The $1.9B AUM LA Fund Targeting 100x Returns

[00:00] We believe ideas are cheap, execution is dear. There are five or 10 companies going after every idea right now. They're all well-pedigreed, they're all well-funded. We wake up every day and say, look, we just gotta out-execute everyone. We gotta get 1% better every day. And if we can do that, we can be 37 times better by the end of the year. Our portfolio companies have raised about $800 million behind rounds we've led the last three years. And they're raising those Series Bs about 30% faster at about 25% higher valuations. [00:30] medium series B. That means our hands-on approach is working. We're filling in the gaps, getting those companies up the J-curve and just giving them a slightly better odds to create the next unicorn. We've already spent well more than a million since we started. It just wasn't called AI then, but we kind of called it this idea of like harnessing the collective brain of us, of our partners, of Evo and the network. LA Venture Market is still 10x Miamis. As Carter said, I think there's certain types of companies that will always be better suited to be here. When we first moved [01:00] Really drop great one-liners consistently. [01:14] Courtney and Carter. Welcome to Sorcery. [01:17] Thanks so much for having us. It's great to be here. Thank you for having me in your lovely home. This is so peaceful. It feels like a spa. We like to, you know, life's stressful enough as it is. We like to make the house feel like a little modern Zen sanctuary. It was funny because when we walked in, you're like, this is the pod house because of Maggie's pod. And then also a previous pod was here. And so now we also have a pod here.

[01:39] So what is the history? Well, yeah, the house was previously owned by Will Arnett. [01:47] Smart list here, which I think is, you know, I don't listen to too many podcasts outside of yours, my wife's and a few others, but really popular podcast. And as I showed you, he has this his podcast room downstairs, but he doesn't do video. So we're on the next iteration podcast 2.0. [02:02] And now Maggie's is in the house, top 50 in the country. This does have good podcast, Juju. It's huge. I know. I'm like, this is a good way to start the year. We've done the feng shui of podcasting for this house. [02:15] Okay. So we have to talk about you two. You've also built a podcast. [02:20] very large tech investing empire here in LA, $1.9 billion. [02:25] AUM and 54 exits. So what are you focused on right now? [02:31] Yeah, I think right now, you know, we break the world into two buckets, those companies that are trying to find product market fit, and those companies are trying to hyperscale. So we're focused on the early stage where companies are trying to find product market fit, you know, writing seed and Series A checks. And we really focus on the future work, health, commerce and money. And so it means we have a broad swath of things that we can invest in. And, you know, we've been lucky, I think the last two years, we've backed nine previous unicorn founders, but we're just trying to invest in. [03:01] trying to find great founders that are trying to disrupt big spaces. And I think we'll obviously talk about it. We won't go too long without talking about AI and hype cycles, but it's a fantastic time to be investing right now.

[03:13] The core of the fund, you guys are unicorn magnets as well, I guess. So what were some of the first early exits and some of the big names that you backed? As one that's an LA local one, we're really proud to have put some of the first million into Ring. Video doorbells kind of become ubiquitous. We use them here, obviously. I've been in other things early that are household names now, like Pinterest and Lyft. [03:36] What else? Yeah, I think we've been lucky. You know, we've been in the Cedar Series A investor and 15 unicorns. So I think we're pretty good at picking them. I think what's great is that we've just been able to continue that pattern recognition. And so, so much of early stage investing is kind of, if you've ever read Malcolm Gladwell's book, Blink, it's just intuition. But really what intuition is, is just that constant pattern recognition. [04:06] time founders who have previously built unicorns. You know, I like our chances even more because, you know, in fund one, when we had we had 13 unicorns and just that fund, you know, they were unproven founders. And now we're getting access to the best of the best. [04:22] And I think to your question earlier, when you said, what are you focused on? For sure, there's categories. For sure, there's theses. But I think one thing... [04:28] as a firm now, seven, eight years in, however long you quantify it as, we're focused on going bigger and going earlier. Meaning I think in the early days, we were even doing some co-investing. We were like, oh, I'm not, I'm not sure we'll, we'll put in half as big a check. Now I think just as a firm, we've coalesced and know where people's strengths are, know what we're focused on. So a lot of times now, especially with

[04:50] A is getting bigger, B is getting bigger. We're actually going more earlier, writing bigger checks, going for more ownership. And I think that's going to pay off really well down the line. [04:59] So what's that like for the fund strategy right now, like talking about the macro environment and the size of checks you have to write to compete? [05:07] How do you guys manage that? [05:08] Well, I think in today's day and age, there's kind of two sports of VC and Courtney will touch on it, but there's the big multi-stage funds and then there's earlier stage funds like ours. And we're focused on generating alpha, right, which is very different than the multi-stage funds who have to flock to five big names because they're the vessels that can carry so much capital to the potentially the promised land. And so, you know, I think we just have to stick to what we do best, right? In every check we write, we want to own about 20% of a company. [05:38] that company can, you know, return the fund. And so, you know, everyone's focused on the next trillion dollar company. But you also realize when you have a fund size that's disciplined and you understand venture math and you're going after alpha, right, we don't need [05:55] $25 billion outcomes to return the fund. We need about $3 billion outcomes to return the fund. And so I think the key is [06:02] There's a lot of ways, there's a lot of innovation out there. There's a lot of great companies and a lot of different ways to generate great returns for your investors. [06:10] Yeah, I think it's... [06:12] as they say, really important to make your money when you buy. We have to stay really disciplined on the entry. Sometimes it's [06:18] interesting or maybe even exhilarating to see, oh, some of the people have been doing this for 40 years are competing with us on that deal. Once you kind of get past that, you go, ooh, we have to be really careful because they can afford to

