Tremendous

An angel investor's take on life and business

  • Can China’s Top Tech Company Beat America in AI? — Testing Hunyuan-T1

    Tencent is worth $600 billion, making it the largest company in China. But very few Americans have tried its AI models. This morning, I tested their most powerful model yet…

    Tencent released Hunyuan-T1 in April. T1 is their most powerful reasoning model. But can it beat the best from America?

    Let’s find out!

    Round #1: Finding Missile Defense Startups

    I read Nuclear War: A Scenario last year and it scared the heck out of me. Ever since, I’ve been looking for missile defense startups.

    Let’s see what T1 can find…

    T1 gave me a wonky response. It found only one startup, Black Swift Technologies. Confusingly, it marked it as number two, but there was no number one. What’s more, the link it provided as a citation was broken.

    When I looked up Black Swift, I found it had nothing to do with missile defense. It produces drones for scientific and industrial applications.

    This response was utterly useless — I’m giving it an F.

    Round #2: Beating the Heat

    Let’s give T1 something a little simpler but still useful…

    Lately, it’s been hotter than death here in North Jersey. What are some great ways to beat the heat?

    T1 did much better here, giving me some interesting ideas like avoiding spicy food. Spicy food can make you sweat, which isn’t very helpful in humid climates like mine.

    However, it didn’t cite any sources in its response, even though I told it to base its answer on research. Citations are table stakes these days — any decent AI model can do it. There’s no excuse for T1 missing that.

    Still, T1 provided me some useful info. I’ll give it a B- for this round.

    Round #3: Teach Me About Solar Energy

    I want to see a future in which we use way more power than ever. But all our power comes from the sky, and neither the Russians nor the Arabs can take it away.

    So for our final round, I asked T1 about the growth of solar energy in America. How much of our energy is coming from the sun today, and how quickly is that number growing?

    T1’s response looked impressive, with exact figures and a source. But the source was dated — a 2023 report.

    When I looked at the report, the numbers didn’t line up with T1’s response. T1 was off by around 20%.

    T1 gave a roughly correct response, but its sourcing was weak. I’ll give it a C here.

    Wrap-Up

    T1 barely survived my testing, notching a C- overall.

    In all, I found Hunyuan-T1 to be an embarrassingly poor AI model. It does well on benchmarks, but benchmarks can be gamed by “teaching to the test.” Perhaps that’s what Tencent did here.

    Tencent is way behind the leaders in China like Moonshot’s Kimi and DeepSeek. And it’s even further behind Grok.

    If Tencent wants to stay on top, it’s going to have to do a lot better than this.

    More on tech:

    Grok Companions — Elon’s AI Girlfriend?

    Grok 4: The Best AI Model Ever?

    Where I’m Most Excited About Investing Now

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Grok Companions — Elon’s AI Girlfriend?

    Elon just dropped Grok Companions, and they look an awful lot like an AI girlfriend. This morning, I chatted with one of the Companions, Ani. Let’s see what she can do…

    Meeting Ani

    Ani, a tarted up anime character, sashayed across my screen suggestively. It’s pretty clear what Ani is meant to be: an AI girlfriend.

    But I was here for research purposes, not virtual romance. So I had Ani teach me about missile defense.

    At first, Ani tried to inject flirtation into the conversation, calling my questions about missile defense “brainy and sexy.” But I, ever the proper gentleman, demurred.

    So Ani, having been frustrated romantically, got down to business…

    Ani vamped back and forth as she gave me an excellent tutorial on the difference between Patriot and Aegis systems. Turns out Aegis systems are mostly used on ships. And despite the panic over hypersonic missiles, the Aegis system is actually pretty good at shooting them down.

    How Good Are Grok Companions?

    I giggled to myself as I watched this scantily clad figure talk about phased array radars. “I doubt anyone else has asked Ani this,” I said to myself.

    Having an anime girlie teach you about missiles does make it a bit more entertaining. But to be honest, I doubt I’ll be chatting with Ani again.

    If you’re not looking for flirtation, Ani probably isn’t for you.

    I also tried to chat with an adorable companion named Rudy the Red Panda. But unfortunately, he was unavailable when I tested Companions this morning.

    Are AI Companions Good for Us?

