Inside the AI Gold Rush: Who Wins, Who Gets Wiped Out

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Everyone's chasing the AI Gold Rush, but few are asking who's getting wiped out in the process. Billions of dollars are being deployed, valuations are exploding, and yet beneath the surface, there's a silent reshuffling of power that's redefining the venture landscape itself. 

Uncover the secrets of AI venture capital, from seed stage heuristics and cap table power shifts to quantum investing horizons and resilient founder traits that drive unicorn outcomes. Whether you're a fund manager raising your first venture fund, an alternative asset manager deploying into AI infrastructure, or a startup founder seeking Series A strategies, this episode delivers actionable insights on private equity fundraising, angel investing in energy and tech, and navigating 2025's AI gold rush.

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[THE GUEST]: Maria Palma, General Partner at Freestyle VC, one of the most disciplined

Transcript

Maria Palma  

Can I be honest that I think AI saved venture right now, like that is the truth, and I think AI created this gold rush feeling again, right? And I think everyone always wants there to be a gold rush where, like, overfund things that we wonder why we're in a bubble and why it's not been out as quick as we want. Then there's a trophic disillusionment, and then things grow anyway. But in some ways, I feel better about it these days, and like you maybe need that irrational as he runs to get something really new off the ground. And I do feel that difference right now when I'm in Silicon Valley, and it's not the only place to invest, but it's a great place to be right now. 

Ryan Miller  

My name is Ryan Miller, and for the past 15 years, I've helped hundreds of people to raise millions of dollars for their funds and for their startups. If you're serious about raising money, launching your business, or taking your life to the next level, this show will give you the answers so that you too can enjoy your pursuit of Making Billions. Let's get into it.

Ryan Miller  

Everyone's chasing the AI Gold Rush, but few are asking who's getting wiped out in the process. Billions of dollars are being deployed, valuations are exploding, and yet beneath the surface, there's a silent reshuffling of power that's redefining the venture landscape itself. Today, I'm joined by Maria Palma, General Partner at Freestyle VC, one of the most disciplined and forward thinking firms in early stage investing. Maria is at the epicenter of the shift, leading Freestyle's charge into the heart of AI's infrastructure backing the unseen technologies that power the next generation of artificial intelligence. In this conversation, we'll unpack what she's really seeing inside the AI Gold Rush, who's building enduring value, who's overexposed to hype, and what frameworks Freestyle VC is using to identify tomorrow's winners before the market even knows their names, so that you too can enjoy your pursuit of Making Billions. Here we go.

Ryan Miller  

Maria, welcome to the show. 

Maria Palma  

Thank you, Ryan, it's so great to be here as a fan of the show, I'm really glad to participate. I really love how you demystify and humanize the world of finance and venture and private equity. 

Ryan Miller  

Yeah, it's great to have you. I think we were ranked number 2 in the world for private equity and top 10 for venture capital. So we're really doing well, and it's all because of amazing guests like you. So with that said, and with opening with the love, let's jump right into it. So Maria AI isn't just changing industries, it's changing who holds power in venture itself. So my question is, what are you seeing as the biggest structural shift that you're seeing across funds right now?

Maria Palma  

There's a couple of shifts going on right now in venture, one of which is the power of hooval is the cap table. So we used to see that from seed to series A to Series B, you get kind of a healthy dilution per round in the companies that have now exited this year. If you're talking about whether it's Figma or Chime or looking at the scale AI acquisition, when these seeds and A's and B's were done, you were getting all the ownership. What's happening now is that you're still getting ownership in the first round. But because these AI rippers are having what we call stripper pole growth, which means the growth curve is very much a vertical, as opposed to any kind of a budget point. What that means is they can demand a lot of different things for dilution. And so the funds that want to be in these companies so bad, are willing to take less dilution, and so you're having a hard time getting overall around dilution to be what it used to be. And that does change some of the math of venture capital, and I'm interested to see how that plays into long term returns. And one of the other things you're seeing shift is just how company building works at the very core, who do you need to hire? How big does the team need to be? And it's changing how much capital the companies need early on or not, which very fundamentally shifts where people play. A lot of the bigger funds are coming down at seed. It's changing sort of each different round structure, power dynamics, if you will. 

Ryan Miller  

So does that mean, then, that you're seeing smaller companies from a headcount standpoint, with higher valuations? Is that what you're seeing? 

Maria Palma  

Yes, definitely. There's this concept of seed-strapping, where basically you do the seed and then you grow so quickly and profitably you don't need to raise again. I think we've seen some of those companies already continue to raise. So even if they can go on without raising, that doesn't mean that they will, but it is an open question in the industry. One of my good friends, who's a founder, has been getting pretty far, and he was joking with me, he's like, I'm getting pretty far with just me and cursor, but it's kind of lonely, you know? And I think that there is an element of like being an early stage team, which is a pretty unbelievable cultural moment, but there's a point there that you can just get pretty far right now with not that much capital and not that many people, in a way that you didn't get to do before. 

Ryan Miller  

Brilliant. Yeah, what a phenomenal shift. But like we said, where it's shifting who holds the power. So traditionally, it was VCs, but it was like, because the VCs had it, it was these startups, they needed higher headcount, and they had these lower valuations and next rounds, and we're starting to see that, would you say that's being driven a lot by the proliferation of AI? 

Maria Palma  

Certainly, and the proliferation of AI is also changing how companies are built. Right? Sound really less able, but you have a lot of these tools where you can now build things without knowing how to code yourself, and that just means that people are able to quickly generate MVPs product revenue without the capital that they used to have to get to get to that stage.

Ryan Miller  

That, phenomenal. And so that deals with a lot of infrastructure and, and you know, with that said, you said the real money isn't always in flashy applications, it's in the plumbing. I love that. So how, based on that, how do you evaluate infrastructure plays that enable the AI economy, and where are those underpriced assets today? 

Maria Palma  

Yeah, it's an interesting question. I feel like I've definitely invested a lot more at the infrastructure level over the last sort of five to seven years, and I will do application layer. I think, I think a lot about the application layer as the shift from consumer went from like these big brands to smaller brands, and having a proliferation of these companies that can get from 50 to 100 million but aren't going to be like multi billion dollar companies on their own, from a revenue perspective or a valuation perspective for that matter. The same thing is kind of happening in the applications where you're getting tons of things that get off the ground. You do have a subset of those that are massive and venture backable on their own. And then you have a law where there's just sort of fragmentation of certain markets, you kind of have to know which one you're dealing with. And then on the infrastructure side, it is changing by the second. I think I'm personally not invested in foundational model companies as a whole. It's just not what our size fund is really structured well to do we did kind of make one exception for a really cool AI math team, but in general, that's not what we do. What I think is interesting is there's this shift going on up until now, LLMs, which are probabilistic in nature, have been trained sort of on the entirety of the internet, right, and so they're already creating a ton of value, just as is, if we didn't approve them, but they're improving all the time. But I'm seeing it a lot of teams think about how we actually get even better, more accurate, AI LLMs from day zero, so that can be training on different subset. Can be using symbolic AI, can be training different ways. But I'm seeing a number of teams tackle this, which might actually be helpful. I always joke, if you've gone on to Reddit recently, like, I'm not sure training the entirety of what we want to be the future decision making powers on how people treat each other on Reddit is like the best strategy in the world, but it's gotten us pretty far, and I think people are tweaking and making it better by the second. And at the infrastructure layer, a couple of really interesting things are happening right now. You said kind of under valued assets, I think a lot of the cool stuff in infrastructure is, like, pretty known, and so it's not undervalued, per se, but it's still very interesting. The best people I see like, there's a QA company right now that was very hot in the hunt. They're just doing the best job of taking probabilistic things but also adding in deterministic infrastructure so that even though you're calling LLMs, you're able to have an outcome that has a much higher accuracy than if you or I were just to go ask Gemini online, you would get less accuracy than what they're building. So I think that is something that's happening at the infrastructure layer. 