[06:30] overpay and still have it work based on their AUM, their structure, everything else. And we can't really afford to do it. So we have to be really disciplined. [06:39] What do you think most managers in this category get wrong right now? I mean, of course, one of the obvious ones is just kind of following the hype, right? [06:48] Clearly in this cycle of AI, the companies will be bigger than ever before and get there faster. There's no doubt about it, right? When you look at company scaling. But, you know, we try to be very analytical in our approach. And, you know, when someone says to me, this could be a $20 billion company, I say, statistically speaking, it's very unlikely. It could be, but there is math to it. There is pattern recognition. [07:18] we need to write 30 to 35 great checks, right? We don't have to be in everything, we can miss, but we have to lead with discipline. And when you look at the fact that we've had 54 exits, the fact that we're top decile in DPI, most importantly, something that not everyone focuses on, I think the root of it is that discipline. And I think a lot of people get that wrong. They think venture investing is easy, [07:45] Because it's fun, but it's hard. [07:47] I think what I see a lot of emerging managers kind of getting wrong is to Carter's point, portfolio construction. Um, [07:54] You know, there are funds where everything they go is a moonshot, and that's a different thesis. That's not our thesis. [07:59] But...

[08:00] Yes, of a portfolio construction of 30, 35 companies, we can take a couple moonshots and go, this will either be a zero or... [08:08] Billions, billions, billions. But you have to balance that with things you have a higher confidence interval. And I think I think what people miss mostly, honestly, is that this is still a game of asymmetrical risk risk reward. Right. And friends of mine, I see them going, yeah, but I think this will be a three X. [08:25] I go, it could be a 3X, which is... [08:28] Fine, but it could also be a zero. I can show you something I think will be 10x, 100x with the same odds, in my opinion, and could still be zero. So you have to kind of balance all that out versus kind of looking at, [08:39] maybe some of these later stage SPVs or things like that, where the risk reward is just not [08:45] the right bet. You know, you can't, we always say you can't confuse right process with right outcome, right? And we have to believe that if we keep doing the right process, [08:53] Eventually over time, it'll bear out the right outcome. One of our favorite mantras is if you have a 10% chance at 100x, you've got to take that shot on goal. But you have to be very smart about that because like Courtney said, you know, [09:06] And 3x with a lot of risk is a very bad risk reward, right? Well, and if you want a 3x portfolio, you can't aim for 3x because you'll end up under that. You need some things that have a higher probability. This isn't private equity. Private equity can aim for kind of things that are consistently 3x and they can get very little wrong. And if one goes to 5x, great, but this isn't private equity. [09:26] Still all about power law. How has the fund construction changed over time as you built up more AUM and like we've gone through different...

[09:34] cycles? How have you thought through that? Yeah, our investing approach has been pretty similar for the last five years. The only difference is our ownership target and fund two was 10%. And now we've concentrated at 20%. You know, we take such a hands on approach with our propulsion team and kind of being in the weeds with these companies. We want to own more of our winners. Because I always say when you're thinking about portfolio construction, you have to respect diversification [10:04] have to respect power law. And then in terms of where we invest, I know- But if you're a really good founder out there, we might settle for 15%. We strive for 20, but we would take a little less for something we love. And then I think in terms of where we invest, a lot of people think of us as- [10:19] one of the best DTC investors out there. We obviously had a lot of great consumer software like Lyft and Pinterest and things like that. [10:26] But I think they missed the point, to be honest, which is the job of a VC is to understand the latest technological innovation. [10:35] and then have a prepared mind to find where the best opportunities are, the best value layers, and as Courtney pointed out, find the best risk-adjusted returns, right? [10:45] If you think about previous cycles, the reason we invested in so much D2C and consumer software, because the [10:51] The innovation that changed the world was the iPhone. The iPhone led to everyone having a supercomputer in their pocket. That led to the rise of social networks. That led to the rise of consumer software like Lyft and Pinterest and Uber. And so that's where we invested. And then that arbitrage and those opportunities got less attractive, right? And so we didn't invest in a D2C company, even though we were one of the best in the game and fund one since about 2019, right?

[11:21] You think about someone like Josh Kushner. Today he's associated with OpenAI or maybe Stripe. [11:28] But one of his best bets is skims, right? Because there was a moment in time he thought he could, you know, have a good risk adjusted return in that. And so I think the job of a venture capitalist is, and today everyone invests only in AI. [11:42] But how many of these firms 10 years ago only invested in AI? Very few of them. And so the job of a VC is to understand the latest technological innovation, and [11:52] Think about what the ripples of that are. What's the second and the third waves? We're obviously in the early innings of AI. [11:59] And then we say we're sector thesis driven and then access driven. We do a lot of sector thesis work to understand where is the world going? Where is the value layer? So, you know, in fund one, that was the application layer in D2C. By fund two, we were chasing the future of commerce and the infrastructure layer. So it's constantly changing. And I think, you know, that has served us very well. It's served others like Josh Kushner very well. And I think we'll continue to serve us well because as a VC, you also have to understand [12:29] to invest through cycles. Are there any subcategories you're extremely excited about? Yeah, I think, you know, we think about AI and the blockchain as horizontal layers that cut across everything. I think it's yet to be announced, but we participated in a series A for one of the high flying stable coin companies. We think stable coins are kind of the ultimate use case for the blockchain, how people kind of move money around in countries outside of the US. And so that's an

