David Frankel

1. Key Themes

The Bubbles Get Bigger — and So Does the Roadkill

David argues we are in the wave of our lives, but that the scale of destruction will be proportionate to the scale of the boom. He sees a dot-com-style crash as inevitable, only the timing is unknown.

"The bubbles get bigger. This is the wave of our lives. Will there be roadkill from this wave? Oh my god, there's going to be a lot... Are we headed for another dot-com crash? Definitely. If is not a question. When? Nobody knows." 00:00:00

Seed Investing Is Crowded but Not Dead — the Math Still Works

David makes a careful mathematical case that seed remains viable because fund-returning outcomes don't require trillion-dollar exits. The median of the top 500 companies created in the last 25 years is $2.6 billion — and 5% of that returns a fund.

"Of the top 500 companies created in the last 25 years, the median is $2.6 billion. Now, if you own 5% of one of those companies, you return the fund each time." 00:06:52

"I don't have to be in the one. If there were five companies that are worth $5 trillion with exits... you take then NVIDIA... Palantir, Palo Alto Networks. That's about $5 trillion of market cap. And then the other $495 at a $2.6 billion average." 00:21:36

Multi-Stage Funds Are Bad for Most Founders — the Insurance Policy Reframe

David argues that taking multi-stage money at seed is dangerous for 95% of founders because when growth stalls, the champion at the big fund moves on and follow-on support evaporates. Founder Collective positions itself as a low-cost insurance policy alongside the big check.

"The more junior venture investor... starts their own fund, moves to another fund. Happens all the time. So the person who invested doesn't have mandate... your champion's gone... 95% is mandate for further funding is dead, is gone." 00:23:07

"From smart entrepreneurs, there's almost this knowledge of they may abandon me, and then having FC in my back pocket could be useful... for 500K, not bad insurance policy." 00:08:50

Pro Rata Is "Original Sin" — a Call Option Against Founders

David takes a strong and non-obvious position that pro rata rights, while standard, are fundamentally misaligned with entrepreneur interests. He goes further to criticize the trend of pro rata only for lead investors as inequitable.

"Pro rata is almost like the original sin... I kind of think that there should be a universal approach to treat your investors equally. But I think pro rata is generally not great for entrepreneurs. It's a call option against you." 00:30:06

The "Nepo Baby" Thesis — Vertical Edge as the Real Moat

David is writing a piece on what he calls "nepo babies" — founders who grew up inside a specific vertical and have accumulated edge others cannot replicate. He sees this as one of the most underrated signals in founder evaluation.

"TJ Parker, working in his dad's pharmacy when he was 15, 14, 16, he has got more edge in that vertical than he knows... There are folks who have been in these verticals since they were kids. He watched his uncle in this vertical. It's like there was nothing else he was going to do." 00:44:32

Applied AI on Commoditized Hardware Was the Real Theme — 10 Years Early

David flags that his Fund 2 winners — Shield AI, Vokada, Whoop — were all essentially "applied AI on commoditized hardware" plays before that phrase existed. The insight is that the next wave is also already here and equally non-obvious today.

"It's about putting AI around these completely commoditized platforms. It was 10 years ago, but it wasn't the theme... In 10 years' time or in five years' time, there will be a new theme. The job will have been to get into that theme ahead." 00:37:56

"I guarantee you all of these things are called applied AI businesses today or physical AI. The job is to be in there five years or 10 years ahead. And it's not where the momentum is." 00:38:24

DPI Discipline as the North Star — GP as Largest LP

David reveals that at Founder Collective, the GPs are the single largest LP in their own funds, which he argues creates an alignment that forces genuine DPI focus rather than management fee optimization.

"The GP has been the biggest LP and we're greedy for returns, not management fees... We're certainly in the last few funds, the largest LP. There's no LP that is bigger than the GP." 00:24:48

"We've been very disciplined about strategy and very disciplined about DPI." 00:25:18

Secondary Markets Are Unprecedentedly Liquid — and Should Be Used Strategically

David observes that secondary liquidity has never been better, and argues that even in top names, taking 20% off the table to return 25% of a fund early is a sound strategy — especially for newer funds.

"I have never seen secondary markets as liquid... In the top 100 names, wow, the secondary liquidity is incredible... If it's a 2024 fund and you can give back 25%, why wouldn't you do that? And you're still long. You still own 80% of that company." 00:00:00

Photonic Computing Is the Next NVIDIA Disruption

David makes a specific, forward-looking call that photonic (optical) computing will disrupt NVIDIA's dominance, driven by energy efficiency demands in data centers — and it is not yet a momentum trade.

