Newsletter #17 Week of October 7th, 2024

Four weeks till election night and Open AI raises over $6 billion. Finally SF tech week is upon us!

Author

Joshua Schoen
October 07, 2024

Shout out to my friends Bryce Johnson and Vincent Zhu (also a fellow Hoya) for being included in the list of the top VCs under 30 in NYC. 

Table of Contents

  • The Rundown

  • Events

  • News and Research

  • Podcast Episodes, Deep Dives, and Projects

  • Thoughts

  • Final

The Rundown

These past two weeks were probably some of the most interesting regarding tech news and global events. Earlier this week, Israel invaded Lebanon, signaling a larger expansion of the conflict in the Middle East. While less critical for the tech world immediately, conflict in the Middle East bodes a potential “Black Swan” event that could alter the shape of the election, which is significant for the rest of the tech community.

The second major event this week was the Vice Presidential debate, which had no noticeable effect on opinion polls. The election remains in a dead heat. Also, with so many states within the margin of error ( AZ, GA, MI, NV, NC, PA, and WI), many scenarios could shake out across the states as election day nears. I found it more interesting that A16Z has decided to walk back its “all-in” support for Donald Trump by donating to Kamala Harris. While it's not uncommon for business leaders to donate to both sides to retain access, it with much chagrin that I see one of the most prominent firms in the valley walks back their bet on the “Donald.”

In the tech world, OpenAI dominated the headlines by raising a whopping $6.6 billion at $157 billion valuation. The big question: Will OpenAI ever be a great business? Right now, that’s uncertain. Investors in the latest round likely need OpenAI to hit a $1 trillion valuation to see strong returns. But to get there, OpenAI must shift from burning cash to generating it—fast. The seven companies worth over $1 trillion have a median annual cash flow of $57 billion, and OpenAI is still far from that.

Some investors have strategic reasons for backing it even if it doesn’t reach $1 trillion. Microsoft and Nvidia see their investments as a win-win, and funds like SoftBank and MGX have the cash to gamble big. If it all goes south, they'll at least have some stories to tell.

Finally, next week is A16Z tech week in San Francisco. I will be in SF on Wednesday and Thursday before I turn around for Yom Kippur.

Events

Monday, 10/7:

Tuesday, 10/8:

Wednesday, 10/9:

Thursday, 10/10:

Friday, 10/11:

Wednesday, 10/16:

Tweets

This last one caught my attention… So much opportunity in a large market!!!

News and Research

  • AI and Nuclear Power. Its a VC's wet dream. Pennsylvania's Three Mile Island nuclear plant is set to restart under a deal with Microsoft to supply 100 percent of its power for 20 years, aimed at supporting energy needs for AI development. Read in The Washington Post.
  • Zoom gets stingy with employee stock comp. is this a new trend with public tech stocks? Read in Bloomberg.
  • How the turntables have turned. A16z now backs Harris as well as Trump. Read in CNBC.
  • Starting your business is hard. But look for other ways to raise money before looking for outside capital. On Todd Graves, co-CEO of Raising Cane’s Chicken Fingers, shares his entrepreneurial journey from working an oil rig to launch a chicken finger restaurant to becoming one of America’s richest individuals, with a net worth of $9.5 billion. Read in CNBC.
  • London Breed may be still worse, but this ain't good. Mark Farrell, a venture capitalist and San Francisco politician, is a leading candidate in the mayoral contest and has a history of intertwining his political and venture capital careers, notably with his support of Airbnb-like businesses. Read in Power and Influence.

Podcast Episodes, Deep Dives and Projects

  • Please see my recent Podcast on Eidolon AI, a Kubernetes-like open-source platform for AI agents. 

  • I started my series on founder thoughts. I have found that I keep saying the same things to many early-stage founders, so I thought it would be good to have something on hand.

  • Give a listen to Mark Cuban on the “All-In” podcast. It’s finally good to hear someone vehemently disagree with David Sachs and call him out on his BS.

  • I am working on my new services-enhanced-by-AI software thesis. Get ready for a release soon.

Final Thoughts

Please contact me at [email protected]. I have more time to speak with people and help where I can. I am still actively angel investing.