One of the more sordid stories in Silicon Valley history is buried in the book: ‘Founders at Work’ It’s the story of Hotmail and Draper Fisher Jurvetson (DFJ). Sabeer Bhatia and Jack Smith were the founders raising money for Hotmail. DFJ invested $300K at roughly a $2M post-money valuation. The important detail wasn’t the valuation. It was DFJ’s right of first refusal on the next financing. Bhatia says he didn’t appreciate what that provision could mean. Then Hotmail started taking off. Bhatia went out to raise another round. Here’s where it gets ugly. According to Bhatia’s account, investors would call DFJ as part of their diligence. Bhatia alleged DFJ discouraged them from investing. His interpretation: kill the competing bids, preserve leverage, and buy more of Hotmail at a lower valuation. Meanwhile, Hotmail was running out of cash. Eventually they were down to a couple weeks of runway and approaching a payroll they might not make. DFJ knew it. The founders knew it. And every day that passed shifted negotiating leverage away from the founders. Hotmail ultimately took the financing. Never let a single financing counterparty become your only option. That’s @travisk’s point and why he ran an auction. Founders obsess over price (valuation). They should obsess over terms (governance, control, ROFRs, etc). The book ‘Venture Deals’ is a classic that entrepreneurs read now and has since set standards. post script: Microsoft acquired Hotmail for $400 MM. That was a massive head turning deal back in 1997. Hotmail was less than two years old, and had zero revenue.

DRUCKENMILLER 13F DROP 1) Druck sold memory stocks before the July semiconductor crash. He exited $MU $AVGO $BE $NET $SNDK $LITE Extremely well timed. 2) He rotated into cloud businesses like $AMZN and $GOOGL We agree, these names got way too cheap. 3) He invested in datacenter storage name $STX . We prefer $WDC. Same theme. Data storage does not have the same DRAM or HBM pricing volatility risk. 3) He bought $FOXA. We picked this up 2 weeks ago when it sold off after $ROKU acquisition news. Was sub 10x forward PE, and their earnings will grow sharply as we see WorldCup hit and Mid Terms and a Presidential $15 Bn+ election spend. 4) He bought cybersecurity names. These are a bit pricey, but they are one of the few areas that have maintained momentum. 5) Interestingly, he picked up $PURR which is a bet on Hyperliquid. We re-established a small position in $PURR a few days ago. 6) He picked up $RDDT. We like that as an indirect AI play (licensing revenue). 7) He added to medical devices. If you want a quality category on sale with value there’s a lot to do here. He bot $DHR. 8) He bought $CDW. This is a mean reversion high free cashflow and capital return story. This was surprising to see. I attached the bull case on this name. 9) He bought a semi name that is under the radar: $STM. This one is also a surprise. That business is experiencing a decline in revenue, but the Lumida Invest app says they are re-positioning to get into Autonomous Vehicles. 10) Druck added to airlines which sold off due to SoH. We like this theme as a bet on Baby Boomer travel demand. Overall, he has a thoughtful portfolio.

NVIDIA IS THE LENDER OF LAST RESORT Nvidia Guaranteeing Open AI $250 Bn Financing This is bullish for $ORCL $MSFT and $GOOGL - all of whom have counter-party risk on OpenAI. I added to our Cloud datacenter exposures last week. The big issue was never demand -- it was about credit risk...

‘Member of Technical Staff’ at Anthropic is now easily the most under-stated and prestigious engineering title in technology. It’s the corporate equivalent of introducing Michael Jordan as ‘works in athletics.’