[12:59] Obviously we've seen some big, big winners already there. And then me personally, I, [13:03] I just keep going back to we're so early in AI, right? To use another historical analogy, you know, in the 1920s, there was this really cool technology. It was the car. So you could choose to invest in car companies. But do you know who made a lot of money in the 1920s? It was people that bought real estate in L.A., a city only possible by the car. It's people that bought gas stations. Those are the second and the third ripples from the technological innovation, which was the car. [13:33] holds true today, everyone's focused on LLMs and the five big names. [13:39] But that's just the technological innovation, and those are hard to compete in, and quite honestly, you really need to be a multi-stage fund to compete in those. And I would argue, [13:49] I'm not sure they're going to have the best risk and probability adjusted outcomes, right? They have the highest entry valuation. They take the most capital, therefore the most dilution. And you're also competing. [14:00] with the best tech companies on the planet, right? When you think about the previous cycle, there was a guy named John Zimmer competing with a guy named Travis. There was a guy named Zuck competing with a guy named Evan. It was innovators competing with innovators, right? [14:14] What's different today and quite honestly keeps me up at night is it's innovators competing with innovators who are competing with the best innovators. [14:23] companies on the planet. And the best talent. You're seeing aqua hires for billion dollars or maybe even multi-billion. I think Johnny Ives, 6.5 billion dollar aqua hire. And so, you know, people were counting out somebody like Google and now everyone thinks they have the best model. But these big companies, as Cordy suggested, they have the most money.

[14:41] the most data set, [14:42] and the most talented. So, you know, I laughed. I saw at dinner with a VC the other day and he goes, "Oh, this one's going to return our fun." And I was like, "Oh." [14:51] You silly, silly, silly person. I personally think as quickly as they rise, some of them, [14:57] will fall just as quickly. And so I think this is a period of time where you can't count your chickens [15:03] before they're hatched. For me, I'm kind of our consumer guy in the sense that like I still just love following trends and I think there's certain immutable truths, meaning... [15:12] Just take one little thread to pull on, right? I think coming out of COVID, people are still more hyper aware of their health than they've ever been. Most people are more willing to spend on it. Even someone who doesn't action, their health is more aware of it. So look at something like... [15:26] AI, ChatGPT, [15:29] The other day, I mean, isn't it fascinating that I see a commercial [15:32] for just chat GPT's health part. And this was actually weirdly even, I think, a couple days before they announced it publicly. But it just shows that some things are just the basic things. Like people want to feel good. People will spend money on that. You can put all the AI against it. [15:48] But that is a focus that they're running commercials just for the health part of ChatGPT and making its own separate tab. There are a lot of very large health trends going on right now, whether it's fertility, whether it's obesity. Are those areas that you focus on or are you working on like specific areas? [16:04] I don't know, subcomponents of that? How do you think about it? I think the answer is some of both. And the great part about, you know, having diversity at M13 and diverse partners is that we have partners like our partner Latif, who I know, you know, and Morgan, who are focused on what I'll call like the health care of the consumer health care AI.

[16:34] life force that we originally started with Tony Robbins, have a great team running it. I think it can do both, right? There's still a place for physical products. There's still a place for people to go in bricks and mortar, but combined with technology, combined with the data sets, combined with the predictive analytics, I think it's really powerful. So you can't lose sight of that. And I think what's exciting is take a fun to portfolio company like Form Health. It's one of the largest obesity management platforms in the country today. Like it was [17:04] of GLP ones before they happened. But now a company like that gets even more exciting when you think about the AI of it all and the data sets of it. Now they can both expand the market, but they can, you know, scale much, much, much more efficiently using AI and the tools. So yeah. Because AI aside, there's basic things of life force or form or whatever it is, which is that. [17:27] Trust, right? Brand loyalty. I've helped improve how you feel on a day-to-day basis. So like that engenders a lot of trust. And there's a lot of things you can do with that to start to convert from maybe a physical product to something that's more software driven, something that's more one to many. And I think those are the things that are really interesting and emerging. [17:57] impacts to their business, either it's more efficiencies, their margins are increasing, they have much better product retention. What are you kind of seeing?

[18:05] Yeah, I mean, I think everybody these days is building an AI first company, right? At M13, we're going to spend over a million dollars building AI on dev, engineering, platform system, things like that. We've already spent well more than a million since we started. It just wasn't called AI then, but we kind of called it this idea of like harnessing the collective brain of us, of our partners, of Evo and the network and a bunch of stuff we did, but it's evolved. Yeah. [18:29] Yeah, and I think, you know, when you think about M13, everyone is an operator by background. It's kind of crazy. We have 40 people and only one of those people has ever worked at a VC. Yeah. [18:39] So that's either crazy or it's by design. In our case, we think we learn from the best and do it our own way. And so, you know, I think when you think about an environment like this, having all former operators who can get in the weeds, right? We designed our platform with our, what we call our operating team, our propulsion team, very specifically to be able to fill in the gaps for these great founders, right? [19:09] And so I think we are just hyper obsessed with [19:13] how do you build a better tech stack, right? In today's world of AI, you have to be doing everything, right? And we also obsess about, you know, we measure the burn multiples of all the companies we invest in, because in today's day and age, you have to be more efficiently scaling. And so, you know, right now with a portfolio company, Pietra, that I'm on the board of with Founders Fund and Andreessen, I'm literally doing a 60 day AI sprint. I talk to them every single

