# How Many $10 Billion Startups Will There Be? | Eric Hippeau NEW ECONOMIES · 2026-05-13 Eric Hippeau, co-founder of Lerer Hippeau, argues that while AI is transforming tech faster than ever, startups must avoid being mere wrappers around foundational models, as they can be instantly disrupted. He explains that physical AI, combining hardware and AI in areas like robotics and defense, offers more defensible opportunities. Hippeau warns that the startup market is disconnected, with inflated seed valuations assuming many will reach $10B, but historically there's no market for hundreds of such companies. He discusses healthcare, where AI-driven diagnostics could make primary care nearly free, but political will is needed to overcome entrenched systems. On media, he shares lessons from building Huffington Post—keeping stories live and separating opinion—and predicts that AI could restore trust by providing verifiable facts. Hippeau also reveals he has rebuilt his firm's workflow around Anthropic's Claude, cites AR glasses as underrated, and notes that solo GPs must build teams to succeed. ## Questions this episode answers ### Why is Eric Hippeau concerned about current startup valuations? Eric Hippeau highlights a disconnect where seed-stage companies are priced as if they'll become $10 billion, but historically few reach that and markets can't support hundreds of such exits. He illustrates with SpaceX's potential $1.5 trillion IPO raising $50-75 billion, more than all IPOs in 2023 and 2024 combined, which could crowd out capital for other worthy companies. [12:41](https://neweconomies.podhood.com/1e295f74-7b8f-45f4-9921-0fe84bc34448?t=761000) ### What type of AI startups does Eric Hippeau invest in to avoid disruption by foundational models? Eric Hippeau invests in 'physical AI'—combining AI with the physical world like robotics, automation, defense, and space—because these areas are harder for foundational models to disrupt. He avoids startups that are thin wrappers around LLMs, noting that coding startups can be made obsolete overnight by models like Claude or OpenAI's advancements. [4:56](https://neweconomies.podhood.com/1e295f74-7b8f-45f4-9921-0fe84bc34448?t=296000) ### How is Eric Hippeau's venture firm using Anthropic's Claude? Eric Hippeau's venture firm, Lerer Hippeau, has rebuilt its entire software stack around Anthropic's Claude, using it as their workspace. He says this has dramatically improved productivity, awareness, and instant research capabilities, fundamentally changing how they work. He calls it a transformative tool that he has never dreamed of before. [53:29](https://neweconomies.podhood.com/1e295f74-7b8f-45f4-9921-0fe84bc34448?t=3209000) ## Key moments - **[0:00] AI Acceleration** - [2:09] AI is the culmination of mobile and cloud foundations, transforming faster than any prior tech shift, says Eric Hippeau. - [3:36] Q: Has Eric Hippeau been surprised at the pace of AI change since ChatGPT? A: Yes, but he's amazed and embraces the change as a VC. - **[4:56] Physical AI** - [5:17] Eric Hippeau warns: 'Anything that is a wrapper around an LLM should be viewed very carefully, if not skeptically.' - [6:03] Eric Hippeau sees physical AI—bringing AI to buildings, facilities, and transportation—as a key investment area. - **[7:00] Healthcare AI** - [7:13] Healthcare makes up about 20% of Lerer Hippeau's portfolio, says Eric Hippeau. - [7:58] Eric Hippeau argues that with political will, the US could deliver primary care almost for free using effective online diagnostics. - **[10:35] Valuation Boom** - [11:36] Most seed-stage startups Eric Hippeau sees now already have revenue, often a few hundred thousand dollars. - [13:46] Eric Hippeau: 'There's no market for hundreds of $10 billion companies' and likely not enough capital for them all. - [15:39] Eric Hippeau says Lerer Hippeau can live with $20M-$25M seed valuations but still rejects $50M seed rounds. - **[15:45] Mega-Funds** - [16:50] Lerer Hippeau will never be a mega-fund; its current $200M fund is as large as it can be while remaining a true seed investor. - [18:56] Eric Hippeau says SpaceX's proposed $1.5T IPO could raise more than all IPOs in 2023 and 2024 combined, sucking air out of the market. - **[20:04] Going Public** - [20:22] Q: How should founders approach going public? A: Eric Hippeau advises being prepared for IPO for discipline, but only executing if conditions are right. - [23:19] Eric Hippeau argues that today all AI upside goes to private investors, unlike the dot-com era where public shareholders captured most gains. - **[26:40] VC Moats** - [27:05] Eric Hippeau says early-stage VC is a mix of art and science: the art is taste in founders after thousands of meetings. - [29:06] Lerer Hippeau has built a NYC startup community moat with 60% of portfolio companies based there over 15 years. - [30:46] Eric Hippeau believes specialist solo GPs can succeed, but must eventually build a team to avoid isolation. - **[33:58] New Media** - [34:50] Eric Hippeau on OpenAI's $200M TVPN acquisition: 'I don't know what to make of it, quite frankly.' - [36:07] Eric Hippeau says he can't back media companies because digital advertising is dominated by Meta and Google, making it hard to aggregate enough revenue. - [37:27] Eric Hippeau: 'If you're going to be a tech company, you have to generate your own media.' - [38:33] Huffington Post was among the first to have social media editors and publish on Twitter, says former CEO Eric Hippeau. - [41:54] Eric Hippeau: 'The credibility of the media has fallen to all-time lows' as it's hard to separate news from opinion. - [44:01] Huffington Post kept major stories live and updated them in real time rather than publishing daily articles, recalls Eric Hippeau. - **[47:17] Media Trust** - [47:31] Eric Hippeau says the key lesson for new media builders is to establish and communicate clear editorial principles to build trust. - [51:49] Eric Hippeau gets his news from X by curating a list of trusted individuals, and wishes X provided better templates for source verification. - **[53:09] Rapid-Fire** - [53:22] Eric Hippeau: 'We've completely rebuilt our software stack around Claude' at Lerer Hippeau, boosting productivity. - [54:10] Eric Hippeau: AI model race is not winner-take-all; Anthropic is enterprise-driven, OpenAI consumer-driven, and 'never bet against Elon.' - [54:50] Eric Hippeau thinks AR glasses like Meta's are underrated, predicting widespread adoption if privacy issues are solved. - [55:49] Eric Hippeau: 'I never give up. I'm a supporter of every one of my companies... Failure is a huge asset.' ## Speakers - **Ollie Forsyth** (host) - **Eric Hippeau** (guest) ## Topics AI, Hardware & Robotics, Venture Capital ## Mentioned Anthropic (company), Canva (company), Cursor (company), Huffington Post (company), Lerer Hippeau (company), Mistral (company), OpenAI (company), SpaceX (company), TVPN (company), XAI (company), All In Podcast (product), ChatGPT (product), Claude (product), Gemini (product), Instagram (product), MrBeast (product), Substack (product), TikTok (product), X (product), YouTube (product) ## Transcript ### AI Acceleration **Eric Hippeau** [0:00] AI is transforming tech and transforming our lives at a much faster pace than I've ever seen. As a venture capitalist, that's very exciting. But obviously, anything that is a wrapper around an LLM should be viewed very carefully, if not skeptically. Because as we've seen, for instance, in coding, you can have a coding startup and then the next day it's completely disrupted by Claude. I started in tech way back in, kind of, the '80s and '90s, and things were moving fast, but nothing has moved as fast as AI. What we're trying to do is to find areas of investment which are not going to be immediately disrupted by the foundational models. You're looking for companies that will survive the next few years. The thing that is worrisome, people are valuing companies at the very beginning as if everybody's going to be worth $1 billion. But if you look at it historically, there's no market for hundreds of $10 billion companies. On the other hand, we have to accept reality, which is that the price of companies has gone up. So it doesn't mean that you have to forget everything I've learned in my decades as a venture capitalist, but it means that suddenly you have to adapt. As a venture capitalist, it's important to us to also— **Ollie Forsyth** [1:17] Eric, welcome to New Economies. So, it's a small world, but I've actually known of you for about 15 years now, from back in the Huffington Post days. I interacted with Ariana a few times, and I kept seeing this name, Eric, pop up, and I'm like, who is Eric? And now, 15 years later, it's kind of come full circle and we have so much to chat about. So welcome to the show. **Eric Hippeau** [1:41] Thank you, Ollie. I'm happy to be here. **Ollie Forsyth** [1:45] Amazing. So Lerer Hippeau has just turned 15 years old, and probably like us and like many people in tech, this entire AI tech world has changed so much, probably more in the last 3 years than in the last 15 years since you guys first launched. Help us unpack what's actually happening and what's your take on everything happening in the tech worldright now. **Eric Hippeau** [2:09] Yeah, so I—well, I think—I think what's happening is kind of the culmination of the foundation that's being built. So when we started, we were getting to the peak of mobile, so pretty much everybody had a mobile phone, particularly a smartphone, to the point where today the great majority of people have this supercomputer in their pocket. And then you had—it was—at the same time, there was this move into the cloud. So massive infrastructure for compute in the cloud, where you had kind of unlimited access to files, speed, and so on. So that is the foundation, and now we have AI, which is kind of built on all of this. And AI is transforming tech and transforming our lives at a much faster pace than I've ever seen. Because remember, I started in tech way back in, kind of, the '80s and '90s when I published computer magazines. And, you know, it was the mainframe to mini to the PC, and things were moving fast, but nothing has moved as fast as AI. **Ollie Forsyth** [3:21] And it's all changing so quickly. Even just in the last 12 months, you know, a lot of the conversations were: OpenAI is going to win over Anthropic, now it's healthcare, now it's defense. The whole categories are just changing so quickly. Have you been surprised just how quickly things have changed, really, in the last 1,200, 1,300 days since ChatGPT launched? **Eric Hippeau** [3:44] Yes, I—yes, I've been surprised, like all of my colleagues. But obviously, this is our job. Our job is to embrace change, and our job is to embrace the future. So we—we are amazed, in a very positive way, as to what can be done with AI and what is being done with AI. And we're just at the very beginning of this cycle. And virtually every aspect of our world and our society is going to be transformed by AI, and that's, as a venture capitalist, that's very exciting. **Ollie Forsyth** [4:17] I feel like you have been around this whole ecosystem for a while, and I think to set up today's chat for the audience, we would love to hear about, you know, what's really happening inside tech and across venture. I think one of the biggest trends also a lot of VCs are talking about is how do they stay relevant in this new day and age. It'd be quite interesting to talk about that. And obviously, one of your biggest career moves is around, kind of, in this whole new media space, and obviously this is a massive topicright now as well. But I think it'd be helpful to go back to, you know, some of the trends which you guys are really excited about. Where are you spending most of your time today, and what are some of those tech trends you're most excited about? ### Physical AI **Eric Hippeau** [4:56] Well, what we're trying to do is to—is to find areas of investment where—which are not going to be immediately disrupted by the foundational models. So anything that is a wrapper around an LLM should be viewed, you know, very carefully, if not skeptically. Because as we've seen, for instance, in coding, you can have a coding startup and then tomorrow or the next day it's completely disrupted by Claude or by OpenAI. And so—so anything that depends on the LLMs, depends on the foundational models, can easily be gobbled up, and probably will be gobbled up, by the foundational models. So what we're trying to do is to find areas where it won't be that easy for them to absorb and to disrupt. So I just—one example, kind of, physical AI is a good example, where, you know, where—how do you bring AI to the physical world? To buildings, to facilities, to transportation, to, you know, you name it. And so, you know, the—that marriage of, kind of, hardware and AI is very interesting to me in particular. And we do a lot in automation, we do a lot in robotics. We—as a result, we're starting to do a few things in space, in defense tech. Kind of areas that, if you had asked me just a year ago, 2 years ago, I would probably not have thought about. But that's, you know, that—again, you—as you—as a venture, particularly an early-stage venture capitalist, you're looking for companies that will survive the next few years. Certainly, you know, you want them to be around in the next 10 years. And they can't be easily disrupted by the foundational models themselves. ### Healthcare AI **Ollie Forsyth** [7:00] Super interesting. You know, when you say bringing AI to the physical world, one trend which also comes to mind is healthcare. Not sure how much you guys are now spending into healthcare today, but that—that whole category seems to be completely changing as well. **Eric Hippeau** [7:13] Yeah, healthcare, I would say, is about 20% of our portfolio is healthcare. So we've done—historically done quite a few things in healthcare. Healthcare is super interesting because obviously it—there's a huge amount of data in healthcare. But