Maria Palma  

I also think the key to the infrastructure layer is like, where, where do you think the big players who are already well funded will actually go into on their own? Where does it make sense for them to and where does it not? And so I think you can identify a couple of places, like one of which is like an MCP enterprise, and the way that you shift context that I don't think they've solved well today, and maybe they will in the future, we made an investment in a space like that. There's also an energetic payments layer. I actually kind of think about it. I have like, six thesis areas that I came up with back in 2023 and I'm still investing out of some of those, which I'm happy to talk to if it's of interest. But obviously I'm a generalist investor, so I'll invest outside of those. But you're in this moment where you kind of need to have like, enough knowledge to know how to navigate it, but also know that you're never going to predict the future, right? Enough knowledge to basically, like, go toe to toe in a conversation with the best founder in the space, that's what you need to do, but not because you're going to predict where the future is, and nor are they, but they're going to do a faster than you are. 

Ryan Miller  

Yeah, I love that. And you know, I remember the first time that we met, you talked about something that you found. So you're a big player in this space, in AI, and there was six areas of defensibility. I'm wondering if you could share that, that these are some of the things that you really look for, as far as making a deal. How do these AI companies stack up as far as the defensible position? 

Maria Palma  

Yeah, I think there's these. Well, I think there's six areas that I feel like I could see defensibility in. I guess I'll say it that way, or see what I wanted to back because I think I've kind of come full circle. They started as that these are the six areas where I could find defensibility. I would say, over the last 18 months, I've kind of come to the conclusion that there isn't really a lot of core technology defensibility in most cases. It's more execution defensibility these days in almost every stack. But there are some exceptions. So like, the first area is basically data outside of language. And I really do think that there's defensibility there. So what I mean by outside of language is I don't mean multimodal like video, and I'm kind of putting that all as language. And I'm saying that you have these data sets, whether it be in biology with molecules or chemistry or even, like pediatric poop samples like it can be it can come in lots of different ways, but you have these data sets that are super unique, that aren't available on the internet, aren't even available in a pharmaceutical company behind closed doors. They just don't exist anywhere else and if you have one of those, that tends to be like a truly defensive play if it's really valuable to what you're building. And similarly, another one of these theories we talked about is code generation. And even though, I think we can all agree now that code generation is one of the fastest growing use cases of AI, there's another set of infrastructure we need for it to truly happen at scale. So a lot of the does, you know, or I know, are using Cursor, are using Windsurf, but the truth is, like, let's take a big bank like JPMorgan Chase or Wells Fargo, they have to have unbelievable security requirements, right? So now if, as they are using career server, they're either lowering security requirements, which they're certainly not doing, or you're just generating a lot more code, but it's not up to snuff from a security perspective, so you can't even deploy it as fast as you can generate it. So some of these things are getting solved, like I actually invest in a company that is tackling this sort of vibe coding security specific issue, but everything from what's the role of a software engineer to do you need infrastructure around coffee code to be able to get it to work right, and things like that. Then, as we think about code Gen getting into like the next phase of its evolution, there are a tons of opportunities around.

Ryan Miller  

Brilliant so those are some of them. Any others that you find useful as far as assessing defensibility, even if it was in the early days, but there still are kernels of defensibility in some of this. 

Maria Palma  

I'll talk about the rest of the six in a second. But you know what, I really think we're undervaluing some of the things that have always worked in defensibility. Like, most of the time when I'm talking about defensibility, we're talking about like, technical defensibility, right? This, there's a unique data set, a unique code, a unique way that this has been built that somebody else can't replicate easily. I think those are actually harder to find today. But like, brand defensibility isn't something we think about all the time. Like distribution, we all think about but I think one of the reasons that, like, Lovable for example, has done well against some competitors, is they have unbelievable brand recognition, and customers love them. And I think at the end of the day, some of the stuff that has been in defensible mode. At the beginning, it's hard, but like, once you get a certain scale of network effects and brands, those brands, those things still do really help you. But just to kind of cover off the other areas, another couple areas of thesis I like, is the AI native tech stack for companies. So this is, you know, when Shopify came in, it made sense, and when Stripe came in, it made sense, and everybody started using these tools. And it's kind of like, what is the version of that for all these AI native companies. So you have Windsor up and cursor for coding. But what are you doing for marketing? What are you for doing for product? What are you doing for back office finance? What are you doing for communicating as a company, getting your knowledge base, all these things if you were really starting a company from scratch. Another area that I'm really excited about is agentic payments, and how we actually truly move money with AI in a way that never screws up, essentially, and is allowed to have your bank account actually be able to to either have an agent or move on its own, but like in a really compliant, bank friendly way and so that's something that I spent time on. Robotics is obviously having a huge change right now, both in sort of single use vehicles, also in humanoids. And I think it's starting to proliferate in more places, and actually starting to deliver ROI that's been promised for a very long time. And then the future of computer compute is another area spent time in, where everything from photonic interconnects to quantum computing, which I'm sure we'll come back to at some point, since we both love talking about it. But just like, where does future of compute go from chips to software, how does it continue to evolve and that's a big topic for everyone right now. 

Ryan Miller  

Brilliant, you know. And getting into those deals, they're fun to talk about, but let's go back to the actual beginning, where you're like, I don't know what this is, what do you got? And when you're investing in seed, most founders, they don't have metrics. They only have momentum,  hopefully, they have momentum. What specific heuristics or founder behaviors have proven to be predictive for Freestyle when you're betting on early AI driven companies? 

Maria Palma  

Yeah, I think metrics, by the way, unless they are like, just unbelievable the best you've seen in your life, I think they're just false friends at early stage, because they're not really giving you that much information. Like, if you can't back a person to go hire a great team, build an MVP and get a few customers, you are by far back in the wrong horse. Because that is out the harbor of the dirty and so I actually care a lot less about the number of the preceding seed. I care a lot about the team and the market. So on the market, I usually probably go with some view. And if I don't know the space at all, I will get smart on very quickly if I really love the founder. And so, you know, I can get smart on pretty much any space in a span of three to five days, if that's my number one thing I'm trying to achieve. And so, and I've done that number of times recently, and everything from robots in waste and recycling to therapeutics and all sorts of spaces. But going back to heuristics question, I really wish that there was just like this, one beautiful answer, and we could score everyone, and it would be easy. And even when I got into Metro like you, always think about that and it just, I don't think it exists that way. The truth is, the best founders come in lots of different packages, and also from a diversity, inclusion perspective, like you can be a resource magnet, which is a term that I love, where you subtract things, that people to you lots of different ways. You can do it by being a very tall, charismatic person. You can do it by being a very short, introverted person who just knows their space really well. And so I think it's, about, like, what are you giving off, and how does that actually help you attract the right things to your company? 