"Photonic computing is coming down the line. And I think that's going to be the NVIDIA disruptor. Or NVIDIA is going to buy those companies." 01:09:47

The "I Love It Because..." Framework as Investment Discipline

David describes a specific team meeting ritual where no investment can proceed unless a partner can complete the sentence "I love it because..." — with the completion never being about valuation.

"We have at our team meeting... 'I love it because dot, dot, dot.' If you can't complete that sentence, you can't invest. That's how we start the team meeting." 00:43:01

"I will not say I love it because of valuation. By the way, we've always come to valuation last. We've always gone opportunity, market, founders, founders first and foremost... And we come to valuation last." 00:43:31

2. Contrarian Perspectives

Triple, Triple, Double, Double Is Still a Valid Venture Pathway

Against the prevailing view that only hypergrowth companies deserve venture capital, David argues for patience and that many of the greatest outcomes take far longer than the market expects. His example: still owning every share of SeatGeek from a 2010 investment.

"These 10-year funds are taking 18 years. The one thing you learn is loads of patience... Harry, we still own every last share in SeatGeek. That was an investment I made in 2010. It's become in the top three ticketing businesses in the world. It just takes a really, really long time." 00:18:21

Google Is a Net Winner From AI, Not a Loser

Contrary to common narratives about OpenAI destroying Google, David argues Google is actually in pole position in the AI era due to its contextual search capabilities — while Microsoft is the one losing ground.

"Google is actually, if anything, in pole position because they come from that environment and the ability to search with context, the ability to apply AI with context is just like incredible... Microsoft, it's not clear to me that they can get back because their AI feels second rate compared to the top three or four." 00:58:55

The SaaS "SaaSpocalypse" Is Overdone for Deeply Embedded Companies

While most investors are fleeing SaaS, David argues the market is throwing the baby out with the bathwater for companies where switching costs are genuinely high — and suggests a basket of top SaaS stocks that have lost massive market cap could be a strong contrarian trade.

"The contrarian in me, this is not what I do, would say buy a basket of, like, the top SaaS stocks that have all lost huge market cap. You're going to do okay." 00:41:32

"The more embedded you are, I think the more overdone that SaaSpocalypse may be. The less embedded, clearly, the easier you are to kind of turf out." 00:41:32

Seed Stage Risk Premium Was Historically Overstated — and That Arbitrage Is Now Gone

David argues that Founder Collective's early success was built on a genuine pricing inefficiency that has since been arbitraged away, which is an unusually honest admission that their original edge no longer exists in the same form.

"As an angel, I had said the risk premium for the seed stage was way overstated... There was an arbitrage. There was a real arbitrage because the risk premium at the seed stage was way overstated. That has changed completely." 01:11:37

Uncapped Notes Are a Financial Mistake for Seed Investors

David is unusually blunt that uncapped convertible notes — increasingly standard practice — are bad for seed fund economics, even when the founder is exceptional.

"Uncapped notes suck at the seed stage... That's going to be $100 million, $300 million priced when it happens. Now, you're in a year in advance and you take that price. From a venture perspective, it doesn't make much sense." 00:11:38

3. Companies Identified

Suno

AI music generation company. Founded by Mikey Shulman, Georg, and Martin Camacho, all formerly of Kensho. David was the first check in, putting in every cent of the first round. Now valued at $5 billion. Being underwritten by later investors as a Spotify and Apple Music disruptor — pivoting from creation tool to consumption tool, with Jack from Snap brought in to lead that transition.

"Mikey comes to voice AI, to music, to audio, right? They've come out of Kensho. That's all they did at Kensho." 00:44:32

"When you're doing Suno at $5 billion, what are you underwriting it to? I think that the folks investing at that level are going, this is a Spotify disruptor." 01:15:04

Shield AI

AI defense technology company. David was the first institutional check in 2016. Now a top-three holding. Highlighted as proof that applied AI on commoditized hardware was the real theme a decade before it became consensus.

"Fund 2, Vokada, Shield, Whoop, PillPack. In and for the most part, one of or the single largest investor in the first institutional round." 00:38:59

"Having been very, very early, the first check in Shield AI and watching how that's played out. The US needs it. Like our enemies have access to all of that on steroids." 01:07:48

SeatGeek

Online ticketing marketplace. David invested in 2010 and has never sold a share. Now a top-three global ticketing business. Co-founded by Jack Groetzinger, described as having undergone a transformational CEO journey.