[19:43] approach at M13. I think we're probably the rare VC that doesn't think, although we have 15 unicorns under our belt, that we just have some special superpowers and we invest in special people and then special things happen, right? We believe ideas are cheap. Execution is dear. There are five or 10 companies going after every idea right now. They're all well pedigreed. They're all well funded. And so we wake up every day and say, look, we just got to out execute everyone. [20:13] You know, we can be 37 times better by the end of the year. And we are doing an internal review the other day and our portfolio companies have raised about $800 million behind rounds we've led the last three years. And they're raising those Series Bs about 30% faster at about 25% higher valuations than the median Series B. [20:34] That means our hands-on approach is working. We're filling in the gaps, getting those companies up the J-curve, and just giving them a slightly better odds to create the next unicorn. Sorcery is brought to you by Brex, the financial stack trusted by more than 30,000 companies, including one in three venture-backed startups in the U.S. Nearly 40% of startups bail because they run out of cash. Brex is literally built to help founders avoid that. Unlike traditional banks that let your money sit idle, [21:04] Brex's designs help you spend smarter and move faster. Their all-in-one solution combines checking, treasury, and FDIC protection into one powerful account. You can send and receive money globally at lightning speeds, get 20 times the standard FDIC coverage through their partner banks, and even high yield from day one. With same day and even same hour liquidity, access your funds

[21:34] Flexport, Robinhood, and Plaid. Trust and use Brex. Start today at brex.com slash sorcery. That's B-R-E-X dot com slash sorcery. Turing is training the next generation of AI with tasks that require real expertise and real world judgment. That's why companies like NVIDIA, Anthropic, Salesforce, and Gemini partner with Turing. [22:04] I guess... [22:14] This is a really good segue. So... [22:18] Sorcery is proudly sponsored by Brex, the performance modern finance stack. You're saying Rho? No, Brex? Brex. Oh, okay. I thought you meant Rho, our Funtu portfolio company that's high flying, but keep going. Brex is also high flying. Yeah, exactly. So they're all about performance. I'm really curious from your perspective with these companies, what are the key metrics you look for to determine their performance? [22:42] Yeah, I think, you know, so when we invest in a company, then we get our propulsion team involved. And we basically do a two hour welcome kickoff with each of those companies. Right. And we say, we're just here to be your sixth man. If this were a basketball analogy, we know you already have a great team. We just want to fill in those gaps. And we're always identifying two or three key drivers that for the next three or the next six or the next nine months that we think we can help with and should be focused on to get the company to where they want to go.

[23:12] For every company, it's different. There are some universal ones like burn multiple, you know, monthly compounding growth rates, things like that. But I think every company, right, it might be, hey, go find 50 great brand logos to show, you know, that this is really resonating. With Pietra right now, we're tracking, you know, daily queries to see how many people are querying their AI and making sure that's up and to the right. And so, you know, [23:38] I think, again, that's very much the M13. It is not one size fits all. It's jump in the trenches with these companies and figure out what they need to get to that next point. I think it's important to just... [23:49] be super founder friendly, as Carter said. We were a bunch of founders who came together, so it's kind of four founders by founders, so we know what it's like. So we always start with, [23:59] What do we believe are the one or two most important things for the company for this next quarter or next year, irrespective of us? [24:07] It's about them. And then it kind of trickles down to, hey, what are the two or three [24:12] biggest KPIs or whatever word you want to use where M13 can be most impactful. Sometimes it could be hiring. Sometimes it could be mapping AI strategy. Sometimes it can be BD intros, whatever it is. It all starts from what helps them the most. And then where can we add, you know, the most value based on our strengths. To your point, there's a really hot topic right now, and it'll probably continue into 2026. And that's talent, the war for talent, and also making sure that the teams have the right talent to execute. Because AI is like creating this insane [24:42] leaving a lot behind. So how are you helping your teams with talent, whether it's, you know,

[24:48] like retraining, uptraining, upskilling, that kind of thing, or just what to look for in their first hires. I'm going to let Carter answer that, but I'll tell you a funny story. [24:58] Call I just had on a kind of a, what was it on, like a health AI company. [25:03] Pre-launch, certainly no MVP, they couldn't even show me a demo. [25:08] They've already raised money at like 100 million valuation. They had someone offer them money at like 188. [25:15] I said, how can I understand this valuation? [25:18] there's nothing here to like look at yet. I mean, a nice deck. And his answer was, we'll go look at the page on our team because we just have the best team. So that will justify it and we'll win out really quickly. [25:30] If he's right, maybe it does, but that is a tough thing to get behind investing a really impressive team page. But truly, that's where they were at. [25:37] Wow. Yeah, I mean, talent is always the driver, right? You can have a great idea, but it comes down to execution and execution is done by a great team. And in today's environment, we're talking about technical AI talent, which is why you see these crazy aqua hires and things like that. [25:53] You know, at M13, we have a five person talent team. They're always obsessed with figuring out how to help our companies today more and more. It's kind of technical, technical jobs. And it's not easy. You just got to go out there and compete and do the best we can. I think, you know, we don't tend to invest in things like the foundational models. [26:15] A lot of the talent's flocking there. Different talent, though, is needed for some of these kind of other companies that are more infrastructure layer. But it is clearly our number one focus because it is what makes the execution look easy when you have a great team.

[26:29] I mean, you can never spend too much time on it is a short answer. My wife just did a podcast with her new partner, Stephen Barlett, from Diary of a CEO. [26:37] He said, I mean, a couple of things he said really stuck with me, but he claims you say talent's important and then I need to go look at your calendar and see how much time you're spending on it. He claimed he himself is spending 50 percent of his time on his team and talent. [26:51] And it was just a wake-up call for me because I went, yeah, it's important to me. I spend time on it. You spend time on it. We all do. But I certainly don't spend 50%. So it was a good... [26:59] good kick in the you know what to think about it and make sure you are spending that time. And so how would you change from here? I think it's what he said, the calendar reflects it. So I think it's everything from the people you are hiring, being more thorough. You know, I find that whether it's cursory references or just a world of, oh, this person was recommended, I think just going deeper with our internal hires because it has to start from the inside out. But when we're helping other companies, you know, [27:27] you know, higher and scale engineers, just really going, we can never do too much of it. And I think everyone's focused on it, but there's ways to be, [27:36] unique in where we look and how we look, especially for someone like M13, where I think we have really unique access to non-technical hires that are still really important for most of these companies, especially ones that have some kind of consumer element. Well, we're in a very, I guess, unique part of the technology industry because we're in LA and it's often overlooked a little bit. It's probably the most gorgeous place in the world. I think you guys would agree. It's January people