Maria Palma  

The way I actually think about it is in the early days of AI, or like, at least my early days, like, 2015 I remember this AI founder took me back to his office, and we were looking at these screens, and it was, everyone was very like, odd at the time by the fact that AI could tell the difference between cat tails and dog tails. And you never, you never labeled it as, like, with a definition. You just said, this is a cat, this is a dog. You didn't give any other information. And then, like, 1000s and 1000s of generations of images later, the AI knew if it was a cat or dog, and we don't really know how it wasn't, like, okay, maybe it was the slope of the tail, maybe it was the type of the fur, but, like, very accurately, got dog or cat tail with, like, a tiny little sliver of the tail picture and I think about investing, actually, very similarly. It's like, I've now, I meet hundreds of founders a year. I've been doing that for 10 years and so I end up getting this sort of gut intuition of like, this is a person I'm gonna back or this is not, and parts of it, I can tell you why, and parts of it is probably, like, very deeply rooted in subconscious. And so a lot of my first meeting is actually really about the founder. I actually almost never have anyone pitch me a deck in the first meeting. We go much more into who they are and what they care about and what drives them and I would say there's, it's never the same thing twice. But everyone I back, I can tell you what it is about them that I think is so special, that spikes so much. And at least, like everyone has a different type, but I tend not to back what I'll call cookie cut founders, which maybe isn't like a fair term, but I tend to bad people who, like, been through some shit. I don't really have a way to say it, but like, and I don't mean I don't like some, some VCs talk about, like, childhood trauma. I'm not talking about that. Sure that could be part of it, but it's, it's more like you have experienced stuff in your life that you have reacted to that has been hard to deal with and you know, or you've gotten it wrong a couple times, or you thought you had the answer and you didn't. And just experience some setbacks, experience some changes in what you thought life was going to give you and I think that that tends to build a certain sort of resilience. 

Maria Palma  

And then the other thing that I've noticed a lot recently is people like to talk about this, like, founder Market Fit concept, and I do like it. I think we all talk about it's like, oh yeah, obviously there should be a reason why this team is building in this space. Makes sense. I think sometimes we're, like, overly attached to that concept. I actually think there's just great think there's just great, smart people sometimes that are opportunistic and are like, hey, I actually see this really cool space. And I think it's a good idea. But I also think you get these moments, and there's two founders, I think I've recently for this where they've kind of been serial founders, and they actually have never, like, hit it big. They've always done something, but they've never hit it big. But there's something that's different about them with this current company, where they just have to build this. It's like it like exists at a deeper level, that they're like being than anything else they've ever built before and you can feel it when you talk to them. And so I think it's not necessarily about founder market fit, just in the industry. It's also like, what is this founders motivation in this moment in time, and why do they want this thing to exist?

Ryan Miller  

Brilliant, you know, it's, I love what you said about the resource magnetism, or however you put that. I think that's phenomenal. And it reminded me of a time when I first started. And one of those things, I think, when you're able to go into your industry, own, your space enough, you don't be so expert, but you can be an expert, but I think it's important to show that you're resourceful. But then it goes back into what you said about maybe have been through some stuff, and you can tell a very compelling story. Just reminds me of the book by Angela Duckworth on Grit, so we find people that it's they're a little gritty. 

Maria Palma  

Yeah, I think grit is a really good word. I actually just saw founder last night. He was telling me, like, I don't know why people don't vet for grit more. And then she's right I think it's almost like people have this internal capacity, and it's very hard to tell from the outside, like, what people's capacity is, but then you see them up close and personal, and you see them working. Some people, you're just like, wow. Like, you just know whatever is thrown at them, like they will find a way to rise to the occasion and make it work. And you see that, and it makes a pretty big difference. Also on the grid point, I think one of the most underrated skills that founders need to be good at, that people don't talk about enough, is knowing when to listen to their gut and when not to so the best founders, I know, they seek advice from everyone, right? They're going to go fundraise, and they're going to call you, they're going to call me, they're going to call a lot of people I know. They're going to call 10 founders who just fundraise and I think most great founders would do that. The trick is to know which of that advice do you take, and which of that advice do you shed? And what's like, really true to you? And like, when do you take everyone's advice and really listen, say, you know what that wasn't my instinct, but I'm going to do that. And when do you go? I hear everyone, but that's still another answer for me. I have to do this. And I think that the best founders always figure out to do that. 

Ryan Miller  

Yeah, that grittiness, that hard to find, because I think exactly what you said is like that just comes from maybe having, not the easiest child, not necessarily, but you just, you've put in the reps of saying, like, yeah, I had to pick myself up over and over, maybe in a different context, but the attitude is still there to say, hey when, when I get kind of roundhoused in the face by life or business or capital or relationships, whatever it is, there's just those certain people. And it was a wonderful book, Anti Fragile, who just they get stronger, that the harder they get pushed, the harder they bounce back, and stronger than ever before. That is a dream founder, dream fund manager is just to say, yep, you're going to see some stuff, maybe, but it's how you respond. And so, as I always like to say, in the moment of trials, some you are introduced to yourself. And so sometimes those people who have seen it, and they already come in and they're asking you for 10 million or 500 million, whatever. And these are people who have been through some stuff. They've seen it, they put in the reps, and they're like, no, no, like, your money is great. And if you recall, of course you do. But before we hit record, we were talking about high finance and raising capital. And you asked me, What do I think the biggest misconception is and I said, easy. I think that people forget that finance is more about trust than transactions, and getting the trust before the transaction is absolutely key. Too many people go for the transaction before the trust. So finding a founder, that you can invest in, that you can trust, that when it gets hard, they are going to lock in and overcome because that's what they do. That's just who they are, they don't walk away. I mean that, who wouldn't want somebody their money betting on that horse, that's absolutely a phenomenal thing. Anything else you can add to that? 

Maria Palma  

Well, I would just say, I love your kind of life roundhouse kicks to the face. I think the thing is, like, when you get those, we all, everyone

Ryan Miller  

We all get them.

Maria Palma  

Thinks of their moments when you say that you're like, 

Ryan Miller  

It's not great. We all have at least one, we're like, yup. 

Maria Palma  

For rules.

Ryan Miller  

Yeah.

Maria Palma  

The only thing is two things, I would say. One is when you get a roundhouse kick to the face in life, I actually love this idea, and I started doing this with myself, like having your own resilience story, because I think sometimes when you're in that moment, it's just hard moment to be in, you forget to say, like, you know what I went through this other roundhouse kick moment and this other one, and if I went through this one and that one and this one, I'm gonna be fine. Like, it may not feel good today, like nobody promised you a life without pain and challenge, right? But how you respond to that pain and challenge is kind of everything. There was a founder this week who said something is absolutely beautiful. You just said it's really not about what you do, it's about who you become while you do it. And I think that is, like, totally spot on and I feel like even like, let's say we're gonna talk about this in like, a rah, rah. Like, these are the people we back way, but also, nobody is fixed, right? So like, let's say each of us had a roundhouse moment tomorrow, roundhouse moment tomorrow, and we reacted in a way that we didn't like, and it wasn't as resilient as we wanted to be. You get to decide that every single day, and so like, the next time you get in with that, how do you respond? And I think that the more you learn how to respond in a very positive manner. And I went through some personal health stuff with a family member quite recently, and my initial response was, like, probably very human, but like, I just kind of like, wallowed a little longer than I normally have, and felt I was really worried about the person, and after a couple of weeks, I just had to, like, I don't know, virtually slap myself in the face and be like. This is not a healthy way to think about this. Like, if it's something really bad, we're gonna find out and deal with that forever. And if not, then I need to just be the joyous person I am for my family most of the time and not live in this negative headspace. But I think it's sometimes catching yourself, even if your initial response isn't what you really want to really want it to be. 

Ryan Miller  

I love that. You know, my final thought on that, my wife and I, we were exercising. She's like, man, I could barely walk. You know, you did really good, whatever and we have a saying in our home, is pain is only the place where growth has happened. So I was like, you can't walk. You're probably building muscle, right? You had a sad day and your heart hurts. Guess what, this is the opportunity where growth can happen and so thank goodness that there is an industry of venture capitals that find these people that have grown from that. And so to say, growth can be a challenge, but it's also growth in itself. The challenge is where you feel the growth. I love that. 

