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VC: “Software Is Basically Worth Zero Now” | Tyler Hogge, Ex-Pelion

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Tyler Hogge helped take Divvy from zero to a $2.5B acquisition by Bill.com. Now, as General Partner at Pelion Ventures, he argues that charging for software is dead, per-seat pricing is collapsing, and the next decade of venture-scale companies will be built on outcomes, not subscriptions.

In this episode of the GTMnow VC Podcast, Tyler sits down with Max to break down what comes after SaaS pricing, why founder intensity is the only trait that still matters in 2026, and how Pelion concentrates capital into its biggest winners (Cloudflare alone returned over $1B to the fund). He also shares why most startups won’t survive going head-to-head with OpenAI and Anthropic, the “bent the odds” contract he signed with Redo’s CEO, and the lesson from raising four kids that changed how he leads.

This is an honest, no-fluff conversation about where venture is going as AI commoditizes software.

Episode highlights

1:14 – Intro

18:48 – Tyler joins

23:09 – “Sell Jesus, sell anything”

27:42 – The $2.5B Divvy exit

34:39 – The “bent the odds” contract

38:11 – Startups vs. OpenAI and Anthropic

39:05 – “Software is worth zero”

40:55 – The death of per-seat pricing

43:02 – Lessons from raising 4 kids

46:44 – “LinkedIn is the trailer park”

Key takeaways

1. Software is worth zero now. Outcome-based pricing is next.
Tyler builds in 27 minutes what used to take his Divvy engineers months. The moat isn’t the code anymore, it’s the business model innovation around it.

2. Founder intensity is the only trait that still matters.
Without it, no shot. With it, even brutal markets produce $2.5B exits in four years (see: Divvy).

3. Concentrate, don’t diversify, in your winners.
Pelion led Redo’s seed, A, and B. Cloudflare alone returned over $1B to the fund. The default outcome is “not exceptional,” so when you find a winner, you back the truck up.

4. A VC’s only real assets are network and reputation.
They compound like a flywheel. Tyler’s pitch to founders, “Trusted Advisor and Helping Machine,” is so specific he signs a quota contract with portfolio CEOs to prove it.

5. Big markets support multiple winners. Don’t pattern-match yourself out of them.
Ramp is still at under 1% of TAM at $30B+. Investors who passed on Anthropic sub-$10B assumed OpenAI had already won. First principles beats pattern matching every time.

Brought to you by: AngelList

Our LP base spans from individual operators to institutional allocators, and AngelList has been instrumental in supporting all of them. They handle everything from investor onboarding and accreditation to distribution and tax documentation, creating a seamless experience across geographies and fund types. Plus, all of this is available on a single, modern platform.

For an LP-base like ours, with over 350 C-suite and VP-level operators, this kind of white glove service and seamless workflows is so important. It’s also instrumental that we support our institutional LPs that we’re fortunate to work with, and AngelList is able to do so every step of the way.

If you’re looking for a platform that can support any type of LP investing in your fund, learn more at www.angellist.com/gtmfund.

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VC 10 Episode Transcript

00:00 – 00:15

Tyler: When I got hired at Wealthfront, Andreessen Horowitz, then doing all of it can be tied to some part on Twitter. People find you, they read what you write. Several hires that I’ve made have come from Twitter. Several founders that I’ve invested in. Twitter is a definitely a big part of my addiction.

00:15 – 00:23

Max: Tyler Hoag. And then you’ve got OpenAI and Tropic, some of these massive, massive companies. How are you thinking about the ecosystem?

00:23 – 00:32

Tyler: How quickly can cloud build? This is certainly a component, and I’m building things now that would have taken our engineers a months to build. I’m doing it.

00:32 – 00:33

Max: In literally.

00:33 – 00:52

Tyler: 27 minutes. You know, it’s just wild. The joke is that if you can sell Jesus, you can sell anything. And software falls into that bucket for sure. We do. We let their seed round, then we let the air. Then we let them be. So we have plowed a large amount of money into redo, and we try and do that with our best companies.

00:52 – 00:55

Tyler: Remy is another one. Remy Edgecomb.

00:55 – 01:09

Max: Are you trying to invest in categories where the markets are huge and there could be many winners?

01:14 – 01:28

Max: Group. All right. We’re back with another exciting episode of the VC podcast on GTM now. Today’s guest is Tyler Hogue, general partner at Pelion Ventures. And I’m joined with my partner, Paul Ervin. How are you doing, Paul?

01:28 – 01:47

Paul: Doing well? Yeah, I think we’ve got to travel. I think you’re you’re, You’re currently on the road. I got home from the road, on a redeye yesterday, but that’s just the busy. May is always one of the sneaky busiest months of the year. People getting deals done, closing on, new launches, whatever it is before the summer months.

01:47 – 02:08

Max: We’re certainly getting deals done. Yeah, I feel like I’ve been on the road for most of the last two months. Maybe even three. You have to. We’re covering a lot of ground, across the continental United States and Canada, maybe even more. I know we have London coming up, in June, so that’ll be fun. And then, yeah, hopefully a little bit more of a, peaceful summer at home.

02:08 – 02:09

Max: But I don’t know, it.

02:09 – 02:15

Paul: Never is and never is. We say that every single year. And then there is. Which is, I think, just how we like it anyway.

02:15 – 02:37

Max: Yeah. It is, it is a lot of fun today we have Tyler Hoag on the show from Pelion Ventures, and actually, as of airing, he’s now kind of spun out, and doing his own thing. So that’s exciting, but comes from the Utah ecosystem through and through. I’ve always been an admirer of the Utah Tech ecosystem. They think they call it Silicon Slopes.

