Joshua Kushner, Founder and CEO, Thrive Capital
In conversation with: Alyson Shontell, Fortune
In conversation with: Alyson Shontell, Fortune
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TechTranscript
00:00So Josh, thank you for joining us today. I know you don't usually do interviews. So we're lucky to have you live in person
00:06The first thing I want to talk to you about is you've said we're in the biggest paradigm shift of your career granted
00:12We're both middle-aged now. It's not the longest career ever, but it's still a long career for you 20 years in venture about
00:18Why do you say that what's going on right now?
00:21Yeah, so when I started thrive
00:23We were in a very exciting moment in that the internet was starting to kind of gain a tremendous amount of distribution through mobile phones
00:31And cloud infrastructure was taking off
00:34Right now with AI. I think it's a very exciting moment primarily because the foundation for the entire ecosystem
00:41has been set
00:43I think as a firm we get incredibly excited about this moment just because of one
00:50You know the second and third-order implications of a lot of this technology in terms of how impact consumers how impact enterprises
00:57But also we're kind of living in this
01:00Exponential moment where things are just happening so much quicker and I think the rate of progress
01:05That is ahead of us is just going to be tremendously exciting. So there was one other paradigm shift that happened last week
01:13In the United States a lot has changed
01:16We have now an idea of what we know now who our next president will be it'll be President Trump
01:21There was a lot of feelings in Silicon Valley and in the tech world about
01:25Trump versus Kamala and a lot of people are saying Trump is great for a little tech first off
01:30Like what the heck is little tech and what does this mean for the venture and startup community?
01:35Yeah, so I think you know, my vantage point is
01:39You know irrespective of who our president is
01:43It's very important that we're all patriotic and I think you know
01:47America's
01:48greatest export is innovation and
01:51I think in this moment, it's really important that we continue to kind of lean into
01:57Thinking about how we can all support the ecosystem in every single way possible when I think about
02:03How the technologies that are built here impacting the rest of the world?
02:07I think it's a moment for us all to kind of you know, rally behind
02:12the technology
02:14Industry to kind of make sure that we're pushing the world forward in the right way
02:17But it should be a good thing for the industry
02:19I mean, there's a lot of people who felt like there's no exits happening
02:22The IP IPO market is down and the mergers and acquisitions are getting blocked. This feels like maybe this could be good for venture
02:30You know, I think the the industry at large
02:35You know, you have to kind of like disconnect liquidity from progress in terms of technology
02:41If you think about
02:43Public markets there are good times there are bad times
02:46It kind of doesn't matter
02:48You know
02:49What administration is involved when you think about kind of the rate of progress in terms of the things that are being built?
02:54I would say the last couple of years have been amongst the most exciting
02:59in my career
03:01you're seeing
03:03founders dream in terms of what is possible and
03:07When you think about some of these things whether it be robotics or life sciences or some of the things that we're all using every
03:14day with regards to AI
03:16Things that seem somewhat impossible a couple of years ago feel very very very real
03:22and and and in front of us and
03:25I'm very excited about kind of what is being built and and the impact that it's gonna make on the world. Great
03:31So I want to talk about though one sort of in particular, of course open AI
03:35Yeah, Elon Musk is now the center force of business in the White House
03:40We just came out with our most powerful people in business list today. He was indisputably number one
03:45He has a competitive startup to open AI X that AI's raised billions of dollars
03:51He does not like Sam your founder for open AI Sam Altman. They are in a quite a public spat in lawsuits and things
03:59Are you worried about your investment now? Like what does this mean for open AI that Elon is there?
04:04So first off I have like deep admiration and respect for Elon
04:10And you're a SpaceX investor. We feel very grateful to be yeah, and
04:15I think
04:16You know my understanding of him first off
04:20He has defied expectations on everything that he's ever been a part of and no pun intended gravity
04:27and
04:28you know my
04:30You know my core belief is that he leads with intentionality and
04:36With an orientation with regards to kind of what is best for humanity and for everyone
04:42my interpretation
04:44my interpretation of
04:48His excitement to kind of participate in the government is very much driven by his desire to do right by everyone and
04:55Based on what I know of him and to be self-aware
04:59There are others who know him better. I think he always leads with good intentions and I have extreme confidence
05:07That he is always gonna do what he thinks is right for all Americans
05:11Well, maybe you will broker a treaty between the two of them some peace between Elon and Sam. Um, I
05:17Know for certain that both Sam and Greg have deep respect and an immense amount of gratitude for
05:24For all that Elon has done for not just open AI, but for the rest of the world in humanity
05:30So, okay. Let's talk about what's going on at open AI in the valuation
05:33So you guys just put in 1.25 billion not the first billion dollar check. You've written this company
05:38That's more than Microsoft put in in this past round more than NVIDIA more than Khosla
05:43I mean you are like all-in on this company
05:45I know that you have a rigorous back-and-forth at thrive. Should we invest should we not invest?
