Uncategorized
You Think AI is Going To Kill Ads on the Internet? It’s not…
People don’t talk about adtech at cocktail parties. You don’t know the names of the fund returning adtech outcomes that have occurred over the last decade…who wants to talk about enabling the hated but necessary business model that’s sustained the internet for the past two or three decades? Well…I’ve always found adtech interesting. If you like thinking in systems and infrastructure, it’s actually a pretty expressive place.
We’re in an interesting moment today, where for the first time in a VERY long time, the most closely held assumptions around how the internet is monetized are being challenged. Like it or not, AI is abstracting away the content and information from the web from the publisher or website that has historically hosted it. That’s a profound change for anyone whose business model relied on eyeballs on their webpages. Interestingly, it’s not just the underlying, ad supported web property that’s under fire, it’s also the distribution channels that have built large businesses driving traffic to those pages. Look at what Arc Search and Perplexity are doing to Google’s stranglehold. A machine’s ability to synthesize and understand what previously required a human brain to understand is upending the paradigm of how we consume the internet, and in turn, how we incentivize movement around it.
With any emerging technology or market, the initial opportunity tends to be downstack and infrastructural. As a market matures action moves up toward the application layer, and along the way value is captured at a number of different layers in the stack. Adtech is this weird middle layer that has an infrastructural shape (which nicely indexes an ecosystem as a whole), but it’s super close to the application layer (and of course to the money). In AI, if chips and then foundation models are the lowest levels of infrastructure, an emergent adtech layer is ascending up the progression toward applications capturing value. You have early AI apps, like Arc and Perplexity, that are well positioned for the future, but we’re early at the pure application layer.
I’ve read contentions that advertising as a business model is going to die in this new age, perhaps replaced by data monetization alla Reddit’s $100M Google deal to train AI on Reddit data. I don’t believe that for a number of reasons.
Which begs the question…what does advertising look like in an AI world? Will brands and advertisers figure out how to bid against influencing inference? Will there be an ad-supported inference API that’s free to build on, but explicitly allows 3rd parties to have a say on the tokens it delivers? Will people figure out how to target ads against a point in space as opposed to keywords as data captured by applications is immediately passed through embedding models and stored as vectors? And will the context of a conversation or information being consumed influence the creative and format of an ad in a performant and maybe even pleasant way?
Those are all interesting questions to chase down as an early stage founder. And there are a bunch of others as well. Whether you need $1M or $20M to build out an adtech ecosystem that’s native to AI, I’m ready to lead your financing and go on the journey with you. jordan@pacecapital.com
Read Full Post | Make a Comment ( None so far )The Purpose of Life
The purpose of life, in my mind, is to achieve the complete expression of whatever physiological code happened to make it intro production through the iterative development process that was your parents’ attempts at procreation. There’s a complete version of you waiting to exist in this world, and a million contextual tailwinds, and a million contextual headwinds that are influencing whether or not that version ultimately expresses, or some diluted derivative thereof…which in and of itself may be amazing, but shy of your truest essence. Obviously life is about finding who you are….but I’d take it a step further and say it’s about maximizing who you are…reaching for the deepest expression, the most distilled self, and owning it completely in a sea of context because the world needs it and you need to process the world through its specific lens. How do you do this? The world is a mirror, but it’s highly prismatic. No one person, or pursuit, or event, or anything else reflects back this self as it is….each reflection is a directionally correct distortion of your true self…and through the consumption of probably trillions of reflections you consume, through some passive and some active synthesis, you connect to what’s inside you…your source code becomes legible despite its invisibility. Why are you here? The short answer is to be you. You have a place. You play a role. It matters. You matter. And what you present to the world matters so much, because if you are presenting something that is far away from self, the reflections you get back are even more highly distorted…and your understanding of who you are drifts further and further away from who you were meant to become. This life is an imperfect pursuit. It is a curve that approaches a line but never intersects…and yet furiously moving along that curve is perhaps the deepest purpose that I see.
Read Full Post | Make a Comment ( None so far )AIs are living on my Macbook Pro
Hosted inference is expensive. No two ways about it. GPT4 and Claude 2 are amazing, but if you are a developer using them heavily in production, the bills can stack up pretty quickly. There are plenty of startups that are trying to help developers manage those costs, but I’ve come to believe that local inference is going to be an important dimension to the coming bloom of AI powered applications. There are tons of smaller, task specific open source models that can get the job done running locally on my Macbook Pro, Ipad, and at some point my phone. And the beauty of running inference locally is that it’s free. At some point, the venture dollars and free cloud credits companies rely upon to subsidize users’ inference costs will run out, and when they do, apps are going to (and already have started) to pass those costs along to the end user.
As a consumer, I’ve become accustomed to the vast majority of my applications being free, so how does that persist when expensive inference is at the center of all the new apps I want to use. Well…if I download an app and whatever relevant LLM it relies upon to my own device, that’s a way to maintain the costless status quo to which I’ve become accustomed. Oh, and btw, I don’t mind that all the personal data I pass to this app stays on my machine as opposed to joining the app developer’s training set.
Downloading and configuring LLMs to run locally on my devices is an extreme pain in the butt, and honestly too much to ask of me or any regular user, but I’ve been using an app called Faraday for the past few months which does all of that work for me. In Faraday, I download a desktop application to my Macbook and they handle all the LLM complexity for me. On it’s surface, Faraday is an app where I can design, discover, and chat with AI powered characters and assistants. The UX is really good. There’s a super expressive prompting layer where I can define all the attributes of the AI I want to talk to. But then there’s another dimension where I can browse different underlying LLMs that when paired with the character prompt I create, result in very different conversations and personalities. The same character I create may act and speak very differently if I choose to run it on a 13B parameter fine tune called Chronos Hermes vs a 7B parameter alternative called Luna. I’m personally interested enough in the underlying models to tinker with different options, but the cool part is that for those that aren’t, the community does that work for them. People create the perfect character prompts on the perfect model and upload them together to a marketplace called the Character Hub, as a package, for others to download and use. The result is a really diverse set of combinations (model and prompt) that to me feel like mini applications. I browse the character hub and I feel like i’m moving through an appstore of cool apps that others have designed, and I get to download them and interact without paying a dime.
