Judith Dada, general partner at Visionaries Fund: 'I'm deeply troubled by what lies ahead for Europe'

Hello.

0:02

As usual, it's your host, Amy Lewin. Joining me today in London is Judith Dada, general partner at European VC Visionaries Club newsletter, author, mother and setter upper of numerous side projects. Judith started her career in venture almost a decade ago at LA Familiar, the Germany based early stage investor, which later went on to merge with US Megafund General Catalyst. She's now come full circle, joining forces with LA Familiar founding partner and and fellow former Sifted podcast guest Rob Lacker. At Visionaries, their portfolio includes plenty of companies that are on a tear right now. Lovable Black Forest Labs, Nan Solve Intelligence and Tandem Health. And their thesis that Europe is in a fantastic position to shape the next wave of disruption in business seems more relevant than ever. Judith, it's great to have you here in person. What brings you to London?

0:02

I was here for a little lecture and session at Cambridge yesterday for a lot of students because I'm doing a lot of work with students these days. And then there's a ball, I believe, that we're both attending tonight. The Legend Scala by Matt Miller. So lots of things that are happening.

0:53

Yeah. So Matt Miller, formerly of Sequoia, now set up its own fund, Vantic. I got a last minute invitation. Judith, I'm sure you've been on the guest list for a while, but it's going to be a black tie ball at the Natural History Museum with Stormzy on the guest list, which I'm very intrigued about and I will report back on a podcast soon.

1:08

I did listen to some of his songs yesterday, just in an effort to be able to do the wooing.

1:27

Perfect. Great. I'll let you know how this all goes. It's been a busy time for your portfolio. Black Forest Labs raised a big round in December. The AI medical scribe company, Tandem Health, I just noticed, has made an acquisition. If you look at the companies that are really sort of pulling away and leading the pack, what would you say they're doing differently from others?

1:32

I think it's a really good question. I think it's a really good question. At a point in time where AI asks more of all of us rather than less, right there is this notion that AI is coming to do all the work, so we kind of get to relax and AI is kind of augmenting us. I think that's not true. I think the very opposite is happening. AI is giving everyone superpowers, which vastly increases our output and productivity. But it also means that the race is ever fiercer and companies have to fight really, really hard. So if I look at the companies that are really able to break through the noise, it's teams that are able to navigate this breakneck speed and to, you know, I always say stay ahead of the exponential kind of development curve of AI. So it's teams that are extremely focused. It's teams that have incredible resilience, and teams that are really versatile. Right. In terms of being able to shift what they're doing from one date to the next, but also in a way that allows them to lean into the exponential, understand what it means for how they're positioning without losing sight of who they're serving, which are customers, which are human beings, which are people who are stuck in their own kind of realities, who don't think about AI and the exponential every day. And so kind of being able to walk that tightrope, I think that is really something that the best founders are doing a great job at. It's a job that asks a lot of them. You know, I think it's never been harder to be a founder in many ways, but it's also never been more, you know, it's never been as powerful to be a founder and to be achieving a lot in a very, very short period of time. We're now seeing companies that are able to reach 10 million ARR over the course of just, you know, months, you know, something that took them in the past many, many years. And so the impact that they're having is incredible, but they kind of need to rise to the occasion. And a picture that I always have inside my head is kind of dragon riders and someone who's able. AI is the dragon, and it's this vast, big beast and very powerful. You need someone with the courage and the tenacity to kind of jump on its back and be able to ride it.

1:55

And you're investing pretty early stage. So what? Maybe three things, if there are. If there is a kind of tick list that you're looking for in founders before they've really maybe encountered a bunch of those challenges to know or to feel confident that they might be able to ride the dragon.

4:04

Yeah, I think more and more, we are really compelled by founders where it feels like their whole life led up to starting this company. And oftentimes it's a short life. Right. We're oftentimes backing very young founders. But there is an obsession, almost a red thread that kind of goes through their life that kind of leads up to this moment in time. And just the authentic obsession that we see in founders of having always been interested in something or having always kind of already Followed a passion when they were very young, having tinkered with systems, having kind of built web shops. I think that is something that we increasingly, increasingly compelled by. I think the second really is, you know, this. This fierce we. We always call it in German, there's a word zugzum tor, right? So the ability to just get things done, to hustle is another word, right, like hustle culture. And I think it's a mindset. It's seeing the world not in terms of obstacles, but in terms of things that you can achieve. And it's almost a switch that needs to go off in your head where, you know, you suddenly realize that you can just do things, which is this famous, you know, slogan that everyone in Silicon Valley is using. So just this relentless drive, I think is something that we also look for. And then last but not least, I really think is just ambition, right? I think we live at a time where you can have crazy ambition because a lot of things are possible now. And founders whose ambition grows over time, who in the beginning, you know, think that they can achieve something, but the more proof points they put behind it, kind of the more fuel it gives for their ambition to grow. And, you know, because we always typically meet them at a point in time, sometimes we have the privilege of really seeing them, you know, at several moments in time because we've met them maybe when they were still on their last gig or still working at a company. And, you know, in the best cases, we really have kind of this longitudinal observational study of seeing how the ambition of founders grows as they put more proof points behind what they're doing. So I'd say these are three things that we are incredibly drawn to. Bye.

4:23

And we're speaking a week after Anthropic released new tools to automate legal work, which sort of sparked this sell off at publicly listed software companies. And I expect this is not going to be the last that we'll see of situations like this. How do you think your portfolio will fare in these situations? Or maybe a better question is like, what? What does good future proofing against one of the AI giants coming along and releasing something that at least seems similar to what those companies do?