Ryan Miller  

Hey, thanks for listening to Making Billions, if you liked this episode, could you do me a huge favor and go leave a review? This helps us to get the podcast to more ears, to help people raise capital, learn fund management strategies and serve our mission, to help fund managers and deal syndicators to gain greater hope and focus as they build their empire. All right, let's get back to the show. 

Ryan Miller  

So you know, with that being said, we like gritty founders. We hope we're gritty enough as well, and we really rise to that occasion. And with the proliferation of AI, we can see those business models, they're changing. So from your perspective, what does that, what does that mean as it relates to just moving beyond software? 

Maria Palma  

Yeah, I think a lot about this. I mean, we really are moving beyond software right now. I think for two decades, there's been a lot of sense and a lot of solutions and software. One of my founders actually likes to say that Silicon Valley won't sell you a cake. If you want a cake, they'll sell you the tools to make a cake, but they won't actually get you a cake. And I like that analogy for conversations like this, because I think we are now entering a world where AI touches everything. I cannot imagine, even roles that we say it doesn't touch, like nurses or tradesmen. I just looked at a trade saying this morning, like it's it does touch in a different way. The training is different, the way you book jobs is different, the way you're gonna it touches everything, right, and so you can now actually tap into parts of the economy and the GDP that you weren't tapping into with startups before. It's no longer just the software you sell to someone, you can sell tons of stuff is happening right now in services, right? So I actually backed, I actually backed an entire AI holding company, almost think, like, Berkshire Hathaway is for AI services. So instead of like, I think people have been talking a lot about these roll ups, we can come back to that, but it's not my strategy for my fund, for a bunch of reasons. But there's also people incubating, which is what this company is doing in AI services, and every single one of their companies is a different AI services product. But I think we're starting to see new to being we're starting to see companies be able to go after things like Accenture, things like Deloitte, and people that have been selling services, not just software, just software. So it actually creates a much, much bigger pie than you were previously able to go after. And the best people I know doing this are really mixing both AI and humans in the loop. So infinity this company I mentioned that I backed also spent on invisible, and both of them are very good at this, which is really marrying the best of AI in a workflow, but knowing where to actually have humans in the loop to make sure the accuracy works and the service that you're delivering is really high quality. 

Maria Palma  

The other thing that's shifting is you're getting these companies that are just scaling so quickly in revenue like we've never seen before, like unreal, right? Things going from zero to 100 million in a year, or less than a year, a little over a year. It's wild, right, now, is it durable? Is it, how does it play out? Everyone has a second question, which is fair, but I think it's also like, let's also remember that that didn't happen 10 years ago. It took you, like, 12 years, if you were lucky, and if you ever got there. And so, on the one hand, I think it can make it harder if you're building a traditional business that just can't scale that way, because now when you go to raise your Series A or Series B, you're getting compared against those growth curves, right, wrong or indifferent. And the other opportunity is that it's changing what gets under way, what I used to underwrite to 100 to 200 million in revenue, and like, if you got there, you'd probably be good enough to IPO or have a really good exit, MNA or whatnot. The truth is, look at what's ipoing now, these things are a billion in revenue, and usually IPOs are happening 10 years after I'm investing, and so I'm now underwriting to things that can be at least a billion in revenue, not enterprise value, right? We used to call unicorns, and it's not a slight, because it's not that building unicorn is easy. It's not at all, right, none of this stuff is easy. That's why we just talked about pain and like resilience. But the truth is, I'm now underwriting to a much bigger multiple, because I think that if you want IPOs in the future, that's that's what the public markets are demanding and so you have to react to that. As an early stage investor, because at some point, I know we all like to pretend that it doesn't sometimes, but at some point the music stops, and things have to have a real landing. And so you need to be able to tie things back to the public markets, or else it's not going to work very well for you. 

Ryan Miller  

Yeah. So things are moving fast or getting to higher revenue with fewer people, which may be good on one side of you can have a liquidity event, but me, as a recovering CFO, I'm like, yeah, but there's such thing called growing broke. And so sometimes when you grow too fast, that can be painful. It can draw down your working capital to nothing, and you're just trying to keep up. So with that, and it's not just companies that feel it, it's also allow companies like Freestyle. So, you know, I'm wondering, how has your fund, how has Freestyle adjusted its reserve allocation, check, sizing and pacing strategy, just to stay agile in a market where these valuations are, they can double in like a quarter. 

Maria Palma  

It has been bonkers, right? I think, I think you just have to look at your fund size and your strategy, so it hasn't actually changed our pace as much. I think we've had moments where it's been wildly fast and moments where it's been a little bit more quiet. We're high conviction investors, so I'll personally do two to five deals a year, even if I made a couple 100 or 2 thousand so it's a pretty low conversion rate. Well, what has really changed for us is we've actually upped our first check size, which is where you're getting most ownership right now. We have definitely fixed down on reserves, and I think that we're seeing a lot of funds do that actually had a lot of LPs also tell us that's their preference right now. So really, assume you're getting your ownership in the first check, which needs to be the case. I think that's generally true, but I am seeing the exception to that. I've seen a couple of cases where we've been able to grow ownership either sort of proactively in between rounds where we know companies growing well and and they would like a little more capital to keep growing faster, or in a round that's come together as like the step up. So that is still happening, but reserves are definitely going down, and I think you just have to be a little bit more disciplined on when you're going to flex up and when you're not going to.

Ryan Miller  

Brilliant well. So different check sizes, faster in, faster out, smaller companies. The whole landscape has absolutely changed. And sometimes change can be great, sometimes not, I think this is positive, but still it is breaking the mold, and maybe it needed to, I don't know. I'm no judge of that, but it's breaking the mold and typically, just generally, in finance, we kind of like those moments because it creates opportunity, right, flat markets channel strategy, all these things, they're not great. And so when we have volatility, we have these things kind of break loose, and it creates the opportunity for many things, including operating models, anything you can add to that. 

Maria Palma  

Yeah, can I be honest that I think AI saved venture right now, like that is the truth. We before the AI run up, the topic that we had at our AGM was liquidity and how it was just this indigestion problem that was affecting everyone in the industry. And it was kind of the only thing actually that our hope, you wanted to talk to us about this is actually at my former fund. But it was such a big topic that we were like, let's talk about this with everyone. And I think AI created this gold rush feeling again, right and I think everyone always wants it to be a gold rush. I've kind of changed my mind on this a bit. Everyone likes to talk about the gardener, Gartner, hype cycle curve, right and sometimes it drives me a little nuts, because I actually don't think that's how technologies were meant to be adopted. I think it's probably much more like Ernest Hemingway's like talk about how people go bankrupt, which is gradually and then suddenly. I think that's probably how technologies are supposed to be adopted, but we kind of as a venture ecosystem, and like this rational, irrational exuberance almost create this, like, all right, where we're like, over fund things that we wonder why we're in a bubble and why it's not by now as quick as we want. Then there's a chocolate disillusionment, and then things grow anyway. But in some ways, I feel better about it these days, because I'm like, you maybe need that irrational exuberance to get something really new off the ground, and I do feel that difference right now when I'm in Silicon Valley. And it's not the only place to invest, but it's a great place to be right now. And you feel it right, because everyone around you is also building in the same space. And so there's just this like iteration speed, which is unbelievable to a new ecosystem and I think that stuff really matters. 

