It’s been a sad state of affairs for consumer companies not named TikTok.

Poparazzi just shut down. (At least some of the team went to Instagram.) Popshop is struggling. The venture capital firm Benchmark helped establish both companies as consumer startups to watch by leading their Series A rounds.

Sarah Tavel, who led the investment in Poparazzi and has worked closely with Popshop, agreed to come on the Newcomer podcast to talk about the brutal state of consumer startups. “Our deep belief at Benchmark is that our job is not to predict the future, but to try as best we can to see the present clearly,” Tavel told me.

Of course, it’s not just Benchmark’s once high-flying startups that are reeling. Andreessen Horowitz audio company Clubhouse laid off more than half of its employees. Hype for the photo company BeReal seems to be dying down. (Searches for the company’s name on Google are at less than half their peak.)

“It is a really tough environment right now to build that type of company,” Tavel said about startups building for consumers. “It’s always been difficult, but the level of difficulty has been turned all the way on. Because right now, anybody building something in consumer has to compete with the most addictive consumer format that we’ve ever had — which is short video.”

Tavel, who co-led an early investment in Pinterest and then became the company’s first product manager, talked through some of the most promising opportunities in startups. Artificial intelligence seems poised to create new consumer startups. Tavel flagged the legal artificial intelligence company EvenUp, which just raised at a $350 million valuation from Bessemer, as one such promising startup. I marveled at the bootstrapped rise of Midjourney.

But, of course, many generative AI startups, especially ones building foundation models, are raising such large rounds that it can be difficult for a firm like Benchmark to rationalize an investment.

We also talked about one of Tavel’s most successful investments at Benchmark, Chainalysis. The blockchain data company raised $170 million at $8.6 billion last year. The New York Times wrote a glowing profile of the company last month.

Tavel, who doesn’t like to announce her startup investments, revealed that she has secretly invested in an unannounced NFT company.

“Crypto is a bad word now,” Tavel told me. “It’s really hard to train consumers to trust something again — once a consumer has made a first impression. It’s much easier to teach a user a first impression than to rewrite that first impression.”

Finally, I asked Tavel to give us a peek behind the curtain at Benchmark. Fortune’s Jessica Mathews recently interviewed Benchmark’s Bill Gurley about his decision to step back.

Mathews wrote:

“The venture business, if you want to be at the top, requires insane, remarkable hustle… You have to live in fear that the next Google is going to get funded by a firm that’s not yours,” he says. “Either you’re in there rowing as hard as you can, because we’re all a team, or you’re not.”

That said, he still has strong instincts about the future of tech. “If I were still active as a venture capitalist, I’d be looking at a lot of the vertical applications of A.I. I look at the coding stuff, and it’s insane… If you’re not using it, I think you’re probably writing your own death certificate as a programmer, because people are going to be so much more efficient. And the question is: What are other applications that have that kind of productivity boost or lift, and I think people are trying to figure that out.”

But in the end, it was a book by Steve Martin, Born Standing Up, that helped convince Gurley it was time to step back. “One day, [Martin] is in Vegas and he comes out, and the top row is empty, the first time he’s ever seen the top row empty. He quits the next day—never does standup again. And then he goes off and he does his banjo and his theater and his acting.… Like I said, I don’t think I ever played the stage, so I’d rather not say I’m the same. It influenced me. That notion influenced me.”

Today, the Benchmark partnership is made up of Tavel, Peter Fenton, Eric Vishria, Chetan Puttagunta, and Miles Grimshaw.

Tavel said about the firm, “We’ve always had a pretty simple idea, which is that there’s this creative destruction.”

“Once you start — there’s no training wheels. So you’re thrown into the deep end. You’re an equal partner and you’re expected to be 100% until the minute that you retire,” Tavel said. “And when you have an equal partnership, it kind of pushes you in the direction of just recognizing — as Bill said in that interview — the hustle may not be in you anymore. And if you feel that way, then the model — as was set up by the founders — is such that it’s time to raise your hand and move on.”

