by end of 2026, first VC conversations will be fully automated
Why every software moat has been “blown up” and what Salesforce, LinkedIn & DocuSign need to do to survive
The OpenAI x The Hustle acquisition breakdown: why it’s the smartest (and cheapest) distribution play in AI
Why missing a great deal is 10x more painful than making a bad one, Auren’s honest VC mistake framework
The baby boom thesis: why AI, IVF, self-driving cars & cheaper energy could reverse the fertility decline
Why companies won’t sign yearly SaaS contracts anymore, and what that means for every B2B founder

Episode highlights

01:05 – GTMfund Q1 recap

02:38 – OpenAI x The Hustle breakdown

06:18 – Redpoint’s optimal VC deployment period

11:24 – Auren Hoffman intro

13:04 – Why am I seeing this deal?

26:26 – Sizing up founders at Replit, Perplexity & Rippling

28:49 – What separates great founders

32:10 – 500+ AI agents for deal sourcing

33:40 – Agent-to-agent VC meetings by 2026

45:13 – Every software moat is blown up

49:09 – Who kills Salesforce next?

51:30 – Why no one signs yearly SaaS contracts anymore

51:50 – AI will trigger a baby boom

56:22 – Thinking generationally

Key takeaways

1. Every software moat is gone.
If you’re not making your product significantly better every month, you will lose customers. The era of “good enough” SaaS is over: Salesforce, LinkedIn, DocuSign are all vulnerable.

2. Agent-to-agent meetings are coming by end of 2026.
Flex Capital already uses 500+ AI agents for sourcing. Auren predicts the first VC meeting will soon be fully automated, founders and investors talking through their agents before any human interaction happens.

3. Missing a great deal is 10x worse than making a bad one.
The biggest VC mistake isn’t backing a loser — it’s never seeing the winner in the first place. Auren’s whole system is built around seeing as many companies as possible, not filtering too early.

4. Always ask “why am I seeing this deal?”
The best companies don’t need you. If a founder is letting you write 80% of their seed round, that’s a red flag, not an opportunity. Deal flow quality is everything.

5. AI will trigger a baby boom among wealthy Americans.
Counterintuitive but data-backed: married, higher-income Americans are already having more kids. As AI reduces the cost and complexity of child-rearing, through robotics, self-driving cars, and cheaper energy, Auren believes that trend accelerates dramatically.

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VC 8 Episode Transcript

00:00 – 00:06

Auren: Everywhere in the stack is like Uber, Uber, Uber competitive and only get more competitive over time.

00:06 – 00:08

Max: For what’s in your go to kind of AI stack today.

00:08 – 00:20

Auren: We do a lot of things in perplexity. Computer extremely powerful tool. We’re also investors in perplexity. We use a lot of AI tools. We have 5 to 600 AI analysts that work for us.

00:20 – 00:26

Max: Wow. With with cloud code, you think more and more companies will start to build their own software instead of buying?

00:26 – 00:43

Auren: I would always rather buy them build if it’s simpler and easier, and almost a thousand agents that we have to maintain, it is annoying. LinkedIn has not improved in the last ten years. It’s probably gotten worse over that time. People still use these things this is not going to be the case in the future.

00:43 – 00:48

Max: You know, you talked about perplexity, your computer before and that’s kind of your main sourcing mechanism.

00:48 – 00:51

Auren: We use Perplexity computer day. We love it. It’s are not so good. In three months.

00:51 – 00:57

Max: We will churn.

01:05 – 01:23

Max: Welcome to another edition of the GTM now podcast are very special VC bonus episodes that we do every other week. Here I’m joined by my general partner, Paul Irving. I’m still going to say congrats on the promotion. I don’t know if we’ve covered that yet on the show, but yeah, we did.

01:23 – 01:44

Paul: But I’m not. You know what? I’m not going to decline any, you know, compliments, pats on the back. Congrats. I’ll take them. Well they exist. Yeah. But yeah, it’s been, continue to be, I think we talked about it on the podcast a couple of times, Q1 of this year, one of the busiest from a narrative perspective, but also from just an investment perspective, current portfolio, net new deals. I think one of the busiest quarters we can.

01:44 – 02:02

Max: Remember, it matches the pace of the market. You know, we’re going to go into a little bit of the red point presentation that talks about how kind of year four and five of a massive platform shift end up being the best year to deploy this kind of inflection point that you see. So I feel like we’re in that right now.

02:02 – 02:22

Max: We’ll get into that talk about narrative, you know, definitely squarely in the distribution era. We’re seeing that left and right from the GTM fund. And it is our story. It is our narrative too, right where we’re helping companies with go to market with distribution as AI allows people to build kind of anything, you know, that used to take multiple engineers or a lot longer to do.

02:22 – 02:38

Max: You’re finding moats in different areas. And one of the interesting things about this is, you know, the acquisition, I mean, talk about distribution. What did that say to you when that when you read the news? We also thought it was April Fool’s because of the April 2nd. But yeah.

02:38 – 02:58

Paul: Also, yeah, I wouldn’t put it past either of those guys for the April Fool’s joke to be that they got a massive acquisition to OpenAI. So once that had passed and you’re kind of letting it sink in, it’s one of those ones. On first blush, if you look at it through a very traditional media acquisition lens, it doesn’t seem like two puzzle pieces that perfectly fit.

02:58 – 03:21

Paul: It’s not about the revenue dollars. I mean, they’ve been doing a great job on that front, but it’s still a pretty new media platform. It wasn’t about the total audience. The audience composition is also interesting because it’s not as if you’re trying to acquire a new audience. Who hasn’t heard of OpenAI and the dispersion of ChatGPT being the fastest growing consumer app in history means, you know, most people know who they are, but then you start double clicking into it and it’s the audience density.

03:21 – 03:46

Paul: So it’s not how many people, it’s who listens. It’s CEOs, it’s investors, it’s policymakers. It’s the most important people that OpenAI would want to influence. There’s talent acquisition there. These are stellar marketers, storytellers. I think are really well respected and known presence within the technology ecosystem. And OpenAI has done this numerous times with technical acquisitions. I mean, acquiring open cloud, you know, not too long ago is a good example of that.

03:46 – 04:00

Paul: On the product side, I think this is one of the first distribution acquisitions we’ve seen, you know, if AI is going to shape the future and so many important vectors of our lives and how we do business and how we interact, you know, having an influence on how that narrative shapes is going to be huge.

04:00 – 04:23

Max: And they come with a brand Halo. I mean, there’s certainly aura that comes with TP. I don’t think anybody’s out there writing hit pieces or saying anything bad about the TBM folks. And meanwhile, you know, OpenAI seems like they’re dodging bullets left and right from all, all different types of media and press. So you’ve got a kind of an easy way to own the narrative, own the strategy, own comms through your own media.

04:23 – 04:43

Max: You know, as somebody who’s kind of been through that, through sales hacker and outreach to a much smaller degree, obviously, on both the size of those two companies and the scope there. I do understand, like it makes total sense. I think it’s probably in is going to end up being cheap for OpenAI in the grand scheme of things, I think they’ll end up doing a lot of goodwill for something that needs a lot of goodwill.

04:43 – 05:03

Max: And it’s not just that OpenAI needs that goodwill, but the entire industry needs that goodwill. I think there’s certainly a PR problem in AI. There’s certainly a PR problem in data centers. There’s certainly a PR problem for billionaires. And if you’re outside of the zeitgeist, you’re outside looking into all this stuff. You’re getting fed a ton of news from folks that AI is going to take your job.

