Transcript Synced · select any line to jump ▾ 0:02 Cheryl Mack: Founders scale faster on Deel. Set up payroll for any country in minutes. Hire anyone anywhere. Get visas handled fast and get back to building. Visit deel.com/dayone. 0:15 Maxine Minter: That's d-e-e-l.com/dayone. 0:22 Cheryl Mack: 8-year-olds are on a whole other level. They are doing things that like I wasn't even thinking about doing until university. And I'm just like, Wow, the next generation is either gonna be crazy productive or completely psycho. 0:34 James Tynan: In 2000, 2001, we didn't have the ability to download that culture, the ways of doing things that we have now. And I think it's led to this crazy explosion in just how good people are at everything. 0:47 Maxine Minter: Surviving the AI apocalypse is all about good humanities-based reasoning, right? We did this lap around vocational and we're back at the humanities as people are like, cool, cool. 0:59 Cheryl Mack: Hey, I'm Sheryl. 1:01 Maxine Minter: I'm Maxine. 1:02 Cheryl Mack: This is First Check, part of Day One, the network dedicated to founders, operators, and investors. 1:06 Maxine Minter: If you wanna be a better early-stage investor, this is the show for you. 1:09 Cheryl Mack: So TL;DR, if you don't wanna suck at investing, listen up. You know what doesn't get talked about a lot? Edtech. 1:22 Maxine Minter: Oh yeah, super not cool at the moment. But actually quite amazing and I think a topic that we should talk about more. 1:29 Cheryl Mack: 100%. I don't know if the not cool is what I would put in the bucket of. It's just, you know that meme of like, such and such so hot right now. I think I'd say like, edtech so not hot right now. 1:43 Maxine Minter: So true. I feel like a lot of people just shy away from it because they don't like selling to school districts or to schools. Like that motion is really painful. But then I feel like there's like a pocket of folks who are OGs in it, and we have one of them on today, which I am so excited for. We're speaking to James Tynan from Square Peg, and he has almost spent his entire career operating in that space and like building in that space and then stepping over. They've done a bunch of really interesting edtech investments. So he is the coolest of the uncool in edtech. 2:13 Cheryl Mack: Yeah, man, to be a fly on the wall in those early days at Khan Academy, like, I just don't think that anybody would have seen that success happening. Like, hey, you know, we're running this cool YouTube thing to now we're one of the largest education providers and just like changing up the education model. 2:30 Maxine Minter: Wild. Totally wild. And then obviously since then he's done a bunch of investing. They're generalists at Square Peg, so I'm super excited to get into the topic with him. I think he's seen some really interesting stuff in longevity. I think he's seen some really interesting stuff in app-level AI, and I just love the way that he thinks about businesses. So can't wait to get into it. 2:49 Cheryl Mack: Yeah, let's jump in. 2:51 Maxine Minter: James, thank you so much for being on the podcast today. We are so excited to dive into all of our questions for you. I feel like it's a really rare thing that we get to bail you up and pepper you with questions and think all things early stage investing together. So excited to dive in. 3:06 James Tynan: Cool, let's do it. 3:07 Cheryl Mack: Okay, so the first question that we ask all of our guests that come on this podcast And if you haven't listened, James, you should definitely listen to a couple episodes, is what was the very first thing that you ever invested in? 3:21 James Tynan: The very first thing, I mean, it's hard to know whether there's stuff before this, but the one that comes to mind is my startup. So I was in first year uni. I kind of decided to do something crazy at the time 'cause that was like 2000, like 2000, 2001 kind of time. So it was not a time where people were doing startups. Like people would go like, what are you doing? I'd be like, I'm starting a business. And they'd be like, so a business? Like, you know, why? Like, you're, you know, you're 19, you're 20. Like, what are you doing? And so, yeah, that was a weird thing to do and ultimately did everything wrong, kind of ended up bootstrapping it for like 7, 8 years and getting a very minor exit and being very disillusioned with Australia. But in a good way, that kind of like led me to go over to the US and probably catapulted me in a way that I wouldn't have otherwise. 4:10 Maxine Minter: Wow. I didn't realize you were operating in 2001 in Australia. 4:16 James Tynan: Yeah, I'm old. 4:18 Maxine Minter: I was gonna say you were like a proper OG of the Australian ecosystem. I also wanna acknowledge that I feel like the Australian ecosystem at that time was like a minor hellscape. It was pretty hard to be building a company then, right? 4:30 James Tynan: In order to be an OG, I think you have to have been like successful and like really, really done something impactful. I think I was like, You know, successful to the extent that most people don't get an exit and most people don't get enough of a financial cushion to kind of go do something fun for a while. So successful to that extent. But I think, I don't know, I reserve the OG term for people who were, you know, building at Lassie, for example. 4:54 Maxine Minter: I love it. That's very humble of you and very Australian. But I think, I think you've earned that mantle, like operating for 7 years in the Australian ecosystem in 2001, no less, right? Like it was simultaneously one of the toughest capital markets we had seen up until today? 5:08 James Tynan: Oh, it was terrible. When you were looking for investment, it was which rich person do you know, like through some kind of network, who's gonna offer you, you know, something in the tens of thousands of dollars for 50% of your business? It was just so brutal and like— 5:23 Cheryl Mack: Did you take that deal though? 5:25 James Tynan: Hell no, no, no, no, no. 5:28 Cheryl Mack: Wouldn't have gotten that mild exit if you had, I guess. 