6:23

I think it's the question that every single VC is asking right now. And I think if I were to sit here and give you all the answers, I would be kidding myself because a lot of this is kind of happening in real time to all of us. But let me try to give you the best way of kind of sifting through the noise that I can give. Right now there's an exponential development that is happening in AI. It is important for companies to stay ahead of that exponential, which is to ask the question, if I assume that models get better and better, how does models getting better and better make my company better versus irrelevant. Right? And so building a surface area of software and a value for the customer that is actually fueled by Anthropic's model getting better versus, you know, relies on, you know, them kind of staying at a certain capability threshold, I think is very, very important. That's the first thing. I think the second thing is it's important to realize that, you know, Anthropic OpenAI a lot of the model companies are already operating at such large scale that they have a lot of surface area to cover, they have a lot of customers to serve. It won't be in their interest, just like it wasn't in Google's interest, you know, kind of in the past, to go very, very, very deep on certain verticals. I think it in that case will make sense for them to partner with startups that are able to be the face to the customer, to be the face to the human, you know, and really go deep into the value creation and the support that is required to give customers value. I think it's the AI world lives in, you know, kind of exponential curves versus the rest of the world lives in adoption curves. And adoption curves, you know, only move at the speed of human change. And humans are bottlenecks. You know, we, you know, we don't like change. We, you know, like our kind of old ways. And so it needs for kind of that translation element. And I think that's where a lot of companies can come in. Now, having said this, I think every single company needs to ask themselves not will software be used in the future because we will still use software, but what kind of software and what kind of value creation. And I think there's no beating around the bush to the fact that in the past we built software for humans, so we built UI and UX interfaces for humans to click buttons and perform certain actions and workflows. That is changing. Software is now moving to a world where it's in the future primarily going to be used by agents. And agents think about the world in very different terms to humans. Agents, you know, kind of read markdown. They're able to, you know, digest a lot more information in a very, very short period of time. So of course the nature of software needs to change and the kind of tightrope that companies are walking is transforming Kind of the existing distribution that they have, all the existing customers, all of the existing kind of surface area to one that works in this new world. And that's, you know, in many ways kind of the classic innovators dilemma, which is why a lot of, you know, kind of legacy SaaS companies on the one hand have an advantage because they have distribution, they have customers, they've served them, you know, in a valuable way. But they'll need to navigate transforming, you know, kind of to this agent first world versus startups are coming in. They have none of that legacy, but they also have none of that distribution. They need to build that up. And so I think that's the world that, you know, increasingly these companies are navigating. I think any company that is not very, very seriously questioning everything that they did in the past, questioning all the ways in which they've built software. I think Satya Nadella, the CEO of Microsoft, you know, said it correctly and he said that a lot of software is kind of moving into crud systems. So create, read, update, delete, you know, kind of the more classic, you know, database systems that sit in the background and kind of agents sit on top of those systems and do the valuable work in that new paradigm of how the world is going to look like and the transformation that is required. How can you kind of be positioned accordingly? I think that is the big, you know, kind of tightrope that companies are walking. But I think a lot of companies will, if they see the world, you know, in a clear right way, will be able to position accordingly.

6:56

Do you think partnerships with the, whether it's the AI giants or huge mega software providers, do you think that's more important for this era of companies than others?

10:39

I definitely think it makes sense to be close to the exponential. And being close to the exponential means getting early access to models, really being able to understand how the kind of capability surface of models increases 100%. Right. I mean, at the end of the day, that is the, the kind of the oil of the 21st century is, you know, kind of token inference and model capabilities. So I definitely think that, you know, spending as much time with the teams, with the researchers on really trying to understand what is not just here today, but leaning into the exponential. And I almost, in many ways, you know, in many ways there's like a dichotomy where you have to worry about what's happening today because that's what your customers care about. Again, people live in adoption curves, but in many ways you need to not care about what's happening today, but what's happening 12 months down the line? So you need to lean into the exponential. And so that's, you know, this, this dichotomy and, you know, the superhuman ability that founders need. On the one hand, you know, having one really close ear to the customer, but on the other hand, keeping a very, very close connection to how the frontier is, you know, kind of downstream impacting all of the work that, you know, you're doing today. Um, so I think you need to be doing both at the same time.

10:53

Yeah. And if it does start to look like a portfolio company is not able to keep up with that and is, you know, is not going to. Is not going to make it. Do you already have a kind of plan in place or, like, what's your thinking around when to stop backing that company or, you know, pull back your support for that company or maybe, you know, sell some secondaries if, if that opportunity arises, encourage them to exit. Has the sort of industry reached the point yet where investors are putting in place their exit plans? I feel like just after Covid, there was this sort of awakening in the industry that investors were good at doing the investments, but not so good at sort of making money from the investments and knowing when to start getting out of companies. And that was a whole conversation. I wonder how much is that beginning around AI companies?

