In this episode of The Next Next, host Jason Jacobs interviews Yohei Nakajima, a venture capitalist and innovator, exploring his multifaceted career as a general partner at Untapped Capital and creator of the BabyAGI AI project. Yohei discusses his latest project, The Agent Fund, an AngelList rolling fund aimed at AI agent investments, and describes his approach to venture capital, which involves a top-down, thesis-driven methodology. The conversation dives into his personal journey with AI, starting with his experiences automating tasks using no-code solutions and moving towards more advanced uses such as employing OpenAI's GPT-3. Yohei also shares insights about the societal and technological impacts of AI, the future of work, and how he integrates his passion for building in public into his professional life. The episode concludes with reflections on parenting in the age of AI and the importance of preparing the next generation for an uncertain but fascinating future.
Exploring AI's Frontier with Yohei Nakajima
In this episode of The Next Next, host Jason Jacobs is joined by Yohei Nakajima, a venture capitalist, innovator, and artist. Yohei, known for his work with Untapped Capital and the creation of BabyAGI, discusses his latest endeavor, The Agent Fund, focused on AI agents. The conversation delves into Yohei's multifaceted career, from his artistic projects like PixelBeasts to his AI-centric investments and automation efforts. They explore the rapid advancements in AI, the societal impact, and the evolving landscape of venture capital. Yohei shares insights into his investment strategy, the future of AI-native applications, and his unique approach to parenting in a tech-driven world.
00:00 Introduction to Yohei Nakajima
00:26 Yohei's Multifaceted Career
01:23 The Next Next: A Learning Journey
02:07 Starting the Conversation with Yohei
03:25 Yohei's Investment Philosophy
04:44 The Role of AI in Yohei's Work
07:28 The Evolution of AI and Its Impact
10:52 Challenges and Opportunities in AI
15:18 The Future of AI and Society
25:38 The Agent Fund and AI Investments
29:19 The Future of Company Growth in the Age of AI
30:14 Challenges and Opportunities for the Next Generation
33:43 Navigating Career Choices in a World of AI
36:02 AI's Role in Youth Development and Education
36:43 Investing in AI: Strategies and Insights
47:52 Balancing Structure and Flexibility in Daily Life
49:56 Final Thoughts and Future Outlook
[00:00:00]
Jason Jacobs: Today, on The Next Next, our guest is Yohei Nakajima. Yohei is a venture capitalist, an innovator and an artist, best known as the general partner at Untapped Capital and the creator of BabyAGI, an influential open source AI project. Yohei also recently announced The Agent Fund, which is an Angelist rolling fund dedicated to investing 50 to 200 K checks across the AI agent landscape.
Now, Yohei is an interesting guy. He's a hard person to put in a box. He's. One part venture capitalist, one part hacker building, , BabyAGI, the first popular open source autonomous agent with task planning capabilities. part artist, he's an artist and creator of PixelBeasts, which is a collection of 10,000 unique NFT collectibles, and he was responsible for the artwork, generative code, and even designed as associated.
And even designed associated games [00:01:00] and apparel. And meanwhile, there's a bunch of things he doesn't want to do in his day job. And he looks to automate anything he can that he doesn't wanna do using agents. So just a very interesting combination. I don't know that I've met anyone like Yohei, and we have a fascinating discussion in this episode.
I hope you enjoy it. But before we get started.
I'm Jason Jacobs, and this is The Next Next. It's not really a show, it's more of a learning journey to explore how founders can build ambitious companies while being present for family and not compromising flexibility and control, and also how emerging AI tools can assist with that. Each week we bring on guests who are at the tip of the spear on redefining how ambitious companies get built, and selfishly the goal is for this to help me better understand how to do that myself.
While bringing all of you along for the ride, not sure where this is gonna go, but it's gonna be [00:02:00] fun.
Okay, Yohei, welcome to the show.
Yohei Nakajima: Thanks, Jason.
Jason Jacobs: I am excited for this one. We, I feel like we, we have some similarities just in terms of the public learning and also the I think portfolio of interest and, we haven't met before, but but dare I say quirkiness, right? I'm certainly quirky. And it's, men as a
Yohei Nakajima: Which is why we run in the same circles.
Jason Jacobs: And it, but but also just quite different approaches in terms of the how. It seems like you are more of a public learner with code and building. And I am a more of a public learner with, conversations like this. But we're learning about a lot of the same stuff. And I am not quite sure what we're gonna cover today,
Yohei Nakajima: Let's see where
Jason Jacobs: pretty sure it's gonna be interesting.
Yohei Nakajima: I think one of the [00:03:00] things you emailed me that I think is like you can, we can never talk about is like, how is this Gen AI revolution gonna change the way companies start? And I think that's a conversation I've had a lot. And I think that's a fun place to start.
I don't even know where to start. That's a broad topic. I.
Jason Jacobs: Yeah, so why don't we do that? I think the one thing I'll ask before we do is just maybe just describe yourself and your portfolio of interest to the audience, just to frame the discussion and then let's jump into that topic.
Yohei Nakajima: I am a I run untapped capital, an early stage generalist venture firm. Within early stage, I think I'm one of the earlier side. I consider myself on the earlier side of pre-seed, right? I don't even do what I would consider late pre-seed. The way in which I invest is very top down. I'm not, I don't like to be reactive to the companies that come to me more.
So I start with picking an industry. I want to dig in on identifying a niche. I want to deeply study. I'm trying to build conviction either through building or conversations, and then go look for companies that would make a lot of money if my conviction is correct. And then as part of that [00:04:00] top down learning journey, the one I'm best known the approach I'm best known for is the build in public learning approach, which is where I essentially use AI to mock up prototypes as a way to learn about the technology and meet founders.
As far as portfolio of interest, I, I tell people that I'm a generalist that I, any given moment looks like a specialist. And sometime, I do deep dives that are a week long, a month long, three months long, sometimes years long and the deep dives overlap. But at any given moment, there's a few areas I'm particularly interested in, but I like to think that as I go deep on different areas they stack together over time and then create this like beautiful graph that's like very wide.
Jason Jacobs: And I, I know we said we then jump into the topic, but I guess. One other piece of context that would be useful to slip in there is just, as you discussed you code, you've been spending a lot of time with ai, you invest in, in what order did these things come about [00:05:00] and and how do they begin intersecting.
