How do you sell a $100M startup when a crisis hits?

Jason Kirby (00:00.766) Welcome back to the show, everyone. Today we have Nguyen Lam with us, former founder of Next Travel and current partner at Grady Adventures. Welcome to the show. Wen-Wen Lam (00:11.528) Bye, nice to see everyone. Jason Kirby (00:14.014) I'm grateful to have you on the show. Our preliminary discussion before hopping on the recording has been already very interesting and I'm excited for everyone to get to know a little bit more about you and your background. So let's just go ahead and kick things off. Can you just tell us a little bit about your background and kind of what led you to founding Next Travel, what happened there and how that led you to going VC? Wen-Wen Lam (00:34.664) Yeah, definitely. So I actually have always been in tech probably from the get go. when I was just out of college, everybody else was doing baking and consulting. And I, for some reason, decided I really wanted to work at a social network. And I really, really wanted to work out my space because Tom was cool and there was a top eight and all of that type of stuff. And I applied to all the different social networks except for Facebook because I thought Facebook was lame. How smart was I in 2005? And I ended up getting a job through LinkedIn at LinkedIn. And so, you know, I was like, this seems pretty cool. It's the future of work. People were like, stop sending me these like spam invites. I was like, no, but this is amazing. And so kind of started running products. I get there and they hand me a product called LinkedIn for groups. So I'm immediately like a PM at, you know, like just right, right out of college, just being like, okay, great. I get to kind of product manage. So I was part of like the initial sales team there. We actually didn't make revenue pre that time. So we kind of brought in the first dollars. And I think the product line still exists today. It's what recruiters sell for draw packages and premium packages. After that, I went to business school at USC. I worked at a couple of small startups in between. And then I actually worked with the Myspace founders at Slingshot Labs in my adult games after that, because I was pretty focused. I was like, I want to work. with the MySpace guys. So did that for a bit. Really interesting experience, really tough industry actually at that point in time. And I decided at that point that I wanted to start a company definitively. So I think it was like 2011, these Singaporean investors found me and they brought me to Singapore to like join a founding team. And we started a company that was ripping off Airbnb. Wen-Wen Lam (02:34.6) So we copied Airbnb for Southeast Asia, because that's what you do when you start a company in Southeast Asia. And at that point in time, there was no way for me to raise money. There was like no money for women. So I was like, great, we have a million dollars to go start something. This is amazing. Which like in today's world, a million dollars is like a pre -seed. So pretty different dynamics back then. Didn't work out probably because the team didn't know each other and kind of got cobbled together. But then I basically started a... not to travel off of the back of that as a consumer travel company. So I love to travel. I thought that this whole genesis of like everything after flights and hotels was really interesting. It's how every travel company starts by the way, and none of them ever succeed. And so we ended up pivoting to corporate travel, mostly because of my experience at LinkedIn, to be honest. Like I knew how to sell to businesses. We had started the sales team there and I was like, Well, I need to figure out something that people actually want to pay for and I don't want to go do consumer because it's really rough and it's very expensive and capital intensive. And we just started getting customers from the get go before we even launched, to be honest. So we had like partnered with a company called YAC. Birchbox was telling us all of their travel issues and there's just something there. And that's kind of how I started Next Travel, actually. Jason Kirby (03:59.006) So going, sorry, we had a, we'll cut that there. You got to cut out the middle. Everything will get recorded locally and then so we'll go to tips. But just something to kind of keep in mind for the editors. Cause yeah, you're getting a little choppy. I'm not sure if your internet's changed or anything. Okay. Oh, that's it. That seems fine now. So, okay. So you went from LinkedIn to startup after startup, and then you're doing your own startup next travel. Wen-Wen Lam (04:02.696) Yeah. Yeah. Cool. Wen-Wen Lam (04:13.8) No. Sorry. Jason Kirby (04:26.558) How big did you get at Next Travel? You made a comment about the difficulty for women raising capital, and then you go out and do this company. Did you raise money for Next Travel? And what was the journey for Next Travel? Wen-Wen Lam (04:38.824) I did. So actually, the story of Next Travel is one of the funnier ones because we didn't raise that much capital, but we got it to be pretty big. So at the end, pre -pandemic, we were about a hundred million top line, which is like, you know, like decent size, like probably seven or eight in revenue ish. And, you know, the margin on travel is small, but we had actually partnered with Expensify pretty early. So we actually didn't need to raise that much money for customer acquisition. Um, so after our