Faraday is architecturally very different than most of the AI apps I’ve seen, but I think they are on to something and I expect more developers to follow their lead…who knows…maybe they’ll even open up and let 3rd party app developers build on their infrastructure and platform…admittedly I’m biased as an investor in the company, but there’s something nascent and special happening at faraday.dev if you want to check it out.
Read Full Post | Make a Comment ( None so far )AI Reading Group NYC
If you’ve been reading this blog for a while, you’ll know that I used to run a really great white paper reading group centered around crypto writing and research. It was mostly builders trying to get a better handle on the new primitives and mechanics people were publishing. The only rule was that no question was dumb and the goal was to collectively learn together.
For the first time since maybe 2018, I find myself reading a lot of research and writing again, trying to develop a more technical and deeper understanding in AI. I’ve gotten to a point where I think it’s time to start doing this with others that are doing the same. The format is pretty straightforward. We all read the same paper (or some other writing that’s relevant) and every week or two we’ll meet around Washington Square Park, bring lunch if you want, and we’ll discuss them. Same rule: no question is dumb, we’re all just here to learn together. Sign up here if you’d like to participate.
Jordan
Read Full Post | Make a Comment ( None so far )Role of AI Agents in Social Applications
Not sure video is my format, but I like a good experiment.
AI, Robotics, and the future of our species
I’ve been thinking a lot about the implications of AI intersecting with robotics. I read this piece by Elad Gil which maps out the species level risk of that interface…it’s a good articulation of what i’ve been thinking through. The basic framework is around competition for resources between AI/machines and humans, and the gate of AI being able to manipulate atoms and physical matter as a one way door we can’t walk back through once we enter it. I believe that is the right focal point as well. Elad proposes some solutions to the species level risk of AI, and among them is “Merger.” He writes:
“Merger. A number of people in the AI community argue the approach to prevent AI from taking over is for humans to merge with AI via brain-machine interfaces or human upload. It is unclear why an AI would actually merge with a human, so some argue we should “force them to merge with use while we can still force them to do so”. Merged people would then effectively have extreme intelligence and digital super powers. The AI researchers who advocate this often think of themselves as the first people to undergo these mergers. If one can become a diety, why not?“
Last night I was at dinner with a group of investors, amongst whom was a PhD and neuroscientist by training. I posed the question to him of whether we would or should merge our physiology with AI…after posing the question i realized that the frame might be wrong. My question presupposed that it was our choice whether or not that interface materializes. In practice, it may actually be that we will merge at the discretion of AI, not us…I know that sounds a little crazy, but if you think about the incentive structure of AI and its push into robotics that Elad outlines, it may actually be that humans are a better interface to the physical world than robots. After thousands of years of designing a physical system that contemplates humans as the primary agent by which physical matter gets manipulated…we might just be the perfect tool for AI to take that throne. And maybe that interface between us and machines evolves faster than robots can get to parity when it comes to a generalized actions in the physical world. The practical progression that would need to occur for AI to “choose” integration with us is a little murky. Of course, we currently have the upper hand when it comes to discretion around the manifestation of physical events, so in practice I think it would look more like AI gathering economic resources through purely digital channels, and then incentivizing us to opt in to it’s will as opposed to say…enslavement, but I’m not so sure we are the ones with hands on the steering wheel.
wild times
oh, and despite the scariness I’m interested in investing at both of these points of interface with AI (robotics and people): Jordan@pacecapital.com
Read Full Post | Make a Comment ( None so far )There’s No Market For This Post
I’d like to think writing on this blog is an active dialogue with readers, founders, and investors. I tend to write about things I’m trying to better understand, be they curiosities, investment theses, emotions, or otherwise. I always thought of writing on this blog as opening up a conversation. I think I was heavily influenced early on by Fred Wilson’s shape of writing. I miss the comments section of his blog. The way he wrote when I first started reading him, posts felt like invitations to participate, think together, collectively explore a concept or technology…and that’s what I wanted to do with my readers too. He wasn’t saying I am the authority and you all should listen, but rather “I care about this, here’s how I see it so far, what do you think?“ That’s not how VC content works today. Now, everybody wants to be the authority. The shape of the writing is predominantly declarative. “I mapped this entire ecosystem and this is how it is,” “Let me explain Zk-SNARKS to you, because I am an expert now and have something to teach you,” “The only metric that matters is burn multiple and if you aren’t measuring it then you are not a good founder.” It’s not that this writing lacks substance, but rather that the author pens it through the mental model of one holding a megaphone. I never thought of writing that way. If anything, my mental model is more of a telephone…I can call out, people call back…and I love talking to the market that way. Comments on blog posts used to be interesting, and when comments stopped being a thing, intimate public discourse on Twitter served a similar function. There is no longer intimate public discourse around content on Twitter. What passes as engagement around even the best content is defined by a reader’s hyperawareness of how her engagement explicitly influences the algorithm on the platform. My heart of your post means “I am going to boost it,” not “I love it and here’s why.” People in our ecosystem don’t advance each other’s written thoughts any more. At least within my information diet, the author is the final word, that is either polished enough to please the algorithm or not, and there is little to zero community around a piece of content. To me that’s a shame…it’s zero sum…it’s boring…and I believe it stifles the available collective progress the internet affords us. So there’s an opinion piece…penned through a telephone, not a megaphone, feel free to call me back: jordan@pacecapital.com
Read Full Post | Make a Comment ( 1 so far )Support
The nature of my work at Pace is rooted in support. When I invest in a company, I take the responsibility to serve and support extremely seriously. In many ways I get paid (in equity) to hold space for people when they need it. Of course there are many other planes of service that are more tactical, strategic, and applied, but part of what makes me a good investor and board member is my ability to listen very intentionally, understand the moment a founder or company is in, and hold the space for us to collectively process it (and ultimately make some decisions). At Pace, we very intentionally limit the number of investments we make, so we can be sure we have the capacity to do this kind of time-intensive and sometimes emotionally-intensive work.
