May 12, 2025 • 37 mins
I sat down with Sheel Mohnot of Better Tomorrow Ventures to talk FinTech and whether a state that struggles to build can maintain its edge as the global leader of innovation. We get into why New York has an advantage in FinTech, his thoughts on SF and CA local politics, and some startup ideas he’d like to see in the world (even though they not make money!). Enjoy!
Chapters
00:00 — Introduction and Personal Background
06:02 — The Vision of Better Tomorrow Ventures
08:23 — The Human Impact of FinTech
12:47 — Comparing FinTech Hubs: New York vs. San Francisco
18:54 — Challenges Facing California: Housing and Governance
26:44 — Startups You Want to See and is AI Washing
32:17 — Political Engagement and the Future of California
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Keywords
FinTech, Better Tomorrow Adventures, San Francisco, New York, technology, housing crisis, public transit, regulation, innovation, startup ideas, overlooked markets, AI, political engagement, talent retention, California future, network effects, simplifying complexity, human impact
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
California is really meaningful to me personally.
It's always going to draw the brightest people in the world.
New York is ahead of San Francisco in fintech.
People in San Francisco have gotten way more politically
active. The network effect is so strong.
I'm excited for the next 1020. Thirty years of all that kind of
stuff to happen. It just makes me so happy and
proud to be a Californian. Hello everyone, and welcome back
(00:23):
to the California Future Societypodcast this week.
I have a great one for you. I have Sheil a better tomorrow
ventures. They're an early stage fintech
focused VC fund based in San Francisco.
Sheil is just a great guy. I love great energy.
He has a fun playful zeal to him.
You can it comes through in the way that he talks.
For those of you who see him on Twitter or elsewhere, you know
this about him. So I had a lot of fun just
(00:44):
talking to him about how San Francisco's texting compares to
New York, Miami, or other citiesand why Sheil is currently in
New York scouting out talent fortheir startup accelerator.
We're talking about whether or not California will ever lose
its status as the leader of global innovation.
We're talking about the types ofstart-ups that Sheil would like
to see more of in the world, as well as just some of his
thoughts about the future of California and his hope for the
(01:04):
state and why he loves it here so much.
So I know you're going to enjoy the conversation, especially if
you're in the tech or fintech world.
If you're a builder who thinks about the state or you're just
someone who cares about the future of California, I know
you're going to enjoy it. As always, make sure to
subscribe to California futuresociety.com or wherever
you're hearing this your Sheil. How are you doing today?
(01:24):
And thanks for jumping on, I'm doing.
Really. Well, yeah, one thing we, we, we
mentioned I, I just over the weekend did a long walk, 35
miles. So my feet are hurting a little
bit, but otherwise otherwise doing well.
Well, one way I like to start off these conversations is ask
what's your connection to California?
(01:45):
Yeah, sure. So I grew up in Pittsburgh, PA,
moved to California after being in some other places in 2012.
And since then I've kind of become your classic California
stereotype. I am a venture capitalist.
I like to hike. I go to Burning Man, all the
(02:05):
various things that you would imagine from somebody who lives
in San Francisco, the back streets.
I, I, I run a venture fund. It's called Better Tomorrow
Ventures, BTV for short. We back early stage fintech
startups sort of shaping the financial system and California
is really meaningful to me personally.
I think it's really, you know, I'm fortunate that I got the
(02:29):
chance to move there in 2012 andreally it's shaped who I am in
in tremendous ways. I think it was really moving
there that exposed me to much more of the exciting world of
tech and really encouraged me tothink a lot bigger than I was
before and I was living in Chicago.
(02:50):
Well, I'm glad, you know, you checked the VC boxes.
We don't want VCs who don't go to Burning Man, things like
that. We want to, you know, tried and
true people who live up to the reputation.
So glad you checked those boxes.Well, the name of your venture,
right? It's Better Tomorrow ventures.
And you know, average person maynot always equate human impact
when they think about fintech, when they think about that.
But obviously positive visions of the future are embedded in
kind of your thesis and how you invest and what you're hoping
(03:12):
for. And I know through other work
and nonprofit work and whatnot, you really care about the
financial systems ability to include people and things like
that. So tell me more about your hope
for the future of fintech and particularly those human aspects
that people might not assume right off the gate.
Yeah. For sure.
So, so you're absolutely right. The name Better Tomorrow is it
means two things. It means one, we're investing
for a better future. And we do think financial
(03:35):
technology is a great way to improve people's lives because
people's lives are very much intertwined in finances, in
their finances, but also better tomorrow is improving ourselves.
Like, what can I be doing bettertomorrow as sort of another
second meaning of the word, the term.
Let's see now I mentioned, I think finance disproportionately
(03:56):
has the ability to impact people's lives.
I, I sort of started my fintech career on the nonprofit side
with a nonprofit called Kiva. And with Kiva, I actually had
moved to India to find microfinance institutions that
they could partner with. Kiva is a website where people
(04:17):
primarily in the developed worldcan make 0% interest loans to
individuals in the developing world for the sake of relieving
poverty. You know, in, in working at
Kiva, I was getting on, you know, I was riding a bus and
getting on the back of somebody's motorcycle to serve 1
(04:38):
borrower and realize is highly inefficient.
And I realized why the loans areso expensive.
And I thought, you know, financeis something microfinance and
Fintech is something that can solve this problem with
technology. And that's part of the initial
reason why I started investing in, in fintech.
And then I also just think it's tremendous opportunity.
(05:00):
I know you know, thinking about it's only the tremendous
opportunity of it, but you're someone who I I associate with
like a playful zeal when it comes to thinking about tech and
like being willing to try new things.
I know a story that circulates online is, is like your wedding
in the metaverse, like when you think about fintech or other
tech, like when you think, let'ssay by like 2050, what gets you
excited for future generations, either things that you're
(05:21):
investing in or elsewhere. Like at the top you list.
I realize it's super broad question.
Take it whatever direction you want to, but what areas of life
do you see as improving most dramatically over the next,
let's say, 25 years? Yeah.
So sticking to my fintech background, I would say they're
just things every day that pop up.
They're so complicated that shouldn't be.
(05:42):
I think, you know, I think aboutmy, my business owner, I have a
friend who owns a bunch of businesses in, in San Francisco,
a bunch of restaurants. And every week he's like
exporting a bunch of things fromone app to another and then
importing them somewhere else. And like, that's a very simple
thing that is a coordination problem.
(06:03):
There's no technology that we need to solve it, but it's
something that can be solved. And so I, based on information
from him running these, these restaurants, I've, you know,
tried to solve it with, with some of the companies we've
invested in. But in general, I just think,
you know, everything we do from getting a mortgage, getting a
(06:25):
loan, working with the bank, opening a new bank account,
getting insurance, all of these things are done poorly.
It leads to a bad customer experience and then also are
actually mispriced. So if you could price better,
you might be able to incentivizethe right kind of behaviors.
And we just as a society are notdoing those things.
(06:49):
So I'm excited, you know, for the next 1020, thirty years of
all that kind of stuff to happen.
The last thing I'll say is a lotof people talk about how we
don't have great financial education and people point to
all of the various things that are going on in people's lives,
people taking too much debt, credit based economy, all sorts
(07:11):
of stuff. I think, yes, I do think we
could do a better job of educating people about their
finances, and maybe we should teach a personal finance class
in high school. But I also think that some of
this stuff is inherent, and someof it we can fix with
technology. Like we can automate people's
(07:31):
financial lives in a way such that it leads them away from
those temptations. And I'm interested in that.
Tell me more, are you talking about like nudges like or you
have to opt out of putting some money in your 4K versus actively
opting in like that level or areyou thinking in another scale
as? Well, I'm thinking of stuff like
that, and the example you gave is a great one.