[28:06] I know, it's January. I'm like telling my parents in Connecticut and they're like, I'm miserable again. I'm like, you know, you can leave. We're from Chicago. So as I had to joke, we've had 20 something white Christmases. So we're good for a while. Yeah, it's good. You're good. You can always fly to it. But why did you choose LA for a venture firm and why are you still here? Yeah, I think at this point, you know, at M13, we have 40 people. We have offices in New York, LA and San Francisco. And so we really consider ourselves... [28:34] a national firm. One of our partners who lives in Miami. Yep. And, but I think, you know, [28:40] I remind people that in the last cycle, LA created about $450 billion of enterprise value. So there have been a lot of great companies that have come out of LA. [28:51] Having said that, I think LA is taking a siesta right now, right? If I'm being intellectually honest. But the reason I use the term siesta is I think we're in the early innings of AI, right? So right now we're focused on the technological innovations that is, of course, going to come from San Francisco and maybe sometimes New York. [29:21] that industry will be disrupted. The winners will not come out of San Francisco, they will come out of LA. So I think we love having our roots here. We also equally love having offices in New York and San Francisco because they're hotbeds of right now. And we're hopeful that we start to see more innovative companies out of LA. But, you know, there are some innovative companies in LA that not everyone talks about.

[29:45] Yeah, and I could talk about those in a second. But this question, I could literally do our whole podcast answering my thoughts on this. [29:52] But I think... [29:54] First off, as Carter said, we want to be adaptive to where things are at. So... [29:58] I would say that however many years ago, I started to feel like people were saying San Francisco's dead. I never would have said San Francisco's dead, but I think it would have plateaued or it had been. And then AI has changed that, which is great. It's kind of brought a certain, you know, [30:13] talent center back to that and that's great i think new york has done an incredible job of hopping on ai as kind of the secondary market la has probably been a little bit behind but i think [30:24] Lest we not forget, think of all the hype of someplace like Miami. Yeah. I mean, the L.A. venture market... [30:30] is still 10x Miamis. It depends where people are moving and everything else, but apples to apples, that's probably the case. As Carter said, I think there's certain types of companies that will always be better suited to be here. [30:41] And I think when we first moved here 15 years ago, [30:44] The fundamental question was like, can you build big companies out of LA? People were not even sure you could build venture scale companies out of here. So look what's happened in 15 years, whether it's the Elon type companies or things like that, or some of the great founders like Brian Lee, who's a good friend of ours and someone who we backed with his company Arena Club. So that's all happened. And then I also think that it's just really important to realize it's hard to tell from statistics.

[31:14] west coast spend some time in LA whether they pay taxes here whether they live here how much they live here that can all vary but there's a lot of big names you know in tech that spend time in here and that's what's most important because there was a time when people were fishing in kind of that sea of sameness in San Francisco that's changed but then everyone's coming down to LA to see what's new see what's different see this convergence of tech and media and consumer and creators and that's all still very much there so I think LA is just continuing to uh to evolve but [31:44] said best. We love having our roots here, but there's a reason we just opened a proper San Francisco office. There's a reason now our New York office is, you know, equivalent to our LA office. It's, you know, they're all interconnected. [31:56] So the big tech billionaires of San Francisco are all shouting from the rooftops about this big billionaire tax bill, okay? So apparently a trillion dollars has fled China. [32:07] the state for from wealth right so there's a trillion dollars of wealth leaving going to texas going to miami is that something that you guys consider at all do you think that's going to have an impact what are your thoughts [32:18] I think, you know, without getting too political, I think... [32:22] It's easy for you people who aren't billionaires and want everyone who is a billionaire to pay. Of course, no billionaire wants to pay that tax. But... [32:29] Stepping back from that, right? California's economy, I think, is the fourth biggest in the world if it was its own country. [32:36] People have left, but it's still huge. [32:39] I think it's just... [32:41] trying to find the happy medium between [32:43] We can't do something that makes all the talent leave. Forget the money. It's the talent. If everyone leaves and goes, that's the problem talent wise.

[32:52] But conversely, I think [32:55] You know, there's just too much happening here for everyone to say, like, everyone's leaving California because that's not the case. It's kind of my point earlier. I think how people spend their time is a little more nomadic and a little more fluid. But what's important is that people are building here and I don't I don't see a change no matter what happens. I guess the good point is that SpaceX is apparently going to be having an IPO pretty soon with a trillion dollar wealth creation event. So we're just going to have more in the early investors. So we hope a trillion and a half. Come on, Molly. Don't jinx us. [33:25] How do you think that IPO will affect the ecosystem? [33:30] Yeah, I think anytime you have a big IPO like that, right, it puts a lot of wealth in people's pockets. It allows people to go figure out what they want to do next. And so I think it will be fantastic for the ecosystem. Obviously, at M13, we don't tend to invest in those industries as much. We tend to do companies like Prepared, our portfolio company that just exited that was using AI to disrupt 911 call centers. So we tend to invest in the software layers of some of these industries. [34:00] a big event and I think we'll have very positive ripples. [34:04] Yeah, and I also think [34:06] Again, [34:07] A while back, YPO, which is like the biggest kind of global CEO group, probably a slightly older generation than people in their 20s are now joining. But there are more YPO chapters in Southern California than anywhere in the world. So I think for a while it was like people, there was this perception that, OK, we're building nice companies, but they're not these rocket ships, pun intended, like a SpaceX. But now those have happened. And now you have people like, like I mentioned earlier, Brian Lee, a very old friend of ours who we invest a lot with, co-founded LegalZoom.