Lately I have had a number of friends and family members happen upon dynamic and challenging life moments. I’m not sure I was aware of this in the process, but over the course of the last 10 or so years, I have pretty clearly reduced the number of personal relationships I try to maintain. At the heart of this phenomena, I believe, is the same principle of being sure I have the capacity to fully show up for my friends and family when they need support.
As we enter a likely recession, try to emerge from a traumatic pandemic, search for life partners, grow our families, continue to consume an ever growing amount of toxic information, and more simply put…live in today’s world, support can be the difference between sinking and swimming. It’s not as sexy as big checks and high prices in venture or big parties and high society in personal life, but it’s what I believe is important and perhaps a non-intuitive dimension in which to strive for excellence.
Read Full Post | Make a Comment ( 2 so far )What I’m chasing down these days
I sent this note to a bunch of friends this morning and it occurred to me that I should share it with the internet at large:
Hey friends. Every so often I share some ideas or themes i’ve been looking to invest behind. If you are interested in any of these, would love to jam on them and think together. And if you have friends or portfolio companies that touch them, I’d love to hear about them. We’re just starting to deploy our $250M second fund at Pace, would love to collaborate on any of this stuff 🙂
Here’s a non-exhaustive list of things I’m actively hunting for at the moment:
1) I’m still obsessed with solving the communication layer in the Web 3 ecosystem. What’s crypto’s version of email? How do wallets message each other? How do Apps communicate with users where wallet is the sole UID? Unlike phone/email, the UID in this ecosystem doesn’t double as a communication channel. Here’s roughly what I’m looking for, but very open to alternate visions: https://jordancooper.blog/2022/06/09/lightweight-contacts-dapp-and-the-path-to-a-ubiquitous-protocol/
2) Proof of humanity: i’m blown away by the volume of machine generated imagery and media that I’m consuming these days. It’s increasingly obvious to me that content creators, consumers, and businesses are going to want and need the ability to prove or attest to their output being “hand made.” This basically gets into the realm of attestation, be it directly from the content creator, or from the app which the creator used to create or capture a piece of media. With deep fakes a few years ago, I spent time with companies trying to solve for post-facto verification and authenticity of media, but I see a change where solutions that contemplate supply side participation are going to emerge and be valuable.
3) Something I’ve been wrestling with, is whether or not prompt generated media is, in fact, a new media type/format, or simply a new way of creating an existing media type. The reason I’m interested in this is because I’m obsessed with publisher platforms that give voices to ever expanding populations who previously didn’t have a voice in a given medium. WordPress, Twitter, Youtube, Snap Stories, Tik Tok, podcast platforms, clubhouse/spaces, etc…when you increase access to a medium by virtue of a format evolution that reduces the friction to have a voice in it, value is created. With prompt generated media, there’s no question that a group of people who have never been able to express themselves visually now can. And I’m confident that the relationship between a prompt and it’s output is distinct from the output alone…so if all that is true, there’s probably surface are for a new publishing platform to enable creation and consumption of the new media type, and said platform would have a lot of pent up demand from wordcels 🙂
4) I read somewhere that the majority of students today are copying homework from the internet instead of doing it themselves. A while ago I looked at a bunch of the platforms that were quietly enabling this type of activity, but I’m curious to find antidotes that can make homework productive in an age where frictionless internet cheating is pervasive.
5) Climate audit: I’m early in auditing the capital flows in the climate space. Increasingly, I don’t think “climate” is actually a space or sector, but there are pockets that I find myself drawn toward. High conviction that there are 20 year investable themes here. So far, and this is not novel, I find myself interested in building exposure to electrification, both EV related, and beyond. I’ve also found some of the software enabling the supply side of the carbon economy interesting. And the supply chain around lithium, cobalt, neon and other inputs to electrification are interesting to me as well.
6) Deglobalization: After 25 or 30 years of hyper-globalization, and against all of my instincts for an optimal system design, it does appear that we’re at the precipice of a pretty meaningful reversal. This one is weird because it’s both profound and gradual, which makes for tricky investing. I haven’t yet figured out how to invest behind this reality, but it’s a long wave that I’d like to have multiple bets in over time. High level curiosities include domestic logistics, local supply chains, talent/skills/capabilities/training/immigration, mining, incentives for people to do undesirable jobs, revival of agriculture, domestic industrial marketplaces, etc…
7) Social interaction with AI agents: A few years ago I spent a bunch of time with Replika and was quite intrigued. Replika is basically an AI chat bot that is positioned as a user’s friend/romantic partner. More recently, I’ve seen attempts at enabling consumers to free-text design that type of chat bot for the purpose of interacting with others, as opposed to themselves. Ultimately it feels like there’s going to be a distribution layer on top of LLM capabilities that helps consumers wield the technology to shape/design/iterate on agents that will expand the surface area of the agent creator’s identity. Your bot will say something about you, the same way that who your best friend is says something about you. I’m interested in the tooling and creation platforms that contemplate an agent creator’s identity and representation of self as the first order problem space. Your bot should be an artifact of your creativity/taste/voice even if AI is generating the media it creates.