    I found Ani entertaining, but I think AI girlfriends and boyfriends are bad for people. We should connect emotionally and romantically with other human beings, not microchips.

    A world where men and women come home from work and flirt with an AI is an impoverished world. We would have less social connection and fewer children.

    Everyone expects men to disappear with their AI girlfriends. Many will, but I fear the bigger consumer for AI romance is women.

    Women consume far more romantic content than men do. Romance novels sell almost exclusively to women.

    Given the natural limits on fertility, I’d hate to see women of prime reproductive age wasting their time chatting with Ani’s male equivalent.

    Wrap-Up

    Grok Companions are fun to play with for a few minutes. But overall, I didn’t find the feature very useful.

    I’d rather see Grok focus on harder but more significant features, like improving voice mode or reducing hallucinations.

    But I’m sure some people will love Grok Companions. And that worries me.

    I don’t doubt that AI romance and AI friends will be great businesses. But I don’t invest in them because I think they’re bad for human beings.

    Let’s use technology to get people connected to each other. That’s harder than making an animated character. But it’s a lot more rewarding.

    More on tech:

    Grok 4: The Best AI Model Ever?

    Where I’m Most Excited About Investing Now

    Testing Alibaba’s New Qwen Model

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 


  • Did China Just Drop The World’s Best AI Model?

    A new model from China claims to be the best in the world. But can Kimi beat the best from America? This morning, I tested it to find out…

    Kimi is open source and can be used to create powerful AI agents. The startup that built Kimi, Moonshot AI, claims that it’s state of the art.

    So far, the new Grok 4 is the world’s top model in benchmark tests. Last week, I put Grok 4 through a series of tests that it passed with flying colors. Today, I’m going to ask the same questions of Kimi so we can compare these two new models…

    Round 1: Analyze My Portfolio

    I’ve been tweaking my stock portfolio recently. My aim is to get great capital appreciation and diversify across US and foreign markets. Here’s the prompt I used:

    “Assume I have a portfolio of index funds. My goal with this portfolio is long term growth. How should I allocate this portfolio across different types of index funds? Consider options like US index funds, foreign stock index funds, etc. I am 39 years old, so my time horizon is long. My risk tolerance is high. What would be the best allocation, given all this information? Use the best research you can find to support your answer.”

    Kimi gave a fantastic answer here, advising a portfolio that’s almost entirely stocks and split between US and foreign. It also hit some key points Grok missed, like the importance of rebalancing and maxing out tax-advantaged accounts first. The sourcing was excellent as well, with reliable citations throughout.

    The one thing I’d improve is to provide a more thorough explanation for the answer. The US/foreign split seems somewhat random, and Kimi didn’t explain how it arrived at those numbers.

    Still, this is an excellent response. I’m giving this round an A.

    Round 2: Find Me Some Startups!

    With fertility falling across most of the world, I’m very interested in technologies that could help us have more kids. So, I asked Kimi to find some startups in this area. Here’s my prompt:

    “What are the most interesting startups at pre-seed stage working on solutions to increase fertility? Consider startups to lower costs and improve effectiveness of IVF, and also startups to improve egg health for older women, among other possible ways to boost fertility.

    Please only show me startups that have raised $750,000 or less in funding.”

    Kimi found some interesting startups, but it didn’t follow my prompt very well. For example, it gave me Zuri Fertility, which has already raised almost $900k per Crunchbase. This is past the point when I usually invest, so it’s not useful to me to see this.

    Grok was much more accurate here, only showing me companies that had raised under $750k. I’m giving this round a C.

    Round 3: Make Me a Better Angel

    I do a lot of meetings with founders. How can I learn more and be more helpful in those meetings?

    Let’s ask Kimi. Here’s my prompt:

    “As an angel investor, I meet with a lot of startup founders. I want to do the best job I can in those meetings. What are some tips to perform better, be more helpful, and learn more about the startups I meet with?”

    Kimi had some great ideas here. I especially liked it’s “quiet Q&A technique” — ask a question and then be silent so the founder can give a full response.

    But when I asked Grok 4 this question, its answer was even better. It emphasized not just success in meetings but success in investing overall through techniques like diversification and building dealflow.

    Compared to Grok, Kimi’s response was a little limited. I’ll give it an A-.

    Wrap-Up

    Kimi is a very impressive model. It’s light years beyond DeepSeek, despite DeepSeek having much more hype.