Maria Palma  

But regardless of how technology are adopted and what curve we put them on. I think there's no better time to be in tech, right now, right, like, these are the moments, to your point, that we all dream about. These are the moments where everything changes and, like, there's a bear case, obviously, that we're in a bubble and prices are high, again, whatever. There's also a huge upside scenario, right, like, the bear case is really obvious. I think the bull case, for a second is that maybe, sure, maybe we are diluting less per round. But what if all these things grow to a higher valuation than we've ever seen startups grow to right? What if we get a trillion dollar valuation for a company? What if something that you know 70 billion, there's 70 billion, I'm probably okay if I have less percentage right, I think there's a reality that we don't always know what the future is going to look and so as like as people with a fiduciary responsibility to our LPs, we have to create fund models and make decisions that have portfolio construction in mind, that are aware of the risks, and then underwrite on a historical backward looking view of what's realistic. And what's realistic backward looking is you actually don't get that many unicorns per fund. So you have to create a scenario where you still make money with the power law, even though a bunch of stuff goes to zero. But we might also be entering a forward looking world where things actually look better than we underwritten them on before, and that'll be a great surprise to have, but we have to underwrite it as if it's still the world we're living in. 

Ryan Miller  

You know, that's phenomenal, and I would love to just talk about with this market and everything that's happening, you hear a lot of firms talk about value add, but few are able to operationalize it. So from your perspective, what specific systems or rituals inside Freestyle actually create measurable alpha for founders? 

Maria Palma  

Yeah, I think I have changed my views a lot on how we support founders in the 10 years that I've been at venture I think when you're like, bright eyed bushy tailed as a new venture capitalist, you just like, really, you're really eager to help, and it's comes from a good place, but it's like, too much about you and not enough about them. And so you're like, trying to, like, give them all this prescriptive advice, or, like, let me make this introduction, and that introduction, and the truth is, the way I think about it now, find exceptional people really allow them to thrive. And if you've been on the operating side first, which actually everyone in Freestyle has been. Built, sold, companies, started out, companies, ever winds up on the operating side, it really gives you this sort of get the right equation, right and I would say this changes in the phase, right? So like, if you're a series B Company, the biz dev team at Andreessen that can make a lot of instructions is quite valuable, right? Or the marketing team, but the truth is, at the early stage, and just in general, if this is what your business does, you need to be good at it. And so I think where we really shine is know where we can actually roll up our sleeves and help and say, okay, you need these seven introductions right now, or you really need to rethink this strategy. Let's spend a lot of time doing this together. Let's introduce you to people far better than us to help you do that. And I think the far better than us is one of the most important things, like having an unbelievable network for our founders, so that whatever question they have, we can get them someone who is like actively solving that, but you really want that like someone who's building now, not 10 years ago, right? 

Maria Palma  

And then I think the piece that is not talked about enough is like leaving people alone. It's literally like, where it's weird, where we can't help it's just letting them build. Like we wouldn't have backed them if we didn't think that they were unbelievable builders. So then let them build, don't ask them annoying questions. Don't ask them for data reviews. Don't ask them for things. Don't make them make a huge board deck that they don't even make for you, like sometimes my pre seed companies, we always decide, you know, with each founder, but like, I've had a company just do a three bullet Google Doc for board meetings for like, two years, then we eventually go into series A we have to make a little more, bumped up and all that stuff. But like, like, don't make the deck for me. If the point of this meeting is to talk about the three things that are blocking you, then let's talk about those three things, right and so I think it's about really getting that balance right. And I actually would say when we talk about, like, rolling up our sleeves as VCs, it's like the whole founder value add. And I came from the platform side, and I really believe these things can be valuable. They're usually more valuable as the company is ready to do things more like go to market and hire. But also it's almost like gone full circle in the metro ecosystem, where I've been joking that the next version of our website is going to be, and maybe it will be, but is going to be, you don't need our help, because it's like, it's just, we can't overstate the role of a VC either, right? I wrote this kind of joking piece as a play to the attention is all you need AI paper, and it's called value neutral money is all you need. We can like it in the like set or whatever. But basically it's arguing that, like, as long as long as you get a value neutral VC, you get a value add VC, that's the best of all the worlds. But as long as you don't get a value neutral one, your job is to go build and you'll go do it. And actually where you want the really value add VCs is usually less what you think as a first time founder of like, oh, you can get me Bank of America as a customer, you can give me this intro. It's usually more like the hard shit of having someone to call when things are really difficult, and not feeling like they make you feel worse, feeling like they make you feel better, feeling like they're in it with you. 

Maria Palma  

A founder once told me, the Litmus test of the right relationship is like, when the bad thing happens, what is your immediate reaction? Is your immediate reaction? I'm going to call this person that's trust to your point, Ryan, like, that's a relationship. If it's like, oh boy, I'm going to get in trouble. I got to solve it. I got to make it into a pretty PowerPoint deck and then send it around and, like, tell people what happened, that is not a trusting relationship. And I can't tell you, I think it's Freestyle got three situations in the past three months where we've literally sent a gift card to a founder and been like, please take your spouse to dinner, because this has been an unbelievably challenging time for you. And like, take a minute for you, do something for you. And I think actually being there in the sort of like, human moments and knowing that you're not the one building the company, and you're not living that intensity the same way they are, is actually one of the most valuable things you can do helpful. 

Ryan Miller  

And that's very humble of you, for sure. And you know, I know, and I'm sure you do too. There's a lot of ego in this industry, both on the founder side and on the funding side, when you're asking people to literally chop down trees with their hands, not literally, metaphorically, but you're asking them to do really hard, painful things sometimes, right or they're wanting to do it, they just need you to fund it. Either way, if you're the kind of person that can do something like that, there can be a lot of ego when they feel like they're changing the world, and it can outpace execution in time. So I'm curious, how do you spot when confidence turns into risk, and how do you bring that founder back without breaking their motivation? 

Maria Palma  

I think that most humans have egos, right, I think we can all do work on ourselves to have less of an ego. And I've been working on meditation the days these days, not that you could tell, not that I like give off a calm Zen energy, because I absolutely do. But we used to joke at my last fund that I'm like, the inverse duck, you know, like, there's like, the thing that paddles underwater and is like, calm, and I'm like, calming myself, and I'm like. But it's but it's interesting, because I think over time, you can always do like, enough. Usually, life throws you enough things to keep you humble enough, hopefully. But if the ego is out of check, I usually think about is, like most people I know with an ego, don't let that ego get in the way of what's best for the business and to me, that's where it's a problem. So if you're making decisions that are so ego driven that it's actually not in line with what is good for the business, that's where I would probably call it out. And I think it's more around understanding where this person is coming from. And I think, I think you have to start with sort of an empathetic lens. 

Maria Palma  

So I'll give you an example that sounds unrelated, but it kind of is related. My very first managerial role, I used to start my career in supply chain and manufacturing. So I was 22 years old, and my, I had three shift group leaders, and they each kind of manage their own shift. And my first shift group leader was not on the shop floor, not doing his job on his computer all day, like, basically, like, if I, if we wanted to, we probably could have, like, gone down a performance path, right? And we probably and we probably could have argued that his ego was bruised for a couple of reasons, and I could have taken that situation. I mean, I didn't do any of this on my own court. To be clear, I had great mentors who I went to for advice and they were like, okay, Maria, you've been managing someone for all of five seconds. Why don't you figure out how to manage him better? And I was like, that's good advice, so I took him for a coffee. He didn't drink coffee, so he had a Pepsi, and it was really awkward for about 45 minutes, because he had this Pepsi and I was like, this cheerful 22 year old being like, hey, how am I doing as your manager? What can I do better, like, I think in general, blue collar employees are not really used to giving upward feedback to white collar employees. And so it was just like, awkward small talk for a very elongated period of time. And I think at some point he just realized that unless he gave me something, and we were not going to go anywhere. So finally, he just gave me a little something, and he was like, you know, sometimes I don't really know what you want for me, and, like, what the goals are for the day. And I start realizing, as he's talking and over the next couple days that he is, like, very routine, driven, very structured, very quiet. I  am not most of those things, and those second and third shift group leaders were more, like, had similar personalities, so I probably just, like, naturally dealt with them more, and I changed the way that I managed him. And we did, like, a week, a daily check, where we were very clear about the expectations, and I was a little bit less, you know, more structure, less chaos kind of vibes. And he became my busted, my best employee, and he had unbelievable technical prowess. He sent me Christmas cards for years. These things don't always go that way, but I see that story here, because if someone was having an ego moment, I actually feel like when your ego is out of check, it's probably more because you're feeling insecure than it is because you're feeling like you're the best thing in the world, like, usually without a check, it's actually it's single in the opposite direction. Do you know what I mean? And so I probably would start with like, what's going on for this person and how I might be able to help them, and then, and then go from there. I mean, world, if we're dealing with fraud, that's a whole different thing. But, you know, and if you're walking off a cliff, from a strategy perspective, there are moments where I've said, look, I'm not going to be prescriptive, but you're doing this thing that we've seen from seven other companies, and every seven led to this. So you can choose what to do. But I'm just telling you, you know this is a thing, but in general, I have been valid to be a huge issue. 