the—but the healthcare system in the United States is—is like—is like a black box,right? It's—it's dominated by massive providers, massive hospital systems, insurance companies, and each one of them is trying to hang on to its data, to its proprietary data, to, you know, its way of doing business. And so the model—the healthcare model in the US is incredibly inefficient. And the fact is that if there was political will, we could deliver, certainly primary care and a lot of other care as well, to the entire population almost for free. Because online diagnostics are real and effective, and they don't hallucinate. And if you marry that with a quick, kind of, 10-minute video call with a provider, with a doctor who can prescribe and who can ask you questions, you have an immediate consultation that costs, you know, if it costs $40, that's a lot. And yet, if I go see a doctor, if I'm a member of an insurance group and I go see a doctor, the cost of seeing that doctor will be in the hundreds of dollars, if not the thousands of dollars. And so when one talks in the US about how healthcare is unaffordable, there's an easy solution. But in order to get that solution to be implemented, you need to break down the structure of the healthcare system that exists today, which politically is very difficult to do, but it can be done. **Ollie Forsyth** [9:10] You know, when I speak to founders building healthcare in the US, they say exactly that, and it's always the same thing. Do you think we're going to start seeing changes with over time, this kind of black box becomes, you know, unbundled, or is it always just going to be such a tough market to compete in? **Eric Hippeau** [9:26] Well, it—you know, the forces of the—just the economy of it, just the fact that we can do a lot more with a lot less, is going to pull the system towards a sense of rationalization. And it's already happening. We have a company, for instance, that provides the platform for diagnostics for primary care for big hospital systems. Because primary care for them is a loss leader, very inefficient. It's very hard for them to find primary care doctors. Nobody wants to be a primary care doctor. And so—so they're being forced to do it. And so they're starting to adopt that technology and the AI. By the way, it's all AI-driven, obviously. And so it's just, to me, it's a question of time before that then kind of bursts open and—and it's made available to everybody. But, you know, again, you need political will in order to do that, because some milk is going to get spilled in the process of doing that. **Ollie Forsyth** [10:35] For sure. You know, one of the greatest things I've been seeing in the last few years, okay, this whole AI category has been changing so quickly,right? But also just the founder environment has changed massively as well. Founders can now raise, you know, within a few days, but it kind of fills, and I'd love to get your take, they always used to go for this unicorn status. ### Valuation Boom **Ollie Forsyth** [10:56] Like, that was a kind of, you know, golden nugget, and that was a North Star. Now it kind of feels they want to go for $100 million annual current revenue as quickly as possible. Do you think that is kind of the new North Star for these companies and founders building today? **Eric Hippeau** [11:09] Well, the—the—the way you build a company today, you need fewer people, you need much less time. And so by the time you raise a seed round, it's not uncommon that you already have revenues. You know, it used to be a seed round was for you to go to market, and maybe go to market would be a few months—excuse me—down the road. Today, the companies that we see at seed are companies that, for the most part, have revenues. Now, it might not be a million dollars in AR, it could be a few hundred thousand dollars, but they mostly—but, you know, they have customers and they have a pipeline. And it's theoretically possible, and some companies have reached $100 million in AR, and the question of, like, I think Cursor was a good example of that, in a matter of months, or maybe a short year or two. But I don't—I don't know that that's going to be the norm. However, what is true is that if you are not building faster and doing it with, you know, a lot less resource, fewer resources, then you're not part of that trend. And as a result, we're seeing a lot more companies being formed. So again, there's an uptick in the number of the formation of companies across pretty much, you know, every sector, which is great for what I do. The thing that is worrisome, and which you touched upon, is the valuation. And people are valuing companies at the very beginning as if everybody's going to be worth 10 billion. You mentioned unicorns. Unicorns is a billion dollars. I see a lot of companies where they, in order to get to the results that they want for the return on their—for their investors, they need to get to $10 billion in valuation. So if you think of how many people—how many companies actually get to that valuation historically, very few. Very few. And there is no liquidity. Again, we're talking about companies that will mature years down the road. So it's hard to predict years down the road how the public markets or liquidity or M&A secondaries, or, you know, it's hard to predict, you know, how all of this is going to behave at that time. But if you look at it historically, there—there's no—there's no market for hundreds of $10 billion companies. There's no capital, there's no M&A capabilities. You're just not going to see those exits, again, if I look at it historically. So I have to believe that the world's going to change dramatically, and that there will be infinite liquidity, and that everybody will—and that a $10 billion company, kind of a newish company worth $10 billion will be relatively common. It's a big gap to jump. So that's where the disconnect exists. **Ollie Forsyth** [14:24] There's also this opportunity cost when companies are being overvalued or slightly overvalued, but they have a massive market. How do you determine that opportunity cost that, okay, slightly overvalued, but let's go for it, versus let's just find maybe a slightly better alternative? **Eric Hippeau** [14:44] Yeah, look, it's—you—in our business, you have to have discipline. And it doesn't mean that you have to be rigid in your discipline. It means that you have to—certainly you have to adapt. But you have to have a thesis. You have to have a portfolio construction. You have to—you can't just say, you know, I'm going to forget everything I've learned in my decades as a venture capitalist and suspend disbelief and believe that the world is going to be completely different, and therefore, you know, $50 million valuations for seed companies is the new norm, the new normal. We—we—we don't want to fall into that. On the other hand, we have to accept reality, which is that the price of companies has gone up. So, you know, do we think now a $20 million valuation, maybe $25, is something that we can