12:01

I think it's definitely starting, but we're early. I think you point to something that's very interesting, which is as soon as something becomes broad consensus, it's almost too late to be able to sell the companies that you, you know, that are struggling because the market now understands and prices that in. And so the multiples that you'll be able to get for, you know, even very decent revenues and, you know, decent growth, you know, are going to be disastrous, and it's just not going to be as interesting to sell them. So I do think, you know, every investor should try and ask themselves how they can be ahead of the exponential and kind of this trickling into the market, as we've already, you know, recently with the kind of stock market tanking. And so that are, you know, those are definitely conversations that we're having at Visionaries Club now. I think that this is a discipline that the market adopted and didn't quite lose after Covid. You know, I think the fact that we know that we're investors, and on the one hand we're investing and we're backing the companies that really, really work, and we're throwing our whole weight and the whole capital behind them, but we're also constantly harvesting from the rest of the portfolio and you know, really thinking about all the different mechanisms through secondaries and so on and so forth that allows us to create value for RLP's earlier on. That is a practice, that is an ongoing practice at Visionaries Club. And we were always kind of in the business of trying to understand which companies may be worth selling, which companies are worth doubling down and we do content portfolio reviews and so on and so forth. But I do agree with you that by and large I haven't quite seen the moment in the VC industry where this becomes consensus because at that point in time I think it's actually going to be quite difficult for a lot of the kind of legacy companies that are struggling to find new home.

12:54

Yeah, and that was something else I was going to ask was, you know, the kind of SaaS, unicorns of 2021, 2022, you know, lots of them, I mean a bunch of them have announced, you know, we've reached profitability, we've done this. And then a lot of them have seemed quite quiet on the, you know, there haven't been new funding rounds, they maybe haven't done announced secondaries. Do you think we're going to see a sort of huge amount of value wiped off of some investors, older funds?

14:31

I could see that. I could see that. I think that's certainly something that I think about. We've seen a drought in terms of being able to exit these companies. IPO markets have been sluggish, M and A has been sluggish and I think it's caused by, you know, for better or for worse, just also a lot of distraction. Right. I mean, every company is as busy as ever because everyone is navigating and figuring out what does this mean for us, what does this mean for the way that we acquire businesses, what does this mean for our own in house capabilities? Everyone's trying to get on the adoption curve, everyone's trying to transform. And so, you know, even just the mental capacity for being able to understand which assets are interesting from an acquisition perspective and which aren't, you know, is this something that's difficult to navigate for acquirers? I think at the same time, you know, we have seen kind of early signs of anthropic OpenAI wanting to go public, you know, and so I think there is, you know, signs on the horizon that the public markets at least are going to pick back up. I also think that would be wonderful because today a lot of the surplus or the kind of growth that's generated by these companies is locked into the private market, where I would hope that these are companies and the growth that, you know, is accessible to a much broader part of society. I think that would be a really commendable development in light of the concentration of power behind these companies. But kind of going back to your question about these private SaaS, companies that are quite big and we haven't heard about them, I do think we're entering a world of potential hyper competition where AI gives everyone superpowers, but that also means that everyone is now able to compete and you're actually able to compete in many more things than you were able to do before. So you can broaden the surface area of your value creation. And I think that will lead to all sorts of weird dynamics where, you know, I do have a hard time believing that you'll be able to charge the same price for doing the job that you did, you know, a year ago for something that you do tomorrow. I think you will either need to grow the value that you're bringing to customers to be able to maintain that price point, or you will need to lower your price point. And this is something that we've, you know, kind of seen in China. I think China is, many ways, a fascinating example because it's a region that has been marked by hyper competition for a long time in consumer electronics. Chinese companies are incredibly competitive. Most European or Western companies would have no business trying to compete on consumer electronics because the market is so perfectly optimized. And because of that optimization, margins have been very, very, very narrow. I always use the example. If in the west you have two companies that are innovating and, you know, both are producing something at the cost of €5 and are selling it for €10, both make 50% margin, €5 margin on it. Now, if one of them finds an innovation, let's call it, you know, AI, and is able to drop the price of production to €2, what would they do? They would likely lower the price to maybe €8. They now make €6 margin. They're able to take more market share, you know, and kind of they grow shareholder value as a consequence in China, that same company, because it's anticipating so much competition, you know, kind of breathing down its neck, but probably in the face of now being able to produce at 2 Euro cost, drop the price to 3 Euros, right? So take lower margin than before, but kind of, you know, in an effort to A, take more market share and B, knowing that they won't be able to defend, you know, this lead because Other companies are going to come crowding in. And so I think that gives us like an early taste at what I think may happen with AI is just hyper competition, which means the bar is getting raised for everyone. You really need to step up your game in terms of the value that you're creating for customers to maintain the price points that you have been charging and that have been very comfortable. Right. SaaS was an amazing category with all this margin and kind of predictable revenue growth for many, many years. I think a lot of those old playbooks, a lot of the kind of metrics that we looked at are completely not just being questioned. We can kind of toss them out the window. And we need to think about ways in very, very different ways. And I do think that particularly challenges companies that have a lot to lose, but are not maybe agile enough in terms of kind of the innovative capacity to really be able to, to kind of lean into the exponential. So it's going to be turbulent waters ahead, I think, for a lot of investors.

15:01

Are you getting lots of secondaries offers? Are you getting other investors come to you and say, I want a piece of these companies?

19:08

Absolutely, yeah. This is something that happens on a weekly basis, but we're not, at least for the kind of front runners in our portfolio, we're not interested in selling right now.

19:16

Visionaries last raised 400 million euros across several funds back in September 2022, which was before you joined. And unless my maths is completely off, that would suggest that you are probably already out raising the next funds.

19:25

We're not out raising the next funds yet, and we're still very focused on deploying and supporting the portfolio. But of course, at some point that will be a topic where we're very lucky to have incredible LPs who have been with us now for several fund generations. And so, you know, it's something that I look honestly forward to. But right now, I mean, the market is keeping everyone so busy that were not yet in kind of fundraising mode, but yeah, down the line that's going to happen.