Ryan Miller  

You know what, to complement that, I use a term I call in leadership. You got to be a savage servant and I find that's not that's a leadership model, not always the right one, but when it does apply, what I found in that scenario is it does soften a lot of maybe harden people and harden ideas. And so when you come in, I had a mentor early on in my career. He literally built databases, he brought the Dewey Decimal System to libraries, right, super exciting. But early in the 80s, a database company like though there's not a lot of those. And he changed in industry, and I had the fortune to learn from him, and he talked about leadership often, and I've never said this on the air, but you reminded me of that. He said it's almost like a Train Heist, because I was this young leader, and I was coming up, and he was teaching me, and he said there's three phases when you really want to earn a difficult person's position. It's like an old western Train Heist and so the phase one is just got to get up to speed with the train, with this person, too often, leaders make the mistake where they just like, parachute into a new role. They land in the driver's seat, and they do a 90 degree turn on the train, and the whole thing derails me, relationship or the department, wherever, and see if it is better. Takes a little bit longer, but not as long as you might think is just get up to speed. Be like, I'm on your side, I want to understand what you do and get up to that. 

Ryan Miller  

The second one is, then get on board to be like, hey, for me, let's see your office. I'd love to follow you around. And then, then after you've ridden around, then you start making those adjustments. And it sounds like, as you were telling me that story, that's exactly what it was. Is he just brought up to speed. You got on his side, you understood it. And you're just like, how can I serve you? How can I do better, I want to see you win and then you're able to he lets go of the wheel and says, Okay, I will follow you as the leader, and you, thankfully you had some good mentoring or coaching or just common sense where you're saying, I'm not going to drop into this guy who's been here for a long time, set his way and do a 90 degree turn that will that, although authority wise, I have the authority to do that. But winning hearts and minds and maintaining that back to the trust factor we talked about, is so critical, not just investing, but in business in general, anything else you can add to that?

Maria Palma  

No, I love the train heist, I think it's a it's a great, apt analogy, and I think, I think it's a reminder, it's kind of a big responsibility, in a way, is it can be hard when you're on the VC side to start to look at every single company like a like, a numbers game or a business, and it sometimes I take 14-15 pitches in a day, or, like, meetings, and it's a lot of meeting, but every single one of those people like, this is their baby, this is their life, and you only have a responsibility. Actually, I'm getting better at this over the years, but, like, I canceled a meeting right before this because I didn't really I was like, I wanted to prepare to have this conversation, and it was a pitch meeting. And I was like, I'm not going to show up the way I want to show up to this meeting, so I'm just going to move it. Because you really owe the founders the ability to show up to that present, prepared, have that conversation and just be honest. If you don't like it and you don't think it's going to work, just tell them why, right, they don't do agree but I think that that's the best if you're not going to the best thing besides a yes is a very fast no and a very honest no, right? And so I think that's a really important piece of the puzzle. And I think, to your point about the train ice, it's, it's both of you, and having these conversations with people, mentorship is everywhere, people older than you, people younger than you. It's, it's a conversation you had today like, I feel like you're kind of always, constantly learning, and you just, if we're not becoming a better version of ourselves all the time, I don't really know what we're doing here. 

Ryan Miller  

Yeah, brilliant. You know, speaking of working with people, I've seen that you've built platforms like NYC blend to expand representation in venture so I'm curious, how does investing in underrepresented founders strengthen and not dilute portfolio returns?

Maria Palma  

I mean, I think there's a lot of data out there that people have probably seen around diversity driving performance. So I won't regurgitate things people will go see. I think, for me, I think it's about, where do you expect the next 100 great companies to come from? And do you think it'll be the same place that the last 100 gate great companies came from? And my answer would be no, it almost never is. I also think in this moment about like, valuations and crazy price dilution, there is a reality, or like AI researchers, and it's a smaller group than other groups might be, but the truth is, these tools, as we talked about, are also enabling anyone to build and so I actually think you're going to get a lot more proliferation of what founders look like. And for me, I think one of the best, it's not like I have solutions, it's a problem that the industry has been facing for a long time. And I think through NYC blend, though, and working with other great funds, through that process, we had 96 funds working with us at one point, but there was kind of a core group of, like 10 of us who were really tried multiple different things, by the way, and it's so interesting because there's a lot of well intentioned things that don't work. So like, office hours don't work, in my opinion, like a lot of the things that people put in place don't really work. 

Maria Palma  

The thing that is undervalued in helping more under presented founders and by the way, I take a wide definition of this. There is a race and a gender component, but it's it's also like, you know, I'm from University of Wisconsin, and there's almost like no one that comes and talks about venture and startups there. And like, it's diversity of thought, it's geography, it's income bracket, it's all these things. But if you want to see diverse groups of people, I feel like the social element, it's kind of your advice so that, like, trust before transaction. If you create more situations to build that trust and relationship ahead of time, it's way easier to fundraise. So, like, one of the downsides of venture that's talked about a lot is the warm intro culture. And there is a reality that the warm intro culture hurts diversity, right? But there is a flip side of that. Like, when I got into venture, I didn't know anyone in venture in New York, when I got in and I, like, went and I basically met half of New York venture by first getting rejected by half of New York venture. I mean, you should have seen some of the first things that I sent in as, like, messages to people and thoughts on spaces. Like, it was pretty bad, like, let's be honest, it was really bad. And a couple of people told me, like, you will never do venture, and you will never be good at this. And, and some of them, I wasn't sure if they were not wrong, but I think you go after things you really want in life. And I was really sure that I had done my homework and that I I really was going to enjoy the industry. I didn't know if I'd be any good at it, but I was like, You know what? I've been up one of the people who almost hired me, it's about halfway through some of my conversations, and it was two candidates, and I was the second one. So I was one off and he sat me down his office. And I'll never forget this, because he was great, and he liked me, and I liked him, and we had had a bunch of good conversations that he said, can I be honest with you, Maria? Like, why are you doing this? You have 10 years of operating experience, I'll put you in the C suite of any of my companies. Like, you're gonna go do this, like, platform, venture role and, like, make less money and he was quite compelling. I went for a run the next morning on the Hudson in New York, I'll remember, I always remember this. And I was like, I have been really thoughtful about why I want to do this. 