pivot, I, um, applied to YC on a whim. So I knew Justin con from prior to that. And all of my friends were encouraging me to apply to YC. So during my interview, I think it was like my first slate of interviews, like Sam Altman and Jessica Livingston. And then my second one was like Justin and Gary and Kat, who were my partners at YC. And all of them are obviously very, obviously very famous now, but this is 2015 and Justin gives me a call. And he goes, in his deep voice, you're an idiot if you don't do this. And he hangs up, because I was like, 7%, that's a lot. And it was the best decision that we ever made. So did YC. It took forever for the travel agency to issue tickets, so we were sitting on our hands for a little bit, because our customers were waiting for us to be able to issue plane tickets. And as we were. waiting, you know, like you couldn't really get that product market fit. So we were a little bit slower, but we started actually building product around some of our batch mates while we were waiting for these like licenses. And we ended up building our product largely around a company called Plotzi, which is a huge Latin American education company out, but they were traveling everywhere. They were flying their teachers in and we... built a best in class product off of them. They had like 40 people and we just built this, the best in class SMB product for small businesses to travel. And there just wasn't anything on the market. So we found out over time that people were using corporate travel agencies, even as like small boutique firms. Like if you were over 20 to 30 people, you really needed a way to manage your finances. You wanted to book everything on the corporate cards. A lot of times people don't want to front the expense on their own cards. Wen-Wen Lam (06:59.656) because they just don't have the credit lines. And a lot of these people are like 22, 23, 24. They're just out of college. So they don't even know, some of them don't even have a credit card. And then they're getting asked to put like 20, 30, 40 grand in expenses over the course of a year and it freaks them out. So we built the platform and we just started getting a lot of traction. And then right after YC, David Barrett contacted me, I think. or, or, um, expensive I did. And they were like, we'd like to work with you. Um, we want to compete against Concur. And so we did a partnership then. And like even year one, year two, I remember at some point we were working with Lyft and we were like a very small company at that time. And Lyft was 5 ,000 people and they were about to go public in Twilio. And we were, I was thinking like, how are we going to be able to do this? But you know, you kind of fake it till you make it. So. Jason Kirby (07:53.182) That's an incredible story, especially the ramp up you got to as far as top line revenue and the clients that you got to bring on, especially after realizing consumer travel may be not the best place to be, pivoting, which a lot of founders do, especially first time founders, they love the sexiness of an appeal of consumer problems, but then monetizing those are very difficult and you found a better way to monetize and you built a real business. But let's talk about what COVID happened, how did that impact? Wen-Wen Lam (08:06.44) Yeah. Jason Kirby (08:23.006) your business being that you were attracted to. Wen-Wen Lam (08:25.289) Um, that was actually a really difficult time. So one of the things that was very interesting about our company is because we had that partnership with Expensify, we raised a lot less capital than our competitors. So our biggest competitors were a company called TripActions, which is now called Navon, and another one called Travel Perk, who we eventually sold to. Um, there are a few other players in this space, but we were pretty big, um, considering we, we ended up raising around four and a half million dollars. over the course of that four years. And we actually had term sheets for more than that. But because TripActions had raised so much money, I thought it was like wiser to keep the raise really small so we could return money to investors. And we're talking, you know, like if you're, if you're, you know, only raised five at 25, everybody gets a five X if you sell for 150. And if you sell for more, everybody really does really well. Right. So we were in that range, right? Like we had, we were talking to like, you know, big, big companies about buying us, like companies that are public. So pre -COVID, we were already kind of starting those acquisition talks. So we kind of had everything teed up. COVID happened and we went from going like, you know, like, I think we were doing $10 million in travel a month at that point to like an absolute zero. And then three months later, we were at maybe like 500K, 500K in travel. So we were like, you know, at a fraction. So I had to do, you know, my first round of layoffs, which was... smaller, right? Because I was hoping that COVID wasn't a real thing. You know, people were just going to get healthy. We all know how that played out. It just lasted for two years. And so I did like a smaller round of layoffs because I was like, we still have to support the business. It kind of seems like it might be coming back. Somebody's traveling. There's a few companies still kind of going for it. And this was like, you know, but then that second wave of COVID came, you remember, in like September, October. and I knew that we