Joshua Kushner, Founder and CEO, Thrive Capital
In conversation with: Alyson Shontell, Fortune

Fortune Global Forum 2024: Big Bets

Photograph by Michael O’Shea for Fortune

Conferences

So Josh, thank you for joining us today. I know you don't usually do interviews. So we're lucky to have you live in person. Um The first thing I wanna talk to you about is you said we're in the biggest paradigm shift of your career. Granted, we're both middle aged now. It's not the longest career ever, but there's still a long career for you 20 years in venture about. Um Why do you say that what's going on right now? Yeah. So when I started thrive, uh we were in a very exciting moment and that the internet was starting to kind of gain a tremendous amount of distribution through mobile phones and cloud infrastructure was taking off right now with a I, I think it's a very exciting moment. Uh Primarily because the foundation for the entire ecosystem uh has been set. Um I think as a firm, we get incredibly excited about this moment just because of one, you know, the 2nd and 3rd order implications of a lot of this technology in terms of how impact consumers, how impact enterprises. But also we're kind of living in this exponential moment where things are just happening so much quicker and I think the rate of progress uh that is ahead of us is just going to be tremendously exciting. So there was one other paradigm shift that happened last week uh in the United States, a lot has changed. Uh We have now an idea of what we know now who our next president will be. It'll be President Trump. Um There was a lot of feelings in Silicon Valley and in the tech world about Trump versus Kamala. And a lot of people are saying Trump is great for little tech. First of like, what the heck is little tech and what does this mean for the beer and start up community? Yeah. So I think, um you know, my vantage point is, you know, irrespective of who our president is. Uh it's very important that we're all patriotic. And I think, you know, America's greatest export is innovation. And I think uh in this moment, it's really important that we continue to kind of lean into thinking about how we can all support the ecosystem in every single way possible when I think about how the technologies that are built here impacting the rest of the world. Uh I think it's a moment for us all to kind of, you know, rally behind uh the technology uh industry to kind of make sure that we're pushing the world forward in the right way. But it should be a good thing for the industry. I mean, there's a lot of people who felt like there's no exit happening. The IP IP O market is down, mergers and acquisitions are getting blocked. This feels like maybe this could be good for venture, you know, I think the, the industry at large, um, you know, you have to kind of like disconnect uh liquidity from progress in terms of technology. Um If you think about uh public markets, there are good times, there are bad times. Um It kind of doesn't matter, you know, what administration is involved when you think about kind of the rate of progress in terms of the things that are being built. I would say the last couple of years have been amongst the most exciting uh in my career. Uh You're seeing founders dream in terms of what is possible. And when you think about some of these things, whether it be robotics or life sciences or some of the things that we're all using every day with regards to A I uh things that seem somewhat impossible a couple of years ago, feel very, very, very real uh and, and, and in front of us. And um I'm very excited about kind of what is being built and, and the impact that it's gonna make on the world. Great. Um So I wanna talk about the uh one serve in particular, of course, open A I Elon Musk is now the Center Force of Business in the White House. We just came out with our most powerful people in business list today. He was indisputably number one. Um He has a competitive start up to open A IX dot A I raised billions of dollars. Um He does not like Sam, your founder for Open A I, Sam Altman. They are in a, a quite a public spat in lawsuits and things. Are you worried about your investment now? Like, what does this mean for open A I that Elon is there? Um So first off, I have like deep admiration and respect for Lan. Um and you're a SpaceX investor, uh We feel very grateful to be. Yeah. And I think, you know, my understanding of him, first off, uh he has defied expectations on everything that he's ever been a part of and no pun intended gravity. And um you know, my core belief is that he leads uh with intentionality and with an orientation with regards to kind of what is best for humanity and for everyone. Um my interpretation, my interpretation of uh his excitement to kind of participate in the government is very much driven by his desire to do right by everyone and based on what I know of him uh and to be self aware, uh there are others who know him better. I think he always leads with good intentions and I have extreme confidence uh that he is always gonna do what he thinks is right for all Americans. Well, maybe we'll broker a treaty between the two of them. Some peace between Elon and Sam. I know for certain that both Sam and Greg have