5:31 James Tynan: Well, also, It was what made me think I'd got to get out of Australia. Like, this is not a place where you can really be successful. And obviously there were people who were successful. And like, the reason I mentioned Atlassian is because like they did it in this environment. And I think that made them incredible. Whereas I think we didn't understand so much. Like, here's the other thing about today is that you can download not just the tactics, but the culture of Silicon Valley. In a way that you couldn't in those days. We didn't know about what business models we should be exploring, which ones were better than others. So we were learning everything through trial and error. And that was rough, not to mention this technology wasn't there. We were doing digital archiving and we had all of these raw hard drives, spinning hard drives that were in files in a cabinet labeled. Yeah. With like label makers. 6:28 Maxine Minter: Incredible. 6:29 James Tynan: The cloud was not really a thing. 6:31 Maxine Minter: Right. To this point of like fully ingesting the pace at which we are able to access the world's best insights today and the pace at which we are able to skill up and as you said, kind of ingest not just the information but the culture, right? We're no longer reading static books. We're, you know, listening to podcasts and those kinds of things. I had a moment. So, one of my team members is based in Pakistan and I had a moment with her this week where we were talking about an area she's wanting to skill up on. And I made a bunch of book suggestions and I was like, you can get 'em on Kindle or blah, blah, blah. She was very politely kind of nodding along. And then I had this moment of like, hold on a second, it's $15 USD for a book, right? And she was like, yep. And I was like, what is that in terms of the average salary in Pakistan. And she very rightly pointed out, like the equivalent of us spending hundreds to thousands of dollars on a single book. And I had this moment of like, holy moly, that means all of that knowledge that's locked up in books on Amazon, like anywhere that can't compete with the outrageously bullish US dollar right now, that information is just gated from them. 7:40 James Tynan: Yeah. Although I don't know, I'm not sure how much books are the go-to for anyone anymore. I kind of feel like— 7:48 Maxine Minter: 100%, that's true. 7:49 James Tynan: You know, the way that people are ingesting information, it's almost kind of cliché to kind of say like, oh, I'm not listening, I'm not reading the book anymore, I'm listening to podcasts with the author. And I think where that's going is I'm ingesting everything the author has ever thought about or said into some kind of AI that I'm then having a conversation with. And I think that's like The way that— In fact, it's so funny. I was in a conversation with Jethro and Lucy on my team. I think it was Jethro and Lucy recently, and they were like, how did you learn stuff before YouTube? Like, how did you even— 8:24 Cheryl Mack: How did you learn things? 8:26 Maxine Minter: How did you learn things? 8:27 Cheryl Mack: Wow. Did that make you feel old? Because that would make me feel old. 8:32 James Tynan: One, yes. Brutal, brutal comment. 8:37 Cheryl Mack: Yeah, brutal comment. Did you say like, how do you learn things? Or, you know, Why don't you get your iPad, you millennial? 8:46 James Tynan: No, no, I totally like, I think that's, it's really true. And I think what I was reflecting on was like, yeah, we didn't have, you know, in 2000, 2001, we didn't have the ability to kind of download that culture, the ways of doing things that we have now. And I think it's led to this crazy explosion in just how good people are at everything. Like, you know, track the latest kind of 8-year-old basketball or soccer. And they're like crazy good. 9:17 Cheryl Mack: 8-year-olds are on a whole other level. They are doing things that like I wasn't even thinking about doing until university. And I'm just like, wow, the next generation is either going to be crazy productive or completely psycho. 9:30 Maxine Minter: Wait, that's so interesting. I don't have kids, so I don't have this interface with kiddies, like, excelling at these things, because the— my understanding is that we're actually falling behind in terms of academic performance. The average 9th grader in Australia today is delivering the the same math and English performance that the average 8th grader was performing at even just a couple of years ago. So are you saying they're like crushing sport and failing math? 9:57 James Tynan: No, I, I, yeah, I reckon there's like everything, it's, it's, everything's bifurcating. I just, one, I would say that COVID probably can't be ruled out, um, in terms of that, um, stat. But I would also say that The ability to leverage more and more tools to support your kid is something that skews enormously toward the affluent, the people who have the time and the flexibility in their jobs to kind of spend time with their kids, get them on whether it's Khan Academy or Beast Academy or any of the enormous number of like great resources there are online. Whereas I think that You know, the average kid is probably not getting that level of scaffolding around them and is dealing with all of the negative consequences of technology, like the fact that it's shrinking attention spans. It's competing for our attention in ways that just we've never had before. I mean, like, video games today are so good that the idea of, like, if you spend your weekends and spare time playing like The Legend of Zelda or whatever, and then you're kind of forced to look at a maths textbook now, like the delta between how much dopamine you're getting from one versus the other is so crazy. Whereas I think when I was growing up and even probably when you guys were growing up, that delta was probably a little bit narrower and what you were doing in your spare time was probably less of a just easy dopamine hit. And so, you know, I feel like kids are really struggling with that. 11:35 Cheryl Mack: Yeah. I think it's also that like the average kid might be failing math, but if you ask them to explain how Roblox works or take apart a skateboard and put it back together or get on the bus and figure out Google Maps and go all the way to the airport, take a plane to another city and come back, they could absolutely do all of those things and tell you exactly how to do them. And any other topic, like that's why you're the kid you know is so good at basketball. So like they can, they can consume information in areas that they they really like. So yeah, they might be failing math, but dude, I couldn't take apart a skateboard and put it back. I, like, I, I didn't know how to do a lot of things, um, that all these kids are really excelling at. So I think it's that they're excelling at things that they're really interested in because they have the information available to them. 12:19 James Tynan: Totally. I totally agree. 