02:37 – 02:59

Max: Talk about a high hit rate per capita. I mean, they have some pretty incredible companies that have come out of Utah for such a small ecosystem. And just even the employees I’ve hired over the years and the, you know, coworkers I’ve worked with, Utah, Utah’s produced some pretty incredible people, you know, you know, great example. Stephen Farnsworth, who’s been at a couple of our companies, was working with me at outreach.

02:59 – 03:10

Max: So cool to get his take on the Utah, ecosystem. I think Pelion is, as he said on the show, pretty much focused on, like, it has to have a tentacle in Utah, right?

03:10 – 03:32

Paul: Yeah. And and you mentioned the two. I mean, they’re the oldest, and they’re not even that old, but I but I think the longest standing fund, a Utah based venture capital company, venture capital firm investing in you know, growth and innovation in the area. I find with non, you know, SF, Silicon Valley based, talent hubs, tech hubs, startup hubs.

03:32 – 03:52

Paul: The real transition point is when, because you hear it, you don’t know just how deep it runs until it starts to aggregate back in the original source, if that makes sense. And so what you’d have is, for example, where, you know, all of us have worked with incredible operators, have met entrepreneurs that are from Utah, but then they relocate to SF to build the company.

03:52 – 04:11

Paul: And when you start to feel the gravity pulling back, and companies are really being built in Utah, in local ecosystems, there can raise capital, there can hire there, can grow there, and can have really meaningful outcomes. Which which, Tyler was part of one of them. And that’s I think, where you start to cross the chasm in Utah feels like it’s done that over the last, you know, five, ten years.

04:11 – 04:27

Max: Definitely. And he’s another, you know, person who’s gone kind of operator, VC operator, VC. I worked with him a little bit when we were both supporting Jason Lemkin with the SAS or annual. So he’s kind of seen, you know, both sides of the coin. I think, you know, one of the things he talked about was founder intensity.

04:27 – 04:33

Max: You know, that was one of the things he looks for in, in a, in a company. You know, what stuck out to you in the conversation?

04:33 – 04:49

Paul: Yeah. The founder intensity part was one of it. I mean, we’ve talked about it again here, at a time when, you know, it’s it’s never been more exciting. Companies are never growing faster, but it’s probably never been harder than ever to build a defensible business. It’s like, what are the few things you can come back to as constants of success?

04:49 – 05:12

Paul: And founder intensity is one of them, and probably more necessary than ever to succeed in such a fast moving, competitive market. The other point that I thought was really interesting was, his about markets that are so big, they can grow, support multiple meaningful outcomes in businesses. And so he was obviously a device they sold for a couple billion not long after founding two.

05:12 – 05:33

Paul: Which is always an incredible outcome for the people who are, you know, employees and investors that were part of that journey to date. Of course, you have ramp Brex exiting earlier this year, for over 5 billion mercury, a really large business in its own right. And if you talk to people at ramp, the joke that they have internally is they’re still at less than 1% of their Tam, even as a 30 billion plus company.

05:33 – 06:02

Paul: And why I thought that was an important point to highlight. I think this is where, as a venture investor or as an operator joining a company or as a founder, you know, you hear two common themes for for decision making paradigms, which is pattern matching and first principles. And I think this is one where they can be kind of at odds in the sense that it’s really easy to say like, you know, ramp isn’t going to be successful because Brex is already in that market or, you know, divvy isn’t going to have an outcome because Ramp and Brex are already in that market.

06:02 – 06:23

Paul: Or, you know, Mercury’s too late to the party because, you know, from a pattern matching perspective, you know, there tends to be the vast majority of value accrued by the winner. And there’s a pretty huge leap between first and second place in a lot of markets. And it’s probably why I think internally we talk more about first principles, thinking it’s not that pattern matching doesn’t work, but you have to underwrite the market as its own.

06:23 – 06:45

Paul: You know, it needs to go through its own individual analysis process to say, this is absolutely big enough. You know, there could be 3 or 4 companies. And it’s not that everybody shouldn’t be shooting for number one in each market, but you need to understand that when you’re joining a company, investing in a company that, you know markets, you should you should be underwriting them from a first principle standpoint and not just say, I mean, La Guerra is a good example of this as well.

06:45 – 06:55

Paul: I think it would have been really easy for a lot of operators and investors and even the founding team to say, you know, Harvey’s off to the races. There’s there’s not room for number two here. And that hasn’t been, you know, couldn’t be farther from the truth.

06:55 – 07:12

Max: Yeah. It’s definitely, you know, a big part of our job to understand what markets are winner take all and what markets are there going to be. You know a lot of winners right. Especially when you’re investing at the preceding seed stages. You don’t need your company to be the winner to be a winner for you. And you know, that’s pretty important.

07:12 – 07:35

Max: I think there are especially you see it in the, you know, the 2021 era where it’s like, we don’t need to invest in the ace sales enablement player in this space where it’s like, okay, this the Tam is not does not support multiple winners here, and it’s going to be very hard for the series A and series B investors to see it the same way that the preceding the seed investors see it in.

07:35 – 07:51

Max: You know, I Harvey la guerra I mean look at OpenAI and anthropic. I mean you’ve got two companies that are going to be, you know, trillion dollar companies that didn’t exist five years ago. Right. And, you know, at least in their current form. So it’s all about markets. And that’s part of our underwriting. That’s part of our job is to figure that out.

07:51 – 08:08

Paul: Right? I was at an AGM last week and I talked to a lot of people who passed on anthropic, less than $10 billion valuations because they thought OpenAI had already won that market. And, I mean, that’s the most extreme example of this same principle. But it gets back to, hey, you got to underwrite these things from a first principles standpoint.