Of course, my understanding is that partners like Gurley, Matt Cohler, and Mitch Lasky remain fairly heavily involved at Benchmark even so.

“It’s like an affliction. The reason they’re here in the first place was because the curiosity and competitiveness and the drive for learning and relevance, being in the mix, that never leaves you,” Tavel said. “They are a significant portion of our LP base, they’re still there on Mondays, and I’m texting all of them all the time.”

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I caught up with Substack co-founders Chris Best and Hamish McKenzie at Substack’s office in San Francisco last week. They’re fresh off raising a community fundraising round and launching their social network Notes.

I wrote in March about my decision to invest $5,000 in Substack’s fundraising round, even though the company revealed that it had negative revenue in 2021:

I’m already compromised when it comes to Substack. They’ve made my job possible. And while I already have plenty of financial exposure to Substack’s performance just by dint of running my business on Substack’s platform, I’m eager to have a chance to show my support.

So this is the rare — hopefully singular — interview where I can’t claim true editorial independence. I’m compromised on this one. Still, I think you’ll find it an informative and entertaining conversation. I’m able to bring my perspective as a Substack writer to the conversation and I can’t help but fish for drama and news.

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Security is no longer a cost center — it’s a strategic growth engine that sets your business apart. That means it’s more important than ever to prove you handle customer data with the utmost integrity.

But demonstrating your security and compliance can be time-consuming, tedious, and expensive. Until you use Vanta.

Vanta’s enterprise-ready Trust Management Platform empowers you to:

* Centralize and scale your security program

* Automate compliance for the most sought-after frameworks, including SOC 2, ISO 27001, and GDPR

* Earn and maintain the trust of customers and vendors alike

With Vanta, you can save up to 400 hours and 85% of costs. Win more deals and enable growth quickly, easily, and without breaking the bank.

For a limited time, Newcomer listeners get $1,000 off Vanta. Go to vanta.com/newcomer to get started.

In our conversation, I asked McKenzie and Best about Twitter’s one-sided war with Substack. Elon Musk has at times throttled links to Substack. It is impossible to imbed tweets in Substack posts anymore.

Adding some intrigue to the tensions, Andreessen Horowitz, Substack’s largest outside investor, is an investor in Musk’s Twitter.

And, Musk actually long ago hired McKenzie, a former PandoDaily reporter, to write for Tesla.

“I try to think about Elon as little as possible,” McKenzie said in our conversation at Substack’s office. “What we’re trying to do here is not build the anti-Twitter or build the anti-Instagram or anything like that. We’re trying to build the first Substack. The vision for what we think it can become is an amazing, beautiful thing and it’s bigger and more important than social media.”

McKenzie acknowledged that “arguably Twitter is trying to kill Substack.”

I asked about newsletter godfather Ben Thompson’s critique of Substack’s community round in his newsletter.

Thompson wrote in April:

We know that valuation because Substack asked its writers to fund a round at the same $650 million post-money valuation it achieved in 2021, despite the fact the company failed to raise money last year; the company never released its 2022 financials.

Frankly, I think this request was shameful: Substack has rightly earned the affection of a lot of writers by providing them with a new way to earn money, and of course those writers want Substack to succeed. Keeping such a lofty valuation, though, is effectively asking for a donation from an audience that almost by definition doesn’t know any better. That doesn’t seem very writer friendly! Nor, for that matter, does this fight with Twitter. Again, I think this is a product bet that makes a lot of sense: Substack needs to take big swings if it’s ever going to reach its valuation. Writers, though, who need Twitter’s distribution, didn’t sign up for this fight; they are simply stuck in the middle.

We also talked about Best’s botched podcast interview with The Verge’s Nilay Patel. In the interview (here’s a link to the key exchange), Patel hammered Best on Substack’s stance on blocking overt racism on Notes. In that interview, Best declined to say that Substack would ban particular objectionable racist comments from the platform unilaterally.

In my conversation with him, Best continued to oppose “centralized censorship” on Substack’s platform. And he doubled-down on his answer, saying that he had “basically the same answer.”