live with? Probably yes. We're still not there in accepting $50 million. ### Mega-Funds **Ollie Forsyth** [15:45] How are you also educating your LPs? And the reason why I ask is we have a lot of LPs and, you know, investors and founders who listen to the show, the way they're also being communicated, you know, what's been happening in tech, changes all the time. What is that communication between your LPs on kind of what's happening in tech, and are they accepting kind of this is the new norm? **Eric Hippeau** [16:06] We—we—we have increased dramatically our communications with our LPs, both in writing and then in LPAC meetings, we—in annual meetings, et cetera. Because the world is changing so rapidly, it's important to us to inform our LPs how we view the world. I think, generally speaking, LPs are excited about continuing to invest in venture. There's a bifurcation, particularly with the advent of the mega-funds, where the mega-funds, you know, the whatever, the 6 to 10 of them, tend to suck up kind of, you know, the great majority of all dollars. And we're never going to be a mega-fund. That's not in our DNA. We're always going to be a seed fund. And you can't be a true seed fund above a certain amount of money. I mean, our current fund is $200 million. It's the biggest fund that—it's fund nine. It's the biggest fund that we've had. And, you know, it's appropriate for today's world. If I—if I raise $500 million or more, I would not be a seed fund anymore. I mean, I could say I'm a seed fund, but it would—the mechanics of it would not work. I would be obliged to do later stage rounds in order to deploy that capital. That's not what we want to do. So it's—it's important to us to also, you know, talk to our LPs about portfolio formation, you know, how we view the exits, how we build the portfolio so that we can, you know, minimize risk. But it's still—there's still a power law going on where a small amount of your investments will return the great majority of, you know, of your exits. So that's—that's not going to change. But then, if you think about the mega-funds, you know, let's say I'm fund X and I'm raising $20 billion. Wow. Well, how do I—how do I get VC returns on $20 billion? Right? I've got a return—I've got a return on $100 billion. This was—this was kind of what happened with South Bank and the Vision Fund, you know, the first billion-dollar fund. Well, I think they discovered it wasn't that easy to, you know, to return the VC, like, you know, multiples. You could be a—you could be a private equity fund at a billion dollars. You could be a hedge fund. Hard to be a, you know, a fund that invests in startups and returns, you know, 5x, let alone 10x. So there's—I'm going to call this physical. There's—there are, you know, there's physical limits. And again, it goes back to the thought that, you know, there's only so much that the market can absorb. Right? So as an example, if you say, okay, SpaceX is going to go public this year, which we believe it will, you know, proposed $1.5 trillion valuation, perhaps more, raising $50 to $75 billion, perhaps even more. Well, that amount is more than was raised in IPOs in 2023 and 2024. And so, okay, would they be able to do it? I'm convinced, of course, that they'll be able to do it, but that's going to suck out the air of the market. Where's the rest of the—where's the capital going to be for, let alone, Anthropic and OpenAI, but let alone a, you know, a really great company doing really well, profitable, that should be valued at only $5 billion, which typically is the bread and butter of new issuance? And so—so these are questions that people should really be debating, because we can only suspend disbelief so much. ### Going Public **Ollie Forsyth** [20:04] Exactlyright. And you mentioned, you know, a few of those companies going public. You've got others like Canva, potentially, Anthropic, OpenAI. You know, at some point, these companies have to go public because they have to return your investment so you can liquidate it to your LPs as well,right? Tough market, I guess. **Eric Hippeau** [20:23] Yeah. Again, this is uncharted waters, and then we'll see how it goes. Now, is SpaceX an exciting company? Very exciting. A lot of investors are doing—are going to do really, really well. But, you know, it's an exceptional company. There are dozens, if not hundreds, of other companies that deserve to be public at, you know, much lower valuations. And the question is, you know, how do we fund those companies? And what happens if they can't go public? **Ollie Forsyth** [21:00] You know, this is a good question around, or good take around, the current cohorts of companies which have launched since ChatGPT, so November the 20th, November the 30th, 2022. We're going to see probably a whole bunch of companies which have the opportunity to go public. When you coach founders on the opportunity of going public, what do you say to them? Is it a good thing to go public in today's market, do you think? **Eric Hippeau** [21:29] My advice to our companies is it's always good—it's always good to be prepared to go public. That's the highest standard. Whether you pull the trigger and actually go public or not, that's a decision that you and your board will make at the time. But in terms of discipline, in terms of being prepared, in terms of having the controls, in terms of having the culture, in terms of having the, you know, the discipline of the quarterly reports, that's something that internally makes a ton of sense for you to have, no matter what. And then on top of that, you have—then you have the optionality, if the market conditions areright, to go public, because there are—ultimately, there are very few M&A transactions that get done in the billion-dollar range,right? I think the average—the average M&A transaction is actually, last time I looked, it was more like $200 billion. Now, obviously, you have spikes. You have exceptional companies that get sold, you know, for, you know, SpaceX just announced that they have an option to buy Cursor for $60 billion,right? Well, that's great, but that's exceptional. So what we need is a healthy public market that will be excited about taking companies public for $2, $3, $4, $5 billion, and let the public really take advantage of the growth that's going to come here. Becauseright now, back in the late '90s, in the dot-com era, most of the upside went to the public shareholders, because companies would go public really fast, having raised tens of millions of dollars, not billions of dollars. And so the private investors would do well if they hang on to their public shares. But today, it's the inverse. You know, all the upside goes to the private investors, people like us, and the public doesn't really have much of an opportunity to take advantage of technology and the incredible wealth that's being built. And so we need to find that balance where the public is excited, that there are people following companies, that there are analysts, that we talk about, you