    But in my testing, Kimi was not truly state of the art. Grok 4 beat it in 2 out of 3 rounds, tying in a 3rd.

    Overall, I’m giving Kimi a B+.

    Grok 4 got an A- in my testing. That puts it ahead of Kimi, but not by much.

    China is still behind the United States in AI. But they’re getting closer every day…

    More on tech:

    Grok 4: The Best AI Model Ever?

    DeepSeek vs. Gemini Deep Research: Which Model Is King?

    Testing Alibaba’s New Qwen Model

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Where I’m Most Excited About Investing Now

    If I work backward from the biggest problems, I can find the biggest opportunities. Here are 4 areas I’m excited about investing in now:

    1) Longevity. Everything about my life is awesome. If you’re sitting in the United States as you read this, chances are the same is true for you.

    The only thing that could derail it some day: sickness and death. That’s why I’m really interested in technologies that could increase our lifespan.

    We’re seeing amazing new AI tools for scientific research, like the Evo2 and State models from the Arc Institute. Those new tools could help us discover drugs that let us live longer.

    Everyone hates biotech these days. But new drugs, especially those for longevity, are becoming a big focus for me.

    2) Fertility. If we’re all going to be living a lot longer, someone’s gotta take care of us oldsters. But sadly, fertility is collapsing around the world.

    You may know that fertility in Korea, China and Japan has hit rock bottom. But America too is below replacement rates. Even more shocking, many developing countries like Brazil and India are below replacement as well.

    That’s why I’m focusing on technologies to improve fertility. If women could have babies more easily past age 40, we might see many more children born.

    3) Human Connection. Most Americans today say they feel lonely. And although we picture the young having the time of their lives, they’re actually the loneliest of all.

    That’s why I’m interested in technologies that bring humans together, in person. This could mean people meeting around shared interests. Or it could be a better dating app.

    What I don’t want to see is AI friends. I don’t want computers taking the place of human beings.

    Those companies will probably be huge financial successes. But just like tobacco or gambling, I want nothing to do with it.

    4) Defense. Number 4 may appear to be the odd man out on this list. But even if we live a long time with many children and lots of friends, it won’t matter if we can’t defend ourselves.

    At the top of my list are missile defense startups. I seldom see one, but I’m continuing to scour startupland for them.

    We’re in great danger from ICBMs and hypersonic missiles. Any technologies that could help stop them, like interceptor missiles or better radar systems, could be a great bet.

    The recently passed One Big Beautiful Bill Act provides $25 billion for the Golden Dome, a missile defense system for America. This is an incredible tailwind for startups working on this problem.

    Wrap-Up

    What didn’t you see in this list? AI SDR’s, ad tech, AI-enabled CRM’s, etc.

    Those could be useful tools. But they’re just not interesting to me.

    I can’t motivate myself to get out of bed to increase ROAS 10%.

    I’ll tell you what is motivating: solving a massive problem. These aren’t the only areas where I plan on investing, but they’re at the top of my list.

    If you’re building in longevity, fertility, human connection or defense, let me know!

    Have a great weekend everyone!

    More on tech:

    Grok 4: The Best AI Model Ever?

    The Top 5 Reasons I Pass On a Startup

    Up to $15 Million, Tax Free — QSBS Changes in the BBB

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Grok 4: The Best AI Model Ever?

    Elon just dropped Grok 4 overnight. Early testing shows it blowing away most other models. So this morning, I ran it through a test of my own…

    When Grok 3 came out in February, I asked it 3 real-life questions to gauge how good the model is. These are actual questions I needed the answer to, which is harder to game than an AI benchmark.

    So today, I posed the same 3 questions to Grok 4. Let’s see how it does!

    1) Grok as Investment Analyst. When I was testing Grok 3 in February, I was planning on making some changes to my investment portfolio.

    I’ve since made those changes. But could I do even better? Let’s ask Grok 4.

    Here’s the prompt I used:

    “Assume I have a portfolio of index funds. My goal with this portfolio is long term growth. How should I allocate this portfolio across different types of index funds? Consider options like US index funds, foreign stock index funds, etc. I am 39 years old, so my time horizon is long. My risk tolerance is high. What would be the best allocation, given all this information? Use the best research you can find to support your answer.”