Best said, “We do have a content policy. It allows a lot of stuff we don’t like. It bans only very extreme things. If people are putting things that are against the overall content policy, they are taken down by us. However, that allows a lot of stuff that we find very objectionable. Then we try to build a system that puts people in control of what they see and who they interact with.”

As should be pretty obvious from the conversation, I think that if Substack Notes is successful, it will actually be much more curated than many other social networks. Writers want to give their readers a premium, elevated experience — not just a platform that does the bare minimum of content moderation. So I’m optimistic over time that Substack will find ways to empower writers to curate the platform. Even though Substack often finds itself talking about free speech and tough moderation decisions, in many ways what the company has built is a system where writers are given the power to moderate the platform themselves.

The last thing I’ll tease from the conversation is that the Substack founders no longer come off as diametrically opposing to supporting advertising. Judge their answer for yourself.

In the conversation we name-dropped a bunch of newsletters and Substack writers, including Gergely Orosz Jesse Singal Heather Cox Richardson Matthew Yglesias Substack Writers Andrew Sullivan The Ankler. Bulwark+ Bari Weiss The Free Press The Pillar

Give it a listen.

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The blitzscaling funding model failed news companies.

Vice Media — which raised more than $1 billion from the likes of TPG, Technology Crossover Ventures, and Disney — is reportedly preparing to file for bankruptcy.

BuzzFeed — which raised hundreds of millions of dollars from investors like Andreessen Horowitz, General Atlantic, and NBCUniversal — just shut down its news division and has watched its stock price sink 95% since going public via a SPAC.

Meanwhile, Gawker, which successfully avoided the cash-burning approach, was brought down in a lawsuit funded by tech billionaire Peter Thiel.

This episode of Newcomer is brought to you by Vanta

Security is no longer a cost center — it’s a strategic growth engine that sets your business apart. That means it’s more important than ever to prove you handle customer data with the utmost integrity.

But demonstrating your security and compliance can be time-consuming, tedious, and expensive. Until you use Vanta.

Vanta’s enterprise-ready Trust Management Platform empowers you to:

* Centralize and scale your security program

* Automate compliance for the most sought-after frameworks, including SOC 2, ISO 27001, and GDPR

* Earn and maintain the trust of customers and vendors alike

With Vanta, you can save up to 400 hours and 85% of costs. Win more deals and enable growth quickly, easily, and without breaking the bank.

For a limited time, Newcomer listeners get $1,000 off Vanta. Go to vanta.com/newcomer to get started.

In his new book, Traffic: Genius, Rivalry, and Delusion in the Billion-Dollar Race to Go Viral, former BuzzFeed editor-in-chief Ben Smith takes stock of the heady days of media spending and snarky online writing. (Of course, for all his insistence that that spendy era of media is over, Smith is the co-founder of Semafor, a company that raised $25 million — including about $10 million from Sam Bankman-Fried — to build a new digital media business.)

I invited Smith on the podcast to talk about his new book.

I started the discussion by going back to David Carr’s 2012 profile of BuzzFeed.

Carr wrote at the time:

[W]ith the addition of Mr. Smith and his new hires, BuzzFeed is growing some serious news muscles under a silly, frilly skin, and added the header “2012” for election coverage. (More traditional news verticals will be rolled out in the coming months.) It’s gone well so far, with comScore showing 10.8 million unique visitors in December, more than double that of the same month in 2010.

Its business model, in part, capitalizes on the mix of high and low content; instead of banner ads, BuzzFeed works with companies like Pillsbury to create content ideal for sharing, including “10 Things You Never Knew You Could Do With a Crescent Roll.”

If it is successful, BuzzFeed will generate the kind of traffic that will rival behemoths like, yes, The Huffington Post. Mr. Peretti says that BuzzFeed makes a profit some months, but given the level of investment and growth — there are now 78 people in its Flatiron offices — the burn rate on that new chunk of capital is significant. “It’s fun to watch them make all these hires,” said Choire Sicha, the founder of The Awl site and a veteran of the New York Web scene. “But it’s important that they don’t overspend. Web ad rates are what they are and that isn’t going to change.”