08:08 – 08:16

Paul: What are they building? How big could it be? And in a realistic world, like, what’s the opportunity set for there to be a winner? Two winners, three winners, and maybe even more than that?

08:16 – 08:38

Max: Well, we had some great learnings from Tyler in the episode, but on general market topics, you know, here in this I’m in a AGM now and hearing I’d say not even just here, but you know, everywhere we talk that the bar for raising a series, a getting series, they’ve done is is higher than ever before. And I think, you know, you and I both disagree with that.

08:38 – 08:55

Max: I think our take is that it’s messier than ever before. Like there’s no there’s almost no standard. Some companies do it very easily and some companies don’t. And those metrics are all over the place. And there’s kind of like no rhyme or reason for them happening right now. What are your thoughts on kind of the seed of the series?

08:55 – 09:27

Paul: It’s just never been harder to give founders really sound advice about whether they’re ready or not. Even ready is sometimes because because in in a great business, you know, I believe that there will be a point. They will absolutely be ready. But then the question becomes, is the time now? Is this the right time to do it? There’s a cost to waiting when the ecosystem is moving this quickly and, you know, wanting to get that extra million of air just to be 100% sure that you’re ready and you’re going to hit the benchmarks, but it’s going to take 8 or 9 months.

09:28 – 09:47

Paul: There’s a real cost to that. And so I think, you know, when we’re talking, we’re pre-seed and seed investors, as you, as you referenced in so that series A hurdle is one of the most important inflection points for a business, who’s raising venture capital and wants to take that pathway to building their business. And so it’s not that there’s a lot of benchmarks out there.

09:47 – 10:07

Paul: A16z, you know, released some at the beginning of the year, but you see them all over the place of, you know, what’s the average IRR at certain rounds and it being higher than ever. But then, you know, behind the scenes we get to talk to founders, talk to investors and see some of these in series A, series B investments at high valuations and a lot of capital in the door get done.

10:07 – 10:24

Paul: All over the place. Or series A’s getting done at 500 K, 600 K, or some of them are getting done at 8 or 9 million. It’s just such a wide continuum and I think harder than ever to give really sound advice, to say, hey, you’re ready. The time is now. We can go out. And I think there’s going to be a really healthy market for you.

10:25 – 10:56

Max: Yeah, I mean, I think in general, you know, my advice has always been you know, chop wood, carry water, focus on the business. And these things will come, I think in in most of those conversations, we’re not having a conversation where the company is running out of money imminently. And so you want to make sure you’re ahead of this series, a conversation by, you know, a pretty good amount of time and you’re in lockstep with your companies, you understand where they’re at, what what they need to do, what they need to show what the scope of that traction needs to be to get an A done.

10:56 – 11:16

Max: And then also, you know, your job as an investor is to be supporting them and socializing with, you know, those downstream or upstream, whatever, whichever you call it, venture capitalists that are going to be investing in the series A, they’re going to be, you know, supporting on that round of the current investor’s going to be doing their pro-rata do does everybody support them going to market now?

11:16 – 11:32

Max: But yeah, it is it does feel superior than ever before to provide advice around it, considering that like you’ll see one company that’s at a million RR with a term sheets versus a and another company that’s, you know, at two and going to ten this year. And it’s like well it’s an unsexy space. And you know nobody’s excited about it.

11:32 – 11:43

Max: And they just haven’t done a good job of, you know, their own kind of building the vision, selling the story, you know, getting out there and being, you know, the talk of the town in that way. So it is a little bit of a funny market right now.

11:43 – 12:00

Paul: It’s an interesting one. And as much as it’s true that it seems to be more gray area than ever to be able to pin down with what’s the right timing and what’s the right advice, I do want to leave people with a couple pieces of advice that we find are foundational to to raising that series A in particular right now.

12:00 – 12:24

Paul: And to your point, too. Yeah, chop wood, carry water. At the end of the day, you build a great business. There’s going to be capital available to you. But if you are, you know, raising that traditional series A and Amanda Robson, Robbie, who we’ve had on the podcast before from MTF, did a good summary here and couldn’t agree more across the board is one momentum in the slope of traction seems to be more important than the absolute traction metric.

12:24 – 12:53

Paul: So if you’re you know, you might look at a benchmark and say the average series A company is raising at 2.2 million RR right now. But if if you get, you know, 0 to 1 point 5,000,000 in 7 months, but it’s going to take you another seven months to get that next million to get to 2.4, you’re sometimes better off because of just the slope and speed of the acceleration in the early days to to go out and raise, you know, it might feel early, but the slope of that traction, we’re finding is more important than the absolute number.

12:53 – 13:19

Paul: The second part is, you know, selling a big novel vision. I think the type of company you can build, the impact you can have on your customers. What what’s possible from a technology perspective has never been more ambitious, has never been broader. And you have to realize that every other, you know, seed company raising a series A is pitching a hyper ambitious vision to series A investors when they’re in the room, and you have to match that and have to believe it.

13:19 – 13:36

Paul: I mean, I think people can tell when you’re you know, putting a few sentences that sound sexy on the deck and whether you really believe that that’s where the business can go. And then I think needing to be ready. I don’t think that every founder needs to be defensive about this in a pitch, but you need to be ready to field the questions about competitive positioning.

13:36 – 13:50

Paul: In an age of AI, where are you defensible? Where are your areas, corners, surface areas to win, and how can that accelerate over time versus standing right in the way of, you know what the frontier model companies, and foundation model companies are building?