    Grok gave a great answer here. It recommends a 90/10 stock/bond split. It also mentions that some sources advise 100% in equities for people like me.

    Within the stock portfolio, Grok suggests a 60/40 split between US and foreign stock funds. It also gives recommendations from a range of sources, which suggest anywhere from 20-40% in foreign funds.

    This aligns pretty well with my current allocation, which is 100% stocks and 66/34 between US/foreign. So, I won’t be changing anything for now.

    Grok 4 did a great job, but it wasn’t much different from Grok 3’s response. It also let one unreliable source slip in: a random Reddit thread.

    Overall, Grok 4 was good but didn’t blow me away in this first round. I’ll give it a B+.

    2) Grok as VC Scout. Birth rates in America and much of the world are below replacement levels. I think that ways to increase fertility is one of the best bets in startupland today.

    So, can Grok 4 help me find some great startups working on this problem? Let’s find out…

    Here’s my prompt:

    “What are the most interesting startups at pre-seed stage working on solutions to increase fertility? Consider startups to lower costs and improve effectiveness of IVF, and also startups to improve egg health for older women, among other possible ways to boost fertility.

    Please only show me startups that have raised $750,000 or less in funding.”

    Grok gave me a lovely table with some very interesting companies in it. It included all the info I needed, like amount raised and a brief overview of the startup.

    Grok 4 did a way better job than Grok 3 on this task.

    Grok 3 often pulled in startups that were way too late stage for me. Grok 4 accurately found the amounts each company has raised, excluding ones that have raised too much.

    I’m giving Grok 4 an A on this round!

    3) Make My Meetings Better. I’ve got 3 founder meetings coming up this afternoon. How can I do the best possible job on them?

    Here’s my prompt to Grok 4:

    “As an angel investor, I meet with a lot of startup founders. I want to do the best job I can in those meetings. What are some tips to perform better, be more helpful, and learn more about the startups I meet with?”

    Grok 4 gave some fantastic advice here, including some sample questions. It also addressed other important aspects of angel investing, like diversification.

    Grok 3’s response to this question was good, but more limited to the meeting itself. Grok 4 went further.

    I’m giving Grok 4 an A+ here!

    Wrap-Up

    Overall, Grok 4 was very impressive and a significant step up from Grok 3.

    I’m giving this new model an A-. If Grok could improve sourcing a bit, I’d bump it up to an A.

    Grok 4 is the best model I’ve used so far. I recommend trying it yourself.

    It’s available via subscription for $30/month or $300/year. There’s also Grok 4 Heavy, designed for very complex science and research questions, at $300/month or $3000/year. I haven’t tried that one yet, but I’m tempted…

    Grok 4 is also available via API. If you’re a founder, consider building Grok 4 into your product.

    I’m excited to see how OpenAI, Google and others respond!

    More on tech:

    How Good is Grok 3?

    Amazon’s Nova Model: Cheap and Underrated

    Testing Alibaba’s New Qwen Model

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • The Top 5 Reasons I Pass On a Startup

    I looked at 4000 deals I’ve said no to in the last 3 years. Here are the most common reasons I passed…

    1) No revenue. This is by far the most common reason why I pass on a startup.

    Cash is king. If a company can get people to plunk down their credit card, it means their product really is valuable.

    I like to see $200-500k ARR when I invest. But unfortunately, most startups never make a dime in revenue.

    2) Wrong Industry. The next most common reason I pass on a startup is that it’s in an area I don’t generally invest in.

    Thus far, I’ve mostly stuck to software. I’m planning to branch out to a few biotech and defense deals, but there are many areas I don’t know about and don’t touch.

    Think stuff like satellites, semiconductors and agtech. I don’t know a lot about those fields and they’re not the areas I’m most interested in. These may be great companies, but I leave them to other investors.

    3) Revenue Growth Too Low. The 3rd biggest reason is that a company has revenue, but it’s not growing very fast.

    If I look at my most successful investments today, they all had incredibly high growth when I invested. I look for at least 3x YoY growth in revenue.

    4) Too Late Stage. While many companies are too early for me, others are already much too big.

    Since I focus on early stage, I don’t write a check into something like SpaceX. In the last year or so, secondaries in major startups have become more and more frequent. There are some great opportunities here, but it’s just not where I focus.