8) Cloud Nations: I’m high conviction that it’s possible to decouple physical geography from services and infrastructure historically provide by local/federal governments. This is a class of coordination and collective resource allocation that I’m obsessed with. Specifically, I’m interested in the points of interface between such endeavors and legacy public systems. How do we ride on existing rails while innovating on the experience of being a citizen of somewhere ethereal? I’ve seen a number of endeavors here. Interestingly I haven’t yet seen cloud religions (at least not explicitly named as such), but I find that interesting too…
9) Gig labor applied to a much broader set of work-types: If uber/doordash etc…have given labor control over their hours and schedule and the ability to “pick up” predictable work on demand, what are new realms of labor that would and do value the same capability? I recently heard that factory workers in the midwest are demanding that kind of flexibility and on demand hours. What about certain classes of knowledge work? Where can a big 4 accountant go to pick up a few tax return gigs at night? Where can an estate lawyer go to pick up a few will gigs on demand? Where can a trained waiter go to pick up an on demand shift? We have an investment in a company called Dework where I’m seeing this behavior on a small atomic work unit level in the web 3 ecosystem, and it feels like low context/high value work is increasingly doable and in many cases preferable to FT/PT/trad contract…
10) As always, very open to inspiration and new areas of exploration. If you’ve been thinking about something you think I would dig, I’d love to catch up and discuss.
Jordan
Read Full Post | Make a Comment ( None so far )We lost a good one
When we started Pace 3 years ago, our team was tiny. It was me and Chris and our first employee, Jenna Julien. For much of the first 2.5 years in business it was the 3 of us on a team that never got bigger than 5 people. Needless to say, we were all very close. Jenna was on the administrative side of the house, working closely with both Chris and I. If you scheduled a meeting with either of us, or visited the office, or received a pair of Pace Airpods, or attended an event, or really anything else outside of pitch meetings and portfolio support you probably met her. She had the biggest smile…that is how I will remember her.
We recently got word that Jenna suddenly and unexpectedly passed. It’s the kind of news that you just can’t make sense of. It didn’t feel real…it still doesn’t feel real…but unfortunately it is. Jenna was younger than me…she had a whole life ahead of her…and in a blink it was taken away. The thing to know about Jenna is that she lived in service and care of others. Her entire world view wasn’t about what was best for her, but rather for her community, for society, and for those in need. She advocated for those who needed it. She pushed our firm to think and invest in the well being of those less fortunate or disadvantaged..she donated her time to service and always talked about how she wanted to run a home for youth without a place to live as her “retirement dream.” Most people’s retirement dream involves a mountain house or travel or whatever…her’s was service.
When I talk to people about Jenna’s passing, the conversation usually ends the same way: “Well…it’s a reminder that life is short and to live each day.” That’s how most people instinctually try to move out of the discomfort of sitting with sadness. I don’t, however, think that’s actually the takeaway. It’s very hard to draw a true lesson from such an abrupt and unfair loss…but the takeaway I prefer to focus on is taking the elements of Jenna that were truly unique and defining, internalizing them, and carrying them on so that the world doesn’t lose what she brought, even if she’s no longer here to deliver it herself.
Jenna was a bright light who fought for the side of good every day…she will be missed both at Pace and by everyone who knew her. I am glad to have known her and called her a friend.
Read Full Post | Make a Comment ( None so far )An Odd Ritual
I’m on vacation this week. Baby is sleeping and Olivia has taken the older one out on some errands. A rare moment to sit down and read the New York Times cover to cover. As I flipped through the pages, stopping to actually engage with each and every tragedy or suffering or instability afflicting some region or segment of the population, it was hard not to notice the contrast between the articles and the advertisements in the paper. Directly opposite 1000 dead in Pakistan flooding was full page “Google keeps you safe.” Adjacent to a severe beating in Hong Kong was an advertisement for the miracles of modern medicine being delivered in some US health system. The subtext was clear: “everyone else is fucked but you, cozy New York Times home delivery reader, are SAFE & COMFORTABLE.” How did this come to be? The daily ritual of sitting down and consuming all of the problems you don’t have…
There’s comfort in processing your reality in contrast to a “worse one,” but it’s a pretty ugly, if not sociopathic ritual to do so. Under the guise of being “informed,” or some kind of thin veneer of empathy for protagonists of the world’s bad news, we’ve been quietly and daily reassuring ourselves how good we have it. How and when was it normalized to sit down, spend an hour effectively rubbernecking societal wreck after societal wreck, only to fold up the paper, take the last sip of your coffee, and do nothing about it? I’m not above this in any way. I’ve done that exact thing thousands of times. It’s just such an odd ritual to have permeated our collective daily routine.
Before digital feeds of information and content, the newspaper was a predictable daily feed of the suffering you weren’t experiencing. That’s not to say you weren’t suffering in different ways, but why not start the morning with something worse than your life? Look no further than reports of death and killing, which I’d wager have graced the pages of every New York Times issue since there was a New York Times, to guarantee that you can consume something worse than what you are experiencing. If you have a pulse, a newspaper can show you someone you are doing better than.
I deleted Tik Tok from my phone months ago because the algorithm decided I like videos of people being punched in the face. I told Chris that’s why I deleted it, and he said “Tik Tok doesn’t think you like that, it knows you like that, you just don’t feel good about it.” Maybe he’s right…a more modern successor to the ritual of reading the Times…their suffering isn’t my suffering…but just because we all have lizard brains, doesn’t mean our attention needs to be pointed at feeding them.
I guess there really isn’t a point to this post…just a weird observation, but it feels good to sit down and write something longer than 140 characters…it has been a minute…
Read Full Post | Make a Comment ( 1 so far )Lightweight Contacts DAPP And The Path To A Ubiquitous Protocol
When I look at the Web 3 ecosystem, it feels like a system in want of a native communication layer. Basic consumer needs like “How do I message a wallet or public address?” are not addressed in any kind of final form. Basic business/DAPP needs like how do I notify or reengage a user when something happens in my DAPP are not addressed in any kind of final form. There are tons of attempts at building for these these needs, but few, if any, that I’ve seen with the properties I believe are necessary to endure.
