E429: Dr. V on AI, Market Bubbles & Finding the Next Anthropic
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Why does Dr. V believe the current venture market is undervalued?
Dr. V, you spent nearly a decade at Lightspeed before deciding to spin out. And before we started recording, you said that the market right now is undervalued in venture. Why is that?
This is something I learned from Chris Chappie, who was one of the founders of Lightspeed. He said the market always seems to be overvaluing technology. And 10 years later, you realize it wasn't. I've kind of like learned to tune these things out. But you look at the data, right? I mean, if you look at, let's say, 2008, 2009, when I was starting my first company, in the aftermath of the global financial crisis, the total market cap of private technology companies at that time was maybe close to $50 to $80 billion. And then the largest company was Facebook, $15 to $20 billion in market cap. And you fast forward today, we're talking about multi-trillion dollar companies. We're talking about a private market that's an aggregate of about $5 trillion.
If somebody had said we would be sitting at a $5 trillion private market cap even three years or four years ago, it might have seemed ludicrous. Right. And here we are. And mind you, we've only seen AI disrupt coding in the world in a realistic way. Most of the revenue of anthropic and open as are coming from coding. So whether it's medicine, engineering, physical automation, when I look at the degrees of possibility, it just feels very, very large.
And the very rough back of the envelope math on that is market cap of the private companies versus venture
capital going
after those private companies.
For perspective, if back in 2008 and 2009, the top funds in Silicon Valley were probably raising like $500 to $1 billion funds. And even that was like, wow, that's crazy. There was no soft bank, $100 billion vision fund. There are no mega hedge funds. And I look at like even just Lightspeed, Andreessen, Sequoia, now increasingly interestingly Benchmark and many others, like you're already in excess of $50 to $70 billion. The markets have completely reset in terms of the capital scale and expected value.
And the big unknown is whether AI will actually disrupt labor.
I don't think it's an unknown. Right, if you look at the impact that cursor and claw are having on coding. which is inherently engineering labor from like writing sophisticated code and research level code to implementing basic systems, like systems implementation and stuff, very different levels of sophistication. You're seeing AI kind of eat into a whole bunch of that. For me, the question is less whether it can disrupt labor. The question is what kinds of labor get disrupted first. My point of view is that categories of labor where there's There is low cost to going wrong, i.e. there's a little bit of course correct available. You don't require a lot of trust. And then second, ones where there's a deterministic right answer and you can actually close the feedback loop, improve the model on a continual basis, which is why coding is so perfect, right?
Because when a code is written, it's expected to perform in a certain way. It either works or it does not. Along those two axes, you're going to see... Things evolve. And if one end is coding, probably the other extreme end is medicine. Cost of going wrong is very high because of multisystemic nature of biology. It's very hard to attribute a response or unintended response of something solely to the algorithm.
You've said that the old venture capital playbook no longer works. Why is that?
The venture playbook has changed. Ten years ago, venture was not a media business. It was a reputation business. where investors were invested over decades and they were known for investing in certain companies. and therefore became aspirational founders to raise capital from. Fast forward today, right? Sourcing, especially at the early stage, is very much a media business. You've seen the advent of like TBPNs getting acquired and recent Horowitz talks about the new media.
Harry Stebbings has deployed over a billion dollars reportedly.
There you go. And so there was kind of like this moment where a lot of podcasters were raising funds to varying degrees of success.
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Chapters
8 chapters
1
Why does Dr. V believe the current venture market is undervalued?
0:00–4:40
2
How has the private‑tech market grown from $80 B to a $5 T valuation?
4:40–9:12
3
What AI‑driven labor disruptions are reshaping venture opportunities?
9:12–13:44
4
Why is the traditional venture playbook no longer effective?
13:44–19:03
5
How has sourcing become a media and distribution business for VCs?
19:03–23:47
6
What role does a capital‑markets team play in modern VC exits?
23:47–27:55
7
Which venture biases cause investors to chase momentum and miss early returns?
27:55–32:20
8
How are “fresh‑off‑the‑boat” global founders creating the next Anthropic?
32:20–36:41
Speakers
1 identifiedMore from How I Invest with David Weisburd
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