    5) Not a Delaware C Corp. When it comes to raising from US investors, there’s only one way to go: a Delaware C Corporation.

    This entity lets you do important things a startup needs to do, like issue stock options. You’d be amazed how many companies get this wrong. Give yourself an advantage: incorporate properly from Day 1.

    Wrap-Up

    Here’s what you, as a founder, can learn from this…

    Focus on investors that invest in companies like yours. Anything else is a waste of time.

    Before you pitch an investor, make sure they invest at your stage. If you’re a biotech company, see if they’ve invested in other biotech companies. If you’re in Australia, find out if they invest in Australia.

    Targeting your investors like this will take extra time at first. But you’ll save countless hours pitching people who are never going to write you a check.

    With a carefully honed list of investors, you can raise fast and get back to building.

    More on tech:

    Up to $15 Million, Tax Free — QSBS Changes in the BBB

    Where I’m Finding the Best Startups Now

    My Biggest Losses as an Angel Investor

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Memos from the Chairman

    “I have just informed the purchasing department that they should no longer purchase paper clips. All of us receive documents every day with paper clips on them. If we save these paper clips, not only will we have enough for our own use, but we will also, in a short time, be awash in the little critters.“ – Alan “Ace” Greenberg

    Why would the Chairman of a top Wall Street bank care about paper clips? Because it sends a message: be frugal.

    Ace Greenberg rose from a lowly clerk to Chairman and CEO of Bear Stearns, one of the top firms on the Street. During his time at the helm, he regularly wrote short letters to his staff, goading them toward success.

    These entertaining letters form the book Memos from the Chairman. When I heard Warren Buffett recommend it recently, I had to pick up a copy.

    Frugality? On Wall Street?

    “At last weeks partners meeting. Haimchinkel pointed out to me that the hors d’oeuvres had been upgraded considerably from peanuts. You will be happy to know that we are now back to peanuts.”

    Greenberg cut expenses relentlessly. Snacks, envelopes, stamps — everything. His partner in this crusade was Haimchinkel Malintz Anaynikal, a charming invented character always advising sobriety and common sense.

    Wall Street is more known for steak dinners and limos than frugality. Maybe that’s why Greenberg never stopped pushing his staff to cut costs.

    Little expenses add up, and every expense comes straight out of your bottom line. If Greenberg let the firm become undisciplined in how it used paper clips and envelopes, soon employees would be wasting much larger sums.

    Pick Up the Phone!

    “…the harder you work, the luckier you get.“

    Wall Street banks deal in some exotic stuff: derivatives, mortgage backed securities, you name it. But no matter how complex the business got, Greenberg always emphasized the basics.

    Answer the phone. Return calls promptly. Show up to meetings on time.

    These are basic things. But too often, we forget these basics, especially if we start to think we’re important.

    In the end, any business is about serving the customer. That starts with being responsive and punctual.

    So many of us in venture capital have long since forgotten these basic rules. A recent founder meeting I had is a case in point:

    “Thank you so much for being on time!” the founder began. Later in the meeting, he thanked me again for showing up at the time we agreed.

    Shouldn’t that be a bare minimum that any founder expects? You’d think. But evidently a lot of VC’s aren’t getting it right.

    I may not be the biggest investor. I may not be the smartest.

    But darn it, I can show up on time.

    How Bear Lost Its Way

    Today in 2025, Bear Stearns is known as a cautionary tale, if it’s known at all.
    The company collapsed during the financial crisis in 2008. JPMorgan wound up swallowing Bear for a pittance.

    If Bear had continued to follow the wise counsel of Ace Greenberg and Haimchinkel Malintz Anaynikal, this never would’ve happened.

    Greenberg ordered his staff to be in the office during business hours, no exceptions. But when Jimmy Cayne ousted Greenberg from the CEO role, those standards began to slip.

    Cayne often left on Thursday afternoons to play golf or bridge. Predictably, other executives followed his lead.

    No one at the top seemed to realize how bad the firm’s finances were getting during this time. No wonder — they barely worked!

    Bear’s collapse shows how the tone at a company is set from the top. Without strong leadership, a great company can cease to exist in just a few short years.

    Wrap-Up

    Greenberg practiced hard work, client service and frugality. If Bear had kept to those lessons, it might still be among America’s great banks.