05:03 – 05:29

Max: The data centers are going to raise your energy prices and take all your water and all you know, electrify you with EMF, and that billionaires are the reason why you can’t afford things, not fraud, waste and abuse, etc. etc. right? So like this should hopefully go a long way for AI and OpenAI. And in our kind of narrative of being in the distribution error, I think it’s obviously right on par for, you know, what we’re thinking about it matters.

05:29 – 06:06

Paul: You know, we haven’t received our anthropic acquisition offer just yet, but I’m sure that’s coming around the corner sometime soon for the GTM now platform and podcast. But, I mean, you’re seeing that the best companies, regardless of what market you’re operating in and understand the importance of brand, understand the importance of distribution. And in a world where it’s really hard to get competitive moats on the product side of your business, people just getting more creative about where the surface area, where I can create a meaningful moat for business execution is, why can’t it be distribution and why can’t it be owned media brand, just like OpenAI is, is investing some dollars in and it looks

06:06 – 06:08

Paul: like some real strategic value behind.

06:08 – 06:18

Max: Yeah, I agree, switching gears a little bit into the red point presentation, what stood out most to you throughout that presentation that, you know, I guess media to find fascinating or want to highlight here?

06:18 – 06:54

Paul: Yeah, 100%. And maybe, maybe we can even link it for people because the the red point folks were kind enough to share it openly. All the slides from their annual market update in the end of March, but a few different points stood out. One of them right near the beginning of of the presentation, was just synthesizing something that we’ve talked about a lot internally, and I think we’ve talked about on this podcast as well, but I don’t think was summarize as succinctly as it was here was, I think it’s easy to make the comparison between the CapEx build out and the infrastructure spend for the current I, when I transformational technological shift and the dotcom

06:54 – 07:18

Paul: bubble of 25 years ago, because there from a really high level from the outside looking in, it might look like those things. Right. But there’s really important differences between those two things. You know, revenue significantly lagged CapEx for a lot of the e-commerce companies. You know, Pets.com wasn’t OpenAI and anthropic generating 20 billion in error each in in basically getting to that point faster than any company in history has most of the build that was funded by debt.

07:18 – 07:45

Paul: And even though there has been a build out in debt in a few companies, you know, Oracle took some flak in the public markets for specifically that. But generally this is funded by cash flow and equity dollars. You know, Cisco’s EPS peaked at $0.37 a share. Nvidia’s EPS right now is $4.06. They’re still growing. And then a lot of this capacity build out and this is maybe most important, is committed with real customer and demand on the other side of AI.

07:45 – 08:02

Paul: And, you know, Sam Altman talked about this at OpenAI. For every dollar that they spend in capacity, they get a dollar in demand. We’re not lacking. I think the fear that we are over building out the infrastructure and CapEx side is still very real, and there’s still a real chance that we’re going to overshoot this because historically, we have a tendency to do that.

08:02 – 08:06

Paul: But I think the signal is like, we’re not there yet. And I think they did a really good job of synthesizing that.

08:06 – 08:24

Max: A couple other things. You know, horizontal SAS last 12 months, down 40%, public markets infrastructure, I think down 2% and vertical SAS down 3% might have those mixed up. But I think that’s right. It just goes to show, you know we built our fund to portfolio not doing that on horizontal SAS. I mean we saw the writing on the wall for that.

08:24 – 08:45

Max: And you know for us maybe it means you miss out on a gamma or a lovable or something like that. But we’ve always been focused on kind of like durable enterprise revenue, great businesses. And we did a lot of vertical SAS, we did a lot of critical infrastructure, we did a lot of AI infrastructure. And I think we’ll continue to be rewarded for that as these companies grow and scale.

08:45 – 08:50

Max: But I thought it was fascinating to see it highlighted in the deck the way that it was in.

08:50 – 09:09

Paul: Just how pronounced it is. And that’s a huge difference in the public markets are obviously priced in repriced on a day to day, moment to moment, minute to minute basis. Venture and private markets are repriced on a quarter by quarter, year by year basis. It seems like most of the time. So it’s going to take a bit of a delay for maybe some of that to to waterfall down into the private markets.

09:09 – 09:38

Paul: But we’re seeing it into companies we talk to, you know, the companies which have more durable revenue growth that seem to have strong retention and are our upsell usually are the businesses that are shaped not like your horizontal software company that’s, you know, seeing competition come in from every single front, including the Frontier Labs. But you’re more durable up market vertical, specific embedded workflows, payments operating in in industries in categories that have compliance, regulatory risks and challenges that you have to navigate around.

09:38 – 09:58

Max: Yeah. Then lastly, you know, history not repeating itself, but it often rhymes. So this is the optimal deployment period according to the chart. You know, so you’re able to see kind of the cloud era, platform shift, mobile era platform shift and then into the AI era. And GPT started in 2022, which means we’re in year four, year five.

09:59 – 10:21

Max: That’s kind of where the hockey stick comes into play. A lot of the value is accrued in the fourth to fifth year of a major platform shift. So great time to be deploying capital in this market. So great for us. It’s cool to see that illustrated. Obviously reassuring hopefully to all the LPs out there. Anything else to, you know, read from this deck, read from that slide that you want to highlight.

10:21 – 10:49

Max: Our LP base spans from individual operators to institutional allocators and angels, has been instrumental and supporting all of them. They handle everything from investor onboarding and accreditation to distribution and tax documentation, creating a seamless experience across geographies and fund types. Plus, all of this is available on a single modern platform for an LP base like ours, with over 300 C-suite and VP level operators, this kind of white glove service and seamless workflows is so important.

10:49 – 11:04

Max: Also instrumental, that we support our institutional LPs, and we’re fortunate to work with and angels is able to do so every step of the way. If you’re looking for a platform that can support any type of LP investing in your fund. Learn more atangels.com/gtm. Fun?

11:04 – 11:23

Paul: No, nothing in particular other than I know we joked internally on that this is the optimal deployment period slide that this has to end up in 50 to 60% of all AGM over the course of this year that, hey, this is the right time to be putting capital to work. The thing is, when you’re on the ground and the founders are meeting, I think we believe that wholeheartedly. But it is interesting to see how the historical patterns match.

11:24 – 11:43

Max: Exactly. Let’s get into the episode. So Orange Hoffman, old friend orange got this. We’ll talk about a little in the episode, I think. But, he is one of the few people sends an email to you the night before your birthday. Gives you the birthday eve. Happy birthday beats you to the busyness of the birthday emails and texts.

11:43 – 12:09

Max: Super thoughtful guy. He’s the data guy. Always has been. Safe graph lab ramp and just, you know, the way he looks at the world is very much through telling a story through data. And now he’s doing flex capital and incubate and just, you know, has some really interesting takes. I’m not sure I agree with all them, but I love kind of the thinking, you know, and the depth of thought that goes into it and the quirkiness and craziness.

12:09 – 12:15

Max: It’s like a pure entrepreneur. Anything you took out of here that you’re that you know, you were wanting to double click on.

12:15 – 12:34

Paul: I’m excited for everyone to hear Lauren’s theory on why AI is going to lead to a baby boom among American families, but I won’t step on, because to your point, when we got to that stage of the conversation, I thought, how is this going to tie in? And he’s just such a thoughtful, clearly an entrepreneur clearly sees the world in years and decades and not days and months.