Then I turned the conversation to former Gawker editor Max Read’s review of Traffic.

Read writes:

In the end, only one character in “Traffic” can really be said to have any vision. In 2013, Disney CEO Bob Iger offered to buy BuzzFeed for $650 million. In the book’s strangest and funniest scene, a nightmare blunt rotation of Smith, Peretti, BuzzFeed video chief Ze Frank and BuzzFeed president Jon Steinberg get high on a hotel balcony in Los Angeles and discuss the offer. Frank and Smith urge an ambivalent Peretti to turn down the offer, worrying that “Disney’s corporate culture would stifle” Buzzfeed’s creativity. Not so much Steinberg, the company’s money man, who gets “down on his knees on the balcony to plead with Jonah to take the deal.”

Frank and Smith would go on to win the argument; they and Peretti saw BuzzFeed’s monster traffic as the key to their dreams of a burgeoning, independent media empire. As we now know, they were wrong. Steinberg is far from a genius — after leaving BuzzFeed, he joined the Daily Mail’s U.S. operation, and then founded the cosmically annoying CNBC-for-millennials brand “Cheddar,” whose videos can be found on gas pumps across the country — but he alone managed to see that traffic for what it really was: the “pump” phase of a pump-and-dump scheme that Peretti never had the vision to complete.

In my conversation with him, Smith, the former media columnist for the New York Times, also offered his thoughts on the upcoming presidential primary and Tucker Carlson’s departure from Fox News.

Give it a listen.

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Union Square Ventures partner Albert Wenger has been successful enough to write a techno-manifesto.

Wenger made early investments in companies like Twilio, MongoDB, and Etsy.

Now, he’s spending much of his time on USV’s climate investing out of the firm’s $200 million climate fund.

Wenger has historically been a media recluse — but he’s started popping his head out.

So when I got the opportunity to talk to him on the Newcomer podcast, I jumped.

After all, Union Square Ventures has ranked 1st and then 2nd in the Founder’s Choice VC Rankings. And USV was among the first venture capital firms to privately raise the alarm to portfolio companies that they needed to protect against a banking crisis. So we had a lot to talk about.

Plus, Wenger is in the big ideas phase of his career.

“We live in a period where there is an extraordinary range of possible outcomes for humanity. They include the annihilation of humankind in a climate catastrophe, at one extreme, and the indefinite exploration of the universe, at the other,” he concludes in his book The World After Capital, which is available for free online.

Wenger has a strong point of view about where we’re headed: He argues that we’ve moved from the Industrial Age to the Knowledge Age and that we need to dramatically rethink society in light of that change.

Despite the book’s manifesto-like qualities, The World After Capital frames up some of the core issues of our time. In particular, he argues that financial markets cannot adequately price the ultimate scarce resource of our age — attention.

As artificial intelligence looks poised to further disrupt society, Wenger’s point of view is only becoming more compelling.

In our Newcomer podcast discussion, Wenger and I examine the current state of universal basic income. You can hear how we think differently about the issue. I’m eager to think about how it could realistically be implemented in the United States sometime soon; he’s interested in the broad sweep of history.

On the podcast, we talk about the banking system and I interrogate whether there’s any hypocrisy in opposing the 2008 bank bailouts and defending the government’s decision to backstop depositors at Silicon Valley Bank.

It was a fun conversation that looks beyond the day-to-day news cycle to some of the bigger questions that technological progress posses for our society.

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Before becoming a partner at Madrona Venture Group, Jon Turow worked as the head of product for computer vision at Amazon Web Services. He spent nine years at AWS in the product organization. Since becoming a venture capitalist, he’s invested in promising AI companies like Runway and Numbers Station, along with the buzzy data company MotherDuck.

So when Amazon announced a partnership, called Amazon Bedrock, with Anthropic, Stability AI, and AI21 Labs, I asked Turow to come on the show to help me break down Amazon’s effort to bring foundation models closer to its cloud customers.

Turow is someone who has helped me think through everything that’s happening in artificial intelligence broadly. So we had a fun conversation about open source and the excitement around AI agents — like BabyAGI.