13:50 – 14:14

Max: Absolutely. It’s and that does you know, bring up a kind of funny topic, which is like the last decade essentially was this SAS decade recurring revenue software only now all of a sudden, we’ve gone into, like services for deployed engineers have gone into hardware. Is that defensible to, you know, the AI models because, you know, anthropic isn’t going to go build, wearable glasses or a containerized data center.

14:14 – 14:32

Max: And then you’ve you’ve opened up kind of all these little wrinkles of conversations around what is revenue. Oh, it’s not just air anymore. It’s like, well, everything is being considered. RR and investors are just like, okay with that. It’s gotten a little bit hilarious. I think, you know, when people do say like, oh, are we in a bubble?

14:32 – 14:49

Max: There are certain parts of that that are bubbly that are like, this isn’t going to like not all revenues, recurring revenue, and it’s being passed off as recurring revenue. And so we’ll see where this goes. I think in the next year or two. Right now, everything’s just growing so fast. People are just like, okay, well, they’ll figure it out.

14:49 – 14:51

Max: But I do think it comes to a head to a certain degree.

14:51 – 15:20

Paul: Absolutely. And I think one of our most interesting takeaways of, you know, of, of course, after investing in, you know, helping companies and supporting companies through the 2021, 2022 and the followed in late 2022 2023 era is great. Companies endure, build a good business. Every company that you know of that era, we would have conversations with founders and our investors about, you know, valuation marks and who’s going to be successful and, you know, what companies are going to come out the other side of it.

15:20 – 15:39

Paul: And guess what? The best companies come out to the other side of it. We just had a portfolio company from fund one announced 300 million RR. I mean, we had conversations in 2021 and 2022. And guess what? Christine is an incredible founder. That’s an incredible business. And, you know, they get to the other side of it, not just successfully, but, you know, shining through the other side of it.

15:39 – 15:46

Paul: And so my advice to anyone, which is pretty simple advice, is, is build a great business. And the rest of the puzzle pieces will fall into place.

15:46 – 16:10

Max: Absolutely. We got our hands on, another portfolio company of ours. Writer. Their state of AI article and, survey findings reveal 79% of organizations face challenges in adopting a double digit increase from 2025, with 54% of C-suite executives admitting that adopting AI is tearing their company apart. This is despite the fact that 59% of companies are investing over 1 million annually in AI technology.

16:10 – 16:33

Max: So it kind of goes back to the booming of these services business. I’ve read a couple tweets over the, the past couple of weeks and, articles here and there that were saying that the, spend on AI will be trumped by the spend on services organizations helping companies implement AI. It’s pretty fascinating. What are your thoughts on the the state of AI article from writer?

16:33 – 16:54

Paul: Yeah, I mean, we could go on and list. I think a dozen other nuggets from that, article that were particularly fascinating and I think to, to writers customer base and where the survey focuses is, you know, these are some incredible enterprises that they’re getting data from about how much are you deploying, how much, how many agents are you deploying, how much of your workforce is using AI?

16:54 – 17:25

Paul: And then what’s the success on the other side of it and just the growth of these services and implementation? And and you know, what’s not captured by those numbers, which is even more interesting, is not just the okay services. And, you know, you have your consultancies that come in and and help you deploy AI as an enterprise. But how much capital is being deployed by the companies themselves in forward deployed engineers and, you know, forward deployed customer success to be able to spin up, you know, enterprise AI and a generic workflows across these, you know, and customers.

17:25 – 17:43

Paul: It speaks to the sheer demand. And I think the realization from a lot of people that this is going to change their business, it’s going to change how the market is shaped and they cannot be left behind. But the other shoe to drop here is there needs to be customer value. And I think, you know, it’s not just writers survey, it’s MIT.

17:43 – 18:03

Paul: Last summer it has been lagging true ROI. On the other end of all of this, capital being deployed and money being spent by customers and resources and change management, we see the capabilities of the technology on the other side. So I believe it’s going to happen. But it’s, you know, it’s the startup ecosystem. It’s the, you know, AI ecosystems job to make sure that that happens.

18:03 – 18:05

Paul: And happens soon for customers on the other side.

18:05 – 18:29

Max: All right. Without further delay, we’re going to get into the episode with Tyler Hoag, general partner of Pelion Ventures. Let’s get into it. Our LP base spans from individual operators to institutional allocators, and AngelList has been instrumental and supporting all of them. They handle everything from investor onboarding and accreditation to distribution and tax documentation, creating a seamless experience across geographies and fund types.

18:29 – 18:48

Max: Plus, all of this is available on a single modern platform for an LP base like ours, with over 300 C-suite and VP level operators, this kind of white glove service and seamless workflows is so important, also instrumental, that we support our institutional LPs and we’re fortunate to work with an angels is able to do so every step of the way.

18:48 – 19:10

Max: If you’re looking for a platform that can support any type of LP investing in your fund. Learn more@angels.com Sgt Fund. Welcome to another episode of the GTM now! VC podcast is a bonus podcast that we do every other week focused on VCs in the state of venture capital in general. I’m joined here by Tyler Hogue. Rhymes with Vogue.

19:10 – 19:14

Max: There you go. I’ll never forget it now. I’ll never forget it. Thanks for coming on.

19:14 – 19:17

Tyler: Yeah, man. Thanks for having me. Good to see you here.

19:17 – 19:19

Max: GP at Pelion Ventures.

19:19 – 19:20

Tyler: You got it.

19:20 – 19:26

Max: Utah startup ecosystem. What a high hit rate per capita. One of the best.

19:26 – 19:46

Tyler: That’s kind of the the thing we hang our hat on is there’s this day that comes out of the Stanford professor all the time. And the unicorn per capita. Utah is second behind California. And so there’s two ways to look at that. One is like, yeah, high hit rate where we have a good batting average. And the second way to look at it is the denominator is just too damn small.