19:39

And how might the next fund or funds differ from previous fund generations? I mean, you weren't a part of those and the world was very different. Is there going to be a slight change in focus for Visionaries? Would you go bigger? What might it look like?

20:03

Yeah, so our focus has always been back in the best founders. The rest is a function that follows that. And so five years ago, that was a lot of, you know, classic SaaS. Today it's AI. Tomorrow it may, you know, be whatever, you know, AI is surface areas then you know, agents or you know, kind of completely new business models that we can't even wrap our heads around yet. So we are flexible in terms of you know, kind of what the investment mandated. We're not kind of thematic in that way that you know, we don't think of our team as like he is the fintech investor and he is the health tech investor but really we're all people investors, we're all, you know, founder investors. Now what we have been doing is we have been, you know, really doubling down at you know, I think the great support that we've been giving, giving companies and you know, kind of the track record of the portfolio in terms of, you know, really only writing lead checks at the seed stage. You know, we're very kind of focused on being the biggest investor and you know, really building a concentrated portfolio but also exploring ways of playing a bigger role at kind of later stages, still early stages, but kind of series A, series B. So that is something that we also really enjoy and that we see as a very kind of natural extension of our work at the seed stage. But we haven't yet decided on what exactly that will mean in terms of fund strategy. But we certainly see and we're very confident in being able to play a really great role for founders not just at the pre seed and seed stage. I mean Solve Intelligence is one example where we just recently, you know, kind of let their series be and it was a very, very competitive round and you know again it's, it's concentrated. We don't do this with you know, 100 companies a year. We do this with a few companies where we have really high conviction but where we think we can be a fantastic partner also at later stages of their growth to continue to support them.

20:19

You're not ordinary no. 9 to 5 meal deal lunches, meetings about meetings, compulsory team building living for the weekend. You're made for more for the extraordinary and you need an extraordinary bank. HSBC Innovation Banking exists exclusively to help visionary VC backed tech and life science businesses achieve their ambitions. From pre seed to IPO and beyond. We provide custom solutions co created by actual industry experts to help you scale delivered by a dedicated team you can call whenever you need to find out why 4 in 10 UK unicorns have chosen us at hsbcinnovationbanking.co.uk One thing I've recently been speaking to a bunch of European investors about is their US strategy. How much time do you spend in the US and how sort of important is that? Why Is that important? Very, you know, very Europe focused fund.

22:07

Yeah. There's a thing called the San Francisco Consensus, which is, you know, kind of the, the, I would call it the crystallized belief of the exponential superintelligence curve. And you can only really feel it when you spend time in San Francisco and you spend time with the founders and the investors there, because life just moves at a different speed. I find it exhilarating. And so we try to. My family and I, my husband is also a founder. We typically take our kids because we now have two young kids. So it's a bit difficult with travel at least, you know, like long distance travel. And so we take them, you know, for a couple of weeks at a time, typically twice a year, and just get an Airbnb and spend time, host dinners and just immerse ourselves in San Francisco culture and the ecosystem. I think that's hugely important. But at the same time, you know, I think there's been this strange narrative in Europe that, you know, to succeed, a founder at the earliest stages needs to go to San Francisco. And it's been propagated by a couple of really, really notable voices. And I'm just sometimes scratching my head because I think that's just honestly quite bad advice. San Francisco is a hugely competitive ecosystem. Any talent there has, you know, a host of companies to choose from when it comes to working for them. They get salaries that are absolutely just kind of mind boggling. And so as a kind of European pre seed founder, oftentimes a very young founder, I think what I've also seen when spending time in San Francisco and catching up with a lot of them is a lot of them are really struggling because they're not able to find the talent and because it's just very, very expensive to build something. Many of them are still also serving European customers. So they're kind of working these really odd hours to be able to do that. And I think San Francisco in many ways is amazing. And I would recommend that anyone working in tech spends time there. It's almost like the mecca that we should all be going to at some point and to take that dose, to raise your ambition and to kind of understand, really if you immerse yourself in that culture, what is possible. But then to go back to your local ecosystems to build there, because I think a lot of founders send a much better chance and are much more competitive because they really stand out in their local ecosystems relative to San Francisco. So this like, you need to go to San Francisco to be successful. I think it's Just for a lot of founders, not for everyone, but for a lot of founders, pretty bad advice.

23:03

Who are the key people you try and. Or key types of people you try and meet when you're there? What kind of people do you invite to your dinner parties?

25:16

Yeah, so it's a lot of founders. We were hosting. We were hosting an event together with our friends at Crowndom, I think, and Robin Spiegel, who's a great founder who's based there. I think it was like 70 European founders who are building there that showed up. Some of them were just spending a few months there. Some of them are building their, you know, full time. Then, you know, it's a lot of, you know, just meeting the partners at Lightspeed, at Andreessen, at General Catalyst, I mean, all the funds that were friendly with Sequoia and spending time with them, just building the relationship. And then there's a couple of people, you know, more operators that, you know, from the Reddits to, you know, kind of big AI labs that we catch up with to just try and understand what's happening at the forefront of innovation. So it's always a mix of different people.

25:24

So it's more kind of a soaking up of ideas and building those relationships for, I guess, portfolio companies who might, you know, you might need a lead for their later stage rounds. And that's the kind of primary.