had to get like term sheets. So I literally went and I took the entire list of PSPs, which is like potential buyers, and I contacted all of them. So I was like, just like hitting the ground, talking to anyone that I would ever thought that I would have to talk to like before. So I knew the travel for guys prior to this, and they had been interested in buying us for quite a bit more before all of this, because they wanted a US presence and all that kind of stuff. Wen-Wen Lam (10:45.128) And we and they were not even on my first list of companies because it was more unlikely because they were a European company. They were on my second list of companies. And as we were in the process, they were the ones who ended up wanting to buy us. And like, I remember my exact pitch. I was like, Avi, this is the time to roll up travel companies. I'm not that great at raising money, but you're great at raising money. And so he literally went, he bought our company. He made it into the U .S. expansion. Then he quadrupled the valuation of travel per. that same year. So he used the acquisition to actually raise money for the parent company, which I thought was such an interesting move because that was the thesis. And so one of the things that I had been thinking about generally during that period of time is that you have to psychologically train yourself to look for opportunity when stuff is really bad like that. And I was like, look, if I could do anything in the world right now, I would snap my fingers. I would raise, you know, like $2 billion and I would buy all the other travel agencies. I would literally like be the biggest when it came out. Obviously people were not like, we want to invest into travel right now, which was probably the mistake at that point, right? Cause you know, they would have gotten stuff for a steal, but I mean, yeah, that would have been a killer move, but I had been thinking about that. And so, you know, because I couldn't do it myself, Jason Kirby (11:59.23) I know, it would have been a killer deal. Wen-Wen Lam (12:06.792) I pitched that idea to someone who could, and they did. And it really did grow their business quite a bit. So they're now, I think, at least a billion top line. They're a unicorn, all of those things. They're the biggest player in Europe. They have a lot of defensibility because of the European and US model. So that was the net results. But it was a really difficult process. We did have multiple term sheets. We had multiple suitors. And I remember the... psychologically just being like, this is just something I have to get done. I don't care about the actual outcome. I'm probably going to make no money. My investors are going to make something, but like it just has to get done. And so that was the mentality I had going into that acquisition. And that's really like when I'm coaching my founders today, we're going through acquisitions. I had that talk track with them and it really works actually. Jason Kirby (12:59.134) So I really want to dive into this. I think this is a very interesting topic that a lot of founders listening will be very interested to kind of poke at and pick at and kind of really extract some value from. I do want to get to gradient ventures, but I think this is really cool. We'll stay on this topic for right now. So when it comes to these acquisitions, or you're running your acquisition and then we'll talk about helping others, you mentioned something very briefly, but you ran a process and you had compiled a list. You had hit that list. Wen-Wen Lam (13:24.488) Mm -hmm. Jason Kirby (13:28.766) You had a pitch, you had an offer. Can you walk us through one, how you came up with the idea to run a process, how you educate yourself to do that, what mentors and education, what resources did you use to kind of understand how you should do this? Wen-Wen Lam (13:41.8) Yeah, so actually, a friend of mine, his name is Pete Bandorn. I was trying to hire him to do specific things. And he actually wanted to be a free agent. He didn't really want to come and run my company or be the CEO or something like that. But he had sold his company called Point Town for like $10 million. And he goes, when you've got to read this book, The Magic Box Paradigm, you've got to read this book and you've got to follow the process. And I literally, every single founder, the f****g first thing I do when they want to sell a company is I'm like, you got to read this book because like it basically sets you up to sell a company. So there are many ways to sell a company and ours are our two ways of selling the company. We're not the same. So the first pre -COVID it was the right way to sell a company and post -COVID it's like our post -COVID it was the distressed way to sell a company. But how it works is you basically need to figure out why a buyer or a list of buyers might wanna buy you and position yourself strategically to be a good acquisition target. So obviously when you're doing a hundred million dollars in bookings and you're making like a few million dollars a year, like you're very attractive in the acquisition proposition, but you're really getting bought because you're bringing some strategic value or there's like tech involved and a lot of these travel agencies didn't have any tech, right? So you've got this scenario that's like that. And that's how you would do it. for a strategic acquisition. And I do coach my founders. If you don't have product market fit, something