(07:54):
And there's so many other thingslike that, but those kind of
things can have a real impact on.
And like right now, people really don't save any money.
Americans barely save any money when they retire.
On average I think 85% of their money is 85% of their wealth is
in their home. And the only reason it's in
(08:14):
their home is because they you can't get the money out.
No, I think a lot of that stuff like there are killer apps in
finance, like if you're an expatbeing able to transfer money
back home with no fees or something like those types of
things are game changing. But a lot of the stuff you're
describing even like even if on their own they might not be game
changing, the cumulative effect,particularly for people who
struggle to save or have been excluded historically, like
(08:35):
those could be really big cumulative effects over the long
term. Well, I want to, I want to pivot
a little bit. This podcast is all about the
future of California. And I feel like fintech more
than other sectors within tech, people talk about whether or not
it is the center of gravity could be in New York, could be
elsewhere. I know you're you're just saying
you're in New York basing your accelerator there.
(08:56):
Tell me more about like New Yorkversus SF and fintech.
And also whether or not you think that California's
advantage as the center of tech,specifically in fintech, do you
think that's ever vulnerable in our lifetimes of of going
elsewhere? Yeah.
It's a great question. So I actually think right now
New York is ahead of San Francisco in fintech.
(09:19):
And I think if you look at the overall the sort of like leader
board of financings at seed stage.
So only looking at seed stage because, you know, the past is
the past, but let's look at what's happening in the future.
And that's that's seed stage financings there.
If you look at across sectors, San Francisco leads in every
sector probably except for biotech and fintech, Biotech
(09:42):
Boston and fintech New York. And I think it's pretty close.
I think it's, you know, maybe 510% delta, but the delta is
actually growing and New York has really come into its own in
the last five years or so. And I think that's fine.
I think look, for a lot of reasons, it makes sense to be
close to where the banks are and, and New York is, is the
(10:07):
financial hub of this country. So it makes sense that a lot of
fintech would be here too, especially the fin part of
Fintech, right? Then there's the tech part of
fintech and, and that actually, I think it's just so hard to
compete in San Francisco. The network effect is so strong
and it really comes out in so many different ways.
(10:29):
They're just like little advantages you have by being
based there. I'll give you a few examples.
We, we had a company that launched a, an iPhone app like
when they were starting just a seed company.
And you know, the founder in SanFrancisco to party met the guy
at Apple who was responsible forlike new finance app launches.
(10:52):
And he met him at a party And they, they, they, he was like,
oh, I really love this app. Like that he met, he saw at the
party and end up featuring it inthe App Store.
And that kind of like really small thing, you know, maybe it
gave them a 25% boost when they launched, but that those kind of
things really add up and compound and are super valuable.
(11:16):
One thing I've noticed in New York that even though I think
it's a great place for fintech and we have a lot of companies
here, I think it's pretty defined from a tech perspective
as compared to San Francisco. So, so I've been here for 2 1/2
months now and you know, for themost part live in San Francisco.
(11:39):
And in San Francisco, there's never been a single time when I
was the expert in tech or AI, never once.
Like there's always somebody who's way smarter than me
teaching me about everything here.
I would say so many occasions, dinner table conversation with
10 or 15 people and the topic ofAI and like, I'm clearly the
(12:03):
expert. And it's, it's strange for me,
you know, I think like I like toknow what's going on, but I
don't think of myself as an expert.
But I'm able to explain all thisstuff to people here.
And it's very surprising to me. I'm talking about being in a
room of people who are, you know, like Unicorn founders in
(12:24):
fintech. And I'm surprised they aren't
familiar with things like advanced voice mode on ChatGPT
or operator, how it works. Like these are things that just
living in San Francisco, you kind of just absorb.
But it's not the case here. And I've noticed it's a marked
difference. So yeah, that's that's something
(12:47):
I found to be unique. There's like a cornable phrase
there. I'm not sure what it is.
It's something like that experience of like, you're like,
oh, if I'm your expert, you're in.
You're in trouble, right. Like, there should be.
There should be other people whocan, you know, speak about this.
But yeah, I mean, that's something when I talk to people
about the future of California, it comes up time and time again,
right? You're in San Francisco or the
Valley. Like, you throw a stick, you hit
an engineer. Yeah.
(13:09):
Those network effects are so powerful.
Some people argue like, it doesn't matter whether there's
political dysfunction. It doesn't matter taxes or
anything else. Like particularly in the
software side, hardware is kind of a different story where you
have to build real things. But some people argue that that
advantage is like, Miami can have COVID, whatever, it's all
going back. So I'm curious, what if there's
(13:29):
any factors that would ever leadto San Francisco losing that
advantage? I don't know if that's the case,
but yeah, it's something that comes up a lot.
Yeah, I think, OK, I think, you know, look, some folks really
made an effort with Miami and you know, I've given them a lot
of shit on Twitter. But like, look, they, they made
an effort. I think it's just very hard to
(13:49):
dislodge a network effect if you're trying to hire the best
people. Like they're they're in San
Francisco. The best AI engineers today are
in San Francisco. We, we have AI companies in New
York and I and they just, the talent is harder to find than it
is out there. There's no question about it.
And dislodging that is very difficult, like dislodging any
(14:14):
network effects business is it'sjust really hard because of the
density of people doing things that you want.
Like, you have to get a lot of people out of there.
And, you know, a lot of VCs really wanted Miami to be a
thing. And of course, for the VCs, it's
especially valuable to not have to pay California taxes.
(14:36):
But it was hard to draw talentedfolks who want to work at
start-ups. They're just, it didn't work.
They couldn't build the ecosystem.
I think San Francisco in particular, in California in
general, have so many things. There.
That make start-ups great and the ecosystem of great
(14:58):
universities, some of the smartest people on the planet
moving there, and the venture capital industry combining is
just a powerful combo, and it's hard to get that anywhere else.
Let's talk about the future of California.
And is there anything that you feel like I wish this one thing
could be fixed, anything that, you know, you feel like
(15:19):
California, we're already we're we're singing it's praise.
Obviously, like the network effects of tech are durable.
They're going to be true. But there's also a lot of things
that people wish, you know, in some ways feel like California's
almost being held back in spite of all of this.
Yeah. Tailwinds that it has there
anything that like is top of your list of if I was, you know,
made governor for a day or something of that nature, like
what what would she'll be thinking about or dreaming
(15:41):
about? Yeah, I, I think look,
California and, and Newsom maybein particular, but not just
Newsom. I think we're always trying to
solve the world's problems. And like we're spending a lot of
money to, I don't know, for, forsomething that's not our
problem, like, I don't know, reparations or something like
that. Like why, why should we in San
(16:01):
Francisco try to solve this problem?
It was, it's not us. There's so many things like
that. Like we have, we have props all
the time that are like really feel like they have little to do
with California. It's really like solving the
nationwide problem. Why are we doing this shit?
And then like we're fighting a stupid culture war in the same
way that the Republican states are as well, like we're doing
(16:25):
the same shit. So I hate all that stuff.
And then I would say sort of number one topic that I, I think
we need to do more of, and this is, this is in part based on my
time in, in New York is actuallylike build housing.
You know, housing is the most expensive thing that that most
(16:48):
people spend their money on every month.
And we can be doing a lot to make it cheaper, namely, you
know, supply and demand. We can be building more supply
and I, I feel very strongly thatthat that will bring more
prosperity to all of us. And then, you know, being in New
(17:08):
York, I'd say one thing that's that's interesting that I've
learned over the past few months, I've thought about more
is here housing in the areas in Manhattan where I live are
extremely expensive. Is is extremely expensive, but
you know, because public transportation is so good, you
can go further out and it actually gets fairly reasonable.