05:50What's what's the case for this hundred and fifty seven billion dollar valuation where you all your chips are in
05:56Versus I'm sure there were people arguing the other side. What are both sides?
05:59Yeah, it might make sense to kind of take a step back to explain who we are and what we do
06:05so we started the firm in 2011 and
06:10when I started
06:13Everyone that I met with on the investor side said no to us
06:15So we kind of took a step back and said, okay
06:19Given that we have nothing to lose. What is the right strategy for us? And we kind of created this
06:26Vehicle that was incredibly opportunistic. It was agnostic to stage sector geography and
06:32Since day one as a firm we have been very much oriented towards
06:36Being extremely concentrated in people and ideas
06:39We have been of the belief
06:41That there's a very small amount of companies that one should be a part of you need to be their most meaningful partner
06:47you need to be extremely long-term and you know, we've always believed in the
06:52monger Buffett way of the world power of compounding one of the wonders of the world and
06:58Hold these companies for a very long period of time. So since then day one, we've incubated businesses
07:03We've invested early and in extremely concentrated ways
07:07We've invested in a number of different areas
07:09And over the last couple of years, we've written multiple billion-dollar checks and companies like stripe and others that you're aware of
07:18with regards to open AI
07:20Our framework has always been that there are really four things that matter in this new paradigm shift
07:27There's research and talent
07:29There is compute and capital
07:32there's data and
07:34There's distribution and there's a lot of other things that are going on
07:38And there's distribution
07:41From our framing open AI is the number one model and research company. It's not the number one enterprise company
07:48And it's also the number one consumer company with a half a billion people using their product
07:54When we kind of think about the valuations associated with some of these large language models, obviously you can value the enterprise business
08:01But our orientation has always been
08:05Towards kind of the application layer and the capacity for
08:09Consumers to kind of utilize these products in ways in which are improving their life and the exponential growth of that user base
08:17Has been quite stunning and is fairly unprecedented
08:21Compared to anything else that has existed
08:23To kind of frame it in the context of numbers
08:27If you kind of look at cloud infrastructure, I
08:31Think there was about 12 billion of spend
08:34About a decade ago now. It's about a 220 billion run rate
08:40That should yield about two trillion dollars of enterprise value. And I think that will grow towards five trillion
08:46over the next five years if
08:48You kind of project forward our view is there's going to be multiple winners in this space
08:53We have deep respect for Google and and and Meta and XAI
08:59But our belief is that open AI is going to be one of those and we feel very lucky to be partnered with them
09:06You have an approach. That's about quality and that quality is scarcity, right?
09:10Like you have a thing you say about Fifth Avenue always invest in Fifth Avenue. You always are paying a good price for it
09:16Yeah, I think
09:19You know one of the things that I that I've once told Allison is I always try my best to kind of explain to my
09:25Mom what I do. She gets it now, but a couple of years ago. She thought I fixed computers for a living and
09:32You know what? I try my best to kind of express to her was, you know at the earlier stages
09:37We're looking for the new and upcoming community. These are areas that people
09:42Are just starting to find interesting
09:44And at the later stages our view is
09:47You want to invest in Fifth Avenue?
09:49You want to be in the high-quality companies that you want to own for decades to come in our world?
09:56You know, there's an ephemerality to technology
10:00Those assets are our family fairly limited, but I think most importantly
10:06It's so driven by the person who's running those businesses
10:11We kind of live in a world where
10:13We kind of live in a world in which the founders of these companies are really the heroes
10:19They are really the ones deserving the credit. They're the ones who are operating these businesses
10:23So as I expressed earlier, we're both concentrated and in ideas and in people
10:29a lot of people who do what I do think that if they were to be involved in something it would make a difference we
10:35try our best to
10:36Be unrelentingly supportive to those that we work with and do our best to support them in every way possible
10:42But we have a tremendous amount of self-awareness that at the end of the day
10:47There are the ones who deserve all the credit and and and deserve to be on stages like this. Yeah, I think a
10:54smart investment philosophy is to invest in people and the people running companies and clearly
11:00You were Sam's first phone call when he was raising venture capital and it goes back to a relationship
11:04You guys have had for a dozen years
11:06I imagine that you had a not-so-minor heart attack when he was almost fired
11:11He was fired for 48 hours. And to me if I'm you that's like, oh my god
11:16My investment might just go totally to zero. That's a big poof for my LPs. What did that moment teach you about investing?