This episode of Newcomer is brought to you by Vanta

Security is no longer a cost center — it’s a strategic growth engine that sets your business apart. That means it’s more important than ever to prove you handle customer data with the utmost integrity.

But demonstrating your security and compliance can be time-consuming, tedious, and expensive. Until you use Vanta.

Vanta’s enterprise-ready Trust Management Platform empowers you to:

* Centralize and scale your security program

* Automate compliance for the most sought-after frameworks, including SOC 2, ISO 27001, and GDPR

* Earn and maintain the trust of customers and vendors alike

With Vanta, you can save up to 400 hours and 85% of costs. Win more deals and enable growth quickly, easily, and without breaking the bank.

For a limited time, Newcomer listeners get $1,000 off Vanta. Go to vanta.com/newcomer to get started.

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Today, we have a bonus double episode of the Newcomer podcast for you — two conversations from the Cerebral Valley AI Summit last week.

Part 1: Replit CEO Amjad Masad and Hugging Face Clément Delangue

Together, they’re a charismatic open-source alliance.

We talked about the threat posed by OpenAI’s partnership with Microsoft, the questions around Replit and Hugging Face’s business models, and where they would like to see more development in artificial intelligence.

Charles Hudson, at Precursor, wrote up a smart reflection on the Cerebral Valley event and one of his main takeaways was about open-source companies like Replit and Hugging Face. Hudson wrote:

Open-source applications will play a big role in this early phase of experimentation. One of the more refreshing and interesting things for me to hear was the different approaches that open-source companies were taking relative to their more commercially-minded peers. It wasn’t simply about business models or go to market approaches — it felt way more fundamental and philosophical about how they wanted to see AI deployed and governed. I didn’t have a full appreciation for that difference before the event, but it was one of the things that I was most struck by at the event.

The Cerebral Valley AI Summit is presented by

Samsung Next invests in the boldest and most ambitious founders.

Tell us about your company. We’d love to meet.

Part 2: Adept CEO David Luan and Greylock partner Saam Motamedi

On stage with Luan and Motamedi, a major investor in Adept, I wanted to know how Adept planned to compete with foundation models like OpenAI and Anthropic — especially now that OpenAI has introduced plugins that allow third-parties to easily connect to ChatGPT.

Adept is building an AI model that mirrors humans input into computers. It’s a different approach than the language models that are getting built by other foundation model companies.

I also asked Luan about his time at OpenAI and at Google. I particularly wanted to know if he trusted his old team at OpenAI to spearhead the AI revolution.

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We’re also posting all the on-stage conversations on our YouTube channel over the next few days.

Right now, you can watch:

* Stability CEO Emad Mostaque one-on-one with me (the first half of my last podcast).

* Shane Orlick (President at Jasper) and Cristóbal Valenzuela (CEO of Runway) with Coatue’s Caryn Marooney.

* Benchmark’s Miles Grimshaw’s conversation with Quora CEO and OpenAI board member Adam D’Angelo and with LangChain founder Harrison Chase.

* A panel of investors (Leigh Marie Braswell at Founders Fund, Bucky Moore at Kleiner Perkins, and Amber Yang at Bloomberg Beta) moderated by me.

* Volley CEO Max Child’s talk with Lisha Li (Rosebud), Caroline Zhang (Knowtex), Chun Jiang (Monterey AI), and Medha Basu (Defog).

* General Catalyst’s Deep Nishar with me (also featured in Tuesday’s podcast episode) .

* Volley CTO James Wilsterman’s talk with Yasmin Dunsky (Wild Moose), Emily Dorsey (Pyq), and Lydia Ding (Code Complete).

Today, we have a double episode for you — two conversations from the Cerebral Valley AI Summit last week.

Part 1: My Conversation with Stability AI CEO Emad Mostaque

I didn’t know what to make of Stability AI and its CEO Emad Mostaque heading into my conversation with Mostaque Thursday at Cerebral Valley.

Mostaque’s company has wrapped its arms around the wildly successful open-source artificial intelligence project Stable Diffusion.