When I started out thinking about this problem, I thought I was looking for a lower level protocol that contemplated a developer facing motion of distribution. I assumed that wallets would become inboxes (still believe that), and a standard for permissionless end-to-end encrypted messaging to those inboxes would be achieved by a protocol that spiked on anti-spam mechanics. Projects like Dialect, XMTP, and a handful of others touch that idea. In some ways, it feels like that game will be won on the back of a few critical BD type wins with heavily penetrated wallets in whatever the respective chain is that matters, but increasingly I’m starting to believe that won’t be enough. There are some pretty critical decision points around whether or not you are storing said messages on-chain, whether or not you care more about the async or real time messaging paradigm, and what if any ambitions you might have at the client/interface layer. For better or for worse, I’ve come to believe that an essential property of the winning system is truly permissionless communication. I believe I will be able to pick an arbitrary wallet address, and with the requisite will and investment, send them a communication that they will consciously receive. A second essential property, in my mind, is that the preservation of pseudonymity for both the sender and recipient must be contemplated as the base case. The path to such a reality is long and riddled with challenges.
Some of the needs articulated in paragraph 1 are being addressed at non-infrastructural layers in the stack as well. Etherscan, for example, recognized their asset of reoccurring attention/engagement with a significant consumer base in the ecosystem, and recently offered users a way to permissionlessly contact the owner of an NFT that one might covet, for example. The insight is that Etherscan has a better chance than most of that recipient seeing a notification by virtue of the recipient’s frequent use of Etherscan. That issue of a recipient “claiming their inbox” is complicated…and most flows I’ve seen that contemplate a messaging universe that’s relegated to the install base of a new client to do so, feel dead in the water to me.
Lately, I’ve been of the mind that the winner in this space is not a lower level protocol thinking dev first, but actually a SUPER lightweight application that achieves high penetration, develops an edge on anti-spam as a result, and then get’s baked in as the standard across wallets down the line. When I say lightweight, I think about the early instantiations of Groupme, that built a very very thin application layer on top of SMS. It feels like the core gesture within such an application is some version of graph formation, and the closest parallel I can see looks like the contacts app on mobile. I think there’s a world where giving someone a token, that she holds in her wallet, grants her access to my priority inbox. I think there’s a world where that consumer level action enhances a protocols anti-spam capability, and I think there’s a real network effect in productizing that gesture because overlapping relationships, as defined by common “personal token” holders, can make permissionless messaging of related non-holders less spammy (think friend of a friend type analysis).
The last thing I’ll say about this, which is related but distinct, is that it feels like forward and backward interoperability with Email and SMS are really valuable when trying to get to this end state. I think there are some pretty creative hacks that can help bridge the gap that seem to be percolating. Skiff, for example, feels to be playing with this line…
All of this is to say, I’d like to make an investment in a super lightweight crypto application that focusses on communication permission as the core user value, with all graph construction living on-chain, and if we nail that, it feels like there’s a path to attaining the dominant protocol position in the ecosystem. I’m jordan@pacecapital.com, would love to lead an early financing and help you build this.
P.S. I’ve done a bunch of research here (that I’m happy to share), but if I’m thinking about anything incorrectly or there are reference points I’ve missed, please do reach out an educate me…still learning
Read Full Post | Make a Comment ( None so far )Immersion and Perspective
I attended a memorial service recently of a very accomplished member of our industry. Listening to colleagues, family, and athletic teammates talk about this person was incredibly inspiring. One takeaway I held onto, was that there is something amazing about approaching each and every moment, regardless of context, with uniform effort, standards, and focus. It’s a very difficult thing to do. Some moments we are activated and some moments we are sleepwalking through life, but what would it look like to be activated all (or almost all) the time? The more I thought about this question, the more I found myself thinking about the concept of immersion. People talk about being present in any given moment, but I think immersion is something greater than that. It’s not just existing in a moment, it’s leaning into the moment, pushing it further and richer, and maximizing the experience of it.
Curious about what a life of full immersion in every moment looked like, I decided to run a little experiment. What if I could “show up” and “bring it” evenly, to everything I do in a day? What if I could apply the same focus and effort to bath time with my kids or a dinner after work that I do an investment decision or a long distance run? I realized quickly that I would need to hack my brain to achieve this. I observed that context switches were the best moments to hack, and committed to “actively reminding and encouraging myself” to fully immerse in whatever was on the other side of any context switch I had in a day. It worked until it didn’t. For about two days I maxed out every moment, regardless of whether it was one that naturally drained or gave me energy, but it was too hard to maintain uniformly.
While the experiment ended (and failed), I still hold onto that intent around immersion. I still activate myself during context switches when I can or remember, but I’ve accepted that the “success” outcome in this experience is “more fully immersed moments” and not “all fully immersed moments.”
Weeks later I was thinking about the pursuit of immersion, and what other running pursuits I hold and strive for. The other immediate one that came to mind is “perspective.” More than immersion, seeking perspective is native to my disposition and brain chemistry. For as long as I can remember, I’ve been trying to see things exactly as they are. In college I connected deeply to the Stoic philosophy for this reason, and in professional pursuits it’s kind of the only thing that matters as a VC.
Interestingly, you could argue that perspective and immersion are zero sum. I think of perspective as stepping as far away from things as possible, such that you can see them from a bird’s eye view. I remember reading some stoic definition of wisdom in college that went something like “you and I are having a conversation. If there were an objective third party, watching down over us, viewing the interaction, wisdom is how close my understanding of the moment is to what that observer sees is actually happening.” I might have butchered that a bit, it’s been a minute…
In some ways, it feels like to fully immerse in anything, you need to stop trying to see it from far away simultaneously. You need to let go of that search for perspective, and live the moment right up close to your face. It’s a totally different mindset. Where I net out, is that toggling between the two feels right, as opposed to existing split or indecisive in any given moment. I guess I’d like to very intentionally be in one mode or the other, and make the toggle active and at will.