26:05

Yeah, 100%, but also just experts to connect them with. Right. It can be someone working in AI chips, It can be working someone working in AI research. It really is, you know, at the end of the day, there's, you know, as VCs, we kind of switchboards, we understand a problem and we connect founders to who we think is the best expert. You know, I'm not a fan of thinking that, you know, I'm the, you know, the end all. Be all of, you know, the wisdom of the world. And so I like to think of myself as a switchboard that can, you know, perpetually connect to the best people and thereby continue to entertain a very diverse set of people that could be valuable for founders down the line.

26:18

And I feel like there's a kind of narrative that it's a sort of marker of success as a European fund when you start to get a lot of US LPs or when the kind of majority of your LPs are American. Would you agree with that? Is that an aim for visionaries as you move through generations or, you know, you've always had a strong history of having sort of very. Lots of an interesting mix of LPs, traditional sort of European industrial businesses, et cetera. How do you think about that?

26:53

So it's a really interesting question. We have some US LPs and they're fantastic. You know, we, we have a, a wonderful partnership with them. But what I sometimes scratch my, my head about is we have these, you know, kind of nationalist boxes in which we think, or national, I should say national boxes in which we think about LPs. A lot of the funder funds in the US actually have European LPs themselves. So I mean, capital in many ways, you know, doesn't know borders and is a very, you know, kind of flexible global category. So at the end of the day, we care about border partnering with the best LPs with LPs that, you know, have built great institutional track records, have built great, you know, businesses when it comes to the family businesses that are backing us and have all this, you know, kind of longitude, like this legacy and, you know, all these insights and connections. We care about, you know, partnering with LPs that have really worthy causes behind them, be that university endowments or foundations that, you know, use the gains for really, really worthy causes on this earth. And so that's really more the lens that we're coming from. And then if we partner with the best people there, you know, the trickle down then tends to be that a lot of that actually also, you know, kind of benefits Europe in some way. Now, having said that, would I wish for a lot more institutional European capital to kind of play a role in that league, to a be interested in the VC asset class and to be, quite frankly, be as sophisticated and great and trusting a partner as we see of the USLP is being absolutely, you know, I couldn't wish for more for this, for this industry in this continent. I think we're still lagging there. But, you know, first and foremost, as is the case with founders, we want to partner with great people who stand for great causes. And we then think about kind of country boxes as a second criteria after that.

27:24

Yeah, I feel like we're very much in an era where the narrative around sort of Europe and European tech or the noise around it feels louder than ever. And it's very split between people who are super pro Europe and, you know, Europe's amazing and why would you go elsewhere? And it's fantastic to be a European founder. I'm proud to be a European founder. And then people who are sort of saying we are slipping behind faster and faster than ever. What would be your sort of top three requests for European Policymakers or, you know, people who can, like, really change the dynamic over here.

29:11

Yeah. So I think, first of all, let me address what you said. It's really interesting. There's a performative nature to pessimism, optimism that's going on on X and LinkedIn that is just quite frankly, egregious and not helping anyone. So the pessimists are like, you know, Europe is entirely effed and, you know, everything is going to shit and we have no chance of catching up. And the best thing any of you can do is pack your bags and go to San Francisco. And then there's the, you know, performative optimists are like, it's great and we have no problems. And anyone who dares to say that we have a problem is delusional. It's also not helping because that's not true. We have really, really big structural issues and really big problems. Macron yesterday called for a state of emergency. I think he's absolutely right. I think we are in an absolute state of emergency on this continent because the entire value creation that the future hinges on hinges on AI. And today we don't even play a nearly as big a role in AI as we should be playing. And I do not understand. I, quite frankly, it's just beyond me how more people cannot wake up in the morning and make this the single biggest goal of their life. You know, kind of in pursuit of a future that is worth living for all of our kids is solving for this bottleneck and this, quite frankly, like, lack of any meaningful anything that, you know, Europe is in right now. And so how does this come back to the kind of, to the policy, or I would call it kind of the change maker realm. I would say that we're now in a phase where the game is on, the competition is on, the exponential curve is developing and we have a very, very limited time window. I mean, it should have happened yesterday. To be able to catch up and compete, that requires what I would call hyper capitalism. This is not a term that Europe likes. It's not something that we stand for. But I think in order to be able to play a role in catch up, we should be doing everything. We should be throwing our weight behind the best talent, be it European or kind of talent from anywhere to come to Europe to build companies that are competing at the forefront of AI. I don't just mean application layer, I mean model layer, I mean kind of infrastructure chip layer. We should be doing anything that we can to play a role there. And at the same time, we should be mobilizing capital to invest in companies that are in general at the forefront of this curve, you know, be that in the US or elsewhere, so that we can participate in the upset of those companies even in the absence of own companies that we have. I think that is kind of this phase of hyper capitalism that we should move to in Europe for the next couple of years such that, you know, as society transforms, as the economy transforms, we can actually reach a phase that I would call transient hypercapitalism or post hyper capitalism that is actually predestined for Europe because that is exactly what we stand for. We don't stand for the same rules that the US stands for, where the fact that you are ill may be kind of a bankruptcy statement for your life. I don't wish that on Europe. But we can't ignore the fact that right now we need to compete in order to again have a seat at the table and have a say in forming a future that works for all, not just for a few billionaires and not just for a few companies. And I think the urgency and you know, the deregulation, the mobilization of capital, the mobilization of talent, we're not nearly taking it seriously enough. We're not thinking nearly, you know, as big as we need to think. People are taking, they're listening to this information one side of their brain, but they're not taking it seriously in the other part of their brain. We're kind of, we're seeing the numbers, we're seeing the data, kind of shocked for 20 minutes and then we roll back over, we go back to sleep and we just go back to how things were. So I'm not sure what it takes. I believe it's like an incredible shock moment. Maybe it's going to be some model capability, maybe it's going to be something else that needs to happen for us to finally be jolted awake and stay awake. I think we are in a state of emergency and we're not nearly acting with the urgency that is required to overcome it. And we need to face a lot of very, very uncomfortable truths if we want to even have a semblance of still turning the rudder, turning the boat around into the same, into the right direction.