[34:37] That went on to be a huge success. Went public, has changed hands a bunch of times. Did Honest Company with Jessica Alba when that was very much in the zeitgeist. And now he has a company started with Derek Jeter, the ex-Yankees legend, called Arena Club that's been kind of under the radar. But it's an incredible company. And so you have people like Brian, who's now started three companies that could easily be unicorns out of L.A. And although impressive, I don't think he's the only one. And I think you look at these other exits. We talked about Ring. [35:07] of companies besides just the spacexes there's a deep bench now in la of those kind of companies it is my mission to cover all of them we will have them all on this couch all on this couch we'll have one big founder unicorn exit hunter day yes perfect well going a little bit off of the you know the main tech road so you're particularly very passionate about sports can you talk about [35:37] athlete? Well, I think, you know, [35:40] Carter and I obviously grew up playing a lot of sports, playing a lot of sports together. I think there's so many good life lessons that come of sports. That's been talked about a zillion times. But I do think it ingrains that sense of teamwork, the sense of competition, all that stuff. And I think it got to a point in my life where I didn't necessarily miss playing football, soccer, as I missed just being competitive, competitive with myself, competitive with other people. And so, yeah, about a year and a half ago, you know, I took a little, a little, a little,

[36:08] vacation to, as I like to say, a lot of people take a vacation, go to Italy for two weeks in the summer. I decided to spend a couple of weeks chasing around 22 year old Portuguese people half my age. And so kind of did this little little adventure that was an amazing experience. But I think [36:24] You know, for me... [36:26] inspiration comes in so many different places. Like I couldn't tell you all the great life lessons I, I got from that. And just being reminded, this was a team that was on the verge of relegation. We ended up getting relegated, but it was probably the best locker room I've ever been in. And trust me, there was some learnings I took from a 22 year old who didn't speak English that I like reminded me some either things I didn't know or had forgotten, you know, around M13. And I think even zooming out from sports, it's, it's what I said before, it's just a passion [36:56] to experience things. And yes, we've worked really hard on everything else, but I love creating things where I can... [37:03] try to equalize that opportunity right someone who might not have been able to afford some highfalutin longevity thing and now can we like we're doing with our company life force bring it to 10 and eventually 10 more and 10 more so i love kind of trying to do things around accessibility and give people you know that that option to live a better happier life and you know that's that's the whole point right it's like do well by doing good i'm gonna ask what the lessons were what were the lessons [37:30] From the locker room? Yeah. So many, but I think, as I said, it's that... [37:36] Culture gets talked about so much, but it's this really...

[37:40] hard thing to define. If you ask 10 people who are probably culture experts, they would have different definitions. But like... [37:47] to see the culture of a team where people hadn't been paid in months, [37:51] They're on the verge of getting relegated. Some people would get deported because they're on work visas, right? Some people don't speak English. Yet I went to this team where people were confused if I was the new owner. People were confused if, hey, I know we're not doing well, but as a 45-year-old player from America, the best we can do at this point. And they all treated me so well. [38:11] that like I can't, our payroll was less than, was half of the next lowest team in the league. And this is, you know, serious competition. You could stream the games anywhere in the world. It was League Two of Portugal, one of the 10 best leagues in the world. And just being reminded that like, [38:27] This team outperformed just by actually sticking together. Now the end result wasn't exactly what we all wanted, but in some ways they had no business being there and they had all the reasons to be down on themselves, make it about themselves, and they really didn't. So it was just that basic stuff because... [38:42] When people ask me now what I learned from us working at Goldman Sachs, Carter doesn't think I can go into a spreadsheet anymore or at least not make one myself. I can at least audit it. But honestly, the biggest thing I take away because... [38:53] Goldman Sachs had less than 10%. [38:56] of the employees they now have, but it's that Goldman had this crazy palpable culture where [39:01] I would have the person come by and, you know, clean the floor at like midnight when we're all there still working. And somehow they embody that culture top to bottom, hourly to salary to the CEO. And that's the stuff that I think kind of endures in this world of AI. Wow. Are you still involved in sports? Are you guys making any investments around that space?

[39:20] As a firm, not exactly. But, you know, there's a lot of money going into sports right now, mostly in the form of private equity and stuff and buying stakes in these teams. So you never know what the future holds. But I think it's more likely that we invest in some other infrastructure layer or some AI component that actually feeds into something with sports. So totally open to kind of dovetailing into it, but it's not one of our core theses. [39:50] but you know we're speaking of like the the up north i think like we're good friends with [39:58] lots of different sports teams you take a team like the san francisco 49ers one of the most storied franchises on the field [40:05] but the ownership group who's kind of all in our age range have been good friends for a long time, and they're smart enough to know that [40:11] Although important, that's kind of the amuse-bouche. These incredible athletes will go out there and do what they do. They built... [40:18] one of, if not the most technological stadium in the world at the time. And they realized that we're sitting here in Silicon Valley. There's so many other things we should do both to help our players on the field, track them, take measurements. I mean, you know, this aura ring didn't exist 10 years ago. So to do all that stuff, but also use that as a jumping off point to be at the cutting edge, given their unique place. So it's friends like that, who we love to stay close with trade notes and say, what are you seeing? Hey, one of our portfolio companies that you wouldn't think has an application of sports could really help with that. You know, that's what that we see. [40:48] heard this yet, but our sponsor Public just launched something called Generated Assets, and it brings AI into investing in a way I've honestly never seen before. Here's how it works. You type in an idea like AI-powered supply chain companies with positive free cash flow, or defense tech companies growing revenue over 25% year over year. Public's AI then dispatches a swarm of agents that scan every single US stock, evaluates them, and instantly builds a custom