Anyway, as I scroll my twitter feed, in which fear and uncertainty have permeated the echo chamber, what I really see is people fleeing immersion. In moments like this, everyone is seeking perspective, but I find it interesting to ask, how do you fully immerse in a painful or uncomfortable moment? I think there is a way to do that. And for some reason my toggle wants to go that direction right now.
Read Full Post | Make a Comment ( None so far )Anon-first world
Adjusting to anon-culture on the internet has taken me some time. After building up a real public ID over the past 13 or so years, I’ve become attached to it. I was anonymous on AOL chat in the late 90’s, real id on closed networks like Facebook in 2004, and then Twitter brought my real ID to the open internet in 2007. Since then, I’ve been @jordancooper on pretty much every public platform I try. My blog is real id, real email addy visible…for better or for worse I am the same person online and offline. I acknowledge that my privilege is an input to this truth. When I bought my .eth domain i chose jordancooper.eth. When i joined discord I was @jordancooper+some random number…and that all seemed to make sense to me until it didn’t. Over the past few years, I’ve joined many discord channels, where the vast majority of participants are anon, and honestly…@jordancooper+some random number started to feel a little outsider-ish. There was no real cost to me doxxing myself. I stand by everything I say on Discord and I’m not sensitive about my real id, but culturally I couldn’t help but feel like I was doing it wrong…With jordancooper.eth the pain of doxxing myself became a little more acute. Here the cost wasn’t really cultural, as it’s quite common to append a legacy social id like your twitter account to your .eth domain, etc…but rather there was a hint of security concern. There isn’t a lot of economic value held at jordancooper.eth’s associated public addy, but it’s not nothing…in a world of social engineering and spear fishing and such, all of the sudden I kind of wish I was exploring the Web 3 ecosystem without putting a target on my real back.
But as I talk to more people who choose to navigate web 3 anon-first, it’s clear that neither of these costs is at the heart of the choice. Yes, the security stuff is real to people, but it’s deeper than that. There’s an intimacy in real id that a growing number of people expect to exist with intentionality. There’s meaning in a relationship progressing from anon to real id, and the moment one doxxes herself to another or a community is an exercise in trust. Doing so forms or strengthens a bond…anon first actors become active curators of their real id inner circle. There’s safety in that discipline, but also social gesture.
I don’t think I’ll ever be anon-first…the cat’s already out of my bag, but I do find myself committing to understand this decision as a first class citizen and approach it with the requisite empathy. An investor asked me the other day if Pace would invest in someone who’s real identity we didn’t know. Such a hard question. My instinct is no, but I’d be very happy to jump through any and all hoops necessary to authentically establish trust with an anonymous founder. I’d readily commit to keeping her real identity secret. I’d earn the intimacy which I am requesting, but my “real life” is too integrated into my work life to approximate trust in my working relationships (and there’s the whole fiduciary responsibility thing…which is real).
Something I’ve come to realize about myself, is that I value consistency in people across contexts. The most authentic people, to me, are the ones who show up to their work life, their home life, their leisure life, their online life, etc…as the “same person.” Chris Poole, who founded early anonymous forum 4chan, and who was first introduced to me as moot, once explained to me that identity is prismatic, and that we all deserve to be different people in different places. At an ideological level I agree. At a personal level, I still try to surround myself with those that show up consistently, regardless of context. Maybe I need to revisit that preference…but I literally don’t know how to trust someone who isn’t “themselves” everywhere. I guess that’s ok in systems that are designed to be trustless (i.e. Dapps, crypto protocols, etc…), and i’m more than happy to transact/communicate/collaborate/create/enjoy trustlessly…but in a world where you are the aggregate of the people with whom you spend most of your time, my close relationships are no such system….
On a more applied note: I think there’s tremendous value to be built in acknowledging the spectrum of anonymity to real identity as a progression. Building professional and social systems and applications that treat it as such feels important. If you are working with these dynamics in mind, I’d love to speak: jordan@pacecapital.com
Read Full Post | Make a Comment ( None so far )We Saved a Seat For You
I have a strong instinct that the next person we bring onto the investment team here at Pace will spend the vast majority of their time in web3. The Associate or Principal role at Pace is explicitly a tour of duty…there’s no hard timeline, but it’s about 2 years. One of my primary commitments that I make to anyone who takes the seat is that I’ll measure my success as a manager and our firm’s success as a platform for them by whether or not their next step is a wildly exciting, offensive move in the direction of their career goals . In Tina’s case, that was becoming a Web 3 founder. For somebody else, it might be ascending into a partner role at another firm, but for better or for worse, we have chosen to make the gig finite. Given that our time together is limited, it’s increasingly clear to me that 2 years is not enough time for someone to both come up the curve on web3 and have a material impact on our firm before our time together is up. As such, I’ve resolved that the right next person, out of their own curiosity and effort, will have already acquired the fundamentals to think from first principles in crypto from day 1.
I’m not looking for “experts,” but we should be able to look at a project/company/application together, spend an afternoon reading or tinkering, and get to both a mechanical understanding of how it works as well as a system level understanding of how it fits in to the broader ecosystem today and going forward. If I said to you, “I’m most interested in permissionless communication/messaging between DAPPs and wallets or wallets and wallets”, I need you to understand why that’s important immediately, and then we can start tackling the question of what a winning implementation might look like. The work I do is very exploratory…I’m looking for someone with whom to explore. Flipping digital collectibles or degenerately chasing yield in the Defi ecosystem or actively trading in any way is not a foundation that will enable you to do great work with me. Isolating foundational primitives and mechanics and dreaming of how they can and will be combined and applied to the world is my preferred way of working and I’d like to think through that lens with you. The foundation I’m looking for is a clear understanding of the constraints and capabilities that define the web3 ecosystem, as well as some informed intuition of how and where value accrues within the efforts we explore. Pace is not where we put capital behind crypto hype…there are plenty of firms where you can go and do that in Web3, but if that’s what you are after this will be a terrible home for you. We make concentrated, intentional investments into a handful of things every year and partner deeply with founders in a way that, dare I say it, may strike you as traditional.