(17:32):
And so you have a bunch of Laborlike the folks, our cleaners are
cheaper here. Like talking to restaurant
owners like their their staff ischeaper than it is in San
Francisco. And it's because people can get
from their cheap housing into the city affordably.
And we just don't have that in the Bay Area.
(17:55):
Like you, you can't anywhere yougo an hour away, it's still very
expensive. And so that's something that, if
we could solve or make a dent in, would be better for
everyone. Yeah.
And that's something that, yeah,we had one of my earlier
episodes, I had that one of the senior directors of Cali and
(18:15):
Beyond, we were talking about the housing crisis and.
Yeah. And what and what they're
working. No, because it's so true.
And it's something that I feel like a lot of tech people, tech
people is obviously is a broad term that's like a huge
generalization. But of, of all the industries in
California, it may be the one that is least vulnerable, at
least because on the upper end, people make a lot of money.
So it's like San Francisco is crazy.
(18:37):
The valley is crazy in terms of prices.
But of any industry speaking broadly, they're the the
industry that can afford it. But like you're saying, there's
like a social fabric that breaksdown when sure, your AI
engineers might be able to afford a condo, but when the
cleaners can't, when the restaurant owners can't, when
all these other people who teachers, firefighters, all the
people you need for cohesive society, when that breaks down,
(19:01):
it really does ripple up in weird ways that you don't always
anticipate. And I think so many of
California's political challenges, we'll just be that
dynamic playing out until this issue gets turned around.
So I think that's a great comparison of the New York
versus San Francisco point. And like all this, you know,
sequel reform, permitting reform.
(19:21):
I actually, I know this is sort of like going off tangent, but
like, I, I renovated my place a few years ago and it, it took
probably a year and a half longer than it should have
because of permitting issues. And, and in one case I had to.
And so that was, you know, time that there was an unoccupied
(19:43):
residence in San Francisco. It's kind of a big deal.
And, and they, I had to, I tore down a wall that a like Stanford
trained civil engineer, structural engineer was who told
me to, and then the city told meI couldn't do that and I, I had
to put the wall back up. So there's all sorts of stuff
that is blocking growth that that.
(20:04):
Kind of sucks. I'm trying to think of other.
I'd say that's, you know, by farmy number one, my number one
thing. I'd love to see more public
transit. It's tricky because when you
talk about public transit, you know, people can obviously bring
up high speed rail and there's areal boondoggle we have in
California. Yeah, I can't profess to know
all of what's going on there, but clearly, you know, that
(20:30):
timeline is insane. I don't know if my kids will
ever go from Los Angeles to to San Francisco in a high speed
fashion, but I feel like we've just had fairly bad governance
over time and and not a lot of great controls.
And so tech, to your earlier point, is really working in
(20:55):
spite of the government, not in cooperation with, which is
unfortunate. Does that affect your like
portfolio and the types of companies you invest in?
I know so much of fintech is at the federal level, but there are
issues that are state specific. Does like regulatory risk,
policy risk come up when you're doing diligence and thinking
about the types of companies that you invest in?
Or is it more just like monitoring at the federal level
(21:15):
and that's it? Yeah.
So there are local laws that do impact companies, but it's not
really something you can do muchabout.
So, so there are a lot of thingsthat are still regulated at the
state level that honestly shouldn't be like, you know, you
need money transmitter licenses for the state level, you need
(21:36):
lending licenses at the state level, but there isn't much that
California can or should be doing differently.
That's coming to my mind off thetop of my head.
So regulation is super importantand we've seen a lot of bad
regulation. We've seen actually the perils
(21:57):
of too much regulation and the perils of not enough regulation,
both in My Portfolio. But at a state level, I don't
think there's that much that California should be doing.
Yeah, so you're someone who, youknow, you're inundated with
pitches all day, like people arecoming to you and pitching
ideas. Are there pitches, topics, and
(22:17):
problems that you wish more founders were looking at or
thinking about? I have a lot of ideas for
startups that are like somethingI want to see but probably isn't
going to make enough money. The talent one and it's Shield.
Yeah, yeah. Yeah, yeah, no, like actually
there's one that I I posted about last week, which is I
missed this app called Detour. Did you ever use it?
(22:38):
No, but I saw your tweet about it.
Yeah, tell me, tell me more about it for those who don't
know. So it.
Was really cool, like it startedin San Francisco and it was
Andrew Mason, the founder of Groupon.
He started this app. This is now over a decade ago.
And it you could walk into a place and it'd say in your ears,
it would say like, look to the left, you'll see such and such.
And it would tell you about it. And yeah, it would give you a
(23:00):
very cool tour of the city that you're in.
And I'd love to see that come back.
So I've been, I've been working on it a little bit.
And I actually, I actually, I pitched the idea to Brian Chesky
in Airbnb and I said, hey, like,what didn't work for them was it
was you had to require customers, but you guys have the
(23:21):
customers and people in various cities and you have this
Airbnb's experiences product, but you could have one that's,
you know, 90 plus percent gross margins.
Yeah. Can we can we look forward to
this in the near future? He responded with I loved
Detour. He didn't say I'm going to build
it. Who knows, maybe.
(23:43):
Ask out the the hot girl at school and she's like, you're a
great person, You know, it's like.
But what what else? Another idea I've I've thought
about working on I I'm not goingto, but is So what better
designed hotels and you could doyou could do a lot to eliminate
(24:04):
the the major costs and something akin to capsule hotels
in Japan, but a lot of great common areas, but smaller rooms
and and then there are things you could part of the expense in
hotels is actually labor. Turning over the room cost like
(24:25):
2025 bucks and I think you can do a lot to make things faster
there. So that was one idea and you can
also like check people in via their phone.
There's a bunch of stuff that like.
I don't know why it doesn't happen already, but another idea
for support you. A little of those and one thing
I wanted to talk about too, is Isaw a quote of yours.
Forgive me, I'm misplacing whereyou said it, but it's talking
(24:46):
about how a lot of companies claim to be AI enabled a claim
to be AI powered, but like how people overuse that hype, right?
And that's natural to any hype cycle when when money, you know,
like the old Silicon Valley show, like how people are
throwing bricks of cash at VR, like people just put AI in their
tagline, right? You know, catnip to VCs.
But tell me more about what you meant by that.
And like, what I don't know, like 5-10 years from now when we
(25:09):
look back on the current AI hypeway, like what types of things
do you think are going to be? You might be laughing at or like
realize that maybe we're overblown in how we were
thinking about it. Yeah.
So you know what, interestingly,I'll say I don't think AI is
overhyped at the moment. I I think it's actually properly
(25:29):
hyped. I do think we are seeing this
wave of AI washing where companies put AI onto a rules
based workflow or some automation script.
It's not really AI or you know, if you're using open AI API to
auto fill a form or to like, I don't know, OCR or something or
(25:50):
really an AI company. No.
And I've seen purely soft, pure software companies that claim to
be AI companies. So we're seeing too much of
that. But the technology itself is I
think amazing and we are seeing some really cool stuff and we
are seeing non AI companies use AI tremendously.
(26:12):
An example is one of the companies in our portfolio.
It's called Deck. They what they do is are you
familiar with Plaid? Like, yeah, so they Plaid can be
an API, grab a bunch of stuff from some a user's bank account
with their permission. And so Deck does that for not
not banks. They do it for like you might
(26:35):
need to use information from utilities or car data or let's
say you're a musician and I wantto get your royalty data.
That's a that's a user permission to log in.
So there's like a ton of examples.
So these guys are building a company that does that and they
are actually using AI to do it under the hood.
(26:57):
And these guys previously started a company that was not,
not not using AI because it was six years ago.