12:20 Maxine Minter: That's fascinating. 12:22 Cheryl Mack: But even like businesses, kids are starting crazy businesses these days. Like, you and I, we started lemonade stands, right? Like, that's how I made money when I was 8. I've— I mentor kids in, in primary school and and high school who are starting businesses. And like, I talked to a girl the other week who was doing a, uh, like, water sampling, uh, tool, like a little thing that you dip in the river to sample the water to make sure it was safe for the fish. Like, dude, I was— I didn't even know what a water sampling thing was at that age. So that's the kind of thing that I think they're just like on another level with. Totally agree. 12:55 James Tynan: Yeah, no, that's a great point. 12:57 Maxine Minter: Wow, that's super interesting. And I feel like, James, your career, right after the 7 to 8 years you spent in the hellscape of operating a company, right, was then, you know, stepping in, moving to the Bay, stepping in, and you're pretty early at Khan Academy. I feel like you've had a pretty amazing front row seat in the progression of edtech in particular, right? 13:18 Cheryl Mack: Mm-hmm. 13:18 Maxine Minter: Like if we can say number one is like the learning management systems, you're like Blackboards and similar, and that you are kind of the next, what I would think of as the next stage of edtech, right? MOOCs, the Andrew Ng's, Coursera's of the world. 13:33 James Tynan: Yeah. 13:34 Maxine Minter: I'd love if you could just kind of give us a bit of one-on-one education on like, what are you seeing in terms of that arc? And especially as we like talking about the change in kids today, but also maybe adult education, right? Like, where are we going next? 13:47 James Tynan: Yeah. Well, yeah, I mean, listen, pull me up if this gets boring at any point, but— 13:51 Maxine Minter: I strongly doubt that. 13:53 James Tynan: We always thought that the MOOCs were on the wrong track because MOOCs, the kind of underlying assumption behind MOOCs is we know what online education is. It's like when you take a semester of this university course and you just put it online. And that's kind of like the equivalent of saying, oh, we know what movies are and filmmaking is. It's like when you take a stage play and you film it and then that's it, that's a movie. And it's like, well, not really, 'cause you don't have the closeup, you don't have editing, you don't have— Yeah. 14:24 Cheryl Mack: It's like the bootleg version with the little camcorder in the corner of the movie theater. 14:30 James Tynan: And then we were wondering why completion rates were like, you know, 3%, 2%, 5% on these courses, like, because that, like, sucks. Like, it's not a good experience. And even if there was kind of a local maxima that they got to in kind of how good you could make that experience, I think that was one misunderstanding. I think the second misunderstanding is what people are buying when they were buying MOOCs and going to Ivy League colleges, it was like, you're buying a credential, you're buying a signal to the world to say like, I'm really smart and you should hire me. And the MOOCs weren't kind of necessarily providing that same credential, that same signal. 15:09 Cheryl Mack: Doesn't have the same ring to it though. I got a degree from the MOOCs. 15:15 James Tynan: Yeah, exactly. Exactly. Like you just don't get the signal, right? Like it's kind of like, oh cool. Well, what? Like I think we were always kind of scratching our heads because at Khan Academy, we were kind And I'm like, no, no, that's not what we're selling. We're selling kind of direct support for stuff that you need to do otherwise in your life. And what we realized is that the real control point around a lot of education, particularly in primary and secondary school, is assessment. And so if you control assessment, then you control a lot which is upstream of assessment. 15:48 Maxine Minter: Mm-hmm. 15:49 James Tynan: Now, it's really hard to do in primary and secondary school because governments tend to control that. But one thing that we were able to do was we had this kind of once never-before-seen partnership with the College Board, who in the US— I mean, Cheryl, you'll know, like, controls the SAT, which is like the big test to kind of get into university, as well as the AP tests, which are the kind of like advanced placement. It's like, hey, you want to show that you're really good at biology or really good at English or whatever, you take an AP course and you do the AP assessment. And so we were able to kind of do this partnership with the College Board where we were able to bring assessment preparation, which had previously been something that only rich people would give their kids, and kind of say, no, what if the best preparation you could have for these assessments was actually for free and on Khan Academy? And that kind of thing, part of the insight to to what I think Khan Academy was doing that was different from the MOOCs, as well as when you conceptualize, hey, we're here to help people do what they need to do in their life and pass these assessments or whatever, you necessarily have a different interface and people in edtech talk about grain size. Like if your grain size, if your size of your course or size of a piece of content is like a semester long, that's tricky. It's a tricky commitment. Whereas if your grain size is very small and you have like lots of these little grains that you can kind of build into whatever you need to do in order to kind of pass the assessment you're trying to pass or