you might want to do is build to get bought. If you have a good tech team, you know how to build things, why don't you just build to get bought? And so that's one thing. And the way you do that is you talk to product leaders, you find out what's on their roadmap, you find out what they can't get done because their organizations are too big and too bloated and they can't be nimble. And you can build something strategically very interesting. or a big company. And, you know, I've seen a bunch of founders do this actually quite a few times. So it's like a, you know, a flip and it's a different type of thing, but like it happens. Right. And I would actually highly recommend founders with no product market fit to kind of go through that, that process, because it's interesting as it's not the same as like just a aqua hair. The other thing that you can do. And so for, for, for just selling a company, you basically have to say, I'm going to sell by this date. Wen-Wen Lam (16:02.408) This is my timeline and it has to happen. I'm going to shut down or not. And I'm okay with the prospect of just getting aqua hired into somewhere and, you know, maybe returning money to investors, but that is still a win. So you're just looking for any sort of win. And you basically go through the list of anyone who would ever want to buy you for any reason. And you bucket them into different reasons. Like this person wants to buy me because they want AI talent or this person needs operations talent or this person needs an engineering team or this person. actually needs what we do and you bucket them and then you pitch them. So it's basically like selling your product, but selling your company as a product to different companies. And so you go and you run that process. And then the important thing you have to do now is you have to figure out how to get one LOI. And then that LOI usually leads to a second LOI. And so like, it's pretty important to figure out that first LOI. It doesn't matter what it actually says. It could be like, here's a shoe for your company. Well, maybe that's a little bit of an exaggeration, but it should be, you know, it doesn't have to be the best LOI, but once other buyers know that like other people who are, especially if they're in their competitive set are looking at you, then they get worried about that. And then they want to snap you up. And I've done a few of these aqua hires that have netted 10, $20 million just because of that. Like people are worried that this team is going to go to their biggest competitor and build something amazing. Jason Kirby (17:30.942) So I can speak to this personally, because this is very similar to what happened to us at Liquid Sky when we sold the Walmart. We had an acquisition. Everything was gravy. We had this amazing offer from Samsung. And then Samsung had an internal implosion management, work with Gale, and there's chaos. And it's the day of closing that that all happened. So we were dead in the water, like, what the hell did we do? And we basically ran a fraud. We knew there was already a couple of prospects we had in the fight that we think could be interested in. We had a value proposition. And we basically did a similar thing. We didn't run a huge process. We had basically four companies that we were already deep in with because we only had about eight to 12 months of runway. And we did exactly, we basically said, we have to sell the company by the end of the year, like period. There's no alternative to this because raising money, we'd have to raise 100 million. No one was going to give us 100 million to do what we had to do at that time. So selling was the only path. And we had to pit companies against each other. We had to pit. Wen-Wen Lam (18:26.408) Yeah, completely. It's the most psychologically though to be like, we have to sell this company and I can't emphasize this enough. People don't get it. They're like, Oh, maybe I'm going to sell. I'm just going to sit here for another 12 months. Do not sit there for another 12 months. Jason Kirby (18:29.438) And then we did. Wen-Wen Lam (18:41.448) commit to selling because also remember as a founder, if you have an opportunity cost, you could be starting another company. You could be sailing around the world. You could be become a VC. You could, you know, there's many things that you could be doing, but sitting on your hands is probably the worst use of your time. Jason Kirby (18:59.518) couldn't agree more. And it's, it's so important to have that first LOI or just those conversations and basically say, Oh, these other guys are doing something like they're going to give us an offer or they gave us an offer. And that legitimizes the intent of the other parties involved. And they're like, oh, they're validating and they're competing and then we got to do this. And it creates that, you know, what might've been a lower value opportunity at the start, you know, to kind of boost up those values, you know, these bigger companies, you know, so it's like Walmart. Wen-Wen Lam (19:15.432) Exactly. Jason Kirby (19:30.014) tens of millions of hundreds of millions of dollars is going to drop in the bucket for them. So pushing, you know, giving them something that they want, giving them that narrative, drafting that narrative and knowing kind of where you fit in in the org and making sure you're talking to the right people, building those relationships so that they're an advocate for the deal to get through and so on. So