And the advantage that they're seeing with AI is like 70X.
It's so much faster to build andeach new integration is so easy
to do and less prone to breakagebecause it's deterministic.
(27:21):
And so it's just so cool what we're seeing from non AI
companies. Yeah, I think that's super cool.
And I never heard the term AI washing before, but I might have
to steal that. Please do it.
It's funny because I see that the negative impact of that in a
lot of my work I work with on policy issues.
So I work for like trade associations for tech companies
and particularly at the state level because there's like 900
(27:43):
plus AI related bills at the state level.
And like, closing my eyes, I'm not even looking at the bill.
I already know when it comes up,like there's gonna be issues
with definitions and scoping. It's already a challenging
problem of how do you define AI just for technologists, but
particularly for lawmakers when they see something bad or they
wanna prohibit some bad behavior, like defining what is
and isn't AI is is actually thorny.
(28:04):
And then it can it can be reallychallenging.
A lot of companies are nervous about getting swept up in rules
that weren't designed for them. But I think about that a lot in
what you're just describing of how if every company claims to
be AI, and that generates a lot of excitement for investors, It
also generates a lot of fear forpeople who are concerned about a
is future going forward. Anyways, that's an aside, but
that's something I think about alot.
(28:25):
Yeah. Yeah, well, you just reminded me
of Scott Wienersville, which would have, I think it would
have really set the state back set, set the state back in, in
AI and fortunately Gavin Newsom detailed it.
But I think brings up the, you know, the idea that you talked
about earlier, which is like local regulation and how
(28:46):
important it is. Yeah, well, I mean, are you cool
talking about that a little more?
Because I, I'm very interested in that topic.
And so for people who don't knowlike 1047 SP 1047, last year,
Scott Weiner's bill to regulate frontier AI models premised on
the idea that the largest, most advanced AI models present the
greatest amount of risk to society.
(29:06):
And so we need a special class of regulations just for them.
That specific bill came along with a lot of liability
structures for developers. It wasn't.
We were just talking about definitions and scoping like it
had a lot of issues for the opensource community about how do
you can define who's the developer in these situations.
It passed both houses, was vetoed by Newsom.
But now this year, there's multiple frontier AI bills not
(29:27):
structured the same way as 1047,but other lawmakers have that
that issue and that idea is still out there.
And one question, I mean, feel free to opine on that in any
direction, but I also have a question related to that is that
feels like from where I was sitting working at a, you know,
a public affairs firm that was works with a lot of EC's and
tech people like that Bill seemed like a unique moment of
(29:50):
the tech community mobilizing and getting energized around a
topic at the state level in particular, which I don't feel
like I see that a lot. Obviously right now nationally
with Elon and this administration, there's like the
A16Z connection and a lot of other groups, like there's a
greater tech involvement in national politics, but
particularly the state level. I don't feel like we had seen
that. And one of my pocket theories is
like in the next 1020, thirty years, tech is going to become
(30:12):
more influential at the state houses just because they can.
Like I think it's like a mispriced kind of thing.
Like I think it's worth the resources for them.
But I don't know. Tell me more about like that
bill and what take it in any direction you realize.
Yeah, I mean, I think regulatingAI is very difficult and I'm not
saying it shouldn't be done. I just think it shouldn't be
done in California. Like why is a state choosing to
(30:35):
go after this difficult topic? And that Bill in particular, if
I remember correctly, had all sorts of strange definitions.
And like, it's not necessarily true that only large models are
risky. So like that was a strange
amount of regulation or type of regulation.
(30:56):
And then they didn't define things clearly.
It just didn't make sense to regulate on a local level.
And I feel like, you know, it could have had an effect of
folks leaving California. Yeah, that, that might be a
little far trashed, but I, I don't know.
It's just another example of thefirst thing we talked about,
which is just California deciding to enact a change that
(31:19):
they think the world should see.And it negatively impacts
Californians and causes people to leave.
And then I, I'm not, I'll be honest, I haven't been as up to
date on the more recent bill. You shouldn't be.
It's a, it's a lifestyle choice that I've taken on that most
(31:40):
people shouldn't, you know, burden themselves with that the
type of boring following monitoring state level bills.
Yeah. But I do think, I mean, to your
point, obviously at a local level, and I know this isn't,
this isn't specifically what you're talking about, but at a
local level, people in San Francisco have gotten way more
politically active. Like I moved to San Francisco in
(32:00):
2012 and you kind of barely heard anything about local
elections to now, I think thanksto work of Sachin and and Gary
and and and many others. Yeah, I had Sachin and Steven on
the 4th episode. Yeah, they were.
They were awesome. So I think those guys have done
a tremendous job in bringing about the importance of of local
(32:24):
politics to us. And then also like a lot of
people are just like, what can Ido?
Who should I vote for? So some of these just simple
things that seem simple, like a voting guide are actually very
valuable. And I think, you know, now CRO
SF itself is a force in local politics, which is which is very
exciting. I yeah, I do think we've seen
(32:51):
another example at a state levelwould be insurance.
So obviously there were the fires in LA in January were
incredibly destructive. And I think a lot of people for
the first time realized the reason that they were so
destructive in part. And the reason why people didn't
(33:11):
have insurance is in part due tothe poor state of insurance in
California. And that's in part the
regulatory state and in part ourinsurance commissioner, Ricardo
Lara, who has no training in insurance.
He as like a bachelor's in journalism or something and then
became our insurance commissioner, does not
understand much about insurance.And the state insurers have been
(33:34):
complaining for a long time. And we of course, have other
major problems with insurance, including the state needing to
approve regulatory filings and and sort of watchdog
organizations getting paid to fight every new regulatory
filing just makes for a really dysfunctional state.
(33:55):
And I think people did not have any idea about that stuff.
And probably, you know, today inMay, it's been a few months, so
people have already forgotten. But you know, they might keep,
they might, they might remember some aspect of it and, and think
about that when it, when the next election comes around.
Yeah, my last guest who's in thecontrollers office in LA said
(34:18):
described it as we have an attention deficit democracy,
like people just, you know, you don't pay attention to issues
until it's broken. But also, I think that's how
like the regulatory state and policy ought to work.
It's kind of like you're like ITsecurity system, like you don't
want to think about defeating every DDoS attack that's coming
across like at our website. You just want to know my
website's secure and that it's working.
I think with policy too, it's like you don't want to think and
(34:40):
wake up like most people. Is our insurance system working
well in the state right now If we have a big wildfire, like you
don't want to think about it, but then when it doesn't work,
you know, it then draws people'sattention to it, but then
hopefully can be motivated to create fixes.
I know with the gross F founders, Co founders, they were
talking about how like the school board recalls and some of
those moments during COVID, it really got the average San
(35:01):
Franciscan who typically may nothave thought about politics to
think about it. And then as a result, they were
able to use that energy and thatmomentum to generate change.
So I think, like, it takes thosemoments of outrage, of people
asking, like, look, shining the light on the situation and
saying what the heck's happeninghere to then engage in a way
that hopefully can change it forthe better.
(35:22):
Well, yeah. Absolutely.
One question I wanted to always end on is kind of like what's
your hope for the future of California?
Let's say we're talking again in10 years.
Like what are some of the changes and things that you
hope? We already answered this with
housing and other things like that.
Is there anything else that you just hope for, for the future of
the state and that gets you excited about the future?
Yeah, I think it's just like it's such an exciting and
beautiful place to live and I think it's always going to draw
(35:45):
the brightest people in the world to it.
And I, you know, I think certainly, you know, there are
ways that that California can mess things up, but I'd love to
see a lot more bringing back to the earlier topic, less theater,
more experimentation. Like we have this world class
talent, you know, it's one of the just California by itself
(36:09):
would be I think the the 4th, 4th.