12:34 – 13:04

Paul: One point that he talked about early on in how they structure their investing practice at flex, which I think is a question that more Angel investors and operators should ask themselves, that LPs and co investors should ask themselves, and emerging funds should ask themselves, why are you seeing a deal? Why am I getting into a deal in reality, there is a certain level of efficiency in the market where, you know, the best companies usually end up finding good funds and they find them fairly early in valuable investors.

13:04 – 13:23

Paul: And so when something comes across your desk, it’s really worth asking yourself the question of why am I seeing this? And especially maybe on the angel investor and operator side of things, that’s probably the right question to ask, because if an entrepreneur gets to a point where they’re, you know, hitting up everyone in their aunt and uncle to see if they can ride a 10 to 25 K check, that might work.

13:23 – 13:41

Paul: But history will tell you that there’s that’s not the right signal that you should be looking for. Right. The signal you should be tracking to make successful investment, especially early on. But maybe there is a really good reason. Maybe it is a founder or, you know, you are an operator in a market which this founder is trying to tackle, and they specifically sought out you and your advice in your network.

13:41 – 14:01

Paul: Maybe it’s someone who spat out from your, you know, last company, and they reached out to all the best operators they worked with at that previous company to see if they wanted to angel invest. There’s a variety of different reasons, but I think too often people don’t stop to ask themselves sort of, why am I seeing this? And the flip side of that question is, you know, how many people maybe saw this and ask before it ended up on my desk?

14:01 – 14:25

Max: I like that, you know, we ask ourselves that question quite often. You know, it’s one of those things where it’s like, oh, it’s a second time founder there in San Francisco. And this, you know, they’ve been raising the deck says January 1st and it’s April 1st. You know, it’s like, yeah, you can rate try to raise this round for like three months now and you’re in the you’re in the echo chamber and you’ve, you’re a second time founder like that one certainly gets hard to kind of understand.

14:25 – 14:46

Max: Right. Because you’re like this has been passed around probably. And you know, coming from the world of extreme ownership, I think if you’re that founder, you need to sit down and say, like all people are buying what I’m doing and for one reason or another. So I either need to rework the company, rework the approach, rework the deck, or or find another way to move this business forward without raising venture capital.

14:46 – 15:16

Max: And yeah, I mean, I think it’s a really good point. Why am I seeing this? Another thing you said was that the future VC conversations from founder to VC are agent to agent, that that to me is on like the crazier side, right. Like that’s for me it’s the people business. So while I understand that you can get a ton of information agent agent early on in the process, ultimately, if you are talking to the very best people and they have their pick of who they’re going to go with, you need to have that kind of face to face element.

15:16 – 15:22

Max: You know, it is a marriage with a VC, right? How do you think about that?

15:22 – 15:40

Paul: Yeah. In the timeline in which or an outline to two is I think end of this year or early next year, I can understand from a funnel perspective, if you’re a founder raising capital, you don’t want to be talking to a whole bunch of people who are not a fit for what you’re building in the stage that you’re currently building at.

15:40 – 15:54

Paul: And that makes a ton of sense. And I think there’s a lot of filtering that can happen there. You know, NFTs built their database. You know, some, like Crunchbase and some other providers have built interesting databases for people to track. You know, who should I actually be talking to based on my business and what their investment thesis is?

15:54 – 16:07

Paul: And the idea would be that these agents would talk to each other, ensure that there’s alignment, and then, you know, there would still be maybe a human interaction on the other side that ends up, you know, going through the diligence process and deciding, you know, is this a partnership that we want to embark on for the next decade?

16:07 – 16:32

Paul: Plus? The challenge for me is there is something inherently non formulaic about especially early stage venture. And you’re trying to systematize something that to a certain level can be. But so many of you know, you listen to venture investors who’ve been doing this for ten, 15, 20, 25 years. So many of their best investments and partnerships that they’ve had with founders were sort of exception investments or nontraditional investments or things that were just outside of the box.

16:32 – 17:00

Paul: But it was the right market, the right person, the right time, the right thesis. There’s these sort of idiosyncratic variables that all come together at the right time for, for what could be a partnership that’s really fruitful for a long time. And although I think we’re heading that direction from an agent to agent commerce perspective in a variety of different areas, I still have trouble like you do, with leaving some of the really important relationship based stuff behind for for venture, specifically, and I’m sure there’s a bunch of other enterprise sales or in a few other categories, we could say the exact same thing.

17:00 – 17:35

Max: We have a great guest joining us for the show today. Oren Hoffman, incubate CEO, GG at Flex Capital, former CEO at Live Ramp and Safe Graph. We’re super excited to have him on. Let’s get into it. Welcome back to another episode of the GTM. Now we’ve got these special edition podcasts. We do our VC episodes, our bonus episodes, and today I’m joined by my good friend Oren Hoffman, CEO of incubate, General Partner at Flex Capital, host of the summation podcast.

17:35 – 17:54

Max: We go way back I you were the CEO save graph. I brought in my good friend Jason Richman, who was running sales for you for a while over there, and then he moved into the CEO role. And before that live ramp, you were a speaker at my first ever sales hacker conference in 2013. So way back time machine right there.

17:54 – 18:08

Max: You’ve done some really cool stuff, and right now you’re investing out of flex. You’re an angel in about 300 companies, but now most of the investments are out of flex. Tell me more about Incubate and Flex. And how the two work together. A completely separate ventures.

18:08 – 18:30

Auren: Completely separate kind of an incubator. So we start companies mostly around data. We started three companies in 2025. We’ll start probably 3 to 4 companies in 2026. Two of the three last year were venture backed, probably 2 to 3 of the four will be venture back this year. And then Flex capital is a seed stage venture capital firm.

18:30 – 18:47

Auren: It’s a scaled venture capital firm. So we do. We did 53 investments in 2025, probably roughly the same number in 2026. So like roughly about one a week. And we typically invest about 500 K in a company. And in the first kind of seed round. And then we hope to scale up from there.

18:48 – 18:58

Max: Incredible. So what are you looking at? I guess you have like a thesis or something when you’re looking to incubate a company, do you have a person, a founder? You’re bringing in a hired gun. How does that work?

18:59 – 19:22

Auren: Incubating companies is really hard because these things are really like very founder dependent. So typically we’ll work with like two founders could be a more go to market oriented founder or a technical founder, or it could be two technical founders. And we’ll often have the idea first, and then we’ll try to find like incredibly talented people and get them excited about it.

19:22 – 19:41

Auren: And then usually we’ll split the equity like two thirds to the founder or one third to us. So it’s kind of like a third, a third, a third. If you think of three founders and then one, we bring in money and we’ll go help and make sure that we, the two of the three that we raise money for last year, both of which we raised around $9.5 million to kind of like kick off the company.

19:41 – 19:50

Auren: And so usually these are like big ideas. They’re big markets. There’s something that’s like very exciting that the world needs that we try to, address.

19:50 – 19:53

Max: So you’re coming in kind of helping them start that company.

19:53 – 20:13

Auren: Yeah, usually it’s ride. And then we find either people who are already passionate about that idea or people who maybe aren’t yet passionate, but we help get there. And then, of course, with them, we we own the idea, we come up with the refounded and then they’re the CEO, they’re the co-founders, they’re the ones running the company.