"We still own every last share in SeatGeek. That was an investment I made in 2010. It's become in the top three ticketing businesses in the world." 00:18:21

Whoop

Health and fitness wearable company. Part of Founder Collective's Fund 2. Described as a long journey requiring significant capital due to hardware complexity, contrasted with Suno's speed.

"Whoop versus Suno... Whoop, which is hardware. Took a long time. Like raised a lot of money along the way. Like unbelievably proud of this company." 00:49:45

PillPack

Online pharmacy, co-founded by TJ Parker. David's canonical example of a "nepo baby" founder — TJ worked in his father's pharmacy from age 14-16, giving him unmatched vertical edge. Acquired by Amazon.

"TJ Parker, working in his dad's pharmacy when he was 15, 14, 16, he has got more edge in that vertical than he knows." 00:44:32

Vokada (Voca.ai)

AI voice agent company, part of Fund 2. Named as one of the core fund-returners alongside Shield AI and Whoop.

"If you look at Fund 2... Vokada, Shield, Whoop, PillPack." 00:38:59

Olo

Restaurant technology platform. Founded by Noah Glass. David was on the board from founding through the Thoma Bravo take-private at approximately $2 billion. Cited as a 17-18 year journey — a cautionary tale on IRR but celebrated for mission and stickiness.

"Eventually, Toma Bravo, we took the company private for about a $2 billion valuation. So not bad for a few years of work. And if you take it on an IRR basis, you're probably right." 01:14:00

Coupang

South Korean e-commerce giant. Fund 1 holding. Originated from a Harvard Business School connection — the founder dropped out of HBS after first year and came to David in Harvard Square.

"Kupong was like, got back. I said to Eric, Korea... The magic there is I am based in Harvard Square. So bomb drops out of HBS after his first year and comes to see me." 01:16:57

Trade Desk

Programmatic advertising platform. Fund 1 holding. Named as one of the core returners alongside Uber and Coupang.

"If you look at Fund 1, we always talk about the trade desks and the Ubers and the coupons." 00:38:59

Airtable

Collaborative database and no-code platform. Fund 1 holding from very early. Cited as facing challenges from AI cannibalization in the SaaS environment.

"Fund 1 still has Airtable in at the very beginning. Challenges in the SaaS environment." 00:38:59

Simply (Fender Play / Simply Piano)

Music education platform — described as the biggest piano and music instrument teaching company in the world. Still held in Fund 1.

"Simply is the biggest piano teaching and music instrument teaching company in the world." 00:39:28

Rebar

AI platform for HVAC quoting and mechanical engineering workflows. Early-stage Founder Collective investment. Founder Evan worked for his uncle's HVAC roll-up before identifying the gap. 100,000+ mechanical engineers in the US spending their time on manual blueprint quoting processes.

"Evan at Rebar is HVAC preparation and HVAC quoting. There are over 100,000 mechanical engineers in the US that are making 100K each, at least, when they graduate. And all they're doing is sitting with this blueprint process so that they can quote a new commercial." 00:45:02

Polymarket

Prediction market platform. David questions whether it is meaningfully different from DraftKings or Betway — i.e., legitimized gambling — but notes it at $2 billion ARR makes the semantic debate moot.

"Are prediction marketplaces just legitimized gambling? It has to be. I mean, if you look at Polymarket... what's the difference there between DraftKings and Betway?" 01:17:26

Klaviyo

Email and SMS marketing automation. Came to David first via Hugo Fanfieren (who also introduced Suno). David passed based on framework/valuation — one of his stated biggest regrets.

"Klaviyo loved Andrew, loved Ed, came to me first, came through Hugo Fanfieren, who also sent us Suno, and didn't do it because of the framework." 01:18:22

Thrive Capital

Growth-stage venture fund led by Josh Kushner. Named as one of the funds that has generated extraordinary returns, particularly through SpaceX and OpenAI positions.

"If you're like Josh and you're in SpaceX and OpenAI, that's going to be like the most ridiculous fund." 00:27:29

Waymo

Autonomous vehicle company (Alphabet). David cites seeing Waymo driving in London as evidence autonomous vehicles are finally arriving after decades of near-miss predictions.