know, the advantages of buying into IPOs, which is a culture that we have, I think, kind of lost for the moment. **Ollie Forsyth** [24:00] Yeah. I mean, it's a good take. You know, one of the things AI for sure is going to do is it's going to be—it's going to create a whole new generation of wealth for founders, investors, hopefully employees as well. But there's a very small percentage of the global market who are actually lucky enough to be part of that market. The 99.9% of the rest of the world, they're not going to get access to that,right? What do you think needs to change? And I know there are a few platforms cropping up in this market where they allow that kind of access, but that's not going to move the needle very much. **Eric Hippeau** [24:32] No. And again, I think it's a—it's a—it's a combination of things. In the United States, we went overboard in terms of regulations that make it difficult and costly for companies to go public,right? So the average cost for a company to go public these days is about $12 to $15 million a year. So if you have a company that, you know, has $200 million in top-line revenues, you know, does—call it $40 million in EBITDA because they, you know, they reinvest a lot of their money on growth, and then suddenly you cut that EBITDA by a third because of the cost of going public, this has serious implications in terms of valuations, the multiples and the valuations. So that's one set of things. So we need to make it easier. And I think the current SEC is aware of this and trying to make it, you know, less burdensome for companies to go public. Secondly, we need to get the investment banks to really focus on, you know, following companies, putting out, you know, papers and analyses, et cetera. You go public today and you're worth $3 billion, you're going to be hard—it's going to be hard to find an analyst to follow you. So we need to go back to that kind of research. You know, why is this a great company? What's the problem? What's the opportunity? And then, you know, kind of educate the public that, you know, these companies are going to go public. You have to make your own decisions. Some of it is risky. Some of it. But, you know, this is a way for you as a shareholder—you don't have to be a major shareholder. You can buy $10,000 worth of shares, whatever. You'll be able to participate, as you mentioned, in the incredible growth that we think is going to happen as a result of AI. **Ollie Forsyth** [26:40] You know, everything is just changing so quickly. AI is changing everything. The title stuff's coming out. Companies going public. But another trend I'm also seeing is, especially on the VC side, how do they stay relevant? Because all of this is changing so quickly. ### VC Moats **Ollie Forsyth** [26:54] Founders can raise money in multiple different places. So VCs probably have to figure out how do they stay relevant. How do you think about that in today's market? **Eric Hippeau** [27:05] Yeah. So, you know, I'm going to talk about early stage. Late stage is a little different, but early stage is a combination of art and science. You know, the science is the mechanics of putting together a syndicate to complete a seed round. You know, the complementary functions of the different investors. The art is taste. The art is having talked to thousands, if not tens of thousands, of founders. You know, what are the trends? What are the characteristics of a great founding team? What is—what—it's not something—that is art. That's not something that you could put down on paper. You can have your, you know, you can have a framework, but ultimately, it's all about meeting folks and understanding what drives them and testing them to some degree as to how resilient they're going to be. Because clearly, the moment that you fund them, some stuff that you have not anticipated is going to happen, usually on the bad side. And you want people to be—you want people to—this is a marathon. It's not a sprint. You're talking, particularly in today's world, where it takes 7 to 10 years, if not more, for companies to exit, you're going to be together with that company for a long, long time. So you want to make sure it's like a marriage. You want to make sure that these are theright people. So that part is what distinguishes, I think, experienced, you know, kind of, you know, tasteful VCs from others. And we've cultivated this, you know, over many, many years. We also have the advantage that we have built an ecosystem here in New York City because we're the most active early-stage investors here. We've been that for now for 15 years. And the majority of our companies are based here. 60% of our companies are here. And that community of companies is a real asset. It's a real advantage. There are people who root for us. We root for them. We rely on them. They rely on us. They introduce us to new founders. We participate in community events. We're constantly trying to, you know, make sure that people understand that they should move to New York, that it's a great place to start a business. And so that is—it's a moat of sorts. It's taken us many, many years to build, and it's a real advantage. So everybody needs to find their way of doing business, their way of thinking about investing, their way of building a community. And everyone will be different. We were lucky enough that we were early in the boom cycle of New York that we could be that VC, that venture capital firm that built an ecosystem. **Ollie Forsyth** [30:17] You know, when I think of the VCs who actually have the moat, honestly, I actually don't think there are that many. You know, you guys are probably, you know, the premier of early-stage VC and building across New York. If you look at what A16 is doing, you know, with a huge platform team, it's incredible. I've had a few of their partners on the show. But if you don't have that moat and you don't have that insane value add, which no other VC can do, can they survive? **Eric Hippeau** [30:46] Well, if you're a specialist, if you're like a—maybe you're a solo GP, and you have, because of your career or because of your education or because of your interests or the combination of all of those, you have a, you know, a very specific set of relationships and set of beliefs and viewpoints about how technology is going to change your sector or your sectors, then I think you stand a good chance to be able to build a sustainable platform. But, you know, we're journalists. So we—and we—there's good reasons why we're journalists, and we will, you know, dive deeply into areas as we get to know them. But we're never going to stick to one area. We want to go as the—where the market takes us, as things change. But, however, there are, you know, vertical VCs or people who are really specialized, and those will continue to do well. It's when you're in the middle. You know, what are—if you're a Series A, you know, you're a $400 million fund, Series A fund, and you're a journalist, and, you know, how are you going to be able