Yohei Nakajima: I've always built as a hobby. I've never been an engineer by trade, but my dad was an engineer, so he bought me H-G-M-L-C-S-S books when I was in middle school. So I've always coded on the side, but always as side projects, whether it was a personal blog, a tech event site for the LA ecosystem, internal tools when I was working at Techstars.
So building as a way to make myself efficient has always been there. So that, that came first. I started investing when I joined Techstars, so that came second. But the build in public as a way to tie the two together came by accident while I was building untapped. Before untapped I was usually working for other organizations.
So the cool stuff I built was technically trade secrets. So there was a lot of experiments I ran, for example, at Techstars or Scrum Ventures that I never published because I was using internal data and it wasn't me making the decision on what to share. But as soon as I started running my own fund, there was no one stopping me from just sharing everything I did.
And I just started doing it not really thinking of a [00:06:00] objective, but then over time realized that it leads to deal flow.
Jason Jacobs: Now, did you start running your own fund right when you left Techstars?
Yohei Nakajima: No. I went from Techstars to Scrum Ventures, which is a Bay Area based fund with close ties to Japan. So I did that from like 2014 to 20, or no, 2016 to 2020.
Jason Jacobs: Huh. And then how did your own firm come about?
Yohei Nakajima: I always knew I wanted to eventually start my own firm when I joined Scrum. And during my time there I thought about different thesis and, I always thought I would start a firm when I found somebody to start a firm. Partner with, but there was an idea that I just couldn't get out of my head to the point where I had to start talking to people about it.
And then, as things happen you start talking to people, you get more excited, you get this validation and at some point it was I just had to do it, which is probably the best reason to start something.
Jason Jacobs: What was the idea?
Yohei Nakajima: So at that point I was really, and I, and it's still true I think I'm one of the more experienced people when it comes to doing outbound sourcing at the pre-seed stage.
It's, if you look at pre-seed investor, primarily source the referrals. And there's, for better or for worse, a lot of allocation [00:07:00] chasing. At Techstars I ran top of funnel outbound across all of the Techstars programs, so I built a lot of know-how on doing outbound. And so the thesis was really leaning in on that strength.
But the thesis was not just about outbound. Outbound was the how, but the reason for doing that was this fundamental idea that there are strong founders outside of typical networks who just don't get a chance. And if you are really honed in on outbound, my assumption was I can find and invest in those founders and that can produce better returns for LPs.
Jason Jacobs: And as you set out to build that firm, when and how did AI come onto the horizon for you? Because I know you've been out talking about it and building with it since before it was cool. And where did that come from?
Yohei Nakajima: August, 2022 is when I started playing with Open AI api. I was about six months before Chachi T came out, but prior to that I was pretty heavily automating a lot of stuff with no-code. Barry had built our whole fund back in on Airtable. I think my highest month I was running like 15,000 zap tasks [00:08:00] and this was pre ai.
When I got into ai, I learned about it through the Web3 community. I played around an NFT. So when Mid Journey Stable Diffusion and Dolly came out that summer, a lot of the Web3 community was talking about it. So that's how I got started playing around with the image generation first. But then once I had my Dolly account, I was like, oh, Dolly has a text thing.
Which was the, which was DaVinci 0 0 2 GPT-3. And so that's when I started playing with it and the first thing I did was ask it a couple questions that founders would ask me, and it did an incredible job answering better than I did. And that's when I thought, wait, I should try to see how much I can use this to make my job easier.
Jason Jacobs: And so was the initial application of ai. More to look at what you were doing internally with untapped.
Yohei Nakajima: Yeah. The first thing I built was. A rapper, it was called Minio. Hey. I was like, you're a venture capital specialist. Assuming the following question comes from a startup founder answer as an expert venture capitalist. And at that point, like chat PT wasn't out yet. So the value [00:09:00] there was pretty incredible.
And so for a short amount of time, for about six months, I did have portfolio companies using my wrappers sitting in our port founder portal, which was fascinating. I had blog post drafting, SEO, keyword generation, and it wasn't all the founders using it, but as some of them were. And again, it died out after chat GPT came out.
But for that short period of time, what was fascinating was I could see what kind of blog posts my portfolio founders were thinking about publishing. And to me as an investor, I was like, that's incredible insight that I'd never had. And I did go down this rabbit hole of what other data could I get access to if I built tools that are helpful to founders?
Jason Jacobs: And what were your tool building platforms of choice at the time.
Yohei Nakajima: At the time, I was still heavy on no-code. So I was running it largely through Zapier. And just doing API calls to OpenAI through Zapier until I realized that it would be much easier if there was an open AI integration built into Zapier. Fun fact is I built that OpenAI integration and was supporting it as [00:10:00] an unofficial Zapier integration for a month until Zapier said, we'll take over.
And I just handed it to them.
Jason Jacobs: Cool. And so during that time had, it sounds like you were starting to use AI for some internal experiments and starting to pick off different processes and automating them. Was it making its way into the companies that you were backing as well? Or when did that start?
Yohei Nakajima: That started around the same time. I'd say like pre-chat, GPT. It was a, it was definitely a much smaller circle of people who were talking about building on top of it. And so I feel like especially in that first six months before Chacha Piti came out, I feel like just tweeting about building on top of Chacha piti.
I met a tons of founders and some of them I had a chance to invest in.
Jason Jacobs: Got it. And, I guess now taking a step back, how do you, so if you look at the landscape today, [00:11:00] everyone's just adding the word AI to whatever it is they were doing, whether they set out to work with AI or not. There's so much capital that's getting dumped into the. Category. How do you think about what's happening in the short term and how do you think about what's happening in the long term and how do you reconcile the two as well?
Yohei Nakajima: It's moving fast. The best thing I can do especially at the earliest stage preceded I believe that leaning in on gut instinct is important, right? We just don't have the data to make quantitative judgements about which companies are gonna be successful. So the way I think about it is how can I feed my gut instinct to the right information?
And I think it has to be a diverse set of information. I want to learn from builders about their challenges in building.
I want to learn from corporate executives about the challenges in incorporating ai. I wanna talk to day-to-day employees about their challenges in incorporating AI and especially given company culture, and then also with consumers about, what [00:12:00] their experience is like.
