Venture with Grace
00:00:00 · Grace Gong, Jay Zhao
[00:00:00] S0: Oh my god. We're live. Okay. Hi, Jay. Welcome to Venture with Grace. [00:00:08] S1: Thank you. Great to be here. Ad[00:00:10] S0: I'm excited for our conversation, but before we jump into the show, I wanna give a quick shout out to our amazing sponsor. This episode is brought to you by Nebius, the ultimate cloud for AI innovators. Nebius provides AI infrastructure you can count on company engine... Company reliability and speed with flexibility and engineering support are managed by hyperscalers. AI leaders like Meta, Shopify, and Higgsfield are already partnered with Nebius to run their AR workloads. Plus Venture backed startup can save up to a 150 k on compute customers that apply for access. Visit navis.com or navis.com/startup to learn more. Okay. So I want to start with your journey. So you've been a core VC for a long time and you guys started Leonis Capital, which I think we had the conversation also with your brother Jenny about like, you got started with a lot of the top AI researchers as your first backers. Maybe we could talk about what were some core lessons that you learned early on in your career as an investor that helped you start your fund?
00:01:08 · Jay Zhao, Grace Gong
[00:01:08] S1: Yeah, thank you. It's a good question because I have been... One, I feel I'm kind of old nowadays since I've been 14 years I do venture investing. I restarted the career in the last wave of tech investing, which is a lot of marketplace and enterprise SaaS companies. And back then, on my first one, I was lucky enough to get involved with, I went back in Anaplan, Marqeta. I was on board with Marqeta for a few years before the company went public. And then later on, we also invested in Airbnb. Was an intro investing in Lime, the scooter company that went public a few months ago. But all these companies, feel like represent the last generation of tech companies. How I get into Venture is somewhat coincidental because I was a founder previously and after I had this small exit, I started hanging out more of my time and some small check with other founders. That's cool. [00:02:08] S0: What was your company doing before?
00:02:08 · Grace Gong, Jay Zhao
[00:02:08] S0: What was your company doing before? [00:02:11] S1: That was after an e commerce company back in the days and that was before Shopify, before 3PL became more popular. And I have to hand code a lot of the things myself in building the site. And what's even interesting, I don't think any founder should do that nowadays, is that I have to go to the warehouse and then move things around. But in terms of inventory stuff, So there was a lot of kind of just grinding going on. But at the same time, I understand how hard it is to start a company, raise capital, because after three years, I just burn out. Like, it's it's really tough to start a business, during the voting stage. But what it taught me is that when we do what we do at Leonis right now, we're almost like a startup, but it does give us a lot of empathy trying to connect with them and understand what they go through because it's never a straight line up to the right. But we want to be there, know, at the Stuttgart and Dallas.
00:03:07 · Grace Gong, Jay Zhao
[00:03:07] S0: For sure. Want to talk about, since I feel like when you were building your founder investor networks in the Bay Area, like how did you kind of like that plugged into like the Airbnb of the world? And for like in the AI era, I feel like obviously researchers like a really huge like, you know, group of people that like, you know, it's like a super crucial to like the AI space. Maybe we'll talk about like the network building, AI researcher land as well. Yeah. Since you guys had like, I believe as an LP at the very early age and how you spotted the first AI wave and how you created the relationship with these really important people in [00:03:54] S1: Yeah, we're kind of lucky in some ways because Steve Jobs is [00:03:57] S0: Are you guys still in touch with him though? He's very public these days.
00:04:02 · Jay Zhao
[00:04:02] S1: I we are. We're in touch with all the LPs through our investment activities, also the AGM LP meetings and stuff. But obviously everybody is busy nowadays, especially over the past three years. The reason I mentioned the context is that back in 2020, AI was just emerging. OpenAI was a non profit at the time. So how to get started with Leonis? It was somewhat coincidental because at the time I didn't want to join a platform VC firm anymore, and I didn't want to start a VC firm because... Just because people were starting VC firms at the time. I think the origin of Leonis, you talked to my partner Jenny, what we see eye to eye is how can we start and build an entry franchise that's highly research driven and conviction driven. Because a lot of times VC will make investments and in hindsight we see that trend early on but it's very much of a lagging indicator to those investment cases. What we try to do is that because we have a lot of LPs we're early engineers and researchers at labs. We're trying to understand how can we identify these companies one year or two years ahead of the AI capability curve. I think if we do well, we can not only just avoid the hype and high valuation and give a return to our LPs, but at the same time really help the founders. Often times founders start something, it's less obvious, it should be less obvious, like when they start at C companies. Those type of founders, they typically want to have VCs who are thoughtful and understand what they do. And that's really how we build out the platform and also people around the Leonis investment team side.
00:05:46 · Grace Gong
[00:05:46] S0: I guess when you are identifying the early trends, how do you think like what is something that's like, know, one year ahead of the trends compared to like something that's like super early? Because like I think that the blow up like of ChatGPT like was like kind of unpredictable. It was not technically like planned it for these like AI companies. So I'm curious, how do you think about like, what is something that's like gonna be like the huge hype like the next year? And when you guys were first building these like research circles and is there any... I know like Jenny was like early employee and when you guys are selecting the people that are you're connecting or working with, what were some early insights that you have gained that shaped the thesis of the fund?