[41:18] And before you invest, you can even backtest your idea against the S&P 500, so you're making decisions with real context, not just guessing. And beyond generated assets, Public lets you invest in stocks, bonds, options, crypto, all in one place. They'll even give you an uncapped 1% match when you transfer your investments over from another platform. If you want to build a portfolio that actually reflects your thesis, visit public.com slash sorcery. [41:43] Paid for by Public Investing. Full disclosures in the description. [41:47] Founders ship faster on deal. Set up payroll for any country in minutes, hire anyone anywhere, get visas handled fast, and get back to building. Visit deel.com slash sorcery. That's deel.com slash s-o-u-r-c-e-r-y. [42:04] Well, we're in LA and you've invested into Life Force. So I have to ask you guys, what are your biohacking regimens? [42:10] My biggest thing is, as I've said this before, is what I like to call net zero dead time. So, [42:15] I would say there's a lot of things that work and there's a lot of things that [42:19] We don't know if they work. [42:20] I cold plunge every morning. I don't know if it works. The studies are debatable, but for me, it feels better than a cup of coffee, and I don't really drink coffee. When I do, my wife is nice enough to make it by putting in some colostrum and some creatine and everything else. So to me, coffee is just the conduit, but now I've started doing that as a good way to get some calories in the morning. Out here, I have a cold plunge in sauna, so I love the contrast therapy. There's red lights, but the whole point is all like in the morning.

[42:50] sports they're on at the best times right a big american football game's on at 5 p.m so i don't have to choose am i going to dinner or watching this game i can do it before i go to dinner but in the morning when you wake up in la you are always chasing the day whether it's midwest east coast or abroad so you can't afford to get up and kind of have that [43:07] you know, two hours leisurely unless you get up at 4 a.m. So I love getting up and standing on a vibrating plate with some red lights while I catch up on emails, while I go through our company slack. So that's the main thing that I do is do stuff while I'm doing other things. And then I'm like, if it does something great and if it doesn't, I didn't really lose out and I moved my body, which is probably the most important part. But I think according to the nail on the head, right? Wellness is the ultimate luxury right now, right? And it's all about the power of compounding. So [43:37] infrared sauna, all the obvious things. [43:40] How lucky is anybody who can have access to those things a block down the street or in their house because you just get to do them more often? And regardless of how effective each of those are, they do compound and they do great things. [43:55] And I also think people just lose sight of [43:58] You can do all those things, but those are like the sprinkles. If you don't start by, no one's perfect, but generally sleeping well, generally eating well, and do some exercise, whatever that means for you, all the rest won't matter, you know? So it's like that and... [44:13] check your blood every now and then because as we say life force blood don't lie right so it's a good way to just don't lie you heard it here first the sorcery what do you have any favorites molly we should consider what's your do you have any well i love infrared saunas i just feel like it's like a squeegee it's like a body squeegee where you just get totally wrung out yeah it's amazing and then i've been doing red lights a lot recently um what else do i like the cold plunges i can do

[44:43] bodies differently. It's fire. You don't have as much, women don't have as much muscle, don't have as much mass overall. It's... [44:49] Some days when I'm cold, I'm like, I can't imagine what it's like as a woman who weighs, you know, half as much. Yeah. And then I think... [44:56] What else have I been doing? I mean, I've been trying this stuff for forever. I'm so obsessed with it. So that's why I live in LA. Everyone's like, you don't have the personality for LA. You sound like a New Yorker. And I'm like, but I'm like very like health soft at my core. I love this stuff. Just the basic things. Go out for a little morning walk, get a few seconds of vitamin D. It's January. Look at it. Yeah. It's awesome. [45:18] all those things. And it's just, [45:20] It's just... [45:21] nice to have it, but it's like [45:24] the red lights, [45:26] good to just stand in front of them while I'm doing sales. So I'm taking a conference call. I put a little red light by my desk and maybe it helps, maybe it doesn't, but [45:33] Feels good. [45:34] Psychologically, it should. Carter, is there anything that you biohack with? [45:39] I do cryo twice a day because we have a cryo chamber. Twice a day? Twice a day. It only takes two minutes. That's like, isn't that like 1,200 calories you're burning? That... [45:47] I did think that was going to be lost on you. Yeah, I get them to eat about 70 pounds of pasta. What? And wine and ice cream. So yeah, it's... [45:57] Kind of life changing. And then similar to you, infrared sauna, red light bed, PEMF, kind of all the good stuff. But I just try to mix it up and just try to be consistent. But it's also like I was there was just an article I was quoted in for the information about those true age tests. Mm hmm.

[46:14] and [46:15] I think the concept's good, but the science just isn't there yet. I've taken... [46:20] test from all the same companies. That's awkward. It said I was 23 as my true age. I think mine ranged from like about my age to like 20s. And so if I told me I was 29 is very different than if it tells me I'm 43, you know, and that's... Just take your favorite number. Right. Yeah. I take the, the minimum median, right? Mine said I think I was like 17. So I'm going to go with that. Yeah. Go with it. Yeah. Okay. So Carter, last time I saw you, you had just gifted your wife [46:50] I think this was a custom one. How are you? What are you? Is this one of your other hobbies? Outfitting things and creating spas? Less about whatever that is. But my wife and I celebrate monthly anniversary. So needless to say, I have to come up with good gift giving every 30 days, which is a lot of pressure. [47:06] You're really setting the bar for relationships. - If you're, yeah, your next significant other, just tell them to follow my lead and do all the same things. - I'll give them your number. - Yeah, exactly. So, no, but I think like, one thing that I took away from that was how healthy your relationship is and how you guys really help each other. [47:27] it's on a very deep and respectful level. And I was really curious to learn, what are the principles that keep your relationship together? And like, what is the core of it? [47:37] So obviously my wife runs a billion dollar media company and, you know, part of our relationship, the foundation of it is just being great teammates. I think it goes back to exactly what Courtney was talking about being sports. We talk about being great teammates. We talk about being a little extra wind beneath each other's wings. You know, people talk about work life balance. I think that is something that is like trying to find a white rhino in the African safari. So we don't have work life balance.