19:46 – 19:52

Tyler: We don’t have enough founders. We don’t have the the ecosystem is too small. So I think both are true. But we’re we’re pretty proud of it.

19:52 – 20:07

Max: Silicon slopes you know Ryan’s done a great job of kind of evangelizing that. I think you’ve had some some folks over the years. You know, you were part of divvy that had a great outcome. What do you think the catalyst needs to be to continue to drive, you know, making that capital bigger, more expansive?

20:07 – 20:28

Tyler: I think, there’s a couple of things that have to continue, and I am seeing it happen. It’s it’s not going to be super surprising to you, but it’s the flywheel of more exits leads to more capital flowing into it leads to more executives willing to move to Utah, leads to more founders wanting to star, which leads to more exits.

20:28 – 20:46

Tyler: And the hopeful flywheel just continues. And I think there’s a couple ingredients that Utah’s got to improve in order to, like speed up that flywheel. One is founders have to, I think, need to be more ambitious. We need to swing swing harder. Utah kind of been known for the the application layer hit a single or a double type thing.

20:46 – 21:09

Tyler: And I think we’re seeing that change now where people want to build $10 billion businesses instead of 500 million. I think VCs have to be far more courageous. And I think executives and leaders have to be far more intense. You know, we’re a pretty big work life balance state, and there’s no free lunch in tech. I think if you don’t work hard, someone else will, and you talk probably can step it up in terms of intensity. Yeah.

21:09 – 21:28

Max: I mean, it seems like they’ve got, you know, a lot of folks who’ve been there, done that. Now at this point coming at it, great firms that got the the VC firms like yourself and others that are starting to invest in the ecosystem. Do you see a lot of the Utah VCs continuing to invest in Utah companies, or does that kind of visit a Utah firm?

21:28 – 21:30

Max: But they’re still investing in the Bay and everywhere else?

21:30 – 21:51

Tyler: Yeah, there’s probably 4 or 5 active firms that are based in Utah that have the ability to lead around. And I’ll speak for Pelion specifically. We’re a $500 million fund. It’s our eighth fund. So we’re Utah’s oldest and largest venture fund, and about half of our investments have a tie to Utah. That’s not a deliberate quota, per se.

21:51 – 22:06

Tyler: It’s just a function of our network. But it’s been true now for, I think, 7 or 8 years, where 50% of every investment we make has a Utah founder or a Utah headquarter. And then the other 50%, the majority is call it California, New York, Southern Cal, Southern California.

22:06 – 22:11

Max: I didn’t mean to make this a commercial for Utah, but I mean, what’s not to like right there is.

22:11 – 22:12

Tyler: Helps not to like man.

22:12 – 22:31

Max: Such competent people across the board. I mean some of our best employees that outreach you know, we’re we’re from Utah and ended up in Seattle or working remotely from Utah. We worked with a ton of, you know, partners and customers that were up and down that kind of strip of, of offices, you call maybe Silicon slopes or whatever.

22:31 – 23:06

Max: It’s, you know, Draper, Sandy, Lehigh, you know, that whole Provo kind of strip there and then, you know, you get these amazing views from your office buildings, like snow capped mountains is, great quality of life. It’s relatively cheap compared to the bay and other cities, so it makes total sense. Are there any other, you know, I guess like parallels, like what does it have to do with, like, kind of the LDS background or anything like that that, you know, folks have gone out and done two years of selling and then, you know, of course, maybe selling in an area where you don’t speak the language might be a lot easier that, you know,

23:06 – 23:09

Max: going door to door than, you know, getting on the phone and selling software.

23:09 – 23:34

Tyler: Yeah, there’s no doubt there’s an element of that. The joke is that if you can sell Jesus, you can sell anything, and software falls into that bucket for sure. And so you have a lot of people who are used to getting turned down, who are used to rejection, who are used to meeting new people. And so our bread and butter as a state has really been kind of the go to market side in recent years, though, because of like the quality of BYU’s computer science University of Utah.

23:34 – 23:52

Tyler: Our engineering has stepped it up quite a bit. We’re not at Silicon Valley levels, but we are producing great engineering teams. Redo Remy, jump. Several of these startups now, I think are on par with some of the best Silicon Valley engineering orgs in the world. It’s it’s fun to watch.

23:52 – 24:08

Max: As an investor that and a former operator, are you getting most of your deal flow coming out of the BYU’s and engineering organizations, engineering colleges, or are they folks that have come out of FIL or DV or, you know, companies that you’ve worked for previously or your colleagues have worked for?

24:09 – 24:27

Tyler: Yeah, it’s a mix of both. If I go back to the last 4 or 5 investments that I led, one was a referral from another venture capital is my friend Larsen, who runs harpoon, who said, we got to meet this founder from Valinor. Another one was called Outreach on Twitter. Marty from from agree. Another one was a referral from a friend.

24:27 – 24:34

Tyler: So there’s a lot of referrals and there’s a lot of Twitter and Utah networking that takes place. I think it’s a good mix of all that. Yeah.

24:34 – 24:43

Max: You’ve been, very active on Twitter over the years. Do you attribute good deal flow and, and, you know, positive outcomes from kind of that activity?

24:43 – 25:05

Tyler: Yeah, I can point to a lot of positive outcomes from Twitter. I can point to a lot of negative stuff, too, I think on that. It’s been awesome. But, you know, it’s a time suck, no doubt. But like every job, be it, early in my career, when I got hired at Wealthfront, Andreessen Horowitz, then Divi, all of it can be tied to some part on Twitter.