20:13 – 20:30

Auren: And, and then we help out in the ways that we think we can help and usually has something to do with, like there’s some data element to it because that’s where we have a lot of expertise. And so there’s usually something around like, okay, we got to put together these data. We have to run something on the data or there’s something that has to do with data.

20:30 – 20:38

Max: Yeah I do want to get into that. I know your background is like thoroughly data. So live ramp that was your first company or your kind of a.

20:38 – 20:43

Auren: Library was probably my eighth company. But the first big, big success.

20:43 – 21:04

Max: All right. So live brand windfall data. You were a co-founder also there save graph. So yeah, data has always been your, your thing when you moved to kind of the, the VC side of the table. I know you’re investing kind of across the board and SAS have you kind of used that background in data to size up founders, size up markets, make investments for flex and even as you incubate.

21:04 – 21:25

Auren: Companies, I think for flex in some ways, like their data is obviously important in everything that you do, but it might be a little bit less important when we’re using data to score companies and try to understand companies and try to understand, but we’re investing so early at flex often like the product is, is barely out there. There’s not a lot of data to have about the company.

21:25 – 21:28

Auren: And so we’re really making our decision based on the founders usually.

21:28 – 21:35

Max: Are you using data to understand maybe like an industry or solving a problem in an industry better?

21:35 – 21:54

Auren: We use a lot of AI tools. And so, you know, I think we have probably 5 to 600 AI analysts that work for us. And they’re all doing like very, very discrete tasks. And they’re very good at this one, like very, very specific thing, but just that weirdness that’s necessarily, you know, say something like a great human could do.

21:54 – 22:05

Auren: It’s an analytical task that’s out there. It’s not something necessarily like a data thing. You just have to go. Of course you have to gather data. You have to read a bunch of stuff. You have to understand things, etc..

22:05 – 22:08

Max: What’s in your go to kind of AI stack today?

22:08 – 22:44

Auren: Today? I mean, it’s obviously changing every week. So maybe by the time that this comes out, everything will change. So we do a lot of things in perplexity. Computer. Which, you know, as of the day we’re taping it today is only a few weeks old. It’s extremely powerful tool. We’re also investors in perplexity. We’re big fans of what they do. We love the company. We just think they’re just, like, incredibly innovative of how they’re doing things. And we run like a very large portion of our stack there. Now, of course, if somebody has something better just because they’re one of our portfolio companies will move to the best thing that’s out there. And these things are moving like constantly, every day.

22:44 – 23:10

Auren: But, at least as of today, I think it’s like the best way to coordinate a ton of agents. And then we do use cloud and cloud co-work quite a bit as well. And we’re using some of these other things. And then of course there’s something like very, very bespoke. The agents are kind of like coordinating it. But of course we’re using bespoke tools to whether it’s like a data enrichment thing or a whole bunch of other types of tools that are like AI, or at least I light type of things, we’re using them.

23:10 – 23:20

Auren: And then, we use a lot of our portfolio company, so like full and rich, and we’re big fans of we use them, we’re hitting their APIs every hour and many, many other companies that are out there.

23:20 – 23:26

Max: That’s awesome. And you’re in perplexity, full and rich. How many? It’s 300 companies or way more for from flex right now, right?

23:27 – 23:43

Auren: Yeah. I mean, again, our fund invests in like roughly 50 a year or so. And then, you know, before we did the fund, Todd and I, we swore when we started the fund, we had done a little over 200 investments, just kind of with our own money. So we have lots of different experience over time as well.

23:43 – 23:55

Max: So tell me a little bit more about the flex fund model, because we went into incubate, but you’re doing smaller checks 50 companies a year and as early as possible or doesn’t matter. Just buying the SAS when you.

23:55 – 24:16

Auren: Can as early as possible. If there’s a company we miss, that’s great company. Obviously we still want to be in it, but it’s obviously much harder to get into that company later. So if it’s like a great company, well, why are they letting you in later on? There might be a good reason. And one of the reasons is we have a amazing portfolio of, seed stage, and maybe they want to sell to those folks.

24:16 – 24:40

Auren: Or if, for instance, we had missed Mercury. Mercury is one of my favorite companies out there. Almost every one of our portfolio banks with Mercury, they’re just a great company. So even though we had missed them when we had an opportunity to invest later on, we jumped on that opportunity and they let us into the round because we already had so many great seed companies that are their obvious customer, so it sometimes can make sense later on to get in.

24:40 – 24:57

Auren: But you have to understand, like why are they letting you in? There’s got to be a good reason to go do. It’s usually where in the first money into the company. Or maybe they did a small pre-seed typical seed round that we’re in is about $3 million, and then we’re typically doing about 500 K of that $3 million.

24:57 – 25:17

Auren: And our hope is to size up the check over time. So as that company grows, we hope to put more money to work. But for most of these companies, these are fairly consensus deals for the vast majority of the ones that we’re in, which means they’re just extremely competitive. They’re raising three and they have $100 million that wants to go into them.

25:17 – 25:38

Auren: Right. So they can pick who they want. If you want to get more money into them that often and they allow you to do that, that’s often a sign that they’re not a great company. That don’t, you know, they have. Right. So the more money you can put into them, often you have to understand, why am I getting the opportunity to do 2.5 of their 3 million seed?

25:38 – 25:51

Auren: Sometimes there’s a good reason, and you have to kind of understand that. And you can kind of go with that. But often it’s the case that they don’t have other options, and then maybe they don’t have other options because they don’t know how to raise. And then of course, well, okay. Do you really want to be in that?

25:51 – 26:05

Auren: You have to back that person. You want to have to teach them how to raise. Or maybe they don’t have other options because like, you’re seeing something so different than the rest of the market, which could be true. But you have to really understand that and really make sure that as an investment committee, you can kind of underwrite that.

26:05 – 26:07

Auren: And we do do that. Would you though, sometimes.

26:07 – 26:26

Max: I just read an article about there’s people who are like high maintenance, no maintenance and then negative maintenance. And it’s like the negative maintenance folks are the types of folks where like they’re just making your job so easy because, yeah, you know, everything’s they’re, you know, they’re they’re super high agency. They’re taking care of things. So like when you have to do your job is easier.

26:26 – 26:44

Max: Right. So when you’re looking for founders and you’re in a lot of the hot companies right now, replit perplexity rippling, vercel, to name a few, how are you kind of sizing up these founders? It’s 50 deals a year, so not every one of them are just going to be ripping from a number standpoint, right?

26:45 – 26:57

Auren: Yeah. In fact, almost none of them are working from the numbers standpoint, because almost none of them have numbers that are at least for revenue. Most of them are pre-revenue when we’re investing or if they have revenue, it’s still quite small when where you do well.

26:57 – 26:59

Max: So how did you like how did you know?

26:59 – 27:41

Auren: I think it’s extremely hard to pick, because we’re making decisions based on the founders and sometimes there’s a few more employees than the founders, but maybe there’s five people that we’re evaluating or just evaluating the people. Yeah. And then there’s kind of if you just think about it, there’s a small number of kind of decisions. Sometimes it’s just a great set of people like these are some of the best people we’ve ever met. Then we’re 100% investing at any price. We’re we’re investing in the company. Then often you’re meeting good people, good solid people. In that case, we’re not investing at all or below good. Sometimes they’re less than good. We’re not investing. And then the question it comes to when you meet very good people, right. They’re better than good, but they’re not the greatest you’ve ever seen.