"I saw Waymo driving around London. I think it's coming here soon." 01:20:12

Kensho Technologies

AI/data analytics company (acquired by S&P Global). The origin company of Suno's three co-founders — Mikey Shulman, Georg, and Martin Camacho.

"Mikey comes to voice AI, to music, to audio, right? They've come out of Kensho. That's all they did at Kensho." 00:44:32

4. People Identified

Co-founder and Managing Partner, Founder Collective. 18 years in seed investing. First check into Suno, Shield AI, Olo, PillPack, SeatGeek, Coupang, Trade Desk, Airtable, Vokada, Whoop. GPs are the largest LP in their own funds. Known for extreme discipline on fund size and stage.

"Anyone in my seat who says, I knew, is just full of shit." 01:16:33 (quoting Eric Paley's framing on Uber)

Mikey Shulman

CEO of Suno. Co-founder from Kensho. At the time of interview spending 30-40% of his time recruiting. David describes him as a canonical example of the obsessive, transparent founder he seeks.

"I had coffee a week ago. We had an hour, Mikey Shulman from Suno. And I said, what are you doing? And he said, I'm 30, 40% of my time. I'm just recruiting." 00:13:42

Martin Camacho

CTO of Suno. Former CTO of Kensho. Built the entire Suno model from scratch. David highlights his intellectual honesty: when asked whether he'd swap in a better model if one existed, he said he "wouldn't think twice about it."

"Martin Camacho, who's the CTO of Suno... without missing a beat, Martin goes, wouldn't think twice about it." 01:15:35

Noah Glass

Founder of Olo. David's first angel investment. Described as one of the great entrepreneurs — an 18-year journey that David says was "the ride of a lifetime" despite modest IRR. Also mentioned as someone David discussed data strategy with extensively.

"I talked about this with Noah Glass and Olo all day long going like the value of having data and using that data." 01:02:16

TJ Parker

Co-founder of PillPack. Worked in his father's pharmacy from age 14-16. David's canonical "nepo baby" — deep vertical edge translating into founder advantage. Described as a transformed individual through the CEO journey.

"I think of people like TJ at PillPack... they're changed individuals." 00:13:42

Jack Groetzinger

Co-founder and CEO of SeatGeek. David holds SeatGeek from 2010 without selling a single share. Described as having gone through the archetypal CEO journey of transformation and growth.

"I think of people like TJ at PillPack or Jack at SeatGeek. And they're changed individuals." 00:13:42

Eric Paley

Co-founder and Managing Partner, Founder Collective. Credited with establishing the firm's valuation discipline and post-money framework, and with the decision to take secondary on Uber at the Series A stage rather than follow on.

"Credit to Eric Paley in this case is he always created some kind of discipline. So the post money went up and up and up... we would never lead another round." 00:31:41

Hugo Fanfieren

The connector who introduced both Klaviyo and Suno to Founder Collective. A significant node in David's deal flow — both are now multi-billion dollar outcomes.

"Klaviyo... came through Hugo Fanfieren, who also sent us Suno." 01:18:22

Josh Kushner

Founder of Thrive Capital. David credits him with being one of the people who was kind to Harry Stebbings from the beginning. Highlighted for extraordinary returns via SpaceX and OpenAI positions.

"If you're like Josh and you're in SpaceX and OpenAI, that's going to be like the most ridiculous fund." 00:27:29

Jason Lemkin

Founder of SaaStr. Named for his framework of looking for a 3x on the next funding round rather than trying to predict long-term outcomes — presented as a counterpoint to David's 10x-or-nothing discipline.

"Jason Lemkin just told me a very simple one. He's like, I'm not smart enough to predict the future. What I look for is, can I get a 3x on my next funding round?" 00:42:39

Rory O'Driscoll

Partner at Scale Venture Partners. Co-hosts a regular segment with Harry. Mentioned as having taken the contrarian SaaS basket trade that David describes.

"Rory O'Driscoll, who we do the show with every week, has done that." 00:41:54

Evan (Rebar)

Founder of Rebar. Former employee at his uncle's HVAC services roll-up. Identified the absence of AI tooling for mechanical engineering quoting and started Rebar to fill it. David's example of a "nepo baby" with irreplaceable vertical edge.

"Evan at Rebar is HVAC preparation and HVAC quoting... Evan's sitting there... he goes, there's no AI for this. And he goes, I'm starting Rebar." 00:45:02

Jeff Bezos

CEO of Amazon. David recounts a lunch decades ago at which Bezos said he spends 50% of his time on hiring — a story that has stayed with David as the defining insight on what CEOs actually do.