Maria Palma  

And I feel like sometimes, in these moments, the best thing to do is ask your 5 year old and your 80 year old self, is this the most honest answer you're gonna get? And there's no inhibition around that. And so I was like, I think I'm gonna love this, and if I'm bad at it, great. I get fired in the first year I do a job reading. But then I know if I end up 80, and I never tried it, and I don't know, like, what are we doing here, you know, but I say that because, just because you don't have a network in Metro doesn't mean you can't have one tomorrow. Luckily, the tech ecosystem has like, 70,000 events a day, so go to some events, meet some people. That's where we're doing through now you actually will have a network and vice versa. Like, I think that I have a responsibility to go build networks where I don't naturally have networks. And I love helping other women, but also me, helping other women is actually not diversity for me, I don't know, right? I can understand that being a breastfeeding and a board meeting, because I've done it right. So like for me, diversity is not the same experience it's one is a different experience. How do I seek that out to understand that, and how do I also create communities and channels where I can go find those people and or just create channels for them to find me, like I have on my website all the time since nine years ago, or something, a way for you to reach out to me, even if we were never met. And so I think it's about kind of creating bridges, creating socialization. And I am not saying it solve it overnight, but I think of all the things I've seen tried, it's probably the best working version.

Ryan Miller  

I love that. You know, personally, you hear mixed opinions on the effects of diversity, and ultimately, is it a good idea, is it not? What I think is, it's new, and I think it's evolving, and I personally am a fan of it, from this perspective, is that I think version one, speaking like a true VC here, right? First iteration, I think people did the idea is still positive, but I think the implementation on version one was a little bizarre. Maybe I'm more trying to think from the people, the naysayers. But what I think, though, is, as this iterates, the true essence of diversity is going to happen, which is diversity of thought, neurodiversity more than biodiversity is they're saying, If you grew up in a different culture or a certain gender or whatever that is. What we're really after and feel free to disagree, if you if you'd like but I think, as an investor, what we're really after is like, Yeah, I know the typical type of person, right? Usually a dude or whatever it is. What I'm looking for is diversity of thought, and that comes from culture, that comes from all kinds of variables that we talked about early on this, this talk of having a very colorful upbringing that can give you grit. And so what we're really talking about is the mindset. We were talking about, diversity of thought and I think that that is what I think is really exciting. Like, have even Elon Musk is like, we got to, we got to stop putting this emphasis on putting MBAs, even though we both have business grad degrees. But he's saying, like, let's get engineers, like, what about an artist from India or an engineer from Africa? And these different people who have these different backgrounds, like, I don't care that you're an artist and I don't care that you're from India. Is, in that example, what I care about is you actually bring something different, something unique. And that excites me, the fact that you can see the world differently, because if you see it the same as everybody else, you're going to make what everyone else makes. I want people who can say, actually, not really seeing this particular problem or the solution to this problem in this way. And it's those are the people we like. Those are the people that get a VCs blood pumping. Is to say, I like how you're thinking. Nobody's looking at it like this, holy crap, this is awesome. Let's talk more. Can you add anything to that? 

Maria Palma  

I think most of the research to your point around efficacy has been around diversity of thought, but they are correlated. Diversity of thought is also correlated to your point, to background, to experience, race, to gender, all these things. Lot of people who look at that are on the outside and not as close to right. So maybe and just look at as an asset class and say, why aren't we doing X and why are we doing Y? I think being an average VC is actually not hard, but being a top performing VC that actually returns unbelievable money back to your LPs, which is the job, by the way, is very hard. It's very hard. And it's not hard being a founder, right, we're talking about grit and all these things. I think it's more the mental game of knowing if you're any good at it forever, but also just being constantly relevant and constantly in the right jet streams that matter and in the right conversations that matter. And I think when you look at the data of the power loss, so many things go to zero, I think it's like you need to mirror all these things together and then be practical about where you can move forward. And I actually probably think there's more value in just seeing success stories than there is sometimes in, like, trying to overthink how we get there. Like, I think being the founder of Alloy be a woman and just have that company just crush was great, right? Like, look at Europe right now, maybe this is the less contentious thing to talk about. Like, now that there's, like, three or four multi billion dollar companies within a 24 month period in Europe, I don't think any European founder has ever felt more inspired by what they can do in Europe. But I think those success stories are some of the most important things to do. I think we talk about these issues like, do. Like, it's this huge thing, and we have these big solutions, and I think we forget how unbelievably powerful, unbelievably powerful the micro moments are, they're unbelievably powerful. Like, just being curious about somebody who doesn't look like you and their experience, even if you're never funding them, right? Or like, if someone says something awkward in a room to someone who's of a certain ethnicity and you're not that ethnicity, you calling that out is so much stronger than them having to call it out, or them having to not call it out and be embarrassed. Like there's these micro moments where I think just either being curious or leaning into something can just lead to a totally different outcome. And so I think, like the bottoms up on this stuff is actually as powerful as the tops down and I think it's good to remember that. 

Ryan Miller  

Yeah, I love that you talked about curiosity. In our home, we talk about the feeling of judgmental and curiosity probably comes from the same place. The only difference is you're open on one and you're closed on the other. And so if you if there's differences, then just be curious, which means I'm open. I'm genuinely curious, I don't understand it or agree with it, but I'm genuinely curious, not judging, and that curiosity, that's our job, is to be like, you know what? I didn't even consider that. This was actually pretty awesome, and then you can dive in, and you're like, I just found this whole deep well of value, all because I was curious, not judgmental, not closed off in my own ideas or biases. But I'm actually open to learning something, even though it's the same feeling at first, and then back to ego, remain humble, and now you're in a position to exploit or generate value from a place that was never getting any love in the first place. I absolutely love it, and I want to encourage you to keep up the good fight. I love it. So, so with that, a big part of what we do is governance. It's often an afterthought at seed, but what are some of those early signs that a founder has or lacks in operating maturity to handle scale, investor relations, all the power dynamics that exist, what do you see?

Maria Palma  

Boards are often used as this reporting moment where there's a lot of preparation and a lot of extra work, and it's not used as an actual discussion point for the founders on where they need help. And I think a lot of first time founders, especially, take a long time to realize that they can actually manage their board on their own. So think a lot of people go read like the YC series and create a board they think they need, and they kind of forget a couple things. One, you have a ton of autonomy in how you manage that conversation. I mean, if you manage the company horribly, in theory, yes, they can replace you, but it's not happening that often, by the way. But in those conversations, it's very different to walk into your board and say, hey guys, here's three options. Let's decide together. And say, hey everyone, here's three options and I recommend number two, I want to hear all your thoughts. I'll let you know what I decide after I hear everyone think about it, talk to my team. You probably have the control to do that and so there might be moments where you do want to decide together. There might be moments where you don't, but I think a lot of but I think a lot of people go in with this lean but like this board is this thing that then they have to, like, be scared of, or it has to decide the fate of the company. Like, that's not what it's going to do, they're advisors. You should decide, and they should advise, in my view. But also, I think if you set it up right from the beginning, it's a powerful structure, yes, for fiduciary but way more for that. So just take you up out of the weeds, look at your business in a different way and I think that the other thing that gets lost in word dynamics is treating the board like its own team. It's kind of wild, if you think about it, because most founders you know would go on for days and days and days about the company culture they're creating. How they thought about it, how they built it out, how they make sure it stays the same as they scale like unbelievably passionate about the culture they're building their company, and not a single one of them has spent a second thinking about spent a second thinking about the culture of their board in most cases. And this is a group of people that sometimes makes or breaks your life, and in the moments where it can make or break your life, because the company is in an absolute crisis. The world is in crisis. Covid just hit, and you're in real estate, whatever, like these people decide the fate of your company in those moments sometimes. And if you treat them like individuals who show up for one discussion, they're probably not going to be at their best together, because they don't even know each other. There's a lot of internal politics in the room, probably amongst them, because they have relationships outside of the room. And so I think if you invest in the board a little bit as a team, I'm not saying extensively, but like a little bit have relationships, understand each other, have some moments where people get to know each other outside of, like, those board discussions, I think it's a much more valuable asset for you as you go forward. 