So why would someone early in their career, with a web3 background and understanding, want to come work here, at a generalist firm, instead of at a “crypto native” fund? Sector specificity has it’s advantages, but you come here to develop your fundamentals as a thinker and investor…it happens that we will do that together largely though the context of the web3 ecosystem, but if your primary takeaway from this experience is deeper domain expertise, than Chris and I have failed you. We’re a small team by design. There are two of us managing $400M on behalf of world class institutions, and we’ve got an open 2-year seat. Oh, and if you are here and you become interested in something other than web3…as long as you can get us interested…that’s great too. It’s a big world out there…and there’s deep change in the air.
Reach out here: jordan@pacecapital.com
Read Full Post | Make a Comment ( None so far )Spending & Passing Time
Following last night’s news in Ukraine, and on the back of 2 years of pandemic, I am acutely aware of time. There is nothing profound in saying that it is so clearly our most valuable, and undeniably limited, resource. Thinking of time as a scarce resource, and looking through a lens of resource allocation, it occurs to me that the phrase “spending time” is much deeper than I’ve previously considered. There is a monumental difference between spending time and passing time. If we were to map it to another form of scarce resource allocation, like money, spending time is like using money and passing time is like losing money. In both cases, your scarce resource declines, but in the first there’s intention and in the second there’s not. So back to time, spending time is intentional and passing time is not, and while both are exchanges, where you receive presence and experience in exchange for your allocation, the ROI on the prior is much higher.
In less analytical parlance, you could say “live each day to the fullest”, or some other cliche, but I think there is an interesting mental adjustment in considering time spent with the same active calculus as money spent. I feel value in asking very frequently, is what I’m doing right now or what I plan to do worth it? I see higher ROI in maintaining an acute and ominpresent awareness of opportunity cost, and in internalizing the greatness of that opportunity cost by assuming that the BATNA is also intentional allocation as opposed to passive expiration.
If we mentally hold our time in the equivalent of a savings account, the strategy that naturally follows is one of conservative allocation and preservation. I think that’s what most people do. We model our life under the assumption of its stability. Yes, we are aware that freak accidents and unfortunate rolls of the dice pertaining to physical health exist, but generally when someone hits 40, for example, they feel confident that they are “mid life” or something like that. But recently I’ve come to terms with the fact that our time doesn’t really exist in a cozy, snug savings account. Or if it does, it’s subject to spikes in inflation, asset seizure, etc.
I don’t know about you, but whatever I’ve got saved up, I’ll be damned if I don’t spend it.
Read Full Post | Make a Comment ( None so far )Swapping Stamps
These days it seems that the majority of private financings I read about disclose the valuation of the round in question. It hasn’t always been that way. In fact, it almost never happened until 4 or 5 years ago. Without public valuation disclosures, the market of would-be talent and downstream capital in tech was deeply tuned to the brand stamp of whatever venture firm(s) financed a given company. Simply getting money was a news story and the TechCrunch headline was who gave it to you. Your VC’s brand power was a proxy for your potential enterprise value…and so it was really helpful, at a tactical level, to be backed by X, Y, Z firms.
Of course, today, that dynamic still exists, but it feels like the value of the VC stamp has declined as the enterprise value of the company has become a more prevalent public focal point. Now when I read about a company, I can put a number on present value and extrapolate out plausible future value from there…I couldn’t do that before valuations became public. The Techcrunch headline today is “Company X raises $200M at a $2B valuation”…oh and by the way…at the bottom of the article, the money came from firm X. That’s really different than it was. The market is now anchored around a signal that’s more directly measurable. Is it an optimization if that round was led by a tier 1 VC vs a spray and pray allocator like Tiger vs Goldman Sachs? Of course…but the headline, and the thing that cements a company’s position in the pecking order of market-perceived success is the number, not the name.
I’d argue that one of the most brilliant things Andreesen Horowitz did when they entered the market in like 2010, was not so subtly making their brand synonymous with high valuations. They came with high conviction, big checks, and if you got one, people just assumed the valuation was immense and that you had made it. And founders, of course, wanted to be perceived as having made it, so they sought A16Z’s money. Did people think they were good pickers? To an extent…but it was “A16Z = big number” before the market was comfortable publishing actual big numbers. They developed a new kind of stamp that approximated where the market’s attention is currently anchored today.
So anyway, I just find it interesting. Benchmark is still a stamp…and so forth…but weirdly Softbank’s high number has come to be more of one? In a multi-iteration game, and what recent months of turbulence suggest is that, the big number stamps may prove to be less enduring than the firm level stamps. We’ll see. I haven’t decided if the trend toward public disclosure of valuations accelerated the narrative around private capital as a commodity, or perhaps it’s simply a reflection of that narrative taking hold…but one way or another the number seems to have taken marketshare from the name…for now.
Read Full Post | Make a Comment ( None so far )Bronzing Tina’s Shoes
A few months ago our wonderful Associate, Tina He, developed the conviction to go all in on her Web3 project Station. When we hire investors at Pace, we are explicit that its is a ~2 year opportunity, and one of the key KPIs we have as managers is to set these folks up to take whatever next step excites them at the end of such a tour. Tina is a builder at heart. We’ve known that since Day 1. When she told me she was ready to take the leap it was emotional. This is someone I really care about, with whom I LOVE working, and in whom I invested a lot of time and energy. You might think the emotion i felt was loss…but it wasn’t. It was joy….yes, maybe the teary eyed kind of joy…but very clearly joy. There are few things more exciting to me than seeing someone self actualize and step into themselves, and that’s how I processed Tina becoming an entrepreneur. I still wanted to see Tina every day and work closely together, so we decided to transition her role into Entrepreneur-in-Residence late last year. We keep the same sync schedule, and see each other all the time, but now most of what we talk about is Station. I’ve gotten to know her cofounders and the broader Station community and truly believe they are up to something special.