29:49

Do you think investors founders are doing as much as they can to instill that sense of urgency? Or you know, how much can our industry do unless the policymakers, the presidents, the prime ministers, etc, sort of say this is number one priority, let's sort this out now.

33:47

I think we can be doing a lot more because you know what our industry has been doing, by and large, it's kind of saying, I knew we can't really play a role at the model layer and at the infra layer. So let's just focus on great application layer companies. And application layer companies are really important. AI adoption is really important. It's a really important piece of the puzzle. It is not the entire puzzle. So I feel that in many ways, we have gone back to the easy realities, to the safe realities of, you know, the things that are already working, because we have amazing application layer companies that are competing at global scale. We have the Lovables, we have the N8Ns, we have the Black. Black Forest Labs is actually a model company, but we have these examples. And so it's so much easier to just say, let's just back more of these. How can we come to a point where we say, yeah, let's back more of these for sure, but let's also have the urgency to go where it really hurts? And the weird thing is that this is not easy. I'm not saying, oh, competing at the model layer in 2026 after having seen, you know, what Seed Dance has just put out with their video model, after Having seen Opus 4.6 and Codex 5.3 is easy. I have no, I'm not delusional. It's really damn hard. But if we accept that the future, if we actually not accept, if we believe that the future is going to in some way be dictated by this technology and by what is happening here, then even an 0.1% chance of competing should be worth it. It's almost, you know, I always compare it to the Olympic Games. If you had to compete in the Olympic Games tomorrow, Amy, and you had to compete in, let's say, archery and fencing, and you knew that to some extent your life depended on not losing, not coming in last place, what would you do? Would you just say, it's impossible to compete in the Olympic Games, so I'm just gonna drop down dead right now because I have no chance of competing? Or would you, with every single second of your life, with every day, try and get as good at fencing and as good as archery as you can get? Not because you know it's going to be easy to compete, but you know that everything depends on it. And so that's kind of the seriousness that I'm lacking in Europe is we kind of, on the one hand are all saying, oh, AI is going to be so powerful, and so on and so forth, but we're not really taking it serious because if we take it seriously, we should be doing everything we can. We should be mobilizing, I mean, in a mobilization effort that, like, Europe hasn't seen since, you know, you know, the last world wars and trying to fight evil on this planet. That's the kind of urgency that this fight requires. And so unless we don't just read Macron talking about a state of emergency, but actually act like we're in a state of emergency, you know, I'm not sure, you know, I'm that hopeful for our future, and I'm someone who is an optimist. I would love for us to have the urgency for me to allow my optimism to, you know, kind of take hold of me again. Because right now I'm just, if I'm honest, I'm very, very deeply troubled for what lies ahead.

34:10

What would you have Macron do? Would it be give even more money to Mistral or what does that look like if a country leader, say, really took it upon themselves to make stuff happen?

36:57

You know, there's a host of really, really incredible AI researchers, AI talent around the world. I would wish for the strongest European political leaders and, you know, the strongest European company leaders. A small group of people. I'm not talking, you know, Europe often thinks in terms of, like, something for everyone. In Germany, we say, everyone, everyone gets a flower pot. That's not what I'm talking about. This is not like the nth city needs a new accelerator. This is a small number of people coming together and actually asking, what would you need to relocate your company to Europe, to re headquarter here or to start a company here? What are the things that you require in terms of capital, in terms of cutting red tape, in terms of attracting talent? Maybe we need to think about things like, you won't pay taxes for a certain amount of time. You won't have to do X, you won't have to do Y, really. And then in a coalition of the willing, not trying for every Nth European company to agree to this or like, European country to agree to this, but kind of forming a sandbox, whatever that sandbox looks like, to say, this is our sandbox, because we know how important this is. We know that this goes against probably 10 rules and things that people would find fair. But in order for us to keep being a country that can be fair, to keep being a continent that can be fair, we need to win here. And so for the time being, we need all of these exceptions to apply to, you know, this group of people, to these companies in order to be able to get them to compete. I think that's what I would hope for. I think in many ways, you know, we have a lot of summits and we have a lot of photos that are being taken, but I always wonder, you know, what's the outcome, what's the urgency? What is the actual things that are being put in place for us to make this a reality rather than just a great headline in a newspaper? And so, yeah, that's, I think, you know, if I was Macaw, that's what I tried to do.

37:09

So talking of talent and to set the record straight, I think I would want to be an Olympic figure skater right now if I got to choose. Very impressed with them. You are part of the founding team of Relativity Collective, which is a consortium of top technical universities, teamed up to connect founders across borders and hopefully sort of supercharge Europe's startup ecosystem. Why? I mean, it's connected to what you've just said, but like, why did that come about? Why do we need something like this right now?