Also, playing with my kids with ai and if I touch all of these on a regular basis, my assumption is that I will have a good gut, a better gut instinct around both the short term and long term future around different tools that come my way. But I'm not gonna sit here and say I have a clear vision of the future more.
So what I wanna do is look, be able to look at a company, talk to a founder, and have a good feel confident in my gut instinct about whether or not this is a company I wanna work with.
Jason Jacobs: And wh where are you in that learning process so far?
Yohei Nakajima: It's ongoing. I think it's gonna be continuously ongoing, right? As VCs. The tech landscape changes all the time and what's important for us is to is to learn how to learn and to learn how to adapt, to constantly changing information. I dunno if that answers the question.
I okay.
Jason Jacobs: Here's how I look at it. I graduated [00:13:00] college in 1998 and fell into the early innings of the.com boom, and then bust and then there of course was mobile and there was a cloud and now there's. Ai the ground is always changing under our feet, but it does feel like there are certain key moments where the change happens in a more condensed and
Yohei Nakajima: I see. Yes.
Jason Jacobs: So how do you think about the change that we're in the early s of going through relative to some of the other changes that we've experienced in our professional careers before?
Yohei Nakajima: Things are definitely moving fast faster. That's a good question. Maybe I'll try to answer the first question 'cause it does seem in the short term, right? I think I mean moving from chat bots to age agentic builds really happened last year. Right last year was really kinda the boom of people starting to build and implement agents.
I'd say last year tooling was still [00:14:00] pretty nascent and we saw a lot of improvement there with our arcade anon compo were some tools that made tooling easier. MCP blew up in the last two months, so that's the tooling piece I feel like started getting better. I think this year, in the short term, there's a lot of improvement to be made on memory.
Or memory context management, whatever you want to call it, especially when you get to the enterprise level. How do you handle permission of information with an ai? As if I'm asked a question and the answer in a Slack channel I don't have access to, how do you make sure I don't get that answer?
So that's a mix of con context, memory, auth, permission, so that, that's a field I think will expand a lot in the next next year. I think in the long run, one of the things we're seeing is more and more companies that are not just AI native, but more Asian to native. Like I'm being pitched, companies that start companies, right?
We're gonna use AI to build a whole bunch of mobile apps. We're gonna use AI to launch a whole bunch of e-commerce brands. I think those will be fascinating experiments and we'll start seeing a lot more of those. [00:15:00] But yeah what happens in the long run? It's, that's hard to tell. I guess is the short answer.
I I can imagine a lot of different futures, and I feel like I'm just constantly trying to try to balance the probability of this future's happening in my head.
Jason Jacobs: It, I guess one thing that I'm. I've been spending time trying to unpack is there are there's the technological readiness and evolution, and then there's the societal readiness and evolution. And and it seems if you look at history that that the technological. It is typically ready much earlier than society adapts.
And so the technology being ready happens faster, but then the societal readiness happens slower. And what are you seeing as it relates to ai be and I ask because there's this [00:16:00] contrast of it's gonna, these big bold proclamations from the people closest to the technology, but then you look at society and a lot of society is still what like who's that woman that's high up in government that called it like a one, yeah. And so like that's where society is, like that's a high up government official, right? And and doesn't even know that it's ai.
Yohei Nakajima: To some extent that's always been true, right? That is the typical hype cycle is when a new technology is introduced, we talk about the people who are working on it, talk about what it can do, and then as people catch onto that, that turns into the story of what this technology can do. And then once it hits ma the mass media.
Like all that nuance around, oh, we're not ready yet, disappears. And so everyone gets excited about the technology, but then realizes it's not ready as they try it. And then you have this disillusion period. Also in implementation there's a two, three steps forward, two step back, two steps back piece.
Like in ai for example, I. There are gonna be major, issues, right? Companies are gonna make mistakes that cost a lot of money. People are gonna make mistakes that are gonna cost them a lot of money. And those will hit the news. And [00:17:00] when that happens, people will take a pause and slow down a little bit, and it's gonna be a back and forth.
If you think about, internet, mobile, there's still plenty of people in the world without internet, plenty of people in the world without mobile. That's changing. But it's been, it's been a much longer time than probably people who were early into mobile would've expected. So I, I think to that extent, I think you're right that we'll probably see something similar in ai, which is and actually today, especially with the world being significantly more interconnected, especially with Twitter and so on, I do think the the average person is exposed to what's possible much faster and without context.
So you feel that like the gap between the, what's possible and what we're doing today feels bigger. Than it was before, is my gut reaction to what you just said.
Jason Jacobs: Unrelated, but related. I feel like the people that, that are constantly like. This this is the worst time period to live through and all that. It's yeah, there's a lot of bad things happening, but it's not like there weren't bad things happening before.
Like one difference [00:18:00] is that information flows so much more freely now than it did before, that you're just aware of a lot more of the bad things that were already happening. And so you think that it's worse when it's not worse, and maybe it's even better, but you just, it's like you have an IV of all the bad things as they happen, which you didn't used to have.
Yohei Nakajima: Yeah. And for any technology, there's gonna be good and bad, right? If you ask people, if you just blanket ask is social media good or bad for society? A lot of people would start by saying bad because that's what they're close to and that's what their day-to-day. But then if you go back to some of the geopolitical instances that were really enabled by social media, there was clearly good that gave people voices that they didn't have.
So again, social media has done both good and bad. And similarly, I think ai, AI will have that impact as well.
Jason Jacobs: That's another thing I've been sorting through is on the one hand it's oh, if it can offload stuff. That I don't want to do. That's great. Oh, if it can help companies save money that, and have lower cost structures and raise less capital like that, as a founder, like that's great.
But then it's like what happens to all the people who are doing [00:19:00] these jobs today? And it's oh, they'll be free to go and, 'cause they won't need to work. It's or they won't have an income and they won't be able to provide for their families and they won't.
And so well, what determines what happens? It's like government and then it's government's the one that's still calling it a one and not ai. And so it's do you And it, and. And if money makes government work right then who are the ones with the money? It's the big, powerful corporations and who are the ones with the power, the big, powerful corporations.
And is it in their interest to provide for all the people whose jobs are, it's like they don't give a shit. So I don't know. I get the whole like, it's gonna cure diseases and, democratize information and automate all these things so we can build big stuff. Like, all that's maybe true, but like, how are we not, how are the rails gonna stay?