to live between the mega funds and the kind of early-stage funds such as ours? What's your identity going to be? What is your—what is your unique selling proposition going to be? That's probably more difficult. **Ollie Forsyth** [32:23] You know, I do think there's this incredible opportunity for solo GPs at the moment. We're seeing quite a few come out in the market. And again, if they could focus on one niche and completely own that category, potentially amazing. But also, being a solo GP and emerging manager is incredibly hard,right? You've probably met a whole bunch of them over the years. What do you think is the biggest mistake emerging managers make before they really set out to launch their fund of choice? **Eric Hippeau** [32:51] You know, what I always say to solo GPs is that ultimately, venture investing is teamwork. You know, it's really—it's really hard to be the only one at the table. And so that's a good way to start. You obviously—you've been able to raise money as a solo GP. So the LPC value in what you're trying to accomplish, and you're doing well. But you are going to have to build a team. You're going to have to build a team of people that you can bounce ideas off and that have different points of view. Because otherwise, you're going to risk just kind of falling into a well, and it might be difficult for you to emerge from that. So that would be—that's the advice I've always given. And, you know, you could still retain—you could still be the managing partner, but you have to bring in partners. You have to bring in associates who are going to question and have different points of view so that you make a better decision. **Ollie Forsyth** [33:58] You know, there's kind of index everything we've been talking about. Attention is really what moving the needle for so many of these AI companies and VCs in the market today. This whole new media space in the last two to three months, even in the last four months, has changed so much. ### New Media **Ollie Forsyth** [34:21] And you have been in this category for many years. So I think to just set the scene for the audience, the reason why new media is partly so excitingright now, two to three weeks ago, OpenAI acquired this daily technology show, TVPN, for $200 million. When you saw the news, and if you saw the news, do you think that's a good outcome for the media industry? **Eric Hippeau** [34:50] I don't know what to make of it, quite frankly. And then you saw Andreessen and others yesterday or this week launch an X-based, Twitter-based media company that's going to react on the spot to news. And I was, you know, I don't recall them investing in media in the past. And so, you know, new media is really—you're new media. New media today is influencers and kind of individuals or maybe the small groups who've built mini media empires. Some of them, not that many. Look at the, you know, All In Podcast folks. You know, very successful. There's four of them, obviously. But, you know, quite an extremely well-heard and I'm sure financially successful. So the idea of a media company, I don't know that it exists anymore. Obviously, people will launch media companies, but I don't know that I could back, as an investor, a media company because the bigger you are or the more investment you make, the more typically advertising-supported you are. And ever since advertising went digital, ever since advertising went programmatic, it's been very difficult to aggregate enough advertising to support a media company because it's everywhere. And the big platforms, Meta, Google, you know, absorb the great majority of all the dollars. But if you're a, you know, someone of Substack or someone who has a podcast such as you, you know, you could build a very decent media company that will be profitable. And people like to hear all these different voices. And so to go back to why OpenAI would buy a media company, I think part of it is the thinking that or the feeling that if you're going to be a media, if you're going to be a tech company or if you're going to be any company, you have to generate your own media. That part of the go-to-market, part of the way that you're going to build your brand and build your reputation is, by in fact, being a media company. That's, I think, is what's happening here. I don't know that Nestle will have a media company. I don't know that Coca-Cola is going to have a media company. But certainly, the tech companies seem to think that they have to have a media company attached to them. **Ollie Forsyth** [37:55] You know, it all feels as, I mean, you've been in this media space so long. And I think, you know, especially in the last 12 months, especially as all changed, the types of roles which now get hired inside media companies, people are hiring heads of media, heads of media architects, head of clipping, which is, you know, how do you figure out the 47-second viral clip in a two-hour video, which is going to go super viral? The head of, you know, product design. All this is just changing so quickly. And it feels that a lot of these companies potentially are going to hire heads of new media, heads of storytelling, heads of clipping in the future. Maybe that's going to happen. **Eric Hippeau** [38:33] Yeah. And I'd have to post, we were, I think, probably among the first, if not the first, to have social media editors, people who understood. We were the first to publish on Twitter. X today, by the time Twitter, we had an editor whose job was to publish on Twitter. And we didn't, you know, we didn't publish on Facebook and Instagram because news, we felt, was Twitter. And then, to your point, though, you know, how do you repurpose? You write an article, you publish a video. How do you then repurpose excerpts, clips of that so that you can expand your coverage? So distribution has become, you know, dispersed and everywhere. You have to have a YouTube strategy. You have to have an Instagram strategy, a TikTok strategy. And this is happening at a time where traditional media is, you know, totally falling off a cliff. Magazines, of course, you know, went away. I mean, they still exist, but, you know, you never publish a new magazine today. Broadcast television is mostly there for live sports, maybe some news, not really, or to an older audience. Young people would never watch broadcast TV. Streaming is really entertainment, although I think it's starting to add some news. You know, so the way that you publish media today is very different, it's very personal. And also, the means of productions are very accessible, very cheap. It doesn't cost a lot of money to put together a podcast. And so a lot of people are trying it. And, you know, the most popular come to the top, and there's all kinds of other people. There's a long tail of people who probably have a very small audience, but they find enough people to listen to them. **Ollie Forsyth** [40:46] You know, I think it's going to be really interesting just what happens in the next 12 months. We've already seen this new