25:05 – 25:19

Tyler: People find you, they read what you write, you form relationships before you meet in person. Several hires that I’ve made have come from Twitter, several founders that I’ve invested in. So yeah, Twitter is a definitely a big part of my addiction.

25:19 – 25:36

Max: You mean great follow on there. It’s a common theme with a lot of the investors we’ve had on the show so far. And what I kind of like is investors who are good investors that are, you know, one A and then like one B is good on Twitter to not kind of the other way around. We had Ed SIM on recently follow a lot of his stuff.

25:36 – 25:56

Max: Great newsletter. I just you know, really thoughtful investor obviously track record to back that up. But then, you know, great. Follow on Twitter as well. You know, let’s go back to your time as an operator. So Wealthfront Divi, what do you take away from those experiences you know and bring to your investing style?

25:56 – 26:13

Tyler: Now I’ll give you an example from Wealthfront. So Andy Radcliffe and Adam Nash were the CEO and you know, and he was the co-founder of Wealthfront. They both kind of gave me the shot to join Wealthfront. And it was my first time in product. I was a salesperson before that, and I if I’m being honest, that’s who I am.

26:13 – 26:40

Tyler: I’m probably a sales person at heart, but I learned product as well front. And so that was number one. As I learned how to work with exceptional engineers as well front as a product lead on a bunch of our core experiences and had a blast. I love product and that’s what I ended up doing. A Divi is the VP of product, but so that’s number one is they taught me how to build product with a high bar of quality, and to move as fast as you can with engineers who will push your thinking every single day.

26:40 – 27:12

Tyler: And I fell in love with that. I’d say the second thing I learned is just how important it is to have an intense, driven CEO. And he was the CEO for most of my time at Wealthfront, and he, he’s just driven, man. He was absolutely driven to take the industry on and to build a public company. And in the face of so many people who thought, well, from was the dumbest idea, you know, he took it public well from when public like six months ago and, you know, was worth 1 billion or $2 billion, depending on how the markets are reacting.

27:12 – 27:34

Tyler: But it’s, it’s pretty incredible to see a guy call a shot. Maybe it takes 12 or 15 years, but to go out and do something when the odds are against you, it only happens with the founder is intense. And so that is like a big component of what I look for now is you’ve got to be ultra intense across essentially everything you do as a founder or you just have no shot.

27:34 – 27:42

Max: Yeah. And that goes to then Divi two, which had a nominal outcome in 2021. Did you stay on through the bill acquisition at all?

27:42 – 27:59

Tyler: Yeah. So Dave, you got acquired in 2021 and I was there for maybe a year or so after that. And then it was pretty clear that, you know, it wasn’t the right place for me. And several of my other friends and most of us were gone after that. But yes, that theme was true as well. Blake Murray, the founder of Divi, is ultra intense.

27:59 – 28:16

Tyler: He was trying to build a massive business, and the unique thing about Divi is the speed that it happened. I mean, we went from 0 to 100 million back in these days was really fast. It took like four years, you know, which is phenomenal. Maybe five years. Whereas now it’s like you do it in a year, I guess.

28:16 – 28:26

Tyler: But that and then we sold for $2.5 billion after 3 or 4 years, basically. So it was just a phenomenal ride, and the intensity was just how quickly everything happened.

28:26 – 28:39

Max: And you got out at the right time for like local maxima valuation. Right. Because you look at what Brex just went for, it’s only two X. And the revenue had the I don’t know probably closer than ten x right.

28:39 – 28:58

Tyler: Yeah. So when we sold it was around $100 million run rate. And it sold for $2.5 billion. And so a 25 x multiple. And so obviously that’s a very good multiple to sell at the market. You’re hinting at this market right after the acquisition. It actually continued to go way, way up. Bill stock was like you know doubling.

28:58 – 29:16

Tyler: And then in 2022 I believe when rates hiked everything was just crumbling. And so in retrospect and in prospect, the the timing was very, very good. It was a great is a great time to sell. And you know, what’s cool about it is I think if you ask Buildcon, they would say they don’t regret doing it even at that price.

29:16 – 29:26

Tyler: I think it’s a big component of their story. It’s a big component of their growth. And they would say that that was just the market at the time. And I think that they’re happy with it. I don’t want to speak for them, but I think that’s what they’d say.

29:27 – 29:43

Max: Yeah, I think so. I think there’s a great deal for them. And their stock went up quite a bit at that point. So I’d love to know your kind of thoughts then on like the macro environment you’re investing in this wild time of AI, you had 2021 where we had this kind of peak and then trough into 2223.

29:43 – 30:15

Max: Now I kind of go peaking again here a couple years later. How do you reconcile, you know, DV being worth 2.5 billion. You know, where in 2021 then you’ve got Brex realized at five and a half in 2025, and then you’ve got ramp unrealized but invested at 32, you know, in 2025, like as you’re investing and as you’re, you know, part of this ecosystem, like how do you buy and sell your own companies accordingly?

30:15 – 30:28

Max: If you were investing in one of your companies and it was in the same world, like let’s say you were an investor in Ramp, but you were in there series B, are you are you taking profits at 32, seeing what’s happening across these other companies?

30:28 – 30:52

Tyler: It’s a really good question. And obviously it’s case by case if you ask ramps specifically, I actually believe they’ll be worth $100 billion someday. And so one of the main lessons from the DV ramp story is that in infinite markets, which, you know, B2B spend essentially is infinite, you have room for many, many, many, many people who have successful exits.

30:52 – 31:09

Tyler: That doesn’t mean there’s many winners, because there’s that ramp. Ramp is the winner. I don’t want to get caught in that. Like ramp is winning, but there can be many successful exits, which I would put Brex and DV in that camp as well. And you know, what’s crazy is you even look today, 2026, there’s still people attacking this market.