On for society, right? Those are the kinds of things that, that I worry about. And then as the cup, as a venture capitalist investing, it's that's not my lane, bro. That's for other smart people to figure out. It's like, all right who's thinking about it?
Yohei Nakajima: Technically I'd say that today VCs are much more involved in politics than they used to be.
Jason Jacobs: To, [00:20:00] yeah. Certainly in the in, in this calendar year.
Yohei Nakajima: Yes, in this calendar year. Some of the stuff you talked about, right? Technology will advance and we will either do it well or not do it well but a lot of what you're describing feels less like a technological problem and more like just like a cultural problem.
Jason Jacobs: Yeah but that's the thing. It's what will be the impact of technology? It's you can't look at, in a vacuum. You have to look like, you have to look at, as the technology landscape changes so quickly. Will the cul, how will the cultural landscape adapt? How will government adapt? How will policy adapt?
Like how will society adapt? And you can't answer the technology implications without answering the societal ones. And I think what's scary now is that society just seems really polarized and erratic, right? And so you can't really predict how society's gonna react because you can't predict.
What society you're dealing with, right? So then it's whoa, then the technology's the least of our worries. Yeah. I don't know.
Yohei Nakajima: If we use language models correctly, I [00:21:00] feel like they are very well suited to helping two opposing sides communicate better.
Jason Jacobs: You've talked about that, right? But it, but they're also just as capable of, for example, distorting reality and providing what seemingly becomes a pervasive view when really it's just the algorithms manipulating and controlling information.
Yohei Nakajima: And it goes back to the human design. It's what's the intention of the design? What's the intention behind the, these technologies we're building? This sounds super crunchy, but like I think if you come at it with the good intentions and build technology, and if the world does that, the technology will do well.
I. But if we cut if the world in general on average is trying to figure out how to use technology to, to ca capture as much value for oneself, then that's the technology that we're gonna end up building.
Jason Jacobs: So then doesn't it matter who is building? The AI that we're all utilizing and relying on and how they're building it and what framework they're using to make those decisions about [00:22:00] how it behaves and responds to information.
Yohei Nakajima: I think so
Jason Jacobs: Yeah. But aren't we all flying blind to the, I, I don't know if we all, maybe some people know, but i, I enter stuff in chat, GPT or clot or whatever, and then it gives me an answer back. But it's like my mother-in-law's always asking me like who's building the algorithms? And what, what determines if like what their value system is and what value system the algorithm is programmed to, to have, and it's I don't know.
Yohei Nakajima: One of the reasons that Open AI doesn't have all its prior employees is because some of these questions are coming up. From my understanding, I'm not close enough to know the actual details, but I do think that's part of the reason is that some people felt like this should be built ground up from with a different philosophy, which is why you see people like Ilia building.
Super safe intelligence.
Jason Jacobs: And if I guess bringing this back around to the well. If you look at what's happening with startups, so unless you call this podcast something that I'm building, I'm not really building anything [00:23:00] right now. And on the one hand it feels how could you anchor anywhere given how quickly things are moving?
Let me take a step back and not have a horse in the race and just try to immerse myself and understand where the world is going. So that's one lens, but the other is what better way to learn than to build? And until you get your hands dirty or you're not learning actually anything, right?
So I kind, I feel that tension today. And like I wouldn't wanna be starting from scratch trying to figure out how to keep up with this tidal wave, but I also wouldn't want to be an incumbent. With legacy infrastructure and people and processes and culture, and so it's I wouldn't wanna be anybody.
It's just a difficult time to exist trying to figure out like how this plays out. Nobody's safe in a way. Which is exciting, but it's also like it's unsettling.
Yohei Nakajima: yeah.
Jason Jacobs: Yeah.
Yohei Nakajima: When people disagree on the future is when you can make the most amount of money as a vc, if you're correct.
Jason Jacobs: And do you, given that you've started this discussion, seeing how thesis driven you are would you come out on that? Did you and you, but you [00:24:00] also said that you don't have a clear view of how things play out from here. So as a thesis driven investor, like how are you operating in
Yohei Nakajima: I'm, I again, I like to think of what are possible futures and what are the risks for each? I mean from as a pre-seed vc, there's a couple different categories. One, one category I'm thinking about is like, how does the early financialization of startups change? On one hand, you could say that, you could start a company for 500 K and then take it all the way to Series A, right?
Kinda skip the seed, right? Because you can do so much more with little money if that becomes the prevalent way to start companies. I'm actually really well positioned as an early stage proceed. But the flip side, the opposite kind of version of that is you actually don't need any money to start. You can start with zero money because you can build so easily and so that you can actually jump straight to the seed or jump straight to the series A.
And if that future is more prevalent, then as a pre-seed vc, I have an existential crisis. But that's one example of like futures I look at and trying to balance the two. Realistically, it's gonna probably be somewhere in between. We're gonna see both. Plenty of both, I think. [00:25:00] But those, but that's one pattern I'm trying to observe and understand.
And then when I see either of these patterns, I try to see if it can help feed my future understanding of which patterns more likely to immers in the future. When it comes to starting companies, for example, right? I think there's the, even just looking at agents, right? There's companies that sell agents, right?
Use our agent or build agents for people. There's agent tooling, right? Like here's tools that agents need to make to work. And then there's the, we just use agents internally. We don't sell them, but we're gonna build a big company with few people, and those are three very different ways to enter the agent market.
In my approach, in this case, we actually launched an agent fund specifically to cut a whole bunch of small checks across the Asian landscape because I felt like that was the best way to learn about the, which of these features is the most
Jason Jacobs: But an agent fund, meaning that it's actually like agents that are. Do like doing the diligence and allocating the capital, right?
Yohei Nakajima: Nope. [00:26:00] It's a semi-autonomous. We're moving toward that is a playground. Do that. But the fund is more of a thesis driven fund. It's an AngelList rolling fund that we write 20 5K, 50 k checks into a whole bunch of age agentic companies. And we've touched on all these buckets I just mentioned.
Jason Jacobs: Uhhuh.