media wave, but then what happens in the next 12 months? You know, especially newsletters. Are we going to see just AI summaries basically summarizing all newsletter creators? What happens to them? You know, are we going to go from, are we going to shift from people's tastes? You're going to have the very premium content to people creating for the world. It's just changing so much, and it's changing every single day, really. Since this TVPN deal got sold, it feels like it's the only thing people are talking about, new media. **Eric Hippeau** [41:23] Well, yeah. If you have a podcast, you also want to be sold for a few hundred million dollars to a deep-pocketed tech company. I'm not sure how many of these deals are going to get done, by the way, but we'll see. I think, you know, talking about AI, so in media, the question really is, what is the source of truth? And maybe, so it's a minefield to talk about this to some degree,right? Because my truth could be different than your truth, etc. But however, when I publish magazines or when I publish The Huffington Post, you know, we try to be the source of truth. And so we try to talk about, and we try to separate opinion from news. And today, it's really hard to tell the difference between news and opinion. And so people are, so the credibility of the media has fallen to all-time lows. People don't trust the media. They don't trust the traditional brands, like The New York Times or whatever. And very few trust media in general because it's very hard to get to the truth. And the truth could be, you know, what's happening in the Gulf of, you know, in the warright now. It's really hard to get information that you can believe in. And so will can AI bridge that gap? Can AI get to the bottom of what is facts and what is not facts? So will someone come put together a platform that will, without any indisputably, tell us what the facts are with the use of AI? That would be, I would love to see a company like that. **Ollie Forsyth** [43:30] Wow. Super interesting. You know, this is what I feel the Huffington Post is so well at. And I actually remember you guys at the peak. This must have been 2007, 2008. I think I wrote a couple of articles with you guys back in the day. And it just feels like you were the go-to media source, especially for Gen Zs, millennials,right? It was this super cool product. And it just goes to show just how much has changed, really, in that short period of time as well. **Eric Hippeau** [44:01] Well, one of the innovations at the time was that we kept this, if a story was important, we kept it live forever. Well, until the story disappeared. But so instead of publishing a story on a daily basis and then taking it out and then maybe publishing a second story a week later, trying to update it, we kept our stories live. And then we updated them on a real-time basis. So the story, you know, could change every hour or could change, you know, whenever there were new facts. But the story was never taken down. So you could always go back and say, OK, you know, this is my way of following what's going on in Iran today, for instance. And so that was great. And then the second innovation is, as I mentioned before, which we clearly separated opinion from what we consider to be a news story. And not only did we separate the opinion, we encouraged the readers to participate in the opinion. And then we had a whole system of policing that so that people would be treated decently, that there would be no direct attacks, there would be no foul language, that people would stay on topic. We would kick people out if they tried to take over a particular story to talk about something else. So you had to have a, you had to have a view as to how you wanted your world to be built. And then you had to put the resources in place to make sure that people understood that there was going to be policing. And it worked great for a while. You know, today, it's pretty much a free-for-all. If you follow, if you go on X, for instance, it's a cacophony of, you know, anything from facts to hateful speech. And so you're kind of left to your own judgment as to what you believe in, what you don't believe in. It can take time. You know, it would be great to have someone that you trust tell you, well, you know, here's the truth. Here are the facts. **Ollie Forsyth** [46:16] It's a good point, you know. A couple of people were actually talking about, especially with these new media type of creators, maybe should they should almost like have a trust score. And especially if their content is being generated by AI, at least cite is being generated by, it is generated by AI,right? Because there's so much misinformation out there. That's one of my biggest frustrations, actually, in this new media space. You mentioned the war which is happening. So much misinformation out there. Even my friends on the ground don't know what's happening. And it just feels, yeah, it's a bit of a free-for-allright now. **Eric Hippeau** [46:49] Yeah. Obviously, one of the reasons it's hard to get information directly out of Iran, there's a blackout. But, you know, you've got to have feet on the ground. You've got to have people that you trust will report to you what's actually going on. And that's what the newspapers used to do. And the newspapers don't do this anymore because they don't have the resources anymore to do that. **Ollie Forsyth** [47:17] It's changed a lot. You know, you managed one of the biggest media channels back in the day. For founders and creators who are building new media channels today, what are some of the lessons you learned running Huffington Post? ### Media Trust **Eric Hippeau** [47:31] I guess it obviously depends what you're trying to accomplish,right? For us, we were journalists. And so we were journalists in an electronic medium, but we espoused the journalistic rules. You know, I started my career as a journalist way back when. I was a reporter for a daily newspaper. And we would, you know, we would follow rules. If you can't have somebody on the record telling you something because of the sensitivity or for whatever reason, you have to have two or three different sources that are anonymous, but that you trust to give you the same, you know, the same information. And only then can you publish it. You can't just invent that something you heard, somebody said to you, whatever. So, you know, there were journalistic norms. And as a result, I think people trusted that you went through a process to verify the news, to verify the facts. This is all pretty much gone. And so it's no wonder that people don't really trust. So I think that if you are going to try to launch a new media company today, you've got to have principles. And you've got to let your audience know whatever the principles may be. You might invent new principles. But you have to have principles so that people know that you will follow those principles and that whatever you publish will be within the context or the framework of that set of principles, and