deep respect and, and an immense amount of gratitude for, for all that Elon has done for not just open A I but for uh the rest of the world in humanity. So OK, let's talk about what's going on in open A I and the valuation do you guys just put in 1.25 billion, not the first billion dollar check. You've written this company. Um That's more than Microsoft put in in this last round, more than NVIDIA, more than Kla. I mean, you are like all in on this company. Uh I know that you have a rigorous back and forth at thrive. Should we invest? Should we not invest? What's, what's the case for this $157 billion valuation where you all your chips are in versus um I'm sure there were people arguing the other side. What are both sides? Yeah, it might make sense to kind of take a step back to explain who we are and what we do. Um So we started the firm in 2011 and uh when I started uh everyone that I met with on the investor side said no to us. So we kind of took a step back and said, OK, given that we have nothing to lose. What is the right strategy for us? And we kind of created this uh vehicle that was incredibly opportunistic, it was agnostic to stage sector geography. And since day one, as a firm, we have been very much oriented towards being extremely concentrated in people and ideas. Uh We have been of the belief uh that there's a very small end of companies that one should be a part of. You need to be their most meaningful partner. You need to be extremely long term. And, you know, we've always believed in the MGER buffet way of the world. Uh power of compounding one of the wonders of the world and hold these companies for a very long period of time. So since then day one, we've incubated businesses, we've invested early and in extremely concentrated ways, uh we've invested in later stage businesses. Um And over the last couple of years, we've written multiple billion dollar checks in companies like stripe and others uh that, that you're aware of with regards to open A I. Um our framework has always been that there are really four things that matter in this new paradigm shift. Um There's research and talent, uh there is compute and capital, uh there's data and there's distribution uh from our framing open A I is the number one model and research company. It's not the number one enterprise company. Uh And it's also the number one consumer company with a half a billion people using their product when we kind of think about the valuations associated with some of these large language models, obviously, you can value the enterprise business. Um But our orientation has always been uh towards kind of the application layer and the capacity for consumers to kind of utilize these products in ways in which are improving their life. And the exponential growth of that user base um has been quite stunning and is fairly unprecedented compared to anything else that has existed to kind of frame it in the context of numbers. Um If you kind of look at cloud infrastructure, I think there was about 12 billion of spend uh about a decade ago. Now, it's about a 220 billion run rate that should yield about $2 trillion of enterprise value. And I think that will grow towards five trillion uh over the next five years. If you kind of project forward, our view is there's going to be multiple winners in this space. Um uh We have deep respect for uh Google and, and, and Meta and Xa I. Uh but our belief is that open A I is going to be one of those and we feel very lucky to be partnered with them. You have an approach that's about quality and that quality is scarcity, right? Like you have a a thing you say about Fifth Avenue, always invest in Fifth Avenue, you always are paying a good price for it. Yeah, I think uh you know, one of the things uh that I, that I've once told Allison is, uh I always try my best to kind of explain to my mom what I do. She gets it now, but a couple of years ago she thought I fixed computers for a living. And, um, you know what I try, my best to kind of express to her was, you know, at the earlier stages, we're looking for the new and upcoming community. Uh These are areas that people uh are just starting to find interesting. Um And at the later stages, our view is uh you wanna invest in Fifth Avenue, you want to be in the high quality companies that you want to own for decades to come uh in our world. Uh You know, there's an ephemeral to technology. Uh those assets are, are, are family fairly limited. Uh But I think most importantly, it's so driven by the person who's running those businesses. Um We kind of live in a world in which the founders of these companies are really the heroes. They are really the ones deserving the credit, they're the ones who are operating these businesses. So as I expressed earlier, we're both concentrated in, in, in ideas and in people. Um A lot of people who do what I do think that if they were to be involved in something, it would make a difference, we try our best to be unrelentingly supportive uh to those that we work with and do our best to support them in every way possible. But we have a tremendous amount of self awareness that at the end of the day, they're the ones who deserve all the credit and, and, and deserve to be on stages like this. Yeah, I