whatever it is, I think that's probably a better strategy for, you know, certainly for primary and secondary school. But yeah, listen, when you get into vocational, I think it's a really different— Yeah. Game and potentially one that I think is more disruptible. I think edtech has been really, really hard to see the big success stories, particularly at kind of primary and secondary school age. I think in vocational, I think it's probably easier. And I think that the wave that's coming, I think that if assessment is the control point, that it's going to get very exciting because we can't assess in an AI world, we can't assess the same way because it's too easy to go on Claude or like OpenAI and be like, hey, can you write my essay for me? Or go on both and then kind of mix and match. And so I think that assessment will really need to change. And maybe that's great. Maybe we'll get kind of more of the promised land, which is more individualized, Socratic questioning, you know, dialogue between an AI and a human that really tests whether you really know something as opposed to kind of regurgitating an essay and, you know, hoping you get a good mark. So I don't know, I think there's a lot of exciting stuff there. 18:41 Cheryl Mack: There's a lot to unpack there, right? 18:44 James Tynan: Sorry, yeah, I just covered too much ground. Sorry. 18:46 Cheryl Mack: Just, yeah, no, there's just so much to unpack there about like the future of education and what that means for us as investors investing in edtech. Like I've made a couple edtech investments and it's an area that I love and want to make more investments in, but hearing you talk about it makes me nervous. I'm like, I feel like I'm never going to understand this space enough to make like an AI edtech. Actually, the one AI edtech investment I have made just went to near zero. I think I got $500 back. So help us. 19:14 Maxine Minter: Tell us what we need to know. Help us. 19:18 James Tynan: Yeah. One of those things, like poisoned by knowledge. Like I think by virtue of spending, you know, 4 or 5 years at Khan at the cutting edge of this, I love it and I also am terrified of it. And I struggle to find investments that I hear a lot of founders saying the same stuff that we were saying in like, you know, 2014. And it's like, yeah, because the industry hasn't changed. And why is that? And it's because it's in some ways the incentives of certainly school type education are not set up where technological disruption is particularly— I wouldn't even say easy, I almost mean possible. It is really, really hard to come in and disrupt how a classroom works because no one's really incentivized to make it work fundamentally differently. In fact, the opposite. And so I'd love to say, oh, here are all the great places to invest. I think I've struggled to. I wonder whether the AI moment that we're in is one where the differences will force changes because you could— you will no longer be able to assess people the same way. And so that's, I guess, that's one nugget that I'm wondering about, but, you know, still very early to see. 20:41 Maxine Minter: I think there's a really interesting framing of the education system overall, definitely like primary through to kind of secondary, but also university, and then maybe even like continued education, where you could make the argument that if you constructed a system that was about social filtration and you constructed in one case, and then a kind of social grading system, and then you constructed a system that was, its purpose was to educate, you would construct a very different system. And if you compared those two hypothetical systems next to each other, The current education system looks almost one for one for the former, i.e., the social grading system, as opposed to the latter, even though the stated intention of the education system is to educate, right? 21:30 James Tynan: Mm-hmm. 21:30 Maxine Minter: And that makes sense to me if you think about the kind of historical role that that institution has played. I think there is an optimistic bone in my body that says, well, hold on a second. Can I actually call YouTube? An edtech business, right? And what we're seeing is an education business or businesses around education that are starting to trend towards the latter. That is actually not about social grading, right? 21:57 Cheryl Mack: Absolutely. I think it's called edutainment, Maxine. Edutainment. 22:03 James Tynan: Well, yeah, although to your point from before, Cheryl, it's like that perhaps is where we're seeing the biggest gains in terms of how amazing young people are getting at everything that they're getting obsessed by, and they're blowing us away with that level of skill. So I think that's really true. And I think it's also really true that— I mean, we used to talk at Khan Academy about the Prussian model, which is the model we still basically use. And it was designed for colonial empires to build middle managers who could competently shuffle paper around. And that's just One of the things that is kind of heartbreaking to me a little bit about having kids of school age now is like I've spent all this time railing against the system and we weren't able to fundamentally change it by the time my kids got into it. And it's bittersweet because on the one hand, I actually do now see like, hey, it was a bit of a caricature. Like there are people doing really excellent work that's not just about social grading, it is about true education and they are embedded in the system and there's good stuff that happens there. On the other hand, it's still basically the same system and we're still training people for a series of traits that I'm not looking for in the founders that I'm trying to work with. In fact, they're probably anti-signals, like the ability to kind of ingest a whole bunch of really well-known information and then regurgitate it is something that AI can do way better than any student's going to be able to do. And frankly, like the founders that we try and invest in have— they've kind of got this— they're anti a lot of the sit down, sit still, let me spoon-feed you information that is rewarded at school. In fact, they're the opposite. They're kind of like, you can't get them to sit still. They don't want to look at the same stuff that everyone else is looking at. They're over in the corner working on something else. And that's not what's rewarded. And so it's like, am I training my kids out of being the type of people that I would want to invest in? Is like a heartbreaking question that I ask myself a lot. I don't think, I don't think it's that cut and dry, but it's at the extreme version. That's one of the things I worry about. 