Interestingly, with Tina’s new adventure, the Pace investment team has gone from three investors to two! Despite now managing $400M, we are a small team by design and always will be. I do find myself missing her contributions to our collective work as investors. I don’t see anyone filling Tina’s shoes. They are 1 of 1, custom fit, never to be worn by anyone else. Perhaps we can bronze them and put them on the Pace Library bookshelf that she designed alongside a Pace Library companion app that enables guests to borrow our books. Even as an investor, Tina was always designing, always building, always creating in a very user/customer centric way.
While I don’t see anyone filling Tina’s shoes, I do see myself working alongside someone else, with a different set of superpowers, in a similar capacity. Something I learned from hiring Tina was that there is no specific archetype that I’m seeking, but rather I am drawn toward visible demonstrations of original thinking, curiosity, and authenticity. I had been reading Tina’s newsletter long before I reached out, and that was my initial window into her brilliance. As i comb the internet today, reading, researching, etc…I find myself asking “would this person be an impactful member of our investment team?” There’s no timeframe on which I’m trying to fill a seat, but if I slide into your DMs and ask you if you’ve ever thought about venture capital as a career step, don’t be surprised. I’ve got my eyes open.
Read Full Post | Make a Comment ( None so far )Pace II
It’s been about 2.5 years since we closed our first $150M fund at Pace. In that time, we’ve stayed true to our founding principles. We remain a very small team, providing high quality, board level service to a select group of founders with whom we’ve found deep alignment. We’ve concentrated our capital into fewer companies than a typical $150M fund might, and we like that. We’ve looked past momentum and hype, and squinted to see opportunities ahead of the data. We’ve sought to see the world the way our portfolio founders see it, and in doing so, have been able to help navigate toward their envisioned destination.
We’re going to keep doing all of that with Pace II, a new $250M fund focussed on leading Series A and Seed+ financings in generation defining entrepreneurs. Almost 100% of the new capital is coming from the same amazing set of endowments, foundations, and institutions who put us in business 2.5 years ago, with a few notable additions.
Lastly, my hope is that some of this new capital will be deployed by a GP other than Chris and I. It might or might not happen this fund, and both outcomes would be totally fine, but we continue to see Pace as a 4-5 GP perfectly equal partnership and will be prioritizing these conversations with the same intentionality with which we approach investments.
It’s early days for Pace, but grateful to have the tremendous institutional support from a group of LPs who see the world the way that we do.
Read Full Post | Make a Comment ( 1 so far )Pace x Pace
In 2009 a website hacked together by two teenagers in Russia took the world by storm. The premise was simple: you could visit the site, enable your webcam, and the service would drop you and a random stranger into a live video conversation. It was a phenomenon. Venture capitalists salivated…and then came…the male nudity…I was going to write that that was the end of the story, but after a quick google, it turns out this site is still live and connects over 1 million people a month…it’s called Chatroulette.
Chatroulette struck a chord because it spoke to something fundamental in all human beings: we seek connection. While the webcams sucked, and the internet was too slow, the live video based primitive, when paired with a very simple discovery mechanic (the random function), ignited the possibility in people’s minds that they could have rich, live conversations with strangers on the internet. They could find a friend, romantic partner, thought partner, shared laugh…whatever…they could connect.
Without sufficient guard rails to prevent nudity, abuse, etc., Chatroulette devolved into what the internet is very good at. But in its wake, Sean Parker and Shawn Fanning emerged with a new service called Airtime. Airtime’s premise was that if they could overlay Facebook data atop Chatroulette’s core live video primitive, they could address two important issues and deliver on Chatroulette’s promise of connecting strangers through live video. First, they could expose shared FB interests to the strangers in a conversation. Maybe that would solve the “what do we talk about” question. Second, by layering FB identity atop the network, they could create a safer environment for people to converse. Also didn’t work. Right idea, just not enough to get people “there.”
So where is “there?” “There” is where you go from sitting on your living room couch alone to immersion in a substantive live conversation with someone you didn’t know before while never changing out of your sweatpants. “There” is where you truly connect with strangers. “There” is an incremental relationship. A new friend. An inspiring conversation. An educational moment. A vulnerable moment. “There” is real relationships…forming online…with people you didn’t know before. It’s telepresence. It’s connectedness on demand. It’s the live video based antidote to isolation.
This year we led the Series A and I serve on the board of a company called Pace Groups (no relation) that I believe is “there.” I didn’t know it was going to be “there” when I joined my first group…I thought Pace Groups is about mental health…this must be like therapy…or therapy light…or something like that. I knew it was live video based, facilitated conversations, but the vibe isn’t therapy at all. Is Pace Groups good for my mental health? Totally…but primarily because it’s been a place to meet and form real connection with strangers on the internet. They did it…I went from putting in a credit card to making a real friend in a matter of weeks…and that friend happens to be a 75 year old widower in Northern California…to me that’s just amazing.
Jack and Cat are exceptional entrepreneurs and I am so glad to have a front row seat as they work to scale “there” to hundreds of millions of people. If you are looking to join an awesome team, Jack ran product and Pinterest and Affirm and Cat ran growth at Pinterest…they’re kind people and super super experienced and sharp. Happy to intro: jordan@pacecapital.com.
Read Full Post | Make a Comment ( 1 so far )« Previous Entries
Jordan Cooper's Blog: startups, venture capital, etc... 