38:56

I deeply believe in the relativity of ambition. If I look at my own life, there's a couple of moments that really mattered in terms of making Judith who I am today. I studied at cdtm, which is a small study program in munich that takes 25 students from the technical and the kind of more social science oriented university, puts them in a room together and, you know, kind of makes them innovate with technology in a very pragmatic and innovative way. The people that I met there were the people who showed me what is possible in life. And my ambition and my sense of excellence grew as a function of being exposed to those people. And so I think there's a virtuous cycle behind ambition and excellence where more ambition feeds, more excellence feeds, more ambition feeds more excellence. I believe that at the end of the day, people like Daria Moday, Sam Altman are really important because they show us that there is a way. They show us that something is possible. I don't however, think that they make us better on a day to day basis because I can't just call Dario and, you know, tell him about my day and ask his advice. And so yes, they see us that a path is there. They don't tilt the trajectory of our life upwards. Who tilts the trajectory of our life upwards is the 30, 40, 50 people that we spend the most time with or that we have close links to. It can be someone we went to school with, it can be someone we went to uni with, a friend of a friend. It can be an Aunt or an uncle. Because if they achieve something, then I actually, the switch that I talked about earlier, that goes off in my head in terms of me now understanding that I can just do things. And so Relativity Collective is an effort to say, we've been doing really great work at the local level in London, Cambridge and Oxford, in Paris, in Zurich, in Munich, in all of these places, Stockholm, Helsinki, to foster the local innovation ecosystem. I think we've been doing excellent work there. But what we still really suck at or struggle with is the fragmentation of Europe that is such that the most gifted person, young student in Stockholm, wanting to start a company, only knows other people in Stockholm. He never gets exposed to people in Zurich, never gets exposed to people in Paris. And so the idea was, well, how can we break open the local optima that kind of put a ceiling on ambition and excellence and create a much more global optima in the way that Silicon Valley is today? And we were navigating the question, well, do we just choose London and make that Europe's tech capital? I don't think that works because Europe is fragmented, because we have these different cities. And so our kind of focus is on bringing Europe's who have been gaslit into believing that they're very, very far away from each other. Even though it typically just takes a 1, 2 hour flight to get anywhere in Europe. Get them together, expose them over, you know, three days, we get 25 students from those different ecosystems that want to start companies in the future. We get them together, we expose them to one another, and we call it a social engineering project, because we want to see if we can turn a group of strangers over a period of time in a very dedicated program into peers, into friends and people who will attend each other's weddings, start companies together. And if we do that repeatedly and then keep exposing that community kind of to the local hubs of excellence and to the great hackathons and all the things that are happening at the local level. If we do that consistently over years and years, there's a pan European community of students who have met each other kind of at the earliest days, you know, where the excellence and the ambition that they've been exposed to really compounds such that their trajectory in life really gets tilted upwards. That's what Relativity Collective is all about.

39:27

And I feel like CDTM is one of those programs some people know of and the people who know of it know it's this special magic thing. You might know the numbers off the top of your head, but there's some crazy amount of unicorn Founders that have come out of it. But then I think lots of people don't know of it. What is its magic? What does it do so well that it's led to this amazing alumni work?

42:48

I think CTM is small. That is really, really important. It is just 25, max, 28, 30 students per class who spend a lot of time together. I think that's the most important criteria. And the second criteria is that you have an interdisciplinary group of people. You have computer science students, electrical engineers, political scientists, people who study business, you know, who are coming together and one side understands the other side. And you work on these mini projects. So you're almost getting trained to understand that things are not that hard. You work with real life, you know, project partners, companies, research institutions that either give you a technology or give you a problem. And you figure out an actual way and you prototype it, you know, of solving it or building for it. And so because it's small, it gives you the understanding of, you know, kind of everyone's just like you, just as amazing, but also just as flawed. It makes you really realize you can just do things and then you actually just do things. So it's almost a mini rehearsal for starting a company after. I think that has been such a brilliant recipe where people leave CTM with like a fierce belief they can just do things and they actually do things and achieve things afterwards. Both in a way that is kind of the intersection of tech and business, that is really important to create great outcomes, but kind of also in a way that where this kind of tight knit community, anyone achieving something there reflects positively on everyone else. If you feel this kinship, any CTM student, I don't care if they've been class 98 or class 2023, I feel connected to them. I want them to succeed. Whenever they send me an email, a call, you know, I'll try to help. But that only works since it's small. If it was like hundreds of thousands of people, that system would break. And so I think that's really the magical recipe of.

43:13

Yeah, interesting. Another side project you have is you write a weekly ish blog about AI society and Europe. Which topic have you had the most response about?