27:41 – 28:05

Auren: And then we’re digging in a lot more on that. And then and then price matters. So and some of those people like again, very hard to evaluate. So we could miss. Yeah, we could think someone’s a bad and they actually could be great. We could think someone’s great in they’re actually not could. So there could be all these different things like we’re making valuation often and like with some AI and some resumes and a couple 30 minute meetings.

28:05 – 28:10

Auren: So this is a very imperfect science. But we try to hone that over time and get better at what we do.

28:10 – 28:52

Max: Do you feel like it’s, you know, one of those things you make progress on every year? Are there patterns that change? How do you look at it as an investor who’s, you know, built a track record for quite a long time? I mean, your track record spans now, what, 15, 20 years? And you were in, Coinbase chime app loving as an angel investor. And so I’d imagine sometimes there’s even as times change like crazy and everything is changing right now, like week to week with perplexity in some of these companies. But, you know, maybe the tried and true things stay the same. Like what makes a good founder. Like, what’s the difference between Brian Armstrong and, you know, any of these folks that are starting companies now? So are you seeing some pattern recognition or are you actually seeing like a refinement there?

28:52 – 29:31

Auren: I do think it’s very hard. So because the outcomes happen like ten years later usually. And so it’s very hard to understand. And I think it does change founders. It’s very important that people are ambitious. But the hard part is will they stay ambitious. So first of all, even just knowing if someone’s ambitious is quite hard to know sometimes. It’s not like if you ask someone, are you ambitious? Like they’re usually going to say yes. And even if you ask some questions around that, like they’re going to know how to answer those questions. And then the question is, are they like if they could try next their wealth, are they still ambitious when that happens. And then often people would fall off the ambition train at some point.

29:31 – 29:48

Auren: And of course, as a VC you’re really looking for like these tails to happen. So I think these things are hard. There’s two big mistakes that you can make as a venture capital firm. Well, there’s many more than two, but there’s two kind of very easy ones to define. So the first one is making an investment that turns out not to be a good one.

29:48 – 29:57

Auren: And the second one is not investing in something that turns out to be quite good. And the second mistake is for us is like way, way, way bigger mistake. It’s a much bigger.

29:57 – 30:06

Max: I think it’s much better for like that. That is the most painful thing, the ones you should have done and could have done and didn’t do. Yeah, so much worse than anything else.

30:06 – 30:39

Auren: So the simple thing for us, the simple fast data point for us is did they raise, you know, where usually at seed, did they raise a series A at some point? Did they raise a series B at some point? Obviously those companies may end up doing great. They may end up going to zero, but it’s at least an early data point for us to take a look at. So if we we look at every single company that ever raises a series, every single company ever raises a series B, and then we go back in time. Okay. Did we see this company? If we saw this company and we decided not to invest in it, do we regret that? How do we we we try to re evaluate.

30:39 – 30:55

Auren: We look at all of our notes. We look at we we call up our granola tech. You know, whatever it is we try to understand okay. Why try to remember again recreate a why we make that decision. Was it correct? Was it not, etc.. And then of course, the even bigger mistake sometimes is not seeing the company in the first place.

30:55 – 31:12

Auren: So there’s this great company. They raised the series B, we didn’t series C a we didn’t see it at seed. All of a sudden this company is breaking out that how could we have seen this company? What could we have done to see this company? So for us the the most important thing is to try to see as many companies as possible.

31:12 – 31:31

Auren: If you think about a fund, it’s a three year life cycle. You know, in any given year, there’s probably 5 to 10 breakout companies that truly are going to be the breakouts ten years later. So over the course of a three year fund, that’s about 20 breakout companies that are there for us. It’s incredibly important that we’re in at least one of them.

31:31 – 31:46

Auren: The math doesn’t work out that well unless we’re in at least one of them. If we’re in two of them, we’re going to be pretty darn good. We’re going to have like, one of the best funds of our vintage. If we’re in more than two, it’s going to be just an extraordinary that. Right. So we want to see these as many of these things as possible.

31:46 – 32:06

Auren: So first like do we see the companies. How many of these 20 do we see. Right. And then of course when we see them, are we smart enough to invest in them. Hopefully that that happens. And then of course once we’re smart enough to invest, like will they take our money? So this kind of funnel that goes in and that’s where like if you try to put too much money, you also could miss it.

32:06 – 32:10

Auren: So or if you have other kind of like things that are really important, you also could miss these deals.

32:10 – 32:22

Max: Sourcing, picking and then winning getting that X right now this is key there. You know you talked about perplexity computer before. Is that something that you’re using for sourcing. Is that kind of your main sourcing mechanism.

32:22 – 33:02

Auren: Most of our sourcing is done via agents. We have many, many agents that are doing sourcing that are looking for things are looking for signals. Someone changes their LinkedIn profile from stripe engineer to stealth, right. All these different things, we’re reaching out to them. We might be reaching out to many different ways, and then every week we’re just all we do is we work on those agents. So we just try to make those agents better. And we’ve had agents kind of even like pre AI agents, but they just weren’t as good and they weren’t as robust. Now they’re much better. And we’ll personalize it like we’ll spend the time if there’s like a high value thing, we might spend even an hour like reaching out to that person and reaching out to that thing ourself, going, doing that.

33:02 – 33:19

Auren: But the agent will bubble that up for us to help do those things. And then of course, we’re the agents doing it. So an evaluation of every company as well. Sometimes we override the rate agents. Sometimes you know, that where we’re usually think of it, the agent is like another analyst on the team, another principal on the team.

33:19 – 34:02

Auren: They’re adding value, but they’re not like the decision maker yet. Yeah, I am confident that by the end of this year, by the end of 2026, most of our first meetings with companies will be agent to agent was it’ll be our agent talking to their agent. They will be using that to evaluate us were the investor. Are we somebody who’s going to add value to them. And then we’re going to be doing it to evaluate them. And then assuming that agent to agent conversation, which by the end this year will still be in English, but eventually we’ll move to a more efficient way of having a conversation, assuming that goes well the next conversation will be alive. Person to person conversation. When we were talking to the founder, and that will take a lot less time for the founder.

34:02 – 34:10

Auren: So for the founders will be really great. Also take a lot less time for us, and then we’ll all be able to dive in having much more substantial conversations.

34:10 – 34:17

Max: Do you think a founder could just have an FAQ prepared and send you the answers to the FAQ and say, like, here’s everything you need to know about me to know?

34:17 – 34:33

Auren: Yeah, I mean, that’s essentially like that. And that kind of gets trained over time. And, you know, maybe when you’re asking things you might not know. And so, yeah, it’s essentially kind of like that it doesn’t have to be the smartest agent in the world to be able to answer most of the questions that we’re going to have.

34:33 – 35:06

Auren: And some of their answers might depend on our answers. Yeah, right. They might not know enough about our strategy or they might not know. And then based on our strategy, it’s like, well, you know, hey, maybe they’re not even interested. So then they want you don’t need to divulge more information. Yeah. Because there’s usually some sort of information cascade that you’re okay, you’re willing to boil this to everybody, and then this other thing to a subset and something the next steps are all the things that I subset. And there’s some secret stuff that maybe you won’t tell anybody. So there’s different things that you may have there that may also depend on a whole bunch of other kind of interactions as well.