Last year, Mostaque’s company, Stability AI, raised about $100 million from investors. Lightspeed led an investment in the company a $1 billion valuation. Coatue led the previous round.

On the other hand, the company has publicly scuffled with fellow Stable Diffusion co-creator Runway. Stability AI got sued by Getty Images. And it’s hard to understand exactly how Stability AI plans to profit off its proximity to Stable Diffusion. Is it just a really hyped AI consulting company?

Mostaque himself is a man of mystery. He’s a former hedge fund investor who has situated himself at the heart of generative AI. He makes big pronouncements. There are whispers that Stability AI is raising another big funding round and is in talks with a big tech company partner.

On stage, Mostaque didn’t dismiss the idea that the company might partner with Apple.

Mostaque also said that he intended to take Stability AI public, insisting that the public markets want to get behind the AI trend. Bloomberg wrote about it.

The Cerebral Valley AI Summit is presented by

Samsung Next invests in the boldest and most ambitious founders.

Tell us about your company. We’d love to meet.

I won’t tell you how to feel about the conversation.

Some people afterward told me that they were impressed by Mostaque’s performance and conviction. Mostaque had signed the letter calling for a pause in AI development — a surprising stance for someone who helped launch the generative AI craze. He was among the most electric speakers at Cerebral Valley.

At the same time, some well-connected attendees told me off the record that they don’t believe Mostaque’s pronouncements. He can be short on specifics and big on promises. I found it hard to pin him down on many of the details of his business.

The AI world is watching to see what happens next. Give it a listen.

Part 2: My Conversation with General Catalyst’s Deep Nishar

Starting at 30:33, you can listen to my interview with General Catalyst’s lead growth investor Deep Nishar.

A former executive at Google and LinkedIn and then one of the top investors at the SoftBank Vision Fund, Nishar has had a front seat at the table for many of the developments in the technology industry.

Human health — and how artificial intelligence can shape it — was at the heart of our conversation. It’s easy to get lost in chatbots and image generation tools but the promise of artificial intelligence is far larger.

We also talked about Google’s standing in the AI race and I got his reflections on SoftBank’s AI strategy.

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We’ll have a bonus episode for you on Thursday so watch out for that. We’re also posting all the on-stage conversations on our YouTube channel over the next few days.

Right now, you can watch:

* Benchmark’s Miles Grimshaw’s conversation with Quora CEO and OpenAI board member Adam D’Angelo and with LangChain founder Harrison Chase.

* Volley CEO Max Child’s talk with Lisha Li (Rosebud), Caroline Zhang (Knowtex), Chun Jiang (Monterey AI), and Medha Basu (Defog).

Ravi Mhatre co-founded Lightspeed Venture Partners just before the technology industry unraveled in the dot-com bust. Lightspeed weathered the dot-com crash and became one of Silicon Valley’s top venture capital firms, known particularly for many of its enterprise software investments.

This episode of Newcomer is brought to you by Vanta

Security is no longer a cost center — it’s a strategic growth engine that sets your business apart. That means it’s more important than ever to prove you handle customer data with the utmost integrity.

But demonstrating your security and compliance can be time-consuming, tedious, and expensive. Until you use Vanta.

Vanta’s enterprise-ready Trust Management Platform empowers you to:

* Centralize and scale your security program

* Automate compliance for the most sought-after frameworks, including SOC 2, ISO 27001, and GDPR

* Earn and maintain the trust of customers and vendors alike

With Vanta, you can save up to 400 hours and 85% of costs. Win more deals and enable growth quickly, easily, and without breaking the bank.

For a limited time, Newcomer listeners get $1,000 off Vanta. Go to vanta.com/newcomer to get started.

Over his two decades at Lightspeed, Mhatre has invested in Nutanix, MuleSoft, AppDynamics, Zscaler, and Rubrik to name a few.

On the Newcomer podcast, Mhatre and I talked about Silicon Valley in the wake of the collapse of Silicon Valley Bank. We discussed how the gravitation physics of the startup business has changed.