24:19 Maxine Minter: Well, I do also think that like this dynamic is going to accelerate, right? Like I can probably, I can't count on two hands now the number of parents I've had conversations with in the age of AI, like who are close to the metal, right? Like other investors or people who are like at the bleeding edge building. That have had some version of a, like, oh crap moment. What exactly am I supposed to be teaching my kids now? 24:44 James Tynan: I'm having that moment right now because my eldest is so fired up about Scratch right now. Like, he's just, he's like making games and he's like in the Scratch community and he's doing tutorials and building stuff. And I'm blown away by what he can do. 24:59 Cheryl Mack: It's like, in some ways, it's further to Cheryl's point about, Yeah, he might be failing English, but he's really good at coding. 25:06 James Tynan: But you look at what's happening with windsurf and kitesurf, like when I talk to the folks at Anthropic, they're like, yeah, we're maybe a year away from having AGI in software development. And it's like, okay, so what does that mean? My kid is learning to code and Anthropic's a year away from making it so that, you know, you don't need to do that. Like you can just instruct an AI to code. And I don't know, like that, I think again, I don't think it's that cut and dried. I actually do think there will be a lot of really useful skills from learning to code today, but it does, like, it's a much more problematic question than it was 5 years ago. 25:43 Maxine Minter: Absolutely. Yeah. I went to a raging hippie of a school, which was, uh, it's called Glenae and it's a Steiner school. Um, and I'm not sure if you're familiar with that structure at all, but it's very much like focused on helping the children that go to those schools, like, find the thing that they're passionate about and just lean, like, all the way in on the thing that they're passionate about. And so, like, I feel like my entire education journey was just all of us in our various corners, like, obsessing over the things that we loved, and me lamenting the poor teacher in hindsight, like, having to, like, herd these obsessed cats into, like, classrooms every day. But I, I find myself being— intrigued by that model, right? It used to just be like off kind of as a niche strategy, kind of off to the side, and it's definitely got its weird quirks. Like, I don't know if you've ever come across it, but Euridmi is like a thing. But I do think that there is like an interesting framing that they got right in that, which is about like teaching self-determination, teaching the like love of learning, teaching the pace of learning, teaching the ups and downs that is the process of like getting up to speed on a new space, and then— Yeah. Finding a new space and then having to get up to speed on that and going that kind of like oscillation journey that is like expert, novice, expert, novice, and expecting it kind of for your, the rest of your life. And so the open, the thing that I get really excited about is like, what does a population look like and what are they doing? What are they creating in the world if a large percentage of them have those as kind of like hard-coded skills? 27:15 James Tynan: Oh, totally. 27:16 Cheryl Mack: James might find more people to invest in, 'cause that sounds more like the founders you're looking for, right, James? 27:21 Maxine Minter: All of us will. 27:23 James Tynan: No, no, exactly. I mean, so again, this is what we used to gather around the lunch table in whenever it was, like 2012, like talking about this. 27:33 Cheryl Mack: Talking about how to target Steiner School kids. 27:36 James Tynan: Right. 27:37 Maxine Minter: There's not many of us. There's only 28 people in my year. We're a small group. 27:40 James Tynan: So it's like, you joke, but while we were at Khan Academy, we launched this thing called the Khan Lab School, which was an actual physical school downstairs from our office. 27:49 Maxine Minter: How cool. 27:51 James Tynan: And as its models, you know, of course we were looking at Steiner, we were looking at a lot of alternative education models. One of them that comes to mind was called the Acton Academies, started in Texas, bunch of kind of more wealthy families took the homeschool model and said, like, what if we kind of made this real? Like, what if we took this to its logical extreme? And in a classic kind of Clayton Christensen way, it was like the disruptive, you know, innovation model. It happened outside of traditional classrooms. And their model was very much— took a lot from Steiner, took a lot from— every student, like, has their own hero's journey that they're going on. You know, they are kind of resourced with big projects. And that's what really what they're delivering. And at the Khan Lab School, I think that was a very similar approach. So I think the problem is not like, if we get there, then we're living in kind of Star Trek territory where everyone's like an artist, an explorer, or a scientist. It's kind of like everyone's just like looking at making amazing cool stuff. The problem is like, I'm not sure that the way that the incentives are set up within the core kind of education models that keep all of our countries rolling to make that change. So I think it will come in a really lumpy, unfair way and probably privilege people who have means and can afford to, you know, take steps to put that kind of investment behind their kids and put their kids in the right type of places for that, which is not always, you know, it's not always what we want, right? Like, I think it's— 29:33 Maxine Minter: No, not at all. 29:35 Cheryl Mack: But then it also, it always comes back to me around like, well, then what does this mean for us as investors? Like, if we are the ones that are investing in arguably the future, then like, what does that mean for us? And how do we fix that? Open question to both of you. 29:48 Maxine Minter: I think that's an interesting— and definitely in like during COVID I saw a bunch of this, and I feel like we'll probably see it come back. Which is the unbundling of schools. 