Country two weeks ago, yeah. By GDP in the world.
And so that's, that's amazing. And I think we, we, and then we,
we have like that plus this beautiful place with extremely
(36:31):
talented and smart people. And it just makes me so happy
and proud to be a Californian, to be honest.
Well, I'm proud you're a California too.
Thank you for your time, Sheil. Really appreciate you taking
time today to talk to me. Absolutely.
California is really meaningful to me personally.
It's always going to draw the brightest people in the world.
New York is ahead of San Francisco in fintech.
People in San Francisco have gotten way more politically
active. The network effect is so strong.
I'm excited for the next 1020. Thirty years of all that kind of
stuff to happen. It just makes me so happy and
proud to be a Californian. Hello everyone, and welcome back
(00:23):
to the California Future Societypodcast this week.
I have a great one for you. I have Sheil a better tomorrow
ventures. They're an early stage fintech
focused VC fund based in San Francisco.
Sheil is just a great guy. I love great energy.
He has a fun playful zeal to him.
You can it comes through in the way that he talks.
For those of you who see him on Twitter or elsewhere, you know
this about him. So I had a lot of fun just
(00:44):
talking to him about how San Francisco's texting compares to
New York, Miami, or other citiesand why Sheil is currently in
New York scouting out talent fortheir startup accelerator.
We're talking about whether or not California will ever lose
its status as the leader of global innovation.
We're talking about the types ofstart-ups that Sheil would like
to see more of in the world, as well as just some of his
thoughts about the future of California and his hope for the
(01:04):
state and why he loves it here so much.
So I know you're going to enjoy the conversation, especially if
you're in the tech or fintech world.
If you're a builder who thinks about the state or you're just
someone who cares about the future of California, I know
you're going to enjoy it. As always, make sure to
subscribe to California futuresociety.com or wherever
you're hearing this your Sheil. How are you doing today?
(01:24):
And thanks for jumping on, I'm doing.
Really. Well, yeah, one thing we, we, we
mentioned I, I just over the weekend did a long walk, 35
miles. So my feet are hurting a little
bit, but otherwise otherwise doing well.
Well, one way I like to start off these conversations is ask
what's your connection to California?
(01:45):
Yeah, sure. So I grew up in Pittsburgh, PA,
moved to California after being in some other places in 2012.
And since then I've kind of become your classic California
stereotype. I am a venture capitalist.
I like to hike. I go to Burning Man, all the
(02:05):
various things that you would imagine from somebody who lives
in San Francisco, the back streets.
I, I, I run a venture fund. It's called Better Tomorrow
Ventures, BTV for short. We back early stage fintech
startups sort of shaping the financial system and California
is really meaningful to me personally.
I think it's really, you know, I'm fortunate that I got the
(02:29):
chance to move there in 2012 andreally it's shaped who I am in
in tremendous ways. I think it was really moving
there that exposed me to much more of the exciting world of
tech and really encouraged me tothink a lot bigger than I was
before and I was living in Chicago.
(02:50):
Well, I'm glad, you know, you checked the VC boxes.
We don't want VCs who don't go to Burning Man, things like
that. We want to, you know, tried and
true people who live up to the reputation.
So glad you checked those boxes.Well, the name of your venture,
right? It's Better Tomorrow ventures.
And you know, average person maynot always equate human impact
when they think about fintech, when they think about that.
But obviously positive visions of the future are embedded in
kind of your thesis and how you invest and what you're hoping
(03:12):
for. And I know through other work
and nonprofit work and whatnot, you really care about the
financial systems ability to include people and things like
that. So tell me more about your hope
for the future of fintech and particularly those human aspects
that people might not assume right off the gate.
Yeah. For sure.
So, so you're absolutely right. The name Better Tomorrow is it
means two things. It means one, we're investing
for a better future. And we do think financial
(03:35):
technology is a great way to improve people's lives because
people's lives are very much intertwined in finances, in
their finances, but also better tomorrow is improving ourselves.
Like, what can I be doing bettertomorrow as sort of another
second meaning of the word, the term.
Let's see now I mentioned, I think finance disproportionately
(03:56):
has the ability to impact people's lives.
I, I sort of started my fintech career on the nonprofit side
with a nonprofit called Kiva. And with Kiva, I actually had
moved to India to find microfinance institutions that
they could partner with. Kiva is a website where people
(04:17):
primarily in the developed worldcan make 0% interest loans to
individuals in the developing world for the sake of relieving
poverty. You know, in, in working at
Kiva, I was getting on, you know, I was riding a bus and
getting on the back of somebody's motorcycle to serve 1
(04:38):
borrower and realize is highly inefficient.
And I realized why the loans areso expensive.
And I thought, you know, financeis something microfinance and
Fintech is something that can solve this problem with
technology. And that's part of the initial
reason why I started investing in, in fintech.
And then I also just think it's tremendous opportunity.
(05:00):
I know you know, thinking about it's only the tremendous
opportunity of it, but you're someone who I I associate with
like a playful zeal when it comes to thinking about tech and
like being willing to try new things.
I know a story that circulates online is, is like your wedding
in the metaverse, like when you think about fintech or other
tech, like when you think, let'ssay by like 2050, what gets you
excited for future generations, either things that you're
(05:21):
investing in or elsewhere. Like at the top you list.
I realize it's super broad question.
Take it whatever direction you want to, but what areas of life
do you see as improving most dramatically over the next,
let's say, 25 years? Yeah.
So sticking to my fintech background, I would say they're
just things every day that pop up.
They're so complicated that shouldn't be.
(05:42):
I think, you know, I think aboutmy, my business owner, I have a
friend who owns a bunch of businesses in, in San Francisco,
a bunch of restaurants. And every week he's like
exporting a bunch of things fromone app to another and then
importing them somewhere else. And like, that's a very simple
thing that is a coordination problem.
(06:03):
There's no technology that we need to solve it, but it's
something that can be solved. And so I, based on information
from him running these, these restaurants, I've, you know,
tried to solve it with, with some of the companies we've
invested in. But in general, I just think,
you know, everything we do from getting a mortgage, getting a
(06:25):
loan, working with the bank, opening a new bank account,
getting insurance, all of these things are done poorly.
It leads to a bad customer experience and then also are
actually mispriced. So if you could price better,
you might be able to incentivizethe right kind of behaviors.
And we just as a society are notdoing those things.
(06:49):
So I'm excited, you know, for the next 1020, thirty years of
all that kind of stuff to happen.
The last thing I'll say is a lotof people talk about how we
don't have great financial education and people point to
all of the various things that are going on in people's lives,
people taking too much debt, credit based economy, all sorts
(07:11):
of stuff. I think, yes, I do think we
could do a better job of educating people about their
finances, and maybe we should teach a personal finance class
in high school. But I also think that some of
this stuff is inherent, and someof it we can fix with
technology. Like we can automate people's
(07:31):
financial lives in a way such that it leads them away from
those temptations. And I'm interested in that.
Tell me more, are you talking about like nudges like or you
have to opt out of putting some money in your 4K versus actively
opting in like that level or areyou thinking in another scale
as? Well, I'm thinking of stuff like
that, and the example you gave is a great one.
(07:54):
And there's so many other thingslike that, but those kind of
things can have a real impact on.
And like right now, people really don't save any money.
Americans barely save any money when they retire.
On average I think 85% of their money is 85% of their wealth is
in their home. And the only reason it's in
(08:14):
their home is because they you can't get the money out.