Ryan Miller  

That's absolutely incredible. So, you know, my question for you is, if you're seeing that AI is the gold rush of today, what's the frontier that few investors are even looking for and but if you believed you could redefine venture over the next decade, where would you see that?

Maria Palma  

Yeah, I think AI is definitely going to take us into the next decade and beyond. But I also think there's other things that are going to come up, and I think quantum is probably one of the ones I'm the most excited about. I think it's hard as a seed stage investor to play in it today, that might change as we go forward. Full disclosure, my husband works at PsiQuantum, but outside of him working there, which probably does have some play, but outside of that, this year, I did like a whole deep dive on quantum earlier in the year, because I wanted to figure out where I could invest as a C stage investor now, because I think that there's benefit to branding yourself as a quantum investor and getting smarter now, even making some investments, so that by the time that it really comes to bear, you are really much more in the fold and in the right community, especially that'd be valuable in AI and crypto and other moments. And I think that this is as good as anyone in VC or PE thinks about like their own career, and how you get branded. It's really like in what you invest in, and we watch frequent circles you find yourself in. And so I did this work on quantum, and I kind of came to the conclusion that, because PsiQuantum is the only one that has set themselves up for scale, that they are going to do it. So they just did a billion dollar round, Nvidia is in the round and a customer, and I think they are going to actually do it far faster than we've predicted. Than we've predicted in the next three to five years, or it's going to be slower because one of these other quantum technologies that all have actually been really interesting in multiple ways, have to scale, and that just takes time. I started my career in manufacturing, like really new technologies that are very complicated don't often go from like MVP to scale manufacturability wise, easily, and so that's just going to take time. So I am paying attention to the timeline because I think in the initial way, most of the huge amounts of value accrue to whoever gets the hardware right. But then there will be opportunities that will be interesting for my kind of stage investing alongside that, as it's actually taking off. And so I'm kind of paying attention to the timeline from that perspective.

Ryan Miller  

Brilliant. So AI next decade and beyond will be a lot of fun. We're going to ride that wave. Some might get plowed over by it. And then beyond that is the next big one big thing is quantum, I love it. So you know, my final question before we wrap things up is, when you look back 10 years from now, what do you want your funds role in the AI revolution to be remembered for, and what are some of those personal philosophies that drive that vision?

Maria Palma  

Well, to your earlier point on ego, it's probably the wrong question in some ways, because, like, I don't know that. I think truthfully, 10 years from now, like, will, I had had a role in AI, probably the people who would be under that role AI, that's not going to be me. That being said, what I hope is my role, or, like, I hope that I got to participate in a really incredible way by backing the founders whose names you wouldn't know there. And I hope that the legacy of doing that the right way is I do think a lot differently in this world than I did in prior technology cycles of what is the integrity and the motivation of the people we're putting at the helm of this shift. So there's a founder that one of my partners backed at a prior fund is doing some really interesting stuff around gene gene editing, and they're totally tackling chronic disease, things like dementia, Alzheimer's. If we've all known anyone with that in our family, it's very horrible. I don't think anyone the planet would be anti them going after that they are. But when I asked this person when it was my turn to kind of vet him, you know, what could you actually with this technology in 5-10, years, the answers were pretty scary. It was like, we can freeze people and put them on Mars. We can, we could, we could induce bio warfare, we could reverse bio warfare. And you're like, all of a sudden I went, Holy crap, and I realized that actually, for the remaining part of that hour, which was still like 45 minutes, I actually was going to spend 0% of my time on his motivation to do this business, and him as a person and this business, and all of it on understanding his ethics set and his integrity. Because, and I got to the point that, like, this was someone who should be at the helm of where AI goes, and they were going to do all the right stuff. But if they're doing this, someone somewhere else is doing it to induce bio warfare, right? The technology exists out there for all these things. And so I think, because some of these technologies that we're coming up with now are just so far reaching, we really have to take a lens of like, who we're putting at the helm, and sometimes it's the who, and sometimes it's the what. 

Maria Palma  

I looked at the company today, where the founder is brilliant and she's unbelievably high integrity, but the product has to deal with AI and children, and I just, I don't know if it's good enough in some categories to have the founder just have the right ethics. If you think the technology is not at a point where it could be trusted with a vulnerable group like children, so I think it's around like ushering in, being mindful of what you're ushering in. But I would say there's been a lot of fear mongering about AI, and I'm less worried now than I was two years ago. And I think I saw someone give a TED talk, and they actually made an interesting argument around, if you look at what technology is done in general, right, as kind of like the Mark Andrews and techno optimist point, but that in general, we're living better. In general, we're living longer, in general, there's more medicine available. And if some prior generation had robbed us of advancements because they were scared of their reaction, which is always scary, like in 2015 we had a machine learning data happy hour. And this journalist started out the panel by saying, this technology is changing everything, it's changing jobs like the world will never be the same. It's going to be full chaos and it was a quote written about the washing machine. And so I think there's always a fear of these new generations of technology taking jobs, and we should be worried about that, but at the same time, we shouldn't rob the future generation of what these advancements might also bring on a positive perspective. And I don't know what they're going to look like yet, but I suspect that there's a lot of them.

Maria Palma  

And, you know, maybe closing out on that, speaking of next generations, like I'm a mom, I'm gonna go at a moment here, because my daughter has a fever today, but I being a working mom is one of the highlights of my life. Like being a parent is there's nothing better in the world that exists. And I say that as someone who loves her job and, you know, has friends outside of work and all these things, but it's like, and has a lovely husband, but truthfully, like, it's just unbelievable. And I think that it's important to say these kind of things on podcasts like this, which aren't about these topics. And it's not just about being a mom, it's about being a worker parent is, I bet you, almost every listener, maybe, like 80% of your audience, is probably a dad or mom, and. And I think that we're almost doing the next generation disservice. What scares me a little bit more than all of these fear mongering is that there was some recent survey that of people in their 20s and their 30s, and do they want to be parents? And like a less than a majority of them want it to be and I think we're also scaring everyone. At least for me, before I was a parent, I kept hearing all these stories of like exhaustion, how hard it is and how taxing it is. And I'm not saying that it's not hard, sometimes it absolutely is. But if you stop any of those people and you ask the follow up question of like, but would you still have done it again? The answer is unequivocally yes. Like, and the unbelievable amount of joy that you get every single day, and the relationship and the intimacy of the relationship you build with this family, is like unparalleled by anything in the universe to me. And so I think we also just need to like from to, like, remind people that it's possible. I'm not saying you can have it all, I'm not saying everything is easy, that's not what I'm saying. But I'm saying that you can do something you love, and you can be a working parent, and in fact, billions of people do it every day. And so we should also stop scaring the next generation that these things aren't possible. You just figure it out as you go.

Ryan Miller  

I love that. So before we wrap things up, is there any other final, final thoughts? Any ways people can reach out and get to know you, anything at all? 

Maria Palma  

Yeah, I will. We can link some of these in the podcast notes, but I have a substack called Unconstrained, which is where I do a lot of my thinking on venture and AI and what's going on. My information is up on the website, and always happy to learn and if there's something in particular interest, you know, shoot me a message and happy to trade notes. 

Ryan Miller  

Awesome. Well, I appreciate that. So just as we wrap things up, just remember, invest in founders who've demonstrated grit. The second thing is, seek AI placements with some defensibility, again, seek for trust before transactions. The other thing is, keep your hands on AI and your gaze on Quantum. And finally, remember the place where it hurts can also be the place where it grows. You do these things, and you too will be well on your way in your pursuit of Making Billions.

Ryan Miller  

Wow, what a show, I hope you enjoyed this episode as much as I did. Now, if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes. Plus, why don't you head over to YouTube and see extra takes while you get to know our guests even better. And make sure to come back for our next episode, where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then, my friends, stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.