29:59 James Tynan: Mm-hmm. 30:00 Maxine Minter: So you saw a bunch of like Wonderschool and similar companies kind of start off, and I think we've got two really big ones in Australia, right? Like, I think we've got actually quite a lot of edtech comes out of Australia, but more like professional edtech. But I think the version which is like more personalized education, more small groups to like learn together in groups, I think we're going to start to see more of that, even if it's stuff that's kind of like happening outside of school. Yes. And so folks are kind of like learning stuff outside of school, maybe that is just like wholesale outside of the curriculum. So they're actually much wider educated. There's an interesting kind of argument to be made, I think, that we're gonna go back to the humanities, right? We did this like lap around vocational and we're back at the humanities as people are like, cool, cool. Like surviving the AI apocalypse is all about, like, good humanities-based reasoning, right? Like, widely read, understanding a wide group of, um, concepts. So I think, like, I'm definitely thinking a lot about, like, personalization in education and kind of acceleration of certain skill sets within education. 31:07 Cheryl Mack: Mm-hmm. 31:07 Maxine Minter: But we haven't done any edtech investing kind of, uh, out of this fund. I did a little bit as, as an angel investor, but I'm really excited about that thematic on like personalization, both at the kind of high school level but also like vocational level and like adult level. 31:26 James Tynan: Yeah, that makes sense to me. I think, you know, as I said, I find it difficult, but I think if I was— gun to my head, like, where am I looking? I think it's around changing of assessment and whether or not there's a control point there around how assessment is changing. Probably in like vocational or tertiary realms before secondary. It's what's happening outside traditional classrooms and how, you know, to Sheryl's point, like what is the kind of, you know, hyper-education, hyper-acceleration of education that happens in areas that people perhaps didn't necessarily traditionally associate with the three Rs, but are nonetheless really important to people, you know, who's making a huge impact there. But even when you look at that space, Maven was a big one that came out a few years ago. Listen, they've done a great job. It's no shade on Maven at all, but it's just you look at those types of startups and they're few and far between, and it's hard to see that there's obvious kind of massive venture scale opportunities waiting. It's not like they're I don't know, like, I'm not sure that I'm jumping in with both feet into those areas at the moment. 32:44 Maxine Minter: I think it's an interesting— you like make the point on once you've operated in a place, you almost like know too much. 32:50 James Tynan: Yes. 32:50 Maxine Minter: To get excited about the space again. I'm having a very similar thing on legal tech at the moment, right? Like, I'm a recovering corporate lawyer, have built a legal tech company, have done a bunch of legal tech investing. And I think there is like, as an early stage investor that ideally is like right there on the bleeding edge as things are changing, like constantly challenging myself to think like, okay, based on what I know so far, what remains consistent, but also what's changed. 33:16 James Tynan: Yes. 33:18 Maxine Minter: Right? Like one of the big things I'm having at the moment specifically in legal tech, and I think it probably, there's maybe an interesting parallel here to edtech, but I'd be interested in your thoughts is like, for the first time we're seeing appetite on the buyer side that we never used to see, right? One of the like traditional, traditional failure modes of legal tech is that you are selling to a large, slow-moving, conservatively principled buyer that has many, many stakeholders because it's a partnership, right? And so the sales motion into that group is a nightmare. And then even, God forbid, you close that contract. You then have to get a much larger, much more slow-moving, much more conservative group to adopt the product and actually use the thing. And if by some grace of God you made it through those two crucibles and you still have money in the bank, right? They're actually fairly small on contract size. And it's like, why would anyone ever face that? But then you have Harmony. They pop up and they're like, hi, we're gonna completely ruin your business. And it's an essential event and you should probably buy our product. And the law firms are like, seems compelling. Where do I sign? Here, here, and here. Please take all of our data. 34:30 James Tynan: We've been thinking a lot about this as well. I mean, the other big example that I've never seen before is what's happening in primary care around adoption of patient notes type. 34:41 Maxine Minter: Yes. Oh yeah. 34:45 James Tynan: Ambience on it. 34:46 Cheryl Mack: Everyone said no, doctors aren't going to want to use that. Doctors aren't technologically savvy. They, they're not going to be able to figure it out. They're, you know, their writing is illegible and they like their illegible writing. Like every, everyone I talked to said this and here we are. 35:01 Maxine Minter: It's a form of data privacy and Ambience is just crushing. They are probably one of the most effectively executed businesses I've seen. 35:09 James Tynan: I've never seen anything like it. 35:12 Maxine Minter: Incredible. 