31:09 – 31:35

Tyler: Slash are you familiar with them? Slash is the power raise at a massive valuation and they’re doing something fairly similar. Mercury’s now in the space. It’s just not never ending. And that’s one lesson. Is these big markets like tsunamis, they can pull massive businesses into very, very large sizes. So what I think of selling ramps, equity, if I had it right now, I would not, I think it’s going to be three x as valuable as it is today, in the next five years.

31:35 – 31:37

Tyler: I could be wrong there, but that that’s my belief.

31:37 – 31:56

Max: So then are you trying personally when you invest, are you trying to invest in categories where the markets are huge and there could be many winners? Or are you niching down and and you know, vertical sizing and saying like, okay, this is going to be a winner take all or is it. It was nuanced, but is there a strategy around that at all, having seen it play out?

31:56 – 32:14

Tyler: I do think it’s nuanced and where I kind of find, the line between all of it is you have to have, a founder that you are just so excited to work with, that you or you have to be in business with and and then if that founder is that good, they will either grow the market. I mean, Brian Chesky grew this market out of nowhere.

32:14 – 32:35

Tyler: Or, you know, you think of Uber and Travis growing this market out of nowhere. So I would hate to say that it has to be a big existing market like corporate spend is. But, you know, you might say with Uber there was an existing market. It’s called taxis. And they just had a unique way to capture that. In the same way, the Divi Rex and Rex and Ramp had a unique way to capture that existing market.

32:35 – 32:50

Tyler: But the common thread across all is like, do I have to be in business with this person? And do I want to call them on Friday evening and hear how things are going? And do they want to call me? And then hopefully you’re in a market that continues to grow massively, and they’ve got a unique way to capture it.

32:50 – 33:00

Tyler: But that’s the common thread as I think is this is the people are really good and Eric’s amazing. Pedro and Enrique from Brex are amazing, and I think Blake and Alex from divvy did an amazing job.

33:00 – 33:14

Max: And in the companies that you invest in, since your background is kind of on the sales and strategy side of the house, is that where you in the firm are typically supporting portfolio companies or is it pretty much everything, like what’s the Pelion kind of package? And like for you.

33:15 – 33:36

Tyler: Here’s how I pitch it to founders is you and I both have probably spoken to a few thousand founders at this point, and I think I know what they want, which is a product they want to buy, which is not just money, because anyone can give you money. It is improved odds of success. So in my view, the best investors find a way to bend the odds of success for a founder.

33:36 – 33:59

Tyler: And I think there’s two modules to that product and I break it down into two modules. The first is a trusted advisor, and the second is a helping machine. And the trusted advisor piece. It may sound like trite and stupid, but most investors fail this piece. They’re not a trusted advisor in the sense that I don’t believe. Like, does the founder know that they have the founder’s best interest at heart, even ahead of their own?

34:00 – 34:17

Tyler: Does the founder know they will always tell them the truth? Does the founder know that they can call them with good or bad news? As soon as it happens and have a productive conversation when they get a text from this person, do they like getting this text or do they cringe a little bit? We all know the difference between the two, and to me, that is the key of a trusted advisor to do.

34:17 – 34:38

Tyler: They have experiences that I believe that have give them credibility to give me any advice? If they’ve never worked in startups, it’s pretty hard to do that. In my view. There’s exceptions to this, and that’s the trusted Advisor piece. The Helping Machine piece is a pretty particular pitch we give founders. And I’ll give you a specific example. I’m on the board of a company named Reto Reddit.com.

34:39 – 34:58

Tyler: It is one of the fastest growing companies in the country. Most people haven’t heard of it yet, but they are growing massively. They’re at 4000 brands now. It’s an e-commerce compound startup, so anything your brand needs to touch between the customer and the brand. Redo basically handles it. And I sat down with the CEO of redo, who happened to be Devco.

34:58 – 34:59

Tyler: His name is Sterling is.

34:59 – 35:00

Max: Going to say, yeah, okay. So he’s there now.

35:00 – 35:24

Tyler: Yeah, he’s there now. He’s running a redo. And he and I put together a contract. We called it like a Ben the odds contract. And I said, Sterling I’m going to commit to X number of customer intros, X number of engineer candidate intros and X number of product sessions with your DMs to help them. And we created this contract with a specific quota because he’s, you know every he puts everyone on a quota, signed our name to it.

35:24 – 35:46

Tyler: And then every month at the end of the month, I sent him my investor update for what I did to Ben, the odds of success to redo, rather than sitting back and waiting for him to send my investor update. You know, as far as I know, there’s not many investors that provide that product to their founders and it doesn’t scale well, which gets back to you better fall in love with the person you’re working for, because you can’t do that for many people.

35:46 – 36:02

Tyler: But, you know, we sent like 50 customers to redo and like 15 great candidates. And, you know, I think he would say it definitely bent the odds of success, especially in the first year of business. So trusted advisor, helping machine. That’s the package I try and offer people.

36:02 – 36:16

Max: So then what’s the fund model for a $500 million fund for that type of company? So like if you’re, you know, you’re very in the weeds with this company. They’re pretty far along. Are you buying up as much as you possibly can along the way.

36:16 – 36:34

Tyler: In the case you redo? It’s actually we have we let their seed round, then we let the A, then we preempted the B or co-led the B, and then another round that hasn’t been announced yet. So we have plowed a large amount of money into redo. And we try and do that with our best companies. Remi is another one.