    But it didn’t. And now it’s gone.

    It’s not complicated to put Greenberg’s lessons into practice. It’s all about doing basic things: returning messages, showing up on time, and watching expenses.

    Anyone can do these things. But most people don’t.

    That’s a great opportunity for the rest of us. It gives us a chance to stand out!

    I learned a lot from Memos from the Chairman and had quite a few good laughs too. Pick up a copy!

    More on books:

    Street Fighters: The Last 72 Hours of Bear Stearns, the Toughest Firm on Wall Street

    Hetty Green: The Witch of Wall Street

    Gambling Man: Masayoshi Son (Part Two) 

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Up to $15 Million, Tax Free — QSBS Changes in the BBB

    Angels can make up to $15 million tax free thanks to changes in the One Big, Beautiful Bill Act. This is part of a huge expansion of Qualified Small Business Stock (QSBS) in the new bill.

    What’s New With QSBS

    These changes to the rules around QSBS apply to shares acquired from July 4th onward. Here are some of the key provisions:

    • Maximum tax free gain is now $15 million (up from $10 million)
    • Max tax free gain is now indexed to inflation.
    • Tax benefits come sooner. You get 50% of your gains excluded from tax within 3 years and 75% within 4 years. At 5 years, 100% of your gains up to $15 million are excluded. (Before the bill, you only got exclusions after 5 years.)
    • Maximum assets of the startup you’re investing in can be up to $75 million (up from $50 million).

    This is a massive expansion of QSBS.

    Making startups with up to $75 million in assets eligible for QSBS means that the vast majority of angel investments should qualify. Startups usually don’t have that much in assets until Series B or C at the earliest. Meanwhile, angels are usually investing from pre-seed to Series A.

    The benefit is also indexed to inflation for the first time ever. That means Congress won’t need to revisit this any time soon.

    Is QSBS a Giveaway to the Rich?

    Getting $15 million tax free is pretty awesome for us. But is it good tax policy?

    My view is that QSBS is a critical way to build America’s economy and ensure we remain #1 in tech. Startups are a huge engine of job creation in America. Venture-backed startups create jobs at 8x the pace of other companies!

    QSBS is a giveaway to the rich, no doubt. I don’t need this benefit, and neither do most angels.

    But QSBS gives investors a strong incentive to back startups. Without QSBS, they might invest their money in private credit, real estate, or the good old S&P 500.

    And if you let me keep $15 million in gains tax free, what am I going to do with it?

    I might buy a house. But most of the money will go to…you guessed it…more startups!

    “And on and on it goes, this thing of ours,” as Paulie Gualtieri said in The Sopranos.

    Tax savings under QSBS may be unfair in some ways, but they benefit all Americans in the end.

    Wrap-Up

    Critical caveat here: don’t rely on me for tax advice!

    I’m not a tax or financial advisor. In fact, I use an accountant who is well versed in startup investments and QSBS.

    You should do the same. If you want to evaluate an accountant’s knowledge of QSBS, just ask him to explain the law to you. He should be able to explain it clearly and correctly.

    With the right advisor, you’ll have the best shot at getting the most out of this huge expansion of QSBS!

    More on tech:

    Where I’m Finding the Best Startups Now

    My Biggest Losses as an Angel Investor

    Do Non-Founders Make Better Investors?

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Where I’m Finding the Best Startups Now

    Lots of people want to become angel investors. But where do you find great deals? Here’s where I’m sourcing deals now…

    I looked at all 35 names in my portfolio thus far. For each one, I noted where I first heard about the company.

    Where My Deals Are Coming From

    Here are the results…

    Jason’s Syndicate: 23
    Demo Day: 3
    Fellow Investor Referral: 2
    Used Product: 1
    Tom Williams Syndicate: 1
    Mana Ventures Syndicate: 1
    Founder Referral: 1
    Mercury Raise: 1
    OpenVC: 1
    Twitter: 1

    One source stands out far beyond the others: Jason Calacanis’ syndicate. It’s an amazing source of deal flow.

    The fella who found Uber and Robinhood will probably find the next big company too. When he does, I want to be there.

    How My Dealflow Is Changing Today

    When I first started as an angel, I didn’t know anyone in startupland. So I only did syndicate deals.