35:06 – 35:20

Max: If you were raising right now for a startup that you were starting and you didn’t have the tracker, let’s call your first company. How would you run that process as a founder? Would you spin up an agent and send it to.

35:20 – 35:36

Auren: If you’re going to deal with an agent, you kind of want to be an agent dealing with an agent. Yeah, there’s a power imbalance. If you’re saying, hey, you can only talk to my agent or something, right? It just seems like a a little bit weird. Certainly, if our founder told me personally, I can only talk to their agent, I would think that’s a little bit odd.

35:36 – 35:54

Auren: And if I told the founder, I probably could only talk to my agent, that would be a little bit odd. But if it’s an agent to agent conversation, I feel like that’s much more in line with other now. So today, to the best of my knowledge, like no VCs have like a good agent yet. So I don’t know that I would create one if I was a founder, but I might make it easier for them, so I might send out the deck to them ahead of time.

35:54 – 36:13

Auren: I might give them a video of me walking through it. I may have a whole stack out there. And that also gives them the opportunity to opt out, because a lot of times you’re talking to a VC, you think that VC is the right fit for you, and then you realize you might not know them that well. And then, of course, I would use my agents to also research the VCs ahead of time.

36:13 – 36:28

Auren: So is this one that actually is going to be a fit for what I want? I want to raise $4 million, maybe the VC only invests 20 and something. So I dirt is not a fit. Why waste their time? Why reach out to them? Or why have them waste my time of like building that relationship? Now if I’m not going to talk to them for three years.

36:28 – 36:42

Auren: So there’s all these other kind of things that you might want to do when you’re out there. And you could have agents do most of that kind of research for you, for sure. And if you want to know if I was in college today, who are the VCs? I should talk to you. Yeah, I want to talk to Flex Capital for sure.

36:42 – 37:01

Auren: But maybe there’s another, like, broad set of, venture firms. I want to be out there. And other than not just venture firms, like, there’s great angels that are out there. Who are the angels who are most helpful? I’m doing something bespoke and, counter drone, you know, military things. Well, I want someone who understands that or, who has, like, good connections to the Pentagon or, you know, whatever it might be.

37:01 – 37:16

Max: Exactly. I think you can certainly get pretty far with prompts. Build your short list, you know, reach out to these folks. You can probably handle a lot of this with agents. I do think there then becomes the element of like, well, then it’s a marriage. Like, who do you want to take on the ride?

37:16 – 37:30

Auren: That’s a long time, right? Figuring out like, who you should talk to for the first date is, I think, something an agent can do figure out who you want to marry. That’s something that, as a human, I think it’s very important that you spend a lot of time figuring that out.

37:30 – 38:07

Max: A pair of co-founders and Oren, from all accounts, seems like a great guy. Knows my space very well. He’s somebody that I could think I could turn to if I have a disagreement with my co-founder. And we need to figure that out, and they’ll play the right role in that. And they’ll also know our space well. We need to go to market and stress test PMS and all that kind of stuff. And then based off of your interviews and everything you put online, I know that you’d be great investor for us, but it’s not until I talk to you that I’m really like, okay, I want to work with this person. It’s actually funny. I’m not sure that the public from your public persona knows this about you. Maybe they do, but you’re like a phenomenal relationship builder. One of my favorite things values. You send an email on everybody’s birthday eve wishing them a happy birthday. And I like that is a nice touch because it doesn’t get lost in like the day of the birthday craziness where you’re just like, oh my God, I can’t even get any work done today because it’s like there’s, so much craziness going on.

38:23 – 38:36

Auren: But I’ve been doing that for 30 years now, so that’s all the am I love. I’ve been doing that since I was young and it’s just my thing. I like to do that. At some point I’ll have to do something else because at some point, like I was just going to do that for everybody and I won’t have an edge.

38:36 – 38:51

Auren: But for at least for the last 30 years, it’s been quite fun to do. It’s nice to delight people in little ways. So if you can like spend a little bit of time delighting somebody, sending them a birthday thing, sending them a text, if you saw them on a podcast or something or whatever. People like to be delighted.

38:51 – 38:56

Auren: They like to be thanked. They like to. So if you if somebody touches you in some sort of way, letting me know about it is always nice.

38:56 – 39:25

Max: It is. And it’s funny, one time you sent it and I thought about it and was like, oh, I wonder if you just, like, triggers all of these things up at the same time, like at the beginning of the year. And, and I was like, you know, I don’t even want the answer to that because I enjoy the gesture and it’s thoughtful and like, it’s it’s great. You know, it just goes to show, like, you know, when I look at the list of the angel investments you’re able to do and the network you’ve been able to build, I mean, you’ve been in some great companies. I think it’s because of those relationships you’ve been able to foster over time. And so it’s.

39:25 – 40:17

Auren: Very hard to do these things at scale. So see, that scale is an incredibly difficult thing to do operationally. It’s not strategic. Most investors are very strategic. That is why they go into investing. They’re strategic people. They think big. They are really good at kind of connecting the dots and understanding those things. That’s their edge. See, that scale is the opposite. It’s extremely operationally it’s operational. It’s kind of a lot of grunt work. It’s so much more give to me with thousands and thousands of companies, you have to sift through all these things. You have to build all these agents. You have to build outbound. It’s like a mid-market sales process going through right. And it is not something that 98% or maybe even more of investors would like to do. It’s not in their sweet spot, but we’re not that strategic. We are operational people. So for us it’s our edge. But for most people it’s not a good fit for that.

40:27 – 40:50

Max: Yeah. And I think if you compare what you’re doing with the agents and you’re kind of tactical lens with how good you are, relationship building and kind of building the network you’ve built over 30 years, obviously that’s probably a very great winning formula for seed stage investor, and we’ve kind of proven it so far. But I want to pull up a quote you’re extremely outspoken.

40:50 – 41:07

Max: Great. Follow on Twitter. Love the napkin diagrams by the way. Keep those coming. But I think you said something like software spend will double and many software companies will die, and series has become a slaughterhouse. Can you elaborate on that? Because that’s like a strong statement.

41:07 – 41:44

Auren: There’s been a lot of people talking about, like the death of software and software always have always died like it always in very fast moving industry where software companies are constantly dying. Since the beginning of software, so many of the leaders, most of the leaders of the 80s like don’t exist. And these are massive public companies of the 80s don’t exist today, and most people today don’t. I haven’t heard any of their names. Same thing. Even with the leaders of the 90s, they don’t exist. So you just kind of go down the list. So it is, even if you were just the dominant company a couple decades ago, there’s no reason why you would necessarily be around today. It is a very, very fast moving thing.

41:44 – 42:12

Auren: But spend is there. People are spending more on software today than they ever have before. And the question is, will spend increase over time, or will it decrease the big difference between software and almost every other category. So one category would be travel, right? You are flying on United Airlines, you are getting a hotel and Marriott. If you need to fly on United Airlines or you need to fly, you’re not building your own airline unless you’re an airline company, right?

42:12 – 42:32

Auren: If you’re a normal company, let’s say you’re a consulting firm or a bank or something like that. You use an airline, an already existing airline to fly, and you use an already existing hotel chain to get your hotel. You never just, like, make your own hotel be like pretty weird to go do that. Software’s different software. Oftentimes you decide to make.