No, I think a lot of that stuff like there are killer apps in
finance, like if you're an expatbeing able to transfer money
back home with no fees or something like those types of
things are game changing. But a lot of the stuff you're
describing even like even if on their own they might not be game
changing, the cumulative effect,particularly for people who
struggle to save or have been excluded historically, like
(08:35):
those could be really big cumulative effects over the long
term. Well, I want to, I want to pivot
a little bit. This podcast is all about the
future of California. And I feel like fintech more
than other sectors within tech, people talk about whether or not
it is the center of gravity could be in New York, could be
elsewhere. I know you're you're just saying
you're in New York basing your accelerator there.
(08:56):
Tell me more about like New Yorkversus SF and fintech.
And also whether or not you think that California's
advantage as the center of tech,specifically in fintech, do you
think that's ever vulnerable in our lifetimes of of going
elsewhere? Yeah.
It's a great question. So I actually think right now
New York is ahead of San Francisco in fintech.
(09:19):
And I think if you look at the overall the sort of like leader
board of financings at seed stage.
So only looking at seed stage because, you know, the past is
the past, but let's look at what's happening in the future.
And that's that's seed stage financings there.
If you look at across sectors, San Francisco leads in every
sector probably except for biotech and fintech, Biotech
(09:42):
Boston and fintech New York. And I think it's pretty close.
I think it's, you know, maybe 510% delta, but the delta is
actually growing and New York has really come into its own in
the last five years or so. And I think that's fine.
I think look, for a lot of reasons, it makes sense to be
close to where the banks are and, and New York is, is the
(10:07):
financial hub of this country. So it makes sense that a lot of
fintech would be here too, especially the fin part of
Fintech, right? Then there's the tech part of
fintech and, and that actually, I think it's just so hard to
compete in San Francisco. The network effect is so strong
and it really comes out in so many different ways.
(10:29):
They're just like little advantages you have by being
based there. I'll give you a few examples.
We, we had a company that launched a, an iPhone app like
when they were starting just a seed company.
And you know, the founder in SanFrancisco to party met the guy
at Apple who was responsible forlike new finance app launches.
(10:52):
And he met him at a party And they, they, they, he was like,
oh, I really love this app. Like that he met, he saw at the
party and end up featuring it inthe App Store.
And that kind of like really small thing, you know, maybe it
gave them a 25% boost when they launched, but that those kind of
things really add up and compound and are super valuable.
(11:16):
One thing I've noticed in New York that even though I think
it's a great place for fintech and we have a lot of companies
here, I think it's pretty defined from a tech perspective
as compared to San Francisco. So, so I've been here for 2 1/2
months now and you know, for themost part live in San Francisco.
(11:39):
And in San Francisco, there's never been a single time when I
was the expert in tech or AI, never once.
Like there's always somebody who's way smarter than me
teaching me about everything here.
I would say so many occasions, dinner table conversation with
10 or 15 people and the topic ofAI and like, I'm clearly the
(12:03):
expert. And it's, it's strange for me,
you know, I think like I like toknow what's going on, but I
don't think of myself as an expert.
But I'm able to explain all thisstuff to people here.
And it's very surprising to me. I'm talking about being in a
room of people who are, you know, like Unicorn founders in
(12:24):
fintech. And I'm surprised they aren't
familiar with things like advanced voice mode on ChatGPT
or operator, how it works. Like these are things that just
living in San Francisco, you kind of just absorb.
But it's not the case here. And I've noticed it's a marked
difference. So yeah, that's that's something
(12:47):
I found to be unique. There's like a cornable phrase
there. I'm not sure what it is.
It's something like that experience of like, you're like,
oh, if I'm your expert, you're in.
You're in trouble, right. Like, there should be.
There should be other people whocan, you know, speak about this.
But yeah, I mean, that's something when I talk to people
about the future of California, it comes up time and time again,
right? You're in San Francisco or the
Valley. Like, you throw a stick, you hit
an engineer. Yeah.
(13:09):
Those network effects are so powerful.
Some people argue like, it doesn't matter whether there's
political dysfunction. It doesn't matter taxes or
anything else. Like particularly in the
software side, hardware is kind of a different story where you
have to build real things. But some people argue that that
advantage is like, Miami can have COVID, whatever, it's all
going back. So I'm curious, what if there's
(13:29):
any factors that would ever leadto San Francisco losing that
advantage? I don't know if that's the case,
but yeah, it's something that comes up a lot.
Yeah, I think, OK, I think, you know, look, some folks really
made an effort with Miami and you know, I've given them a lot
of shit on Twitter. But like, look, they, they made
an effort. I think it's just very hard to
(13:49):
dislodge a network effect if you're trying to hire the best
people. Like they're they're in San
Francisco. The best AI engineers today are
in San Francisco. We, we have AI companies in New
York and I and they just, the talent is harder to find than it
is out there. There's no question about it.
And dislodging that is very difficult, like dislodging any
(14:14):
network effects business is it'sjust really hard because of the
density of people doing things that you want.
Like, you have to get a lot of people out of there.
And, you know, a lot of VCs really wanted Miami to be a
thing. And of course, for the VCs, it's
especially valuable to not have to pay California taxes.
(14:36):
But it was hard to draw talentedfolks who want to work at
start-ups. They're just, it didn't work.
They couldn't build the ecosystem.
I think San Francisco in particular, in California in
general, have so many things. There.
That make start-ups great and the ecosystem of great
(14:58):
universities, some of the smartest people on the planet
moving there, and the venture capital industry combining is
just a powerful combo, and it's hard to get that anywhere else.
Let's talk about the future of California.
And is there anything that you feel like I wish this one thing
could be fixed, anything that, you know, you feel like
(15:19):
California, we're already we're we're singing it's praise.
Obviously, like the network effects of tech are durable.
They're going to be true. But there's also a lot of things
that people wish, you know, in some ways feel like California's
almost being held back in spite of all of this.
Yeah. Tailwinds that it has there
anything that like is top of your list of if I was, you know,
made governor for a day or something of that nature, like
what what would she'll be thinking about or dreaming
(15:41):
about? Yeah, I, I think look,
California and, and Newsom maybein particular, but not just
Newsom. I think we're always trying to
solve the world's problems. And like we're spending a lot of
money to, I don't know, for, forsomething that's not our
problem, like, I don't know, reparations or something like
that. Like why, why should we in San
(16:01):
Francisco try to solve this problem?
It was, it's not us. There's so many things like
that. Like we have, we have props all
the time that are like really feel like they have little to do
with California. It's really like solving the
nationwide problem. Why are we doing this shit?
And then like we're fighting a stupid culture war in the same
way that the Republican states are as well, like we're doing
(16:25):
the same shit. So I hate all that stuff.
And then I would say sort of number one topic that I, I think
we need to do more of, and this is, this is in part based on my
time in, in New York is actuallylike build housing.
You know, housing is the most expensive thing that that most
(16:48):
people spend their money on every month.
And we can be doing a lot to make it cheaper, namely, you
know, supply and demand. We can be building more supply
and I, I feel very strongly thatthat that will bring more
prosperity to all of us. And then, you know, being in New
(17:08):
York, I'd say one thing that's that's interesting that I've
learned over the past few months, I've thought about more
is here housing in the areas in Manhattan where I live are
extremely expensive. Is is extremely expensive, but
you know, because public transportation is so good, you
can go further out and it actually gets fairly reasonable.
(17:32):
And so you have a bunch of Laborlike the folks, our cleaners are
cheaper here. Like talking to restaurant
owners like their their staff ischeaper than it is in San
Francisco. And it's because people can get
from their cheap housing into the city affordably.
And we just don't have that in the Bay Area.
(17:55):
Like you, you can't anywhere yougo an hour away, it's still very
expensive. And so that's something that, if
we could solve or make a dent in, would be better for
everyone. Yeah.