these are very important tips for founders that might be looking at a situation where their unicorn dreams are no longer realistic or practical and they're maybe not profitable. So. Wen-Wen Lam (19:32.808) Exactly. Jason Kirby (20:00.126) Creating an outcome like this can be a great story, a great narrative, maybe a great financial outcome, usually not massive financial outcomes, but something that can turn into credibility and build your next thing. Like you said, go sailing around the world or become a VC. Wen-Wen Lam (20:15.912) The other thing is like, the thing people always forget is often first time founders, their first company isn't the company that hits it big. Their second company is the company that gets really big. And so I think that's something else. I know it feels like the end of the world when you have to sell your company or you're selling your company. But the reality is like, there is a huge spread between a... a founder who can actually get it done and who can't. And this is something that I've noticed and I this is something that I actually didn't use to credit as much as I do now. There is a big difference because there's something about the perseverance of a founder who's been able to get it over the line. Selling a company is incredibly hard. It's really taxing. You don't sleep. You don't eat like you work 80 hours a week. You're like stressed out. The data room is crazy. You have all these things that could go wrong. And so as a founder, like it really says a lot about you and like where you are, if you can get it across the line. So I think that's something that's been really an interesting process to watch. Jason Kirby (21:19.838) You just, you just gave me PTSD. I'm just like, Oh my God, yeah, I didn't sleep. I was like, what if this blows up or screwed and all this work went to nothing and just the scenarios you play in your head and like, me and my co -man are just like constantly like running scenarios and just like, but we were just, we have to punch at all costs. And like, it felt like you're kind of just holding up this house of cards and you're just like, please no one blow on these cards. Wen-Wen Lam (21:21.864) I'm sorry, I'm sorry I didn't mean to... Wen-Wen Lam (21:34.216) Yeah. Wen-Wen Lam (21:40.424) Yes. Yes. Yes. Wen-Wen Lam (21:48.168) Yes, exactly how to. Jason Kirby (21:49.054) Please don't get through. And like, you know, it passed everything, everything's legit and everything, but you just, as a founder, you just have the imposter syndrome. You're just like, can we actually get this deal done? So it's incredibly stressful, but you're right. You know, there's, it says a lot about founder that can deal with that level of stress and punch it through it. Cause sitting in your hands and saying, well, he's me, you know, it didn't work out, you know, as an option that a lot of founders take, but it doesn't really yield any net value to anyone. So yeah, that's a phenomenal story. So going into kind of how you're helping founders now, how'd that come about? You know, founder, being able to kind of do this and what you did for Next Travel, but for other founders. Wen-Wen Lam (22:31.144) Yeah, so I ended up accidentally becoming a VC, which happens to nobody ever. But also a pandemic happening to a travel company has happened to like seven people, right? So in travel sort of plan. So it's not like a huge spread. I, my first investor actually was is a partner at Gradient and he called me up and I was not even paying attention at all. I was in the middle of an acquisition process. I was like, I'm probably going to end up working at the Spanish company in Spain. That's going to be odd. And I'm like running the process, right? And I'm waking up at six. I'm going to bed at two. I'm like moving data room stuff, right? And so I get this call. And I started having conversations with people at the fund and I have like no idea what's going on. I was like, I might as well talk to them. This is my first investor. And so they like basically recruited me and I had, I just really wasn't sure because I had never really thought about doing VC in that way. Like maybe when I was like very young, like right out of college, but I was never really like aspirationally wanting to do venture or like thinking about it. I was like, I'm going to build a big company and I want to build a bigger company. and all of that stuff. So Gradient is Google's AI fund. One of the reasons I think I was able to end up there is because we built a ton of machine learning into our customer service operations. So one of the sweetest, most interesting things is before AI, I was looking through our first five decks before AI was super hot. It was Xenobits for travel was one of our pitches, and the other one was Travel AI. And so we actually legitimately did make it. I think our customer service org was probably like, 50 % more efficient than a normal agency. So we had like probably one sixth the amount of people at our MPS was much higher. And it's because we had just already built a lot of that stuff. And I think about that a lot today, actually, I'm talking about it, how you can build that into like a lot of like existing organizations that just don't have the bandwidth or know how to do it. And it's the same business at the end of the day, like a call center, a personal like, you know, claim center, travel agencies are another big one, but like, Wen-Wen Lam (24:44.456) AI is like a big, big, um, you