Yohei Nakajima: And
Jason Jacobs: is that a part of the untapped
Yohei Nakajima: it's part of Untapped Family. I'm running it with Alex and Adam from Asian Tops in the Bay Area. So it's the three of us running Agent Fund as a separate fund from Untapped. It's much less valuation sensitive. It's really more about building out that agent community, but also to learn to have access to all these companies, like building agents tools, using agents internally and by having relationship with many of these companies, my hope is that I will have a better understanding.
Of the best way to monetize an agentic future by just getting all this, having access to these companies and and founders.
Jason Jacobs: Do. When you think about the state of AI today, when it does come to, let's take coding as an example, although this applies to [00:27:00] any, to a lot of different sorts of expertise. Do you see it more as an amplifier of existing expertise or as or as an enabler of expertise of some semblance of expertise in the untrained.
Yohei Nakajima: It is definitely both. I wouldn't even say I, I think it's both. I think it's just levels up everybody. And I think what you described, both of those are very impactful and in different ways, right? It'll help top performers in any space perform much better. Which is really gonna push the space forward to some extent because, for example, AI researchers who really master and agent solutions are gonna be able to start having AI run AI experience more for them.
Meaning their speed of iteration is gonna go faster, which means the evolution of the actual underlying AI that they're building goes faster. So that's the experts using AI to be even more powerful experts. But on the other hand, if you look at something like vibe coding, you see all these people [00:28:00] who've never touched code or never touched gaming, for example, starting to play around with it.
Do I think for, let's pick vibe, coding, gaming as an example. Do I think these people are likely to build the next massive Nintendo game? Not necessarily, but. On a whole, does it expose more people to the idea of building games? Are some of these people going to go into game building because of that and will, are they gonna have fresh, new perspectives that existing game developers don't have?
I think all of that's true, and I think there's a way in which an industry can grow because of a surge, like a mass surge. Like a lot of people joining it. Which is the lower level all being able to divide code. And then another way to push forward an industry is to get the experts to like move faster and put, push the top up.
And I think both of those happen because of ai, if that makes sense.
Jason Jacobs: When it comes to scaling teams and companies if you look at just venture backed startups as we've come to know them what are your predictions in terms of. How that plays out and [00:29:00] what changes there will be, if any, in the coming two years, three years, five years, 10 years than the previous similar time period looking backwards.
Yohei Nakajima: It's getting cheaper to start companies. You can run bigger and more massive companies with less people. And that's a trend that's continued over time, right? That's a continuous trend, right? We don't need to set up server farms, all that kinda stuff anymore.
Jason Jacobs: I was.
Yohei Nakajima: I'm assuming the power law will, dynamic will still exist, meaning that few companies will produce most of the value, especially if you look at the startup world.
I do think that still holds, I wouldn't say that's a strongly held, but probably personally because I want it to hold too, but also, brand trust, those things. So I do think the power law will still exist. It's hard to imagine a future where every company is small, that just doesn't make sense, which makes me think there's probably a way to build a company in the future. If you can figure out a way to [00:30:00] grow grow a team. In a way that makes sense in the world of ai, and I don't even know what that looks like. I can imagine you building a massive company, but I don't even that's a very vague thought.
Jason Jacobs: Do you, I'm bouncing around a bit, but do you think our kids will. Have an easier or a harder go of it than than we've had in terms of in the aggregate, qua quality of life ability to ha have a nice home, provide for your family, get a good education, et cetera.
Is that road gonna get harder for everybody or or will opportunities abound?
Yohei Nakajima: Before I answer that question, what has, what do you think is today easier or harder?
Jason Jacobs: Than it was for our parents.
Yohei Nakajima: Yeah.
Jason Jacobs: Obviously it depends on,
Yohei Nakajima: You generation.
Jason Jacobs: personal situation is different. But I think it's har I think it's harder. I'm extremely fortunate and. For a bunch of reasons. And and not to say I don't have my own [00:31:00] challenges, but but I think we're, my we're in a very fortunate position, I think my lucky starters every day.
But I, I feel like in the aggregate it like more kids are graduating and living at home and getting those entry jobs is harder to come by. They're I think. Home prices are through the roof inflation, like cost of living, groceries utility bills, right? And and then there's a bunch of indi, it's like there's no safe havens anymore, right?
It's like you used to, like in our parents generation, you'd go to a company and you'd be a lifer, right? And then, that lifespan has gotten shorter and people hop around and nobody's safe and layoffs and, quarter, and. Dollars above all else.
But now it's even taken a step further with ai. It's is my, not only is my job safe, but is my profession safe? Is the whole occupation gonna be wiped out by machine? So I'm just thinking if I look at my kids, for example it's skates where the puck is going, not where it is, but like, where's the puck going?
It's and if I don't know for myself and I'm 48 years old, like I don't know how to predict like what, where it's gonna be going for them. [00:32:00] So yeah. So it's so I think instead of learn this skill or learn that skill, it's learn how to learn, be adaptable, be resilient, right?
Control the things that you can control,
Yohei Nakajima: in that sense, like yes, it's definitely gonna be harder, especially if you think about choice as a difficult thing, right? If, and if you go back far enough, if you were born into a baker's home, you probably helped in the bakery growing up and you probably ran the bakery afterwards. And if that's the life path that you assume for yourself from the moment you're born that everyone assumes on you, and that's the life path you grow.
That's, that sounds easy, right? In the sense that you don't have to make these like existential decision on what should I do with my life? You just kinda assume that's what you're doing with your life to that sense. That seems easier. The problem with that society was that there was no moving around, right?
Is that if you didn't wanna do that, it sucks. You still had to do that. And so today we're in a world of extreme choice. I can see every profession that exists. I can learn about every profession's available to me, which is just too many choices. And I think in that sense, yes it cre creates challenges, right?
It takes longer to pick a passion. You're [00:33:00] floating around for longer. Yeah, that does sound difficult.
Jason Jacobs: But it also, I think globalization made things more competitive for everybody, right? But then at the same time. It's I'm gonna start speaking over my pay grade here, but it seems like we're trying to put the genie back in the bottle here in this country. But it's like the genie's not gonna go back in the bottle on the global stage.
So by trying to put it back in the bottle in this country, we're just gonna end up. Isolating ourselves and taking ourselves outta the global discussion. And yeah I feel like we're in a globalized world, whether we wanna be or not. And so either we, and it's ai, it's look, AI is coming.