And that's something that, yeah,we had one of my earlier
episodes, I had that one of the senior directors of Cali and
(18:15):
Beyond, we were talking about the housing crisis and.
Yeah. And what and what they're
working. No, because it's so true.
And it's something that I feel like a lot of tech people, tech
people is obviously is a broad term that's like a huge
generalization. But of, of all the industries in
California, it may be the one that is least vulnerable, at
least because on the upper end, people make a lot of money.
So it's like San Francisco is crazy.
(18:37):
The valley is crazy in terms of prices.
But of any industry speaking broadly, they're the the
industry that can afford it. But like you're saying, there's
like a social fabric that breaksdown when sure, your AI
engineers might be able to afford a condo, but when the
cleaners can't, when the restaurant owners can't, when
all these other people who teachers, firefighters, all the
people you need for cohesive society, when that breaks down,
(19:01):
it really does ripple up in weird ways that you don't always
anticipate. And I think so many of
California's political challenges, we'll just be that
dynamic playing out until this issue gets turned around.
So I think that's a great comparison of the New York
versus San Francisco point. And like all this, you know,
sequel reform, permitting reform.
(19:21):
I actually, I know this is sort of like going off tangent, but
like, I, I renovated my place a few years ago and it, it took
probably a year and a half longer than it should have
because of permitting issues. And, and in one case I had to.
And so that was, you know, time that there was an unoccupied
(19:43):
residence in San Francisco. It's kind of a big deal.
And, and they, I had to, I tore down a wall that a like Stanford
trained civil engineer, structural engineer was who told
me to, and then the city told meI couldn't do that and I, I had
to put the wall back up. So there's all sorts of stuff
that is blocking growth that that.
(20:04):
Kind of sucks. I'm trying to think of other.
I'd say that's, you know, by farmy number one, my number one
thing. I'd love to see more public
transit. It's tricky because when you
talk about public transit, you know, people can obviously bring
up high speed rail and there's areal boondoggle we have in
California. Yeah, I can't profess to know
all of what's going on there, but clearly, you know, that
(20:30):
timeline is insane. I don't know if my kids will
ever go from Los Angeles to to San Francisco in a high speed
fashion, but I feel like we've just had fairly bad governance
over time and and not a lot of great controls.
And so tech, to your earlier point, is really working in
(20:55):
spite of the government, not in cooperation with, which is
unfortunate. Does that affect your like
portfolio and the types of companies you invest in?
I know so much of fintech is at the federal level, but there are
issues that are state specific. Does like regulatory risk,
policy risk come up when you're doing diligence and thinking
about the types of companies that you invest in?
Or is it more just like monitoring at the federal level
(21:15):
and that's it? Yeah.
So there are local laws that do impact companies, but it's not
really something you can do muchabout.
So, so there are a lot of thingsthat are still regulated at the
state level that honestly shouldn't be like, you know, you
need money transmitter licenses for the state level, you need
(21:36):
lending licenses at the state level, but there isn't much that
California can or should be doing differently.
That's coming to my mind off thetop of my head.
So regulation is super importantand we've seen a lot of bad
regulation. We've seen actually the perils
(21:57):
of too much regulation and the perils of not enough regulation,
both in My Portfolio. But at a state level, I don't
think there's that much that California should be doing.
Yeah, so you're someone who, youknow, you're inundated with
pitches all day, like people arecoming to you and pitching
ideas. Are there pitches, topics, and
(22:17):
problems that you wish more founders were looking at or
thinking about? I have a lot of ideas for
startups that are like somethingI want to see but probably isn't
going to make enough money. The talent one and it's Shield.
Yeah, yeah. Yeah, yeah, no, like actually
there's one that I I posted about last week, which is I
missed this app called Detour. Did you ever use it?
(22:38):
No, but I saw your tweet about it.
Yeah, tell me, tell me more about it for those who don't
know. So it.
Was really cool, like it startedin San Francisco and it was
Andrew Mason, the founder of Groupon.
He started this app. This is now over a decade ago.
And it you could walk into a place and it'd say in your ears,
it would say like, look to the left, you'll see such and such.
And it would tell you about it. And yeah, it would give you a
(23:00):
very cool tour of the city that you're in.
And I'd love to see that come back.
So I've been, I've been working on it a little bit.
And I actually, I actually, I pitched the idea to Brian Chesky
in Airbnb and I said, hey, like,what didn't work for them was it
was you had to require customers, but you guys have the
(23:21):
customers and people in various cities and you have this
Airbnb's experiences product, but you could have one that's,
you know, 90 plus percent gross margins.
Yeah. Can we can we look forward to
this in the near future? He responded with I loved
Detour. He didn't say I'm going to build
it. Who knows, maybe.
(23:43):
Ask out the the hot girl at school and she's like, you're a
great person, You know, it's like.
But what what else? Another idea I've I've thought
about working on I I'm not goingto, but is So what better
designed hotels and you could doyou could do a lot to eliminate
(24:04):
the the major costs and something akin to capsule hotels
in Japan, but a lot of great common areas, but smaller rooms
and and then there are things you could part of the expense in
hotels is actually labor. Turning over the room cost like
(24:25):
2025 bucks and I think you can do a lot to make things faster
there. So that was one idea and you can
also like check people in via their phone.
There's a bunch of stuff that like.
I don't know why it doesn't happen already, but another idea
for support you. A little of those and one thing
I wanted to talk about too, is Isaw a quote of yours.
Forgive me, I'm misplacing whereyou said it, but it's talking
(24:46):
about how a lot of companies claim to be AI enabled a claim
to be AI powered, but like how people overuse that hype, right?
And that's natural to any hype cycle when when money, you know,
like the old Silicon Valley show, like how people are
throwing bricks of cash at VR, like people just put AI in their
tagline, right? You know, catnip to VCs.
But tell me more about what you meant by that.
And like, what I don't know, like 5-10 years from now when we
(25:09):
look back on the current AI hypeway, like what types of things
do you think are going to be? You might be laughing at or like
realize that maybe we're overblown in how we were
thinking about it. Yeah.
So you know what, interestingly,I'll say I don't think AI is
overhyped at the moment. I I think it's actually properly
(25:29):
hyped. I do think we are seeing this
wave of AI washing where companies put AI onto a rules
based workflow or some automation script.
It's not really AI or you know, if you're using open AI API to
auto fill a form or to like, I don't know, OCR or something or
(25:50):
really an AI company. No.
And I've seen purely soft, pure software companies that claim to
be AI companies. So we're seeing too much of
that. But the technology itself is I
think amazing and we are seeing some really cool stuff and we
are seeing non AI companies use AI tremendously.
(26:12):
An example is one of the companies in our portfolio.
It's called Deck. They what they do is are you
familiar with Plaid? Like, yeah, so they Plaid can be
an API, grab a bunch of stuff from some a user's bank account
with their permission. And so Deck does that for not
not banks. They do it for like you might
(26:35):
need to use information from utilities or car data or let's
say you're a musician and I wantto get your royalty data.
That's a that's a user permission to log in.
So there's like a ton of examples.
So these guys are building a company that does that and they
are actually using AI to do it under the hood.
(26:57):
And these guys previously started a company that was not,
not not using AI because it was six years ago.
And the advantage that they're seeing with AI is like 70X.
It's so much faster to build andeach new integration is so easy
to do and less prone to breakagebecause it's deterministic.
(27:21):
And so it's just so cool what we're seeing from non AI
companies. Yeah, I think that's super cool.
And I never heard the term AI washing before, but I might have
to steal that. Please do it.
It's funny because I see that the negative impact of that in a
lot of my work I work with on policy issues.