know, use case for that today. And so because of that experience and because I understand stood practically how, how to apply AI, um, you know, that was probably how I landed the role, but I didn't think about it that way at the time, right? I was just like, I did YC. I've worked with every hot company. Like, so, I mean, our client list was insane. Like we started working with like, I think Snowflake computing when it was maybe 10 people or something like that. And I was like, this seems like a cool company. They're traveling with us. And they're like, yeah, like brand names like that. But it was really, really like any of them back in the day. And all of our companies just grew with us, which was awesome. Jason Kirby (25:27.422) No, that's a great outcome. So going into Grady's, you get a call from one of your investors who's already at Grady yet, and they basically make an offer for you to join after the acquisition. How did that happen? Wen-Wen Lam (25:41.224) Yeah, I mean, yeah, like I just remember one day it was like, OK, we'd like to put you through the Google process. And I was like, Google process? So I really was a little bit just like surprised because I was just working so hard on everything else. And so like once I joined Gradient, I had to learn how to invest. And I had done a bunch of angel investing. And it's very different actually being like a partner at a fund than doing angel investing. Angel investing is just like, yolo, give money to your friends. Like, you know, being a partner of fund, there's like a process. You have like, I see you make investment decisions, like, you know, either at some funds, it's obviously consensus based, some funds need all buy -ins, some funds don't need that. So it just depends, but it's a very different kind of motion that happens than operating as well. So, started grading in 20, I think 21, 2021. So been there three years. And I've learned a lot. I mean, learned a lot about AI, learned a lot about structure. I've learned a lot about Google and what that's like. And so I would say my big takeaway is that the nice thing about investing is that you get to look at a lot of different things, but not go very deep. Whereas an operator, you go deep into one thing and that becomes your whole life. And I think those are like the two, like the biggest difference between the two, but there are some similarities, right? Like you do have to like, For example, I've spent a lot of my time in the past six months selling companies and helping companies to fundraise. Those are core functions that you have to do at your own company as well. Jason Kirby (27:20.126) So you touched on a couple of different aspects here. One, let's focus on the VC experience. So let's talk a little bit about the acquisition operator role. You mentioned you don't go deep, but you go wide and get a lot of exposure to a lot of things. What's some advice to founders out there? And also, actually, before I go into that, you're technically a corporate VC. You're backed by the balance sheet of Google, correct? You're not a balance sheet. Oh, yeah. Wen-Wen Lam (27:45.128) We're not, we're actually, we're all like this fun. Jason Kirby (27:49.278) Really? OK, so let's explain that. So kind of walk me through the structure of Gradient and how that's set up, just out of curiosity. Wen-Wen Lam (27:49.48) Yeah. Wen-Wen Lam (27:59.304) No, it's just like we have one LPE and it's Google and that's public information. Jason Kirby (28:04.734) Okay, so it is, you know, Google is the sole and only LP, but you're set up as a good Wen-Wen Lam (28:07.88) Yeah, but we're not a corporate VC in the sense that we are strategically something where Google, we should take this part out. I don't want to get into this. This needs to get cut, sorry. Just in case. Jason Kirby (28:22.43) Oh, OK. OK. So I'll take out how Google, everything about the last part about Google. OK. Wen-Wen Lam (28:31.368) Yeah, yeah, yeah. Everything about Euro corporate VC. So let's just jump. Jason Kirby (28:38.718) Fair enough. I thought it was a curious bit. Okay. Okay, fine. I have a rephrase back where it was. So let's go back to just you being as a VC and getting a lot of exposure to a lot of different deals. For the founders listening here, AI is obviously the hot topic. Every founder is trying to throw AI into everything that they do to attract VCs like yourself. Wen-Wen Lam (28:40.808) I'll tell you, we can talk about that later. Jason Kirby (29:07.838) What's actually standing out to you as a VC and a capital allocator now? Someone that went out and tried to raise money, now you're giving out money, investing. What's standing out to you in the market right now? Wen-Wen Lam (29:19.048) Sure. So basically, we have a core thesis ingredient. We focus on three different things. One, infrastructure, two, future of work, and three, consumer. I primarily like consumers. So my personal thesis is that infrastructure is really crowded. And it's pretty tough right now because all of the big LLMs are backed by the major cloud providers. And so if you look at OpenAI and Microsoft as an example, or you know, anthropocore, whatever, everybody's got like, they're kind of like fiefdoms, right? And it's all, you know, like accruing value to the cloud, in my personal opinion, like this, obviously, it's not a Google opinion. But it's accruing value to the cloud. And also, it's becoming more commoditized. So these big LLMs, you know, like they're, you