"I had lunch years ago, decades ago with Jeff Bezos... Someone smarter than me said, what do you spend your time doing? And he said, 50% of my time is bums on seats. That's never left me." 00:13:42

5. Operating Insights

Never Use Valuation as the First Filter — or as Shorthand for "No"

David's biggest stated regret is using valuation as a convenient shorthand to pass on great founders. He is explicit that valuation always comes last at Founder Collective, and that using it as a first-order filter causes the most damaging misses.

"If I look at some of the deals that we didn't do, and we just went, we used valuation as shorthand to say no, terrible mistakes... The frameworks have saved us as well. Penultimate one... I freed myself like you a little more in that area and just go, they're extraordinary." 01:18:22

The "I Love It Because..." Ritual — Force the Non-Valuation Case Before You Invest

Running every deal through a mandatory sentence completion exercise strips out motivated reasoning and forces the team to articulate a genuine thesis before price discussions begin.

"'I love it because dot, dot, dot.' If you can't complete that sentence, you can't invest. That's how we start the team meeting. That's how we start talking about a portfolio company." 00:43:01

CEO Evaluation: Prioritize the Salesperson-Obsessive Over the Domain Expert

David's framework for the CEO is explicitly about sales energy and obsessiveness, not domain knowledge. Domain knowledge in the CTO is valuable but fungible; CEO sales drive is not.

"I'm looking for the CTO to be a bit of a magician and the CEO to be a good salesperson. That's like my favorite combo... The CEO being a good salesperson and being a real entrepreneur is actually more important because the CTO role can be fungible." 00:14:51

Take Partial Secondary in Your Best Names Early — Even If You're Still Bullish

The velocity of returned capital matters as much as total multiple. David advocates taking 20% off the table in top names, especially in new funds, rather than waiting for full exits that may be years away with lockups.

"Even in your top names, sometimes taking 20% off the table if you can return 25% of the fund, particularly if it's a newish fund. So if it's a 2024 fund and you can give back 25%, why wouldn't you do that? And you're still long. You still own 80% of that company." 00:47:55

Recruiting Is the CEO Job — Benchmark It Accordingly

Both Bezos and Mikey Shulman data points converge on the same operating principle: the best CEOs spend 30-50% of their time on talent. Use this as a benchmark when evaluating whether a founder is operating at the right level.

"Mikey Shulman from Suno... I'm 30, 40% of my time. I'm just recruiting... Jeff Bezos... 50% of my time is bums on seats. That's never left me." 00:13:42

6. Overlooked Insights

Seed Extension Rounds May Be the Most Underpriced Opportunity in Venture Right Now

David throws out in a single sentence the observation that "seed plus" or "seed extension" rounds — where hot AI companies have been abandoned by big funds after failing to hit aggressive ARR targets — may represent a structurally mispriced capital opportunity. He names Bullpen Capital as having done exactly this historically. This is a deployable thesis almost nobody is talking about in the current AI hype cycle: the orphaned AI company at the seed extension stage, abandoned by its multi-stage lead, is being priced for failure when many are simply on a slower-than-consensus-but-still-great trajectory.

"There's very little evidence yet that these hot, hot AI companies that are raising huge amounts of money are capital efficient... right... I look at like those funding rounds and they're called Seed Plus or Seed Extensions. And I go, that may be the opportune moment. Like when they're being abandoned and they can't get the capital because the bigger funds have moved on. Maybe that's the opportunity... Do you remember Bullpen where it was like their business to do exactly those rounds? I thought that was an interesting business." 00:09:47

One Query Could Be Worth $100 Million — The Emergence of Ultra-High-Value AI Inference

Harry briefly mentions a founder named June, building a company called Simily (simulation markets), who articulated a world where a single model query is worth $100 million to a large enterprise — because the output of that one query determines a major strategic decision. This framing — that inference pricing will bifurcate radically, with some queries worth millions — is a profound reframing of how AI should be monetized and has significant implications for both model providers and enterprise AI startups. It passed without follow-up.

"I had this incredible founder, June, who's the founder of a company called Simily, which does simulation markets. And he was like, we will have companies spend 100 to 200 million on one model kind of result, because that model result is so important... What's the size of that organization that would spend that kind of money? Oh, P&G, Coca-Cola, NVIDIA, Visa, you name it. Is it worth us sponsoring the World Cup for a 10 year exclusivity period, Visa? Right." 01:05:00