35:13 James Tynan: And in Australia, you know, obviously like with the Heidis and Lyrebirds. We're seeing echoes of that same hypergrowth. I think though, in some areas, also we were just talking today about voice, a lot of these kind of voice receptionist companies that are also having this explosive growth within a relatively thin wedge. And I think what we've been thinking about is that one, let's reset our growth expectations. Like it's no longer triple, triple, double, double, double of the SaaS SaaS era. Like, there is possibility for AI-native startups to explode in ways that were very, very rare in the SaaS era. Two, though, does explosion of growth in a limited wedge equal long-term, you know, a long-term potential venture outcome? Because we've also seen a bunch of AI startups explode and kind of like Icarus, like get too close to the sun and then, you know, melt a little bit. Like Jasper is the, the obvious, you know, example of that. So, you know, the— we start to wonder like, what do you do then? Like, you know, is it you just kind of sit back and wait and just let all of these opportunities go by? I think for what we were just talking about was, okay, you want to see explosive growth. If you're seeing explosive growth in a wedge, that's amazing, and you really want to kind take that very, very seriously. But you also want to see a team and a founder that has the creativity and the capability to expand beyond that wedge, to kind of use that wedge as an initial control point and rapidly get towards some level of stickiness that's broader than kind of a replaceable feature. And probably the third thing is that, as it's a corollary, is that there are adjacencies. Yeah. To that wedge that can be very valuable. And so, Ambience is really interesting because, yeah, of course, like patient notes and that kind of thing, but it's also like billing codes. Like, it's the adjacent thing to doctor notes is we can bill more effectively because we know exactly what the doctor did and we can increase revenues. So, it becomes like an absolute no-brainer to roll it out across an entire hospital system. It is, you know, my understanding. You guys may think differently, but that was kind of like what I'm thinking about is like, those adjacencies are also really important. 37:37 Cheryl Mack: I feel like that's really interesting. Because traditionally, as VCs or as investors, we've typically been like, oh, discount this. Oh, it's a feature, not a product. I don't see this as a feature. So it's like, you know, we're not going to invest. But what I'm hearing you say is that actually, if we see explosive growth with something that just looks like a feature, but isn't a product, could still be something that we could invest in now? 38:00 James Tynan: I would say, Has that conversation ever happened at Squarepeg? Yes, like it definitely does. 38:06 Maxine Minter: I would call you out on it if you did it, didn't. 38:10 James Tynan: No, no, I always hate it though. I always hate this feature product thing because I think that things that start and look like features can be a pathway to broader sticky products, and it has happened multiple times. And really, I think, you know, writing off— listen, Dropbox hasn't been the world's biggest company, but it started with like the most obvious feature and built kind of a relatively, you know, solid business on the back of that thing that everyone could have easily discounted. And there are lots of examples of starting with something that seems very immediate and small. So I think Really, it's about what world are we in? Are we in a world where someone's literally just rolled out a feature and that's all they want to do? And frankly, that's all they're interested in and capable of versus they see this as a wedge and their vision is much bigger and you can see them actively like raptors testing the fences, trying to work out how to turn this wedge into a broader and bigger generational company. Yeah. And I think that's really the— I would try and make that distinction whenever we're kind of falling into the feature versus company divide. 39:30 Maxine Minter: I also think that I have been going back to the fundamentals of competitive modes, right? Because scale is a competitive mode. It is the hardest one to defend, but it is a competitive mode. And I think I have actually been quite obnoxious about this for the companies that we work for, which is I have been sending them tomes of materials on, I think it's really important that you deeply understand the fundamentals of the competitive moat so that in your analogy, as they are in raptor mode testing the fences, they know what a chink in the fence looks like, right? Yeah. Like something that's actually going to be useful for them to go and expand into. And I think one of the challenges that we're seeing at the moment is like, they're getting to immense scale, right? This kind of new form, at least the version that I'm seeing and I'm hearing, is like 0 to 10, 10 to 30, 30 to 100, right? That's the new triple, triple, double, double, double, which is just outrageous, right? 40:32 Cheryl Mack: Wow. 40:32 Maxine Minter: But like, that progression, they can make it pretty far up that kind of progression and then flame out because they just get hotly competed because the underlying technology is commoditized. 40:47 Cheryl Mack: And we've already seen it happen. 40:48 Maxine Minter: Right. We've seen it happen already a couple of times through. And so the thing that I feel like I'm hearing a lot in the ecosystem and I'm definitely thinking a lot about at the moment is like, okay, great wedge. As the very name would suggest, you are trying to get into something for some future benefit, right? You're not just like wanting to just wedge out for the rest of your life. Like, you are wanting to get into this space and then grow into something else. And so like, what do I have to believe you're growing into? And is it a situation like a kind of land and expand contract expansion, or are you learning something proprietary that you can build and expand into? And like, try and craft that arc for me. Something that I feel like I've been watching as well in the ecosystem is there was a bunch of people that were just like, me included, you're meeting a bunch of companies where you were like, Good God, you are at like no millions and then you are at multiple millions in the pace of time between when I first had my conversation with you and you're closing around, right? And I've never seen anything like that before, so