[48:07] life combination. She'll be talking to me about business and then we'll talk about our kids because we got a little three-year-old and a little two-year-old. So, but I think at the root of it, it comes down to that mentality of being teammates and trying to figure out how to make each other better. We were both very successful before we came together, but how cool is it that we can come together and, you know, be a little more successful. The only rule in our house is that [48:37] And we go out and as we say, winners win. And that's what we wake up every day to do. [48:42] Amazing. [48:43] Well, on the topic of performance and kind of like life principles, [48:48] I kind of think... [48:50] Success is a measure of who you surround yourselves with and who are mentors to you, who you admire. So starting with Courtney, who are some people that you admire that you've experienced? [48:59] learned a lot from throughout your life? There's been so many and, uh, [49:04] I think it probably took until my 30s that I really started to be like, wow, mentorship's really important. Maybe it wasn't called that. Maybe no one put it on my radar. [49:13] I don't know that I've had that many official mentors with a capital M, but it's more just like people who influence you in ways that you realize... [49:22] consciously, subconsciously. I know my brother would say like starts with our late father and definitely definitely my dad, definitely my mom in different ways. They both had amazing careers. And I think just that proximity to them, it is a proximity is power thing.

[49:38] Thank you. [49:39] I, you know, starting with when I worked at Goldman, I was part of the team and took Under Armour Public. I would certainly not say Kevin Plank was a mentor because he was too busy for that. But he was like a mentor by osmosis because... [49:50] Once a week for a couple of years, I would go down to Under Armour's headquarters and I learned just so much about culture and business and watching a guy who was only eight years older or something than I was go, wow, there's there's a lot of mentorship that happens from being around it and things like that. So I just feel really lucky now that I think. [50:07] I have actually taken a couple people where I said, will you be my mentor? And they're like, [50:11] I'm like, it means like a once a quarter check in with this and that. And so it's just about how you set it up. But I still feel so lucky to just feel like whether it's organizations like YPO or certain people or certain parts of my life, I ask people to kind of. [50:25] be official and unofficial mentors. And it's just great to almost like have the accountability or to learn from the people who came before you. [50:33] Yeah, I think more than anything these days, knowledge is power. And, you know, the world is moving so quickly. So one thing we talk about is, you don't need to be an expert in everything, you just need to know an expert in everything, right? And, you know, the way I talk about my brain is it's a weaker form of something like the Facebook algorithm. And I'm just constantly taking in data points, right? And when you think about the role of a VC, it's then, I always say, a data point is just a data point until they coalesce, and then it's the data point, right? [51:03] just trying to take in as much data as possible, read as many articles, listen to as many podcasts like yours, and then just try to get to those and see those patterns forming quickly, right? And if you can do that, you can be two steps ahead in today's day and age. But I think it's also like...

[51:18] call it mentorship, but I also think the flip side is just staying super curious, right? I mean, I can live 10 lives and still have so many questions and so many places I want to visit and people I want to meet. So it's just nice to feel like [51:29] you can still have beginner mindset with things and stay curious while starting to form like subject matter expertise on something like hopefully we'll do an M13. So Carter, who is yours? I really don't. Like Courtney said, he did the NLG best, which is I don't have many mentors with a capital N, but man, I learned from everyone. I learn every day from my wife. Our dad taught us so much. He was kind of a CEO of kind of boring industrial companies. And [51:59] But, you know, management principles and leadership principles are just so, so similar. And then we're just lucky, right? Whether it's all day long, we're talking to fascinating founders. All day long, we're talking to some of the biggest names in tech who are our investors who remain nameless today. And it's just those conversations. It might be a five-minute conversation. It might be a 10-minute conversation. But it's just all those data points are so valuable. [52:29] And we're very lucky we find ourselves in that position these days. You really drop great one-liners consistently. [52:37] I'm a big analogy guy and a big one-liner guy. You know, keeps it simple. You should write a book. [52:43] You already did it, buddy. Our last best-selling book, Shortcut Your Startup, Molly. I think that was all the information in my head. I need another decade of experience to see if I have, you know, chapters 13 through 26 to write again with Courtney.

[52:59] from our book, which is that best entrepreneurs, you have to have a microscope in one eye and a telescope in the other. [53:05] That is always the challenge, staying focused on the minutiae and not missing the forest from the trees. Well, is there anything we didn't cover that you want to... [53:12] share with the world. [53:14] No, this has just been fantastic. And we'd be remiss not to just congratulate you on all your success. You know, we surround ourselves with great people doing great things every day. And watching you from the sidelines has been an honor because you are, as we would say in my house, slaying the game, girl. Thank you very much. Well, Courtney, thank you so much for hosting us at your lovely home. It's beautiful. And Carter, thank you so much. [53:37] Thanks again. It's been a lot of fun. Thanks, Molly. Hey, it's Molly. If you enjoy our interviews, check out our newsletter, sorcery.bc, where we deliver a once a week top deals and tech headlines email and also go deeper on our podcast interviews. Subscribe to Sorcery today. And don't forget to subscribe to the podcast on YouTube, Spotify, Apple, or wherever you listen. Link in description to sign up.