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Behind the headlines, Jon McNeill has been a key operator and board member across many of the companies that you read about.

He was the president of Tesla. Then, in February 2018, he left to take the role of chief operating officer at ride sharing company Lyft.

At Tesla, he worked desperately to get the company to sell enough cars to hit Tesla’s sales targets. With the rest of the executive team, he said, “We were arm and arm to do the impossible.”

This episode of Newcomer is brought to you by Vanta

Security is no longer a cost center — it’s a strategic growth engine that sets your business apart. That means it’s more important than ever to prove you handle customer data with the utmost integrity.

But demonstrating your security and compliance can be time-consuming, tedious, and expensive. Until you use Vanta.

Vanta’s enterprise-ready Trust Management Platform empowers you to:

* Centralize and scale your security program

* Automate compliance for the most sought-after frameworks, including SOC 2, ISO 27001, and GDPR

* Earn and maintain the trust of customers and vendors alike

With Vanta, you can save up to 400 hours and 85% of costs. Win more deals and enable growth quickly, easily, and without breaking the bank.

For a limited time, Newcomer listeners get $1,000 off Vanta. Go to vanta.com/newcomer to get started.

“For more than two years we operated the company and we just had a quarter’s worth of cash,” McNeill said, recalling a period that Elon Musk has said put the company on the brink of bankruptcy. Tesla was manufacturing vehicles out of tents.

“For sure, bankruptcy was a reality,” McNeill said. “When you’re peering over the edge of death, creativity starts to happen in really unique ways.”

After Tesla, McNeill helped take Lyft public. But his tenure at the company lasted less than two years. His vision conflicted with the ride sharing company’s founders.

Today, McNeill sits on the board of General Motors, CrossFit, and Lululemon — to name a few.

In 2020, he helped found the hatch studio DVx Ventures, which has spun up seven startups so far.

I brought McNeill on the podcast because I wanted to know whether the high-cash burn, blitzscaling model embraced by ride sharing companies like Lyft could survive in the new normal with non-zero interest rates and falling tech stocks.

“I think blitzscaling is appropriate when interest rates are zero, when capital is free,” McNeill told me. “If people are going to hand you free capital — then you make different decisions and there was an era,” he said, “where capital was free.”

But McNeill argued the bliztscaling playbook isn’t going to work anymore.

“You could go out to burn capital to acquire customers in a business that didn’t have its economics figured out yet. And ride share was a good example of that. And you could burn through a lot of investor capital because basically every time you raised it didn’t cost you much in terms of valuation.”

But McNeill told me, “When interest rates are non-zero, I don’t think blitzscaling is appropriate because you can’t afford the cost of capital.”

I asked him, “Can companies escape blitzscaling?”

“Yeah, they can but they have to have super talented leadership to do it.”

He pointed to his old rival Dara Khosrowshahi as one such leader.

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Laurence Tosi had a front seat for another banking crisis: He worked as a top banking executive and then private equity executive as the financial crisis swept up Wall Street.

Tosi is someone I turn to when I want to get a sophisticated investor’s account of what’s really going on in Silicon Valley.

His resume straddles Wall Street and Silicon Valley. He worked as the chief operating officer at Merrill Lynch, as the chief financial officer at Blackstone, and as the chief financial officer at Airbnb. Today, Tosi runs an $8 billion investment firm called WestCap that invests in startups and venture capital funds.

As Silicon Valley Bank was unraveling, Tosi guided his portfolio companies on how to move their money out of the bank. Then, over the weekend, after Silicon Valley Bank failed, he talked to top banking executives, Senators, and members of Congress, including Representative Ro Khanna.

Tosi, despite his generally optimistic outlook, offered a bleak take on what this year will look like for the startup industry. He predicted a “hard landing” and that 2023 will be even tougher than last year for startups.

“The worst is yet to come,” Tosi said. “They raised rates so fast, the shock to the body after so many years of such a dovish stance and zero rates, it’s going to take some time to work through the system.”

On the Newcomer podcast, we discussed the bank run and what led to Silicon Valley Banks failure.

Give it a listen.

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