So I work for like trade associations for tech companies
and particularly at the state level because there's like 900
(27:43):
plus AI related bills at the state level.
And like, closing my eyes, I'm not even looking at the bill.
I already know when it comes up,like there's gonna be issues
with definitions and scoping. It's already a challenging
problem of how do you define AI just for technologists, but
particularly for lawmakers when they see something bad or they
wanna prohibit some bad behavior, like defining what is
and isn't AI is is actually thorny.
(28:04):
And then it can it can be reallychallenging.
A lot of companies are nervous about getting swept up in rules
that weren't designed for them. But I think about that a lot in
what you're just describing of how if every company claims to
be AI, and that generates a lot of excitement for investors, It
also generates a lot of fear forpeople who are concerned about a
is future going forward. Anyways, that's an aside, but
that's something I think about alot.
(28:25):
Yeah. Yeah, well, you just reminded me
of Scott Wienersville, which would have, I think it would
have really set the state back set, set the state back in, in
AI and fortunately Gavin Newsom detailed it.
But I think brings up the, you know, the idea that you talked
about earlier, which is like local regulation and how
(28:46):
important it is. Yeah, well, I mean, are you cool
talking about that a little more?
Because I, I'm very interested in that topic.
And so for people who don't knowlike 1047 SP 1047, last year,
Scott Weiner's bill to regulate frontier AI models premised on
the idea that the largest, most advanced AI models present the
greatest amount of risk to society.
(29:06):
And so we need a special class of regulations just for them.
That specific bill came along with a lot of liability
structures for developers. It wasn't.
We were just talking about definitions and scoping like it
had a lot of issues for the opensource community about how do
you can define who's the developer in these situations.
It passed both houses, was vetoed by Newsom.
But now this year, there's multiple frontier AI bills not
(29:27):
structured the same way as 1047,but other lawmakers have that
that issue and that idea is still out there.
And one question, I mean, feel free to opine on that in any
direction, but I also have a question related to that is that
feels like from where I was sitting working at a, you know,
a public affairs firm that was works with a lot of EC's and
tech people like that Bill seemed like a unique moment of
(29:50):
the tech community mobilizing and getting energized around a
topic at the state level in particular, which I don't feel
like I see that a lot. Obviously right now nationally
with Elon and this administration, there's like the
A16Z connection and a lot of other groups, like there's a
greater tech involvement in national politics, but
particularly the state level. I don't feel like we had seen
that. And one of my pocket theories is
like in the next 1020, thirty years, tech is going to become
(30:12):
more influential at the state houses just because they can.
Like I think it's like a mispriced kind of thing.
Like I think it's worth the resources for them.
But I don't know. Tell me more about like that
bill and what take it in any direction you realize.
Yeah, I mean, I think regulatingAI is very difficult and I'm not
saying it shouldn't be done. I just think it shouldn't be
done in California. Like why is a state choosing to
(30:35):
go after this difficult topic? And that Bill in particular, if
I remember correctly, had all sorts of strange definitions.
And like, it's not necessarily true that only large models are
risky. So like that was a strange
amount of regulation or type of regulation.
(30:56):
And then they didn't define things clearly.
It just didn't make sense to regulate on a local level.
And I feel like, you know, it could have had an effect of
folks leaving California. Yeah, that, that might be a
little far trashed, but I, I don't know.
It's just another example of thefirst thing we talked about,
which is just California deciding to enact a change that
(31:19):
they think the world should see.And it negatively impacts
Californians and causes people to leave.
And then I, I'm not, I'll be honest, I haven't been as up to
date on the more recent bill. You shouldn't be.
It's a, it's a lifestyle choice that I've taken on that most
(31:40):
people shouldn't, you know, burden themselves with that the
type of boring following monitoring state level bills.
Yeah. But I do think, I mean, to your
point, obviously at a local level, and I know this isn't,
this isn't specifically what you're talking about, but at a
local level, people in San Francisco have gotten way more
politically active. Like I moved to San Francisco in
(32:00):
2012 and you kind of barely heard anything about local
elections to now, I think thanksto work of Sachin and and Gary
and and and many others. Yeah, I had Sachin and Steven on
the 4th episode. Yeah, they were.
They were awesome. So I think those guys have done
a tremendous job in bringing about the importance of of local
(32:24):
politics to us. And then also like a lot of
people are just like, what can Ido?
Who should I vote for? So some of these just simple
things that seem simple, like a voting guide are actually very
valuable. And I think, you know, now CRO
SF itself is a force in local politics, which is which is very
exciting. I yeah, I do think we've seen
(32:51):
another example at a state levelwould be insurance.
So obviously there were the fires in LA in January were
incredibly destructive. And I think a lot of people for
the first time realized the reason that they were so
destructive in part. And the reason why people didn't
(33:11):
have insurance is in part due tothe poor state of insurance in
California. And that's in part the
regulatory state and in part ourinsurance commissioner, Ricardo
Lara, who has no training in insurance.
He as like a bachelor's in journalism or something and then
became our insurance commissioner, does not
understand much about insurance.And the state insurers have been
(33:34):
complaining for a long time. And we of course, have other
major problems with insurance, including the state needing to
approve regulatory filings and and sort of watchdog
organizations getting paid to fight every new regulatory
filing just makes for a really dysfunctional state.
(33:55):
And I think people did not have any idea about that stuff.
And probably, you know, today inMay, it's been a few months, so
people have already forgotten. But you know, they might keep,
they might, they might remember some aspect of it and, and think
about that when it, when the next election comes around.
Yeah, my last guest who's in thecontrollers office in LA said
(34:18):
described it as we have an attention deficit democracy,
like people just, you know, you don't pay attention to issues
until it's broken. But also, I think that's how
like the regulatory state and policy ought to work.
It's kind of like you're like ITsecurity system, like you don't
want to think about defeating every DDoS attack that's coming
across like at our website. You just want to know my
website's secure and that it's working.
I think with policy too, it's like you don't want to think and
(34:40):
wake up like most people. Is our insurance system working
well in the state right now If we have a big wildfire, like you
don't want to think about it, but then when it doesn't work,
you know, it then draws people'sattention to it, but then
hopefully can be motivated to create fixes.
I know with the gross F founders, Co founders, they were
talking about how like the school board recalls and some of
those moments during COVID, it really got the average San
(35:01):
Franciscan who typically may nothave thought about politics to
think about it. And then as a result, they were
able to use that energy and thatmomentum to generate change.
So I think, like, it takes thosemoments of outrage, of people
asking, like, look, shining the light on the situation and
saying what the heck's happeninghere to then engage in a way
that hopefully can change it forthe better.
(35:22):
Well, yeah. Absolutely.
One question I wanted to always end on is kind of like what's
your hope for the future of California?
Let's say we're talking again in10 years.
Like what are some of the changes and things that you
hope? We already answered this with
housing and other things like that.
Is there anything else that you just hope for, for the future of
the state and that gets you excited about the future?
Yeah, I think it's just like it's such an exciting and
beautiful place to live and I think it's always going to draw
(35:45):
the brightest people in the world to it.
And I, you know, I think certainly, you know, there are
ways that that California can mess things up, but I'd love to
see a lot more bringing back to the earlier topic, less theater,
more experimentation. Like we have this world class
talent, you know, it's one of the just California by itself
(36:09):
would be I think the the 4th, 4th.
Country two weeks ago, yeah. By GDP in the world.
And so that's, that's amazing. And I think we, we, and then we,
we have like that plus this beautiful place with extremely
(36:31):
talented and smart people. And it just makes me so happy
and proud to be a Californian, to be honest.
Well, I'm proud you're a California too.
Thank you for your time, Sheil. Really appreciate you taking
time today to talk to me. Absolutely.
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