11:23Yeah, I mean Microsoft looks like they were like, we're never gonna let that happen again
11:27They diversified but you're still I know you have other AI investments, but you're still like all in
11:33Yeah, listen
11:35My wife jokes with me all the time that I'm calm and collected
11:40At most times and I don't know if it's a feature or a bug to use an engineering term
11:47but you know my framing is
11:50every problem has the solution and
11:55You know, there's no hope at a better past and there's
11:59Nothing you can gain from freaking out about anything and you just have to kind of look at the play on the field
12:05And do your best to kind of write things to where they ultimately should be so
12:13Feel very grateful that
12:14We were able to play a small part as others were in that very
12:18Specific moment and we try our best to kind of do that for all the people that we're lucky enough to work with
12:22In moments of crisis last open AI question. I promise will you be on the board after it's done transitioning to for-profit?
12:30And no comment, okay, maybe maybe I take that as a maybe that's my analysis. Okay. Well, we'll stay tuned
12:38okay, so
12:40One thing about the firm you guys are very young and that's by on purpose now at first
12:46I think we talked about in a story that I wrote on you. It was sort of like the feature not the bug
12:52It was hard to recruit but now you actually look for people with less than four years of investing experience
12:57Why like don't people benefit from pattern recognition and but investing seeing cycles knowing cycles
13:04Yeah, so when I started the firm I was 26 years old and
13:09we were fortunate enough to
13:11Be seated by the Princeton Endowment and they really believed in us
13:15And and what we stood for in our approach and orientation as we started to meet with other investors
13:22People pushed us to kind of hire people with more experience and my line at the time was
13:27Anyone who has experience that is talented will never want to work with the 26 year old
13:33So there's an adverse selection dynamic associated with the types of people that we could ultimately hire
13:39So what we ended up doing was just kind of aggregating the smartest people
13:44That we knew that were our ages our close friends from college people that they knew from from from from different work
13:50Experiences and I think you know if I were to orient back to kind of what has gotten us to where we are today
13:59It's been driven by first principles thinking
14:03Humility like an incredible drive to do whatever is necessary to kind of understand
14:10different topics be there for founders and
14:14We have found that instead of trying to hire the experienced person today
14:18we'd rather just
14:19find that young hungry person who's willing to run through walls like we were ten years ago and
14:25Teach them our way and help them grow
14:28And help them become the best versions of themselves
14:31That's great. So in the time that we have left. I want to know two things really one
14:36Sam gave an interview recently and he said what are you excited about in 2025? And he said first I'm having a kid
14:42It's great
14:43Two is he thinks that AGI is coming in 2025. Can you explain? What is AGI to everybody and is it coming next year?
14:52I think
14:54there's a lot of a different interpretations of
14:58What AGI is?
15:01but I think the most simplistic way to
15:04Describe it is this idea that on certain?
15:08Tasks computers will be smarter than humans
15:12and it feels
15:13Like we're making a tremendous amount of headway towards that being the case
15:20And I think as a result of that
15:24there there's going to be a tremendous amount of innovation that is going to occur and
15:28You know, my framework on life is that with any innovation? There's good and bad. I'm an optimist. So I focus on the good things when I
15:35think about
15:37What Demis at DeepMind has done with AlphaFold and the impact
15:42That protein folding can make in terms of drug discovery. That is like an extraordinary innovation that's coming out of large language models
15:49things that can come with regards to robotics and
15:53You know other things like that. So we're very excited about the transformations that are that are that are happening and
16:01Obviously as I expressed there's going to be a tremendous amount of exponential growth ahead of us, but
16:08We have a tremendous amount of confidence
16:10Not just an open AI but the other people who are kind of pushing forward on this frontier that they're gonna steer it in the
16:15Right direction. Well, I was gonna ask you about what's next, but you sort of answered it there with the robotics
16:20So Josh, thank you so much for the time for being here today. Thank you
16:30You