think, um, a smart investment philosophy is to invest in people and the people running companies. And clearly you were Sam's first phone call when he was raising venture capital and it goes back to a relationship you guys have had for a dozen years. Um I imagine that you had a not so minor heart attack when he was almost fired, he was fired for 48 hours. Um And to me, if I'm you, that's like, oh my God, my investment might just go totally to zero. That's a big proof for my LP S. What did that moment teach you about investing? Yeah, I mean, Microsoft looks like they were like, we're never gonna let that happen again. They diversified. But you're still, I know you have other A I investments but you're still like all in. Yeah. Listen. Uh uh my wife jokes with me all the time that I'm calm and collected uh at most times and uh I don't know if it's a feature or a bug uh to use an engineering term. Uh But, you know, my framing is uh every problem has a solution and uh you know, there's no hope in a better past and there's uh nothing you can gain from freaking out about anything and you just have to kind of look at the play on the field. Um And do your best to kind of write things uh to where they ultimately should be. So, um feel very grateful that uh we were able to play a small part as others were in that very specific moment and we try our best to kind of do that for all the people that we're lucky enough to work with uh in moments of crisis. OK. Last opening eye question, I promise, will you be on the board after it's done transitioning to for profit? And how's that going? No comment, no comment. OK. Maybe, maybe I take that as a, maybe that's my analysis. OK. We'll, we'll, we'll stay tuned. Um OK. So one thing about the firm, you guys are very young. Uh And that's why on purpose. Now, at first I think we talked about in a story that I wrote on you. It was uh sort of like the feature nut bug. Um It was hard to recruit, but now you actually look for people with less than four years of investing experience. Why like don't people benefit from pattern recognition in investing, seeing cycles, knowing cycles. Yeah. So when I started the firm, I was 26 years old and uh we were fortunate enough to uh be seated by the Prince and Endowment and they really believed in us uh and, and what we uh stood for in our approach and orientation as we started to meet with other investors, uh people pushed us to kind of hire people with more experience. And my line at the time was anyone who has experience that is talented, will never want to work with the 26 year old. So there's an adverse selection dynamic associated with the types of people that we could ultimately hire. So what we ended up doing was just kind of aggregating the smartest people that we knew that were our ages, our close friends from college people that they knew from, from, from, from different work experiences. And I think, you know, if I were to orient back to kind of what has gotten us to where we are today, um It's been driven by first principal thinking humility, like an incredible drive to do whatever is necessary to kind of understand uh different topics, uh be there for founders. And we have found that instead of trying to hire the experienced person today, we'd rather just find that young, hungry person who's willing to run through walls like we were 10 years ago and teach them our way and help them grow um and help them become the best version of themselves. That's great. Um So in the time that we have left, I wanna know two things. Really one Sam gave an interview recently and he said, what are you excited about in 2025. And he said first, I'm having a kid. Yeah. Yeah, it's great. Um Two is he thinks that A G I is coming in 2025. Can you explain what is a G I to everybody? And is it coming next year? Um I think uh there's a lot of different interpretations of what A G I is. Um But I think the most simplistic way to uh describe it is this idea that uncertain uh tasks, computers will be smarter than humans. Um And it feels uh like we're making a tremendous uh amount of headway towards that being uh the case. Um And I think as a result of that, um there, there's going to be a tremendous amount of innovation that is going to occur. And, you know, my framework on life is that with any innovation, there's good and bad, I'm an optimist. So I focus on the good things when I think about uh what de S at deep mind has done with alpha fold and the impact uh that protein folding can make in terms of drug discovery that is like an extraordinary innovation that's coming out of large language models, uh things that can come with regards to robotics and uh you know, other things like that. So we're very excited about the transformations that are, that are, that are happening. And um obviously, uh as I expressed, there's gonna be a tremendous amount of exponential growth ahead of us, but um we have a tremendous amount of confidence, not just an open A I, but the other people who are kind of pushing forward on this frontier that they're gonna steer it in the right direction. Well, I was gonna ask you about what's next, but you sort of answered it there with the robotics. So Josh, thank you so much for the time for being here today. Thanks to you.