36:34 – 36:53

Tyler: Remi ABC.com. And the best example of this Pelion best investment ever was Cloudflare. You know, a return well over $1 billion to our investors. And we were early in Cloudflare and, you know, putting in tens of millions of dollars into Cloudflare. The key, though, is you have to do it in the right companies. Right? Because follow on into the wrong companies is obviously no, no good.

36:53 – 37:02

Tyler: And that’s the default. The default is they’re not an exceptional company. So you got to find the few where they can actually do this. And that is the key. The whole game as you know.

37:02 – 37:14

Max: Yeah. And then buy up as much as you can be as helpful as you can. That’s right. So and you’re supporting obviously with distribution customer introductions. Did you make the investment then plug Sterling into the business or was he the founder.

37:14 – 37:33

Tyler: Yeah. What happened is the founder his name’s Tay Brown, Utah guy, great great entrepreneur. Sterling and I left bill.com around the same time and joined Pelion as venture partners. And the idea was we find a few companies to help and to advise as venture partners. Sterling picked redo and you know redo picked him and they really liked each other.

37:33 – 37:49

Tyler: Tay and Sterling got along well, and to Tay’s credit, he came to this idea before us and said, honestly, if I could get Sterling to run this business, I guarantee it would have a much higher ceiling and I’d rather scale out of it. And so we, we worked with Tay to figure out the right structure for that.

37:49 – 38:10

Tyler: Sterling basically became a co-founder after the company had started. And, took over as CEO and has ran it for the last, I guess, three years now. So that’s a very unique example, where he started as a venture partner and then became a CEO. And we don’t, you know, obviously do that very often. But that type of active help incubating companies is something we do pretty commonly.

38:11 – 38:31

Max: Yeah. That’s a that’s incredibly impactful. Switching gears for a second, you know, we’re we know you’re out there trying to find these I wouldn’t call them diamonds in a rasp. But you know, great companies coming out of Utah or having some kind of tentacle in the Utah ecosystem. And then you’ve got OpenAI, anthropic, some of these massive, massive companies.

38:31 – 38:53

Max: How are you thinking about the ecosystem with AI like those players involved? Like, are you is every company going to eventually be a wrapper to the models? Are you thinking about moats and like, hey, we need to build companies that anthropic can’t just pivot into or build the product into. Obviously, you know, they’re doing picking up over 100 million bucks or whatever it is.

38:53 – 39:05

Max: It’s like it’s a drop in the bucket for distribution, right? So if they want or conquer something they can is really what that acquisition said to me. How are you think about that in terms of investing and distribution in general?

39:05 – 39:23

Tyler: Well, the most direct answer is I don’t think I have it figured out, but I think I am thinking about it a ton and it certainly is a component. I mean, the question of how quickly content can Claude build? This is certainly a component in the value of software, as you, I’m sure you’d agree, is basically zero. Now.

39:23 – 39:48

Tyler: I mean, I’m building things now that would have taken our engineers a divi months to build. I’m doing it in literally 27 minutes. You know, it’s just wild. And so I don’t think there’s much value in software per se. But one of the other lessons of Divi Max was you have to have a product innovation. And if you have a business model innovation and tie these two together, massive companies can form.

39:48 – 40:06

Tyler: And in the case of Divi, yes, we had a product innovation. We were getting rid of expense reports. We were automating them and tying them to a card. But the business model innovation might have been more impactful, which is we give it away for free and we monetize on the interchange. And that seems obvious now. But no one was doing it then.

40:06 – 40:29

Tyler: And and I think you’re going to see more and more of this business model innovation in a world where software is commoditized, which means marketplaces could play very well because you can now monetize through a rake rather, and give software away for free. Funny enough, redo is another example of this. They give a bunch of their software away for free and then monetize on something called like the returns coverage that they offer as well as other things.

40:29 – 40:50

Tyler: And it’s just a world where you start to charge. Maybe it’s outcomes, which is a business model. Innovation you are agents are charging for outcomes, but charging for software is just dead. I think. I don’t I don’t think you can do it and build a venture scale business. Now there’s exceptions to that. Obviously. I think, you’ll see Harvey and La Guerra, they’re charging for software, but really, is it software?

40:50 – 40:55

Tyler: I don’t know, I think it’s actually moving to outcomes. And that is a business model innovation. So it might fit in my framework.

40:55 – 41:23

Max: Okay. Yeah. We’re in a company called paid which is the former CEO outreach mail company. And it’s billing metering and margin management for, you know, I so you can charge for workflow. You can charge for credit so you can charge for actions. See, based pricing is, is certainly feeling more like a thing of the past. And yeah, and even in the CPA pricing heyday, when you look at some of the best public companies, their platform plus consumption, like they were almost never seat based.

41:23 – 41:43

Max: Right? So I always remember being at outreach and doing this math in my head like, well, we tell the customer we’re going to make them 20% more productive. And so like, they could either like Jevons Paradox, that thing and like hire more people because they’re now they’re more productive. But they can also go the opposite way then like hire less people to hit the same number and then like we charge for seed.

41:43 – 42:10

Max: Yep. Kind of screwing ourselves here because like, we’re helping the customer get a better outcome, but also buy less of our software. So maybe this isn’t the best way to charge, but the problem is that you run into is like and I think Rory O’Driscoll said this on a podcast recently, about like letting the customer the way they like to be charged, you know, getting people out of this, like seed based pricing mentality and into something new that might be better for them.

42:10 – 42:20

Max: It’s tough and especially when there feels like there’s less predictability around it or it’s harder to track. Are you have you been going through that kind of exercise with your portfolio companies at this point?

42:20 – 42:45

Tyler: Yeah, 100%. I think every one of them is going through a transformation right now on how they charge, what products