please take my money. And now we've seen enough of them that we've seen a couple that are like, you know, have done that growth and then realized it's actually not a defensible position. Yeah. So we've done that early market testing, that development, and other very enterprising people have come along, watched you do it, and they're starting to Uber their Lyft. Right. And then, so maybe they will be the first to find that competitive moat that is like possible in those spaces. And I, my hot take is I reckon we're going to see a bunch of companies here be Google to the search market. Right. There's going to be like— Mm-hmm. 7 or 8 people coming in that do all of the work of like market testing, product development, work out how it should work, et cetera, et cetera. And then you'll just have a like king among companies that's going to come in and build in the space after someone else has done all of that work if you don't get that competitive moat right. So I might be kind of, I might have a hammer and everything might look like a nail to me, but my current hammer is competitive moats. So if you speak to me in the next probably month or two, I probably am going to say those two words together. And nerd out about them. But I just, I feel like— 42:55 Cheryl Mack: In a question. 42:57 Maxine Minter: In a question, yeah. And I feel like that is so much of like how you get to conviction that one of these wedges actually expands into a huge company as opposed to just like a sick feature. And I think that's what Mike and the Ambience team worked out really quickly, right? Mike is just obscene as a founder. Like he is so good. And I think that they had views on competitive moats obnoxiously early in their journey. And he's just like playing this out kind of blow by blow in a fairly like omnipotent way, which is kind of terrifying to watch. But I feel like you're like watching mastery at work when you're watching him operate that company. 43:35 James Tynan: Yeah, I could not agree more. I mean, there's one reading of what we're saying, which is like, hey, this is just VCs coping with the fact that they didn't invest in some of these fast-growing companies. 43:45 Maxine Minter: Oh yeah, yeah. 43:49 Cheryl Mack: 100%. 43:50 James Tynan: I genuinely think it's the right way to think about it. 43:54 Maxine Minter: Right. Yeah, yeah. Just cry over the company now that's at $100 million and you met them 6 months ago. Yeah, yeah. 44:01 James Tynan: Exactly, exactly. 44:03 Maxine Minter: Shed a tear, shed a tear. I feel like we could have this conversation for another 10 hours, right? There are like so many additional threads. We'll just have to have you back on the podcast to follow some of these avenues down. 44:15 James Tynan: I'm happy to. 44:16 Maxine Minter: But we're sadly out of time. So our question that we ask everyone: what is your biggest big cojones moment? A moment that you felt really brave. 44:25 James Tynan: The one that came up, I don't feel like I was particularly brave, but it's certainly the decision that paralyzed me the hardest for a long time. So maybe I was the opposite. I wasn't particularly brave because it took me so long to make it. But My plan, you know, since selling the company, going to McKinsey, going across the US had always been go to Stanford because it's in the Bay Area. And then from there, you know, go work for startups. And the decision to not go, like, it was really hard because it was like, you know, when you've got a life plan, you kind of see that's the way things are going to go and it's Yeah, I struggled so hard to not go. And it was ultimately, I think, the right decision because I was at Khan Academy by then and we were taking off and it was just, you know, it was amazing. But yeah, that was something that was— I remember speaking to people and them being like, what are you talking about? Like, you know, you are crazy. And feeling like, no, this is crazy, but I think, I think it's the right, the right move. So yeah, that's probably the— I don't know, it doesn't feel like big kahonas in, in, uh, retrospect, but it was, um, it was a tough one. 45:44 Maxine Minter: I have to say though, when you're in it, right, like, I have now met a bunch of people making similar considerations or dropping out of university, right, like going and then not completing the swing. And I think in the era that you were doing it, it required an enormous amount of bravery, right? Because it was so prestigious at the time and very few people did it. Whereas like now I think, you know, more people feel more comfortable about it. 46:09 Cheryl Mack: You could, yeah, they pay people to not go now, right? 46:12 Maxine Minter: So yeah, how's that? 46:15 James Tynan: But it kind of gets back to what you were saying, Maxine, about there are two learning systems. One of them is based on prestige and social sorting, and the other is based on real learning of both metacognitive and practical skills. And I think the lure of the former is so intense, like especially when it comes to those just incredible brands where you know that people respond to them and that they will tangibly change your ability to open doors and all of that kind of thing in the future because they're just so easily transmissible to so many different worlds. Yeah. Yeah, that you have to take a step away from that prestige and look at kind of really what skills do I need and back. And it takes a bit of faith, I guess, to kind of back yourself and say like, no, no, these skills and what I'm learning here will— I'll be able to open those doors in other ways. Yeah, it's a tricky one. 47:09 Maxine Minter: Yeah, 100%. Yeah, I think it was probably the right call by the sounds of it. Done some incredible things. 47:14 James Tynan: I know. I may be out of a job tomorrow and wishing I'd Headstamp it on the resume, who knows. 47:20 Maxine Minter: You'll be fine. I don't see that in your future anytime soon. 47:25 Cheryl Mack: Thank you so much for joining us today, James. 47:28 James Tynan: Oh, thanks for having me. It was really fun. 47:30 Maxine Minter: Thank you so much.
First Cheque with Cheryl Mack & Maxine Minter
Presented by Deel & Pear Tree 
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