You can either try to resist and protest and or you can like, lean into the wave that's coming because you're not gonna stop it. You're not gonna put the genie back in the bottle.
Yohei Nakajima: Okay. I have a weird, logical jump. So we just talked about how the career choice is possibly one of the challenges and difficult choices. Previously we didn't have choices, but also you like also it wasn't really optimized, right? It was just like where you were born into. Step back a little bit when you think about information, right?
When [00:34:00] internet first occurred. Everybody had access to, like people were just reading what was on there. And then over time, as everyone started joining the internet, as everyone started writing, the way in which we see information became a filter. I'm not looking at every piece of information on the internet.
There's algorithms deciding what I look at. And that's great. I'm not giving it's not like I'm going through Yahoo and choosing which links to click. I can just go to my Twitter feed and it just shows me interesting stuff that I'm likely to like. And if that is the future we want. And if you think about the fact that a lot of companies are using AI for hiring decisions, and a lot of people are applying to companies using AI is the future we're going toward where AI is just assigning its jobs and we're happy with it because we don't have the choice.
It sounds dystopian, but if you tie some of the logic together, it doesn't sound too farfetched.
Jason Jacobs: It's on a micro skill. It's one of the things I'm thinking about building is, so I look at. I look at my kid he, he loves sports and he, he plays one sport pretty seriously. And as much as you put in front of him, he'll just do. And since he loves the [00:35:00] sport, his tail's wagging, he gets better, he has goals, helps him achieve them.
But if he has to think too much about what should I do and how do I then he's just oh, like that's too much mental capacity. Like, where's my video games? Or, where's. YouTube or whatever. So it's like, how do you spoonfeed it ongoing in between all the formal structure stuff that you cart your kids all around to and can you make it really easy and fun at home to just do it without all the mental math and friction?
And can you build a platform? And so it's a similar concept, but around youth sports skills training for people that are serious and have goals, like how do you just provide that continuity and kind of bake it into the fabric of their days in a way. That is fun.
And I think that's what you're saying as well, is take out the friction or the mental baggage around, not in my example with two sports skills training, but in your example it's just like livelihood go about life. I don't know, like it's a slippery slope. 'cause at some point you, you want that control, but at another point, like with so much choice, it's just, it's almost paralyzing. [00:36:00] Yeah.
Yohei Nakajima: One of the things you mentioned, exposing them to different things is I guess, the best we can do as parents, right? In terms of ai, I, when doll, when I started playing with Dolly, I had these dolly sessions with my kids where we'd each throw out a term and we'd have Dolly generate one image that combined the three.
We started doing that with Suno. So we'd have music, like my daughter would pick the genre, one of my other daughter would pick like the topic of the song, and then I would pick something out like an instrument and would just ask Suno to create the music. And I like that as an exercise 'cause it made, it was more of a fun game that we played, but I hope that it internalized to them like what AI can do.
And more recently it's been, they've been playing vibe coded games where I just build a game over the weekend. They play it, they make requests, and then I show them that requests can be like made and they can play the new game within like an hour.
Jason Jacobs: Given that te that AI touches everything, what do you think about having an investment category or thesis called ai? Does that even make sense? It reminds me of having a early on it made sense to have a mobile category and [00:37:00] now mobile's just, everything's mobile early on, it made sense to, had a, have a category called climate tech. But it's climate touches everything, but it's everything. But it's also not a specific ca it's not a vertical, right? And so it's do you need a category or do you just need everything to decarbonize and get more resilient, et cetera.
But it's baked into the fabric of each industry across I guess using that analogy, how do you think about it as it relates to AI investing?
Yohei Nakajima: I think so. I do, I think of ai. Yeah, I think, I don't think of it as like a category per se. It is obviously a category in some exp some aspects. But I think if you're building a startup today and you're not thinking about the impact of gen on the gen AI on the industry, you're just missing a big piece.
You couldn't necessarily say that about every industry, like mobility for example. There's plenty of businesses you can build without thinking about mobility. To some you can largely put it in the backend but I think with gen ai it's, especially today, it's really important to think about how is gen AI going impact my industry and how do I position myself well?
Do companies need to have AI internally? I don't necessarily think so, but I do think they need to have understand [00:38:00] where they fit into, in the future of their industry, assuming gen AI makes impact.
Jason Jacobs: Everyone talks about how AI is gonna, enable us to work less, or maybe not at all. But when I look at the founders who are in the trenches building in these categories, what I hear from them consistently is that. I have two jobs, one job, and my team has two jobs. One job is to do all the stuff that we need to do day in and day out, and the other is to stay on top of how quickly everything is changing under our feet, which means that people are working more than they ever have before.
So how do you reconcile those things?
Yohei Nakajima: Realistic, there was an early on article on Evry about how I was a VC who was trying to automate his job away. And then someone asked me that last week one of my LPs was like, so how are you doing? I was like, it's not working at all. The more time I have, the more stuff I do.
Just if you're a productive person who likes to do things yes, I've automated a lot of things, but in the anytime I'm given spare I find ways to use it so realistically that my throughput has gotten higher, but I'm [00:39:00] not through automating my job, I'm not automating it away.
I'm like automating, I'm like compressing it and just adding more on top.
Jason Jacobs: But a, as the pace of innovation accelerates, what do you think the implications are for how we build companies? Do you think people are gonna have to work? Will it be the same amount of work? Will they work harder? Will they work less? Will it be more stressful? Will it be less stressful?
Yohei Nakajima: I think initially it'll be more SI mean, my personal experience is that when you increase your throughput, it's more stressful. I think I said that everyone's gonna become a manager, right? When you're a manager, you have to you can't, you're not just worrying about what you do, but worrying about everyone else does.
And those are, there used to be just people, but now it's also agents as well.
Jason Jacobs: What do you think the implications are in terms of team construction? You mentioned that your thesis driven, but how do you think about. F founding team composition. And how has that evolved since you started investing?
Yohei Nakajima: Today I'm definitely looking for I'm definitely [00:40:00] attracted to companies who are thinking about how to build a lean team from ground up. If you thought about your team from ground up, like how would you build it? We're seeing a lot more, like we wanna build a hundred million a r company with 10 people or less.