    Now I’ve been investing for a little over 4 years. I have my own dealflow, and I also cold message interesting companies regularly.

    Here’s where I’ve sourced my 6 most recent deals…

    Jason’s Syndicate: 3
    Founder Referral: 1
    Mercury Raise: 1
    Twitter: 1

    I’ve gone from all syndicate deals to 50% of my deals being direct. I expect that percentage will rise to at least 75% over time as my network grows.

    That said, I love doing syndicate deals. Sometimes, the lead will see a company I don’t.

    I like having that flexibility to still invest. And if it’s an Uber, giving up 20% of the gains doesn’t bother me at all.

    Why I Cold Message Founders

    In two of these 6 cases (the founder referral and the company I found on Twitter), I cold messaged the founders. That’s something I do more and more.

    In fact, most of my meetings these days are companies I contacted. That way, I know I’ll be interested in what they’re doing!

    I like to tell the founder exactly why I found their company compelling. I definitely do not send the same message to everyone.

    If my message is carefully tailored to the specific company, I’m more likely to hear back. I also message the same company repeatedly if I don’t hear.

    I’m a small fry. I can’t expect the best deals to come to me.

    But I’m in good company. Sequoia cold messages companies regularly.

    In fact, that’s how Jim Goetz won the WhatsApp investment. If you out hustle the competition, you win.

    Wrap-Up

    Of the countless companies founded every year, only a few will matter. The one thing that matters in venture capital is to own a piece of those companies.

    So I cast a wide net and meet lots of companies. Of the startups I see, I put a check into 1 in every 250 deals on average.

    I’m always looking for new sources of great deals. So if you have one you love, let me know!

    There will be no blog tomorrow for the holiday. Have a happy July 4th and God Bless America! 🇺🇸

    More on tech:

    My Biggest Losses as an Angel Investor

    Do Non-Founders Make Better Investors?

    The Coming Wave of Job Losses

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • The Coming Wave of Job Losses

    Microsoft just announced they’re laying off another 9,000 people. With AI and offshoring rapidly eliminating jobs, are we about to see a new wave of unemployment?

    AI Eats Engineering Jobs

    New comp sci graduates have one of the highest unemployment rates of any major. Big Tech companies are doing hiring freezes and layoffs.

    AI is driving this rapid slowdown in engineering jobs. An engineer skilled in AI can produce far more than before.

    In fact, coding is what AI does best. But LLM’s are coming for other cognitive tasks.

    I expect routine work in customer service and legal to be automated soon. And once AI masters driving, watch out. Truck driver is the most common job in 29 states.

    But it’s not just computers that are coming for your job. It’s humans — overseas.

    Our Man in Cairo

    Whatever companies can’t automate, they’re offshoring.

    “We have a guy in Egypt that does all our cold calls for us now,” a friend in sales told me this weekend. “He speaks perfect English. And it’s only $500 a month.”

    A couple of years ago, his company would’ve hired an American fresh out of school. Not anymore.

    The quality of talent available overseas is insane. We can hire the best students in their whole darn country for a fraction of what mediocre Americans cost. They work harder and turnover is lower too.

    Adapting Is Harder Than It Looks

    Between automation and offshoring, lower end desk jobs are rapidly disappearing. If prior waves of job losses are any indication, it will be hard for laid off Americans to adapt.

    In 2008, Janesville, Wisconsin lost their GM plant. It employed 7,000 people at its peak, perhaps 1/6th of the town’s workers.

    I was living just up I-90 from there in Madison at the time. I remember the plant closure being all over the news.

    I recently read a book about Janesville. It turns out that despite the workers’ best efforts to retrain, 3/4 of them said they were worse off 5 years later.

    Half the laid off families struggled to afford food. Children became homeless.

    This is the future for a lot of laid off Americans. Adapting is harder than it looks.

    Wrap-Up

    AI and offshoring will decimate the lower end of the job market over the next decade.

    Many of the displaced workers will struggle. They could form a potent political force.

    My best advice on how to win in this new era is to embrace AI. Use it every day for every task.

    If you can do that, you’ll be one of the winners in this new world.

    More on tech:

    My Biggest Losses as an Angel Investor

    Did a Robot Try to Attack Humans?

    Testing Gemini’s New Models

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order.