know, it's kind of a race to the bottom, compute's very expensive, we're waiting for compute to get cheaper, that kind of stuff. Future of work. is also like a lot of this stuff is not super, super defensible. And that's why you can switch from like a Jasper AI to like some other copywriting, like writer or copy AI very quickly. They're all the same. So from a pricing perspective, also kind of like, you know, it's like UI based, but still quite race to the bottom because they're all built on the same foundational models. And so I actually chose to focus on consumer because if you think about consumer generally, right, Even today, there's a company called Orca. I don't know if you remember it. It was this Brazilian social network that Google wanted to be the next Facebook. And it got big in Brazil for a minute, and then it was gone. But Facebook ended up building Facebook. And you think about that. For some reason, number one, consumers don't really like to go with the big brands. They're never like, let's go use whatever weird social network that this big corporation has built. They're not into it. And I think it might be because of the way products are built internally. I'm not really sure why, but that is held true. So if you look at YouTube, Google could have easily built YouTube, right? But they had to buy YouTube. And so you think about the dynamics there, you're able to build a brand, you're able to build a bit of a differentiated product, and then you have to leverage the social graph. So those are kind of like the three things that I really like about consumer. And so... Wen-Wen Lam (31:38.312) As a result, I actually started focusing highly on consumer at Gradient and I looked at three different things. And the first one is chat bots. And I know that's really weird and we can talk about that a little bit more. The second one is creator economy and the third one is social. So fire away with the questions. Jason Kirby (31:58.974) So let's talk about chatbots. I'm personally interested in that just because I see a million of them. To me, they all look the same. So I'm curious, how does a chatbot product for consumers stand out to you? Wen-Wen Lam (32:10.984) Yeah. So actually like one of the things that I think people don't really understand is that not everybody is like old like us. Like there's a younger generation that isn't talking to people. And so end of the day, they are actually using chat box active chat bots actively. And you know, like, so there is about a company in my batch called replica and it's before it's time, but it was like the OG chat bot, right? And like the first like big press launch she had was like, I can talk to my dead friend. friend, which was like a whole, you know, crazy thing. And everybody was super scandalized by that. But now if you think about it, people have like their virtual best friend. They talk to like some random chat bot, like they feel more comfortable in some ways interacting with someone that's not a human on the other side. I think there's an effect of COVID, but I also think it's a generational shift. And so you see a bunch of these up - up and coming chat bots actually like getting a bunch of engagement, character AI being one of the most famous. And one of the use cases I heard is the biggest for character is actually therapy. So people are feeling that this need to express their emotion or talk about the things that they feel like they can't talk to other people about. And so one of the biggest issues actually for chat bots is trust and safety, right? Like if you think about it, like you have to make sure the models are trained to like be safe, you know, like not be, you know, like, doing dangerous stuff, self -harm, all of these different types of things become issues, but that doesn't mean they're not engaging and it doesn't mean it's not a new social phenomenon. So like that's my view on chat bots. I think it will continue to grow. I think the corporate chat bot route hasn't worked as well, but like Snap AI has done okay, but not as well. And I think Character AI has done well. And if you look at like the meta chat bots, I think I've talked to like two of them once. Jason Kirby (34:04.062) I haven't really dug into any of the chatbots myself, but you bring a good point. I'm older, married, have an already established life and connections and stuff like that. But if I was younger, in current circumstances, especially if you're in school and you got taken out of school for a year, that's a pretty dramatic psychological shift to a young brain that was in its solitude for way too long. Wen-Wen Lam (34:06.664) Yeah. Wen-Wen Lam (34:22.536) Yeah Jason Kirby (34:33.406) So that's an interesting perspective. And from kind of the, you know, the time you brought up as creator economy, you know, what are you seeing in the creator economy leveraging AI that you see have, you know, massive, you know, Wen-Wen Lam (34:47.432) So this is actually my favorite category. So you can literally make anything using AI. So I actually have done a bunch of angel investing specifically in creator economy. But one of the first deals I ever looked at for creator economy was called pseudo, right? and it helps you write novels. I've known the founder for years. I literally wrote like an outline for a novel in literally an hour. All I did was put like one prompt, spit out an outline, spit out stuff. And then there's other ones for scripts. There's, I've seen