We're seeing more of those types of pitches and obviously as a VC that's very attractive. So that's one thing we are looking at. But it doesn't have to be that, right? There's probably still, there's always gonna be more traditional ways to build companies
Jason Jacobs: For the people that say that, sure, it sounds great. Everyone wants that, but what are they actually doing to make that possible, and what are the elements of their plan that would make that a. Credible plan versus just a pipe dream.
Yohei Nakajima: I see a big part of it is like actually running a lot of experiments and learning, right? Because we don't know how to run a company that's fully AI run. But if you start running experiments, you see what works, you see what sticks, and then you can hire around. Those capabilities. And what I mean by that, for example, we use a tool called wlo for AI due diligence.
I can give it an industry, a company name, it'll gimme a 2040 page report in 30, less than 30 minutes. When I think about hiring for untapped, I am not looking [00:41:00] for research skillset. I do not need that. VCs who are hiring five years ago, were very much looking for the skill sets analyst, because you needed a person to do that.
Now we don't need a person to do that. So when I'm thinking about hiring for my firm. I'm looking for people who can build a relationship with people who can stay on top of news, better people who are gonna be better at running, who I can trust to try out AI tools that might be a good fit for us versus people who can do raw research. So that's just one example, but I think that, I think similar patterns apply to companies.
Jason Jacobs: So you, how do you think about our current education system? Is it keeping pace with the changes that are happening under its feet?
Yohei Nakajima: I don't think it ever has. It's been slow always. I feel like the one challenge is that with technology, is that like people who are really strong at technology coming outta school probably didn't learn it in school. I.[00:42:00]
Jason Jacobs: So for, as a parent, what are the implications of that as you think about. How to set up your own kids for success as they get older.
Yohei Nakajima: Just have them be familiar with it. It's weird, but like I, I was on a instant messenger right when I was a kid. And in a weird way, right? That kind of native, like I, I am able to build a relationship with somebody digitally, right? I have friends who I've never met in person, 'cause I've only spoken on Zoom.
I like to think that my early exposure to maintaining relationships via an Ai m Chat bot chat. Led to me internalizing the idea that I can build a relationship virtually, I think similarly, right? Just exposing them to ai, letting them play with it, encouraging them to understand like how it can be used in a way that resonates with them, will help them internalize how this technology might impact them in the future.
I think.
Jason Jacobs: Did you wrestle with the the, I guess the counter tension in the screen time dilemma, more time outdoors, more time away from the screens? Is that something that you worry about?
Yohei Nakajima: Yeah, at [00:43:00] a high level, yes. Personally, no, not as much. We live in the forest. We don't, we actually don't give them that much screen time. It's more about like, when they do have screen time, I want them to do something interesting with it. But, we live in a forest, we go outside.
My wife is like anti-tech, so we balance each other out pretty well There.
Jason Jacobs: I, it is just hard because you, yeah. You want them to be. Doing something productive with it when they use it. But it's it's yeah, but, we all want to eat healthy food and I dunno about you, but I can eat healthy food except when the junk food is around and when the junk food is around.
I'm not going for the healthy food. I'm going for, whatever the
Yohei Nakajima: You just said it, when the junk food's around my, my, my fridge is full of organic vegetables. I don't have junk food in the house. It's hard for me to eat unhealthy.
Jason Jacobs: But how do you make the internet only full of organic vegetables? To use, to stick with that analogy.
Yohei Nakajima: Parent parent mode, right? Like when I give them a, when I give 'em a kit, like every app has a time limit, a set to it. And if it hits that time limit, they have to ask me for permission to use that app longer. And we, I just block things like YouTube. My kids are young enough that I have that parental control.
It'll get harder when they're older. But for at eight, five, and [00:44:00] three the par, the Apple parental controls are pretty great actually.
Jason Jacobs: I've, I feel like what what the. The, like the insider tech crowd does to when they think about preparing their kids for the future versus what everyone else does when they think about preparing their kids for the future. Is totally different because the, the tech crowd is the crowd that's
Yohei Nakajima: Yeah I'm using op, I'm using Open I deep research to have it come up with a list of apps I should let my kids use. Going and downloading it, setting parental controls, and then being like, here, you can use it. This is all Healthy app. But yeah, it's not how
Jason Jacobs: of like teachers or nurses or firemen, or. Elected officials or academics or whatever. Then you're not gonna be building the picks and shovels to power the AI revolution. And so does everyone else just keep going through their day-to-day and just hope it works out or are there or is there
Yohei Nakajima: Yeah. That
Jason Jacobs: Yeah. Yeah.
Yohei Nakajima: it will work out. Some, when we were kids, some kids had cell phones, some kids didn't. Parents disagreed on whether middle schoolers should have held cell phones. [00:45:00] Ultimately, I don't think it mattered that much. the people who had cell phones didn't ruin their lives just because they had access to cell phones.
People who didn't have cell phones, it didn't ruin their lives because they didn't have cell phones.
Jason Jacobs: You mean? You talked about how your thesis driven, so how does that manifest today in terms of what areas you're most excited about deploying capital in?
Yohei Nakajima: Again, it's constantly moving because the, it's constantly shifting. A couple areas that I'm specifically looking at, I think. LLM Native IP is a fascinating area. It's gonna be hard to find the right investment because it's one, it's similar kind of consumer. It's either like there or not there.
And like by the time you, by the time it's there, the traction's pretty big. But I do think there'll be kids ip, adult IP that's native to gen ai. And if you think about mobile gaming, social gaming with every. Tech iteration, there's IP that's native to that technological generation, right? Angry Birds, Romeo.
Clash of Clans, all the so on. So I suspect we'll see Gena native ip. And so that's a space I'm interested [00:46:00] in and then there's a lot of the enterprise side, right? Better memory, better permission off. Those are a couple specific categories I'm looking at right now.
Jason Jacobs: Uhhuh, but it sounds like less on the application side.
Yohei Nakajima: I look at applications for sure as well. On the application side, I do, I find myself attracted to like super niche applications more so I do feel like it's like the more general you are, the more edge cases there are to solve, the harder it is to grow your brand. I get attracted to we're building a full OS with, gen AI OS system for carpet cleaners.
Like that kind of stuff like always catches my attention. I'm like, why carpet cleaners? I just picked that randomly, but
Jason Jacobs: Just from a practical standpoint if as founders are out there building, how should they think about you in terms of check size, staged, do you like to lead? How should they get in touch with you? Just, some practical information [00:47:00] so they can filter when it might be a fit for untapped.