42:32 – 42:59

Auren: In fact, a bank often spends more money making software than they spend buying software. In fact, they often spend orders of magnitude more making software than buying software. So if you’re using the total software spend of a bank, yeah, they spend on workday, they spend on Salesforce, they spend on this and that and they use AWS. They use all these other types of things, but they also spend just massive amount of money, both in their own employees and in consulting firms making.

42:59 – 43:18

Auren: And so this making thing is something people always forget when it comes to software. It’s already massive how much people spend making. And yeah, they will spend probably even more total of buying and making that pie in the future than they will today, because it’s just becoming more and more potent about what you can do with all of this.

43:18 – 43:30

Max: So I think what you’re saying is, like with cloud code, with a lot of these other, you know, new AI agent builders, essentially, you think more and more companies will start to build their own software instead of buying.

43:30 – 43:55

Auren: They may buy, they may build. It kind of depends. All right. I would always rather buy than build if it’s simpler and easier. And yeah, if you don’t have to maintain it where I flex for maintaining almost a thousand agents that we have to maintain, it is annoying. Hey, it would be so much better to just like, easily buy it if if so, if someone had an agent for OSS or whatever, and also some of those over time probably will buy some of the things we’re buying today will probably make.

43:55 – 44:14

Auren: Well, we’re going to there’s all these new things that are going to be happening. You’re usually only meeting when something’s like so custom to you. Now in case of like workflows and your business, turns out so much of it is custom, so much it is. It’s like it doesn’t make sense for somebody else to make it for you, because they would have to.

44:14 – 44:37

Auren: It’s so unique to your particular business. So these things are really hard to do. But like there’s still going to be tons of buying. The question is like, if you think like a SaaS company, they be like, oh, these SAS companies are cheap or they’re expensive, or they’re going to do well, they’re not going to do well. It’s it’s very hard to know the future of like each individual company and also very hard to know, like how well they’re going to do to innovate.

44:37 – 44:50

Auren: Because if you’re software, the one thing that is for sure changing in the world of software is it used to be you have a great piece of software, people would buy it, and then you wouldn’t have to change it for ten years and they would still use it.

44:51 – 44:52

Max: Yep.

44:52 – 45:13

Auren: And they would just use it. And it doesn’t have to get better. Salesforce.com has not gotten better in the last 12 years. In fact, it’s probably gotten worse. So many tools out there. LinkedIn LinkedIn has not improved in the last ten years. It’s probably gotten worse over that time. People still use these things. This is not going to be the case in the future.

45:13 – 45:37

Auren: You will have to be making it better all the time, and you will probably have to be making it significantly better every month. If you’re not making better for a few weeks, it’s fine. Your customers will stay with you, but once it starts getting to a month, they will get really, really mad. And the big thing that we are seeing is that very few companies today are willing to sign even a yearly deal.

45:37 – 45:58

Auren: You signed multi-year guess before today. Almost all these tools, like if you think of a tool that’s like $200 a month or 2000 a year, 2000 a year is an amazing discount on $200 a month. Only reason not to do that is if you think you’re going to churn off of it. Almost every company thinks they’re going to churn because things are moving so fast.

45:58 – 46:15

Auren: So yeah, you might. We use Perplexity Computer Day. We love it. It’s they’re not still good. In three months we will churn. They know that that’s where they’re working so hard to make their products so good, because they have a lot of competition. Everywhere in the stack is like Uber, Uber, Uber competitive and only get more competitive over time.

46:15 – 46:23

Auren: Our belief. And so these moats have gone away. They’ve basically been blown up. The only way to win is to make your product just better. All the talk.

46:23 – 47:01

Max: I was just going to go into moats, so I’m glad you brought it up. So you think that they’re blown away? Do you feel that way for incumbents and startups? Do you think there’s any truth to the fact that, like, okay, but work days find they’re entrenched in these enterprises or even DocuSign where, you know, there was the whole, oh, I just built, like vibe coded a DocuSign competitor in, you know, 24 hours. And I don’t need to spend money on DocuSign anymore, which, you know, to me personally, I’ve always found a little crazy because it’s like, what are what, 999 a month? And I know that if I sign a document on here, they’ll stand up in court. Like that was the whole point of it, not to sign the actual document. But where do you think that will net out?

47:01 – 47:48

Auren: It depends. Obviously, I think every one of these companies is different, but every one of these companies is going to face way more competition front than before. So if you’re more entrenched you are the bigger you are. Workday is going to be harder to dislodge. And they’re a great company and Salesforce a great company even though their products you know they’re at least our main product stinks. My opinion. But you know it is obviously a great company if you just look at that company. But you know, before when they just haven’t changed the core product or made the core product experience better for five years, like that’s just not going to fly in the future. Now they’re a great company with an amazing CEO. He realizes that for sure before he realized, okay, it doesn’t make sense to make my product better.

47:48 – 48:03

Auren: Everyone loves it. They’re going to stick with it. Or maybe they don’t love it, but they’re going to stick with it anyway. Now he is smart enough to realize, oh, I got to invest in making this product better because someone’s going to eat my lunch and maybe my my current customer is going to churn, but it’s I’m not going to be able to grow because I’m not going to be able to get new customers.

48:03 – 48:18

Auren: I’m not going to be able to. And somebody eventually is going to come after me. So everyone is going to have to be working harder. Everyone is going to have to be innovating. They’re going to have to be doing everything across the stack to do what’s best for their customer. And it’s always hard to know what is best for your customer.

48:18 – 48:48

Auren: Yeah, and sometimes, just like making things faster or making things easier, taking less of your customer’s time, it could be the buying process could be better, because right now the buying process so bad on some of these companies that are out there, it could be making your product cheaper. Maybe Salesforce should all of a sudden say, hey everyone, now you pay 80%, which is hard to do for a public company. Yeah. So there could be a lot of different ways of winning, and there’s lots of different levers to win on, but we don’t have to be using those levers because there’s going to be so much competition in the future.

48:48 – 49:09

Max: Yeah. Another another issue for some of these bigger companies is that they’re all to your point on pricing, they’re all kind of stuck on seed based pricing. And with AI, if you’re not going to need as many people, not going to need is larger headcount, sea based pricing may not be the best way to charge, but the customers have all have kind of all been in sync now and stuck with this pricing for so long. It’s what they expect.

49:09 – 49:26

Auren: It’s not Salesforce killed Siebel and maybe Salesforce won’t get killed by the next. Maybe they’ll innovate. I hope they do, because for some they have a great culture, an amazing CEO, an amazing history. So I hope they do find a way to innovate. But I can tell you with the current product they have, they are not going to win.

49:26 – 49:59

Auren: They can pretty much guarantee you that. So they need to have massive innovation if they want to stay ahead of the game. It’s there. Someone in there who thinks they could win without innovating massively. That person should be fired. And I really don’t think anyone in the C-suite of Salesforce I’ve talked to them believes that, like, they know they’ve got to make things better. They know their product is substandard. They know that a lot of the competing products are better in many dimensions. Maybe not on every dimension. Maybe there’s like one core dimension that they’re way better at or something like that, and they know they have to kind of keep things moving or, you know, they have a lot of other products that are great, like slack and other types of things.

49:59 – 50:01

Auren: So maybe they just kind of invest in that.

50:01 – 50:04

Max: They’re active in M\&A. They bought it.