two for scripts. I've seen a bunch, obviously, text to video. So you can start making short clips. And we all know that how that story goes, right? Like creators want to create things for YouTube that people show. I just announced an investment in a company called Jars. They make you be able to manipulate any animated cartoon type of thing. So you could have like a Judge Judy kind of thing. And you could do like a Rick and Morty thing, which is what they started out with. They moved towards more generic stuff to not impringe copyright. But people like to do that. And people also like to watch it. Right. Like think about how much time most people spend on like TikTok watching memes. Straight up. Right. And the easier you make it for people to like create funny, engaging content for people to watch it. You know, like the more stuff is just content is just going to be out there in the world. The other thing it does is just makes it so that anyone can become a creator. I literally wrote half of a script the other day just for fun. I was like here and like they do the character development for you. I wrote in like one prompt and literally like described the character I was trying to create as to the T. And I was looking at Infinity AI, it was in this last YC batch. You can literally make characters of people that you know as talking to the founders. I was like, how do you get past copyright? Like, what if you use Elon's face? Is that bad? Is that good? That type of stuff. Are you allowed to use public figures? And obviously they used a lot of the YC partners, you know, likenesses with their consent. But I was like, I mean, Michael Seibel was one of my personal investors. And I was like, I would love to make Michael just like talk and say whatever I wanted to just for fun. And... Wen-Wen Lam (37:02.6) One of the things that the founder told me is like, we want people to not think this is serious. We're not trying to do deep things. We're actually trying to create something fun and engaging. Like we're not going to pretend it's real. Jason Kirby (37:14.814) That's it. Just do a look now. Yeah, I love just how you kind of teed it up with our addiction to memes and our addiction to just kind of fun, not serious content, but now being able to do it at a scale that anyone can do and make it more original. I think there's some value to the memes that we're all very familiar with this year, whenever again, but I am starting to see a lot more diversity and less recycling of memes, and it could be just due to this nature of how quick and easy it is to spin these up. Wen-Wen Lam (37:22.056) Yeah. Jason Kirby (37:46.27) Whereas before, it just took a lot more work, took a lot more originality and creativity, but now you can kind of leverage the speed and quickness of AI. Wen-Wen Lam (37:55.336) Yeah, and the other thing is like, creator economy didn't really exist 10 years ago, right? And now it does. So I think you're going to see an expansion of that. Jason Kirby (38:04.83) And just to kind of, since you mentioned JAR, how did they get your attention? Wen-Wen Lam (38:11.56) Hmm. Wen-Wen Lam (38:15.4) I actually just thought right away, I think, I actually think Jars today is going to be something really different tomorrow. But I saw immediately that people have this need to want to. create small things, right? And the thing that was really interesting about them is that they were funny. They were creating funny content. So it was like a vice type content. I think that plays really, really well. I think one of the reasons I particularly liked that was because like they had a very big focus on trust and safety. And so like it was a good fit for us as a fund. But generally, I think that, you know, people want to see like all sorts of content. And like, I think that that's kind of what really struck a chord with me. Jason Kirby (39:01.311) But to be specific, how did they get on your radar? Did they get a warm intro? Gotcha. So warm intro? A warm intro into you? Wen-Wen Lam (39:04.104) Oh, somebody sent it to me. Someone sent it to me. Yeah. But I do go out. I go to the bar. What? Yeah, but I do also go out and like cold email people like I could I cold emailed infinity AI like I do find this one pitch actually I actually funded this company one founder literally brought his friend to a pitch and I ended up funding the friend. Jason Kirby (39:29.982) I'm curious what he feels about that now. That's fascinating. And I'm glad you're kind of giving some insight because I think, you know, on the podcast, everyone talks about their founder experience raising money, but kind of having you come on and kind of share both. You went out and raised money as a founder and now you're actually hunting down and chasing founders to throw money at. So it's a very interesting, you know, dichotomy from what you were to where you are now. I don't know, is there anything else you want to share with our guests before we wrap up? Wen-Wen Lam (39:59.24) I think that's good. Jason Kirby (40:02.942) Well, Winn -Winn, it's been an absolute pleasure having you on the show and just sharing your unique background as an employee, early stage startup employee to founder, to getting the 100 million GMBA for your company, to then selling that and moving on to VC worlds. So you had a pretty interesting career throughout. I'm fortunate to share this with our audience. All right. Thank you. Wen-Wen Lam (40:25.928) Cool, thanks, it was good to see you.