Yohei Nakajima: I like to say that if you're building something cool just share it publicly on Twitter and I'll find it. That's how I find cool stuff. But you can always DM me. That's probably the easiest way. I do look at every dm. I don't respond to most of 'em just 'cause I get so many, but I do look at almost all of them.
We do have I'm in, in the process of rebuilding it, but we have a site called deal flow digest.com. Where as a startup founder, you can submit your round information on the backend. It'll match you to relevant investors. It'll send them that information. They can request an intro, and if you accept it, it'll automatically make the intro.
I look at every company submitted there. Again, similarly, I don't respond to every single one, but it's a good place to do an official pitch to me. And I joke that if you want to pitch me, you have to pitch my friends. There's probably like 300 friends on there that are all investors.
Jason Jacobs: HH how do you determine where to prioritize your time when you get up each day? It sounds like you've got a wide [00:48:00] range of interests and that so much of what you do is just by, by gut and by what catches your attention and fancy. How much structure do you put around or do you just let your days run free?
Yohei Nakajima: I have very structured unstructured time. So during the day, nine to five, I'm very structured. It's like emails and meetings and like to-do lists, action items. Like I have a to-do list at the beginning of the day. I just go through them one by one. Oh, look, I have an hour to answer emails. I'm gonna do emails, super structured.
After at five I get off, I hang out with my kids, I put 'em to bed from nine to 12 is fully unstructured. I never touch any of the structured work during that time, and I just let myself completely, freely read, build, do whatever I want and make it very unstructured. So I have two, I have unstructured time at night and very structured time during the day.
Jason Jacobs: When does sleep come into the mix?
Yohei Nakajima: If I fall asleep by 12 I can wake up at seven. That gets good. Seven hours of sleep.
I do have a one superpower. I can close my eyes and fall [00:49:00] asleep in five seconds.
Jason Jacobs: I can't do that.
Yohei Nakajima: It helps.
Jason Jacobs: I get in bed and then like my, because typically I'll put the computer down and then it's like, all right brush my teeth, get ready for bed, and then I get in bed and then it's like my computer's still like running on super speed. And it's what do I do now?
I get to, that's, I'm actively trying to. Address that. So any tips that you have to be more like you in that regards, let me know. My whoop has not been kind to me lately.
Yohei Nakajima: Meditation. I just I essentially just meditate myself to sleep. There was a, there was an app called Pizz, P-Z-I-Z-Z, that was developed for people with sleep disorders, which I do not have, but I have been on and off using it since college. Actually, in college I was using it very heavily. It wasn't even an app, it was like a actual audio clip that I just used the same one over and over again.
But it has, it's a guided sleep app. And over time, just using it. Like I notice myself repeating those words that are set in that app when I'm going to sleep and it just knocks me out.
Jason Jacobs: So we've talked about the future, the macro future. What about the micro [00:50:00] future, the Yohei future? How much of that is scripted in your head? Are you gonna be a professional investor for as far as the eye can see? Is that how you think about yourself? Or like what does the future have in store for you?
Yohei Nakajima: Being the vc, being a vc, I'm really enjoying, I'm enjoying, I love it. This is definitely my life's work. I suspect I'll be doing this for it for a long time, but I don't have, I don't have a scripted life. I think I think it was like 10 years ago, I was thinking about applying to business school and they had me write an essay on where you see yourself in 10 years.
And I spent the whole paper talking about how, if I can imagine where I'm gonna be in 10 years and I failed, like what I wanna be in 10 years is somewhere unexpected, somewhere I couldn't imagine myself.
Jason Jacobs: I feel like we we have that in common too, like dif different ways to get there for sure. But but I've talked about this before, even on the show, like when I go out for a run, I don't have a plan. Like I, I don't know if I'm gonna run three miles, is something gonna kick in and I'll do a 20 miler that day?
Like I don't. I don't know. So my, it frustrates my wife. She's like, when are you gonna be back? I'm like, I don't know. Yeah.
Yohei Nakajima: I use the analogy of a classical [00:51:00] versus jazz musician, right? Classical musician. It's, you have a script you're gonna play, and it's and it's about the execution of that script that you've planned for yourself. And with jazz, again with jazz it's much more about can you just jam out with whoever jumps on stage? And they're both very beautiful pieces of beautiful art, but very different skill sets.
Jason Jacobs: I wrestle with that with parenting too, right? Because it's like I relish in living such an unstructured life, but then, because you see how it's like murky terrain and so competitive and you wanna give your kids every chance of success I don't know. I find that we're pretty structured parents in terms of, helping them get to the next level and achieve their goals and keep the train on the tracks when it's like sometimes, the best thing to set them up for the long term is like living in that uncertainty. But at the same time, that's like a scary thing for a parent to let go of the reign. So it's I don't have answers, but it's just something I find that I'm wrestling with
Yohei Nakajima: say same. Same here. I think it's constant ebb and flow.
Jason Jacobs: This has been such a wide ranging discussion. Is [00:52:00] there anything I didn't ask that you wish I did? Or
Yohei Nakajima: No, this is fun.
Jason Jacobs: leave listeners with?
Yohei Nakajima: No, nothing in particular. If you're interested in AI agents, go check an Asian fund, right? It's a, it's an enrolling fund, so anybody can subscribe. We've invested in a handful of fund companies there which we'll be announcing soon. But yeah, and if you're not playing around with ai, please do.
Jason Jacobs: Yohei, thanks so much for coming on the show. This definitely has my gear spinning in terms of how the world's gonna play out. I have more questions than answers, but I guess that's part of the fun.
Yohei Nakajima: I think so.
Jason Jacobs: Wishing you every success and looking forward to watching your progress and staying in touch.
Yohei Nakajima: Same to
you.
Jason Jacobs: Thank you for tuning into The Next Next. If you enjoyed it, you can subscribe from your favorite podcast player in addition to the podcast. Which typically publishes weekly. There's also a weekly newsletter on Substack at the next next.substack.com. That's essentially for weekly accountability of the ground I'm covering, [00:53:00] areas I'm tackling next, and where I could use some help as well.
And it's a great area to foster discussion and dialogue around the topics that we cover on the show. Thanks for tuning in. See you next week.