50:04 – 50:06

Auren: And they’re great acquirer. Yeah.

50:06 – 50:09

Max: So I think you know and Mark you know one of the the best.

50:09 – 50:28

Auren: CEOs ever want to bet against Marc Benioff. Yeah he’s an amazing CEO I certainly wouldn’t short that stock. Yeah. So if someone’s out there being like what stock to short it would not be Salesforce. Like that is an incredibly well-run company. And they’re going to figure out a way to win that’s out there. But it is going to look a lot different in the future than it is today.

50:28 – 51:30

Auren: All these companies will, and they’re just going to be out there. I was talking to one of our portfolio companies doing extremely well. We’re on like $1 billion kind of revenue kind of company, and it’s growing so fast. The CEO has been doing this for like 7 or 8 years. He has taken one short vacation. During that time. He is working like an insane madman, and he knows his only advantage is product velocity. He has no other moat. Even a company that big, he has no. He has to just keep grinding and keep working his tail off. And everyone else has to be working their tail off, and that is hard to sustain. It is really, really hard. And he knows because it’s like my competitors are smart. They have super smart people. They’re working super hard. He is paranoid as hell, and that is why he’s currently winning. And he knows if he even just loses a little bit of edge, he is not going to win. That’s a tough business. That is a much harder business than an old SAS company, where you can just lie on the beach for a long time and just rake in the dollars.

51:30 – 51:50

Max: It’s a new day and certainly the new data. Yeah. You know, I want to touch on one more thing while we still have you here, that that you said that was I’d say, an interesting take. So everyone says that AI is destroying jobs, but you’re out here predicting that AI is going to cause a massive baby boom, which is an unexpected take, I guess, in the AI discourse.

51:50 – 51:57

Max: How are you seeing that AI is going to kind of reshape our our meaning and stability and what everyone else is missing?

51:57 – 52:19

Auren: They’re fearful. There already a baby boom going on in the United States amongst richer people. Okay. So we’re already seeing that married, richer people are having more kids than they were 25 years ago. So we’re already seeing that boom starting to happen as people are getting wealthier, they’re investing more in their families. They’re investing more in their kids.

52:20 – 52:37

Auren: So many people who had two before having three so maybe will have three are having four. And all you need is people go from like nuclear family of two to a nuclear family of three to to see just like a massive baby boom happen in the United States. And this is not necessarily happening in many other countries, but in the United States, we’re seeing it happen.

52:37 – 53:13

Auren: The fertility rate has declined in the US, but the reason the fertility rate has declined over the last 30 years is that unmarried women are having fewer kids. We saw a massive drop, for instance, like teenage pregnancy. This in the 90s, teenage pregnancy was a problem. Now that’s dropped to very, very, very low rates in the US. And then unmarried women are having fewer kids. Married women are still having the same number of kids today than they were having 30 years ago. Now fewer people are getting married and they’re getting married later. And of course, we’re only getting married later. The only reason people are having the same number kids as they were before. So we have all these new technologies to help them.

53:13 – 53:32

Auren: We have IVF. You have all this other stuff today to help them, like catch up to it. So if they’re having two point something kids before, they can still have those two point something kids today. So the question is, will technology allow them to have even more kids as they’re getting married later? Or will people get married a little bit earlier, which will also allow them to have more kids?

53:32 – 53:45

Auren: Will people want to invest more in kids? I will become easier of the people who are super wealthy. I am gonna say super. Let’s say people making $200,000 a year up. So like quite wealthy people in the United States.

53:45 – 53:47

Max: Upper middle class.

53:47 – 54:26

Auren: Yeah, yeah, definitely. You know, top 5%, earners or something like that. The number one reason I believe they don’t have kids is because they have to invest so much in the kid, and the reason why they invest so much in kid is because college is still so important. And so they have to invest in things like private schools. They have to invest in travel sports, they have to invest in these other things, potentially, I will make college less important if I make scholars most important, that’s another. People will have more kids. And so if you see the area where the college is the most important place, the most determinant place of your life, South Korea, and that is the place where people have the fewest number of kids per family.

54:26 – 54:43

Auren: So there are some sort of sometimes different correlations there. It doesn’t didn’t work out perfectly, but that is one of my beliefs. Another thing is just like it’s so human, so it’s just something AI is just not going to replace is that parental type of thing. And people want to have more, and potentially it will become much easier to have a more.

54:43 – 55:01

Auren: There’s a lot of ways sometimes people have tough pregnancies. There should be a lot of ways to reduce that to make the pregnancies better. With technology, there are even alternative to pregnancies that are happening like surrogacy is happening potentially. You can even have like an artificial womb. You could have all these other things that could happen with technology.

55:01 – 55:18

Auren: All those things could also increase. And then of course, things like self-driving cars, that’s going to be great for families. There’s a lot of other things that are out there that could potentially do more of the housework, other things in the future. So all these things could make it where it could become a lot easier for people to have more kids.

55:18 – 55:30

Max: I think we’re very close on AI and getting close on robotics, and that includes like self-driving cars. I think the third unlock would be finding a clean, safe energy source.

55:30 – 55:46

Auren: Yeah, obviously if energy can get cheaper like that would be great. So there’s a lot of things that if you really believe in the promise AI, you could see where people don’t. They’re too interested in the AI and they don’t want to meet their spouse. So if marriage rates start to fall dramatically, well, then that will be a counter argument.

55:46 – 56:22

Auren: I can see that argument being made as well. But if there’s still a very human thing to getting married, still human thing to getting paired up, if you believe that that’s still going to trump all the technology, all the sometimes it’s like, okay, do I want to go to the bar to meet my spouse? Or do I want to watch this new show on Netflix? Like, it’s a tough decision and maybe people choose the Netflix one? And then of course, as the AI gets better, becomes even harder decision to go make. And maybe that does the marriage rates fall. But so I could see the argument. I’m an optimist, and I’m betting that, that we’re going to have more people who are going to want to pair up and find their life partner, etc..

56:22 – 56:48

Max: I love it. I think it’s certainly good for humanity when people are thinking a few generations ahead. You make different decisions. So it’s certainly changed my mindset and outlook on life. When I went from kind of like, oh, I don’t know if I want to have kids, I can kind of take it or leave it to like, okay, I’ll have kids. And then actually having kids. And then the way you see the world is different in terms of kind of how you want to leave it when you take more in the future. Exactly. Or in thank you so much. This is so fun.

56:48 – 56:50

Auren: This is awesome. Great to see you, my friend.

56:50 – 57:03

Max: Likewise. Likewise. Appreciate you. That was another fantastic episode of the VC series on the GTM now podcast. Head over to Apple, Spotify, or YouTube and give us a like and subscribe and we’ll see you on the next one.

Max Altschuler

Max Altschuler is the General Partner of GTMfund. He previously founded Sales Hacker, a premier B2B sales media company, and scaled it to over 150,000 monthly visitors before its acquisition by Outreach.io. At Outreach, Max served as VP of Marketing for four years. During that time, he built an incredible team that helped the company 3.5x ARR in under two years, while building and becoming the leader in the Sales Engagement Category. A recognized thought leader, Max has been featured in Forbes, Time, Inc, Harvard Business Review, and Quora. He is also the author of “Hacking Sales: The Playbook For Building A High Velocity Sales Machine,” published by Wiley.