they can trust that. **Ollie Forsyth** [49:12] What do you think it takes to build a new media creator company today? Can they build something the size of Huffington Post? And do you think VCs will ever get excited about investing in this new media category? **Eric Hippeau** [49:28] Yeah. Well, I think it's, I mean, obviously, if you look at YouTube, you've got MrBeast and you've got, you know, all kinds of other creators that have started or have companies that are worth hundreds of millions of dollars today. But there's a lot of noise out there. And you have to have something really powerful, I think. I think you can build a very decent business that will give you a nice standard of living. But to build an organization, we ended up selling the Huffington Post for 300-plus million dollars, which at the time was the most that anybody paid for a new media company. And I don't think that number has been superseded since then. Obviously, if MrBeast decides to sell his business, he'll probably sell it for a billion dollars, but he hasn't sold it. So it's pretty rare to get to that level. But there's a lot of in-between. And so it depends how many people you want around you. If you need to build an organization, then you need to make sure that you can bring in the revenues. And that's the tough part. To build a relatively large organization on subscriptions only, very difficult. And to build it on subscriptions and advertising, also pretty difficult. So. I'm going to build the biggest audience I can, but I'm only going to go with advertisers. You know, the advertisers, the audience that you can aggregate and bring to them, compared to them advertising on Meta, the economics don't really work that well. **Ollie Forsyth** [51:21] It's a super exciting space. It's quite a new space. And I think we're going to see a lot of innovation, you know, changing. But, you know, the hardest part is just keeping up with everything happening in this changing world. It's super exciting. And hopefully, we're going to see a ton of new, hopefully, we're going to see a ton of new media creators and founders, you know, build hugely enduring companies. **Eric Hippeau** [51:49] I think so. I continue to like getting my news out from X because I can decide who I want to follow and who I can trust. And I curate this. And I think I get to a pretty decent view of what's going on in things I care about. And, you know, I never understood why X doesn't actually provide you with better templates for this,right? Just don't say, you know, if you like your information, if you want credible information from the Middle East, here's a list of 25 people that you can trust, that we've verified, that we believe are theright people. And then you can still, you could use that as a base, and you could then curate it, add, and subscribe. But they don't make it easy for you. You have to go find people by trial and error. But it can be done. And I think that there's no other platform where you can get, you know, those kinds of results. **Ollie Forsyth** [52:56] That's a great insight. Anyone listening on X, you should take Eric's advice. But hey, this has been amazing, Eric. Thank you so much. We always have some quick-fire questions at the end. So I'll say a question, and you can just answer it in a rapid response. ### Rapid-Fire **Ollie Forsyth** [53:09] How's that sound? **Eric Hippeau** [53:10] Good. **Ollie Forsyth** [53:11] Awesome. OK, so there are so many amazing companies out thereright now. But what is your favorite outside of the Lerer Hippeau kind of portfolio? **Eric Hippeau** [53:22] Oh, outside of my portfolio? OK. **Ollie Forsyth** [53:25] Yes. Don't be cheating. We can't do that. **Eric Hippeau** [53:29] I love Anthropic. I think we've completely rebuilt our software stack here at Lerer Hippeau around Claude. Our workspace now is Claude. But, you know, our productivity has gone through the roof. Our awareness and knowledge and kind of like instant research is something that I've never dreamt of and dreamed of. And it's changing the way we work entirely. **Ollie Forsyth** [54:00] This might announce the next question. I thought there was going to be OpenAI who's going to win this AI Monday Race, but maybe it's Anthropic. Would you bet against OpenAI or Anthropic? **Eric Hippeau** [54:10] This is not a winner-take-all. You have to include Gemini. You have to even include XAI. Never bet against Elon. You know, maybe Mistral. I'm not quite sure what their thing is. But they, you know, just take Anthropic and OpenAI. Anthropic is enterprise-driven. OpenAI is consumer-driven. They're somehow trying to get in the middle. But ultimately, their DNA is going to be different. **Ollie Forsyth** [54:40] Love it. There are so many tech categories we're excited aboutright now. But what do you think is the most underrated tech category that you think is going to make a comeback? **Eric Hippeau** [54:50] I think AR. I think the Meta glasses, if we could solve the privacy issue, which is the main issue, I could see myself walking around or driving around or being around wearing AR glasses that will enhance my experience of whatever I'm doing. And so I, and they sell a lot of them. I think they've sold them in the millions. We've gone to these big goggle formats. Clearly, people don't want those. But I wear glasses. There's no reason why I couldn't be wearing AR glasses at the moment. **Ollie Forsyth** [55:37] Good take. And finally, the one founder trait that people might not know about you. **Eric Hippeau** [55:49] About me? I never give up. I'm a supporter of every one of my companies, you know, even when it's clear that they might not be successful. I still appreciate the fact that people have dedicated a good time, a good portion of their lives to building something that they believed in. Hopefully, it's going to succeed. But as we know, often it doesn't succeed. And I so admire people who can do this. And it's, by the way, one of the great traits of the United States is that we actually view failure as an asset because you have gone through that experience. I think that there's still places in Europe, as an example, where if you failed, that's a black mark against you for the rest of your life. And so that's not true. Failure, taking the risk, having the courage, and having the courage to seeing it through, even if you have to close down the company, is a huge asset to people, for people. **Ollie Forsyth** [57:00] I love that. I love that. That's such a good note to end on. Eric, this has been amazing. Thank you so much for your time. We covered so much. And all the founders out there, you're just going to keep hustling. And if you're in New York, go and hit up Eric. **Eric Hippeau** [57:11] Yeah. And next time you come to New York, come and see us. **Ollie Forsyth** [57:15] I will. **Eric Hippeau** [57:15] OK. **Ollie Forsyth** [57:16] Eric, that was amazing. Thank you so much. --- This library is powered by PodHood (https://podhood.com), the podcast website platform.