44:56

Yeah, so there's two topics. One was raising unfuckwithable kids in the age of AI. That was one that I think people really took a lot away from. I'm actually quite in many ways proud because a lot of work goes into writing. These are kind of long form. I often mull them over for weeks and weeks and write them late at night and finish at some ungodly hour in the morning. But for unfuck withable kids with AI, it's basically about, in the face of rapidly increasing and powerful AI technology, you can protect your humanity. And I was asking myself the question, how would I want to raise my own daughters? And so I was going through kind of the loops of thinking through that. And 10% of it touches on AI as a really helpful and very powerful tutor. But 90% is like, we need to radically embrace our humanity. We need to embrace our creativity. We need to embrace our curiosity, we need to embrace friction. We need to embrace human rituals. Because AI is so powerful, it's seductive in many ways, and it risks turning us into hollow shells that just wrap around AI. But, you know, when AI is stripped away, there's nothing there. You've become empty. I think kids are especially at risk of that. And so how do you use the upside of AI while at the same time kind of guarding against its downsides? That's what that article went into detail about. And a lot of people sent it to their kids or sent it to their parents, and then they all reached out to me. And that was just beautiful to see. That kind of it resonated in that way. And then the second one was, why the industry that taught me not to be afraid, not to fear, should stop being afraid. Which was about this strange moment in time that we're going through as a VC industry and that I do think we need to grapple with a lot of the societal repercussions of the technologies that we're backing and building. I think in many ways, we always saw each other, or kind of the funds that we were running as a force for good in terms of we were creating jobs, you know, companies were creating jobs, we were, you know, kind of a net positive for society versus now we are looking at a technology and companies that will replace a lot of jobs that, you know, are even requiring less people to create these technologies, which means that the benefit of these companies will be in the hands of fewer people. And so there's, you know, kind of a bifurcation of the value of AI that gets concentrated in the hands of very, very few people in a way that I think should not be the ambition of the venture capital industry. I think, of course, we're optimized on maximizing shareholder value, but that should in itself serve the function of being a force for good in society. And so it was just grappling with that in many ways. I don't have an answer. I was just, you know, it's kind of a paradox because I was just giving you my hyper capitalism. We need to go back to hyper capitalism, you know, kind of kind of spiel. And you should say, why do that? Doesn't make any sense. And so there's so much, so many paradoxes that we need to navigate because I know that we need to compete on the forefront of AI, we need to be winning at the forefront AI in order to go back to the actual notion that VCs and technology should have, which is creating human benefit and human good. And so it was just grappling with a lot of the non answers that I have and just asking a lot of those questions and just bringing them to the surface because I think it's happening in a lot of VCs. You know, we're kind of realizing, wow, you know, something that was always small in terms of, you know, kind of the remedy. I mean, SaaS was just a small part of society is now being turned into a general purpose technology that could potentially disrupt and augment everything. And how do we grapple with that responsibility? That was what that article was about.

45:08

I think it's interesting, but maybe not surprising that the more or one of the ones you just mentioned there, the more kind of human exploration got so many responses because I feel like that's often lacking both in what we see of founders and investors in the public sphere. And you also launched something called Open Source Nanny last year, which you know, is obviously a result of having small kids. And I feel like when there are those initiatives that are a bit more personal, the outpouring of sort of finally someone's talking about this or finally someone's doing about this is really notable, isn't it?

48:41

Yeah, I think you're spot on. I think a lot of the resonance came from the vulnerability. And you know, I was kind of, I was having panic breathing each time, you know, kind of publish one of those articles or also Open Source Nanny because a lot of truth and just raw Judith Ness went into them. But at the same time, it's just, you know, I was at an event of a really, really great VC that I respect highly in the German Alps. And there was four conversations. The whole day was structured in four conversations. The first three were about AI infrastructure and it was, you know, a host of founders and VCs that were attending. We were kind of all discussing in each camp while we were climbing this mountain. The first was about AI infrastructure, the second was about AI platform shifts. The third was about AI distribution. And then the last one was about AI and society. And I was kind of co moderating that last conversation. And this was a really bright crowd. People were very engaged. But I would say kind of the conversation level of each of the three first conversations was medium. Everyone was engaging, they were participating. The fourth conversation, once we had reached the peak, I mean, the tension in the room was palpable. People were like, you know, struggling to keep in their chairs and like, you know, talking over each other and you could just feel how riled up and just touched and you know, kind of emotionally almost like electrically activated people were. And that was the moment when I sat there and that's when I decided to really lean more into long form articles in AI in Society. Because in many ways that room of people is living three years into the future compared to everyone else in society. So it gave me an early understanding and an early glimpse and interesting. What is happening right now, right here will happen in all of society in probably like two, three years time from now. And we don't right now have voices, have people that help us navigate all of the craziness that is coming our way. And if it's not people in this room who are actually the ones investing in and shaping this technology in many ways, then who should it be? And so that's just. It was almost like the room was calling to me, you know, to kind of take the mic and try to engage in this collective effort of sense making. That datalog, this newsletter that I write is all about and that, you know, open source, then he is about, you know, I was kind of thinking everyone is talking about declining birth rates and like it's Elon Musk's favorite topic to tweet about. And you know, we always talk about, you know, you can totally do it for women. And it's like, it's totally possible, but what are the actionable resources that actually show women that it's possible? And because I was pregnant with my second daughter and people knew that I was going to join Visionaries club and I was, you know, kind of going to go back to full time VC role, I got a lot of reaches of people thinking, how do you do it? My husband's also a founder and after answering their questions for the 20th time, I was just like, let me just write this down. And then I wrote it down, I was like, hold on. Okay, that's my answer. But there's like a hundred other answers from other people. And that's how open source nanny was born. And I just reached out to a bunch of founders, a bunch of other VCs and started collecting these anonymous stories that are really, really honest. And it shows you transparently the cost because it's incredibly expensive. I mean, if you and your partner both want to work full time and raise kids, good luck. It's going to cost you an arm and a leg. It's incredibly vulnerable about all the ways in which it works, also all the ways in which it doesn't work. And there's a cost that you're paying and there's a price that comes with it. And that was what open Source Nanny was about. We had all these founder equity for salary calculators. We had nothing like that for childcare. And so again, it's just engaging in the collective sense, making effort. I think if more of us were doing that, there's so much societal benefit that can be reaped from that. And that's just a lot of the passion and energy these days that gets me out of bed and, you know, gets me writing until late at night that I feel a lot of passion for.

49:23

Judith, I could ask you a million more questions, but you've got several other meetings to go to today. So thank you so much for joining the show.

53:07

Great. Thank you so much, Amy.

53:15

I will drop a link to Judith's newsletter along with the Sifty daily newsletter in the episode description. As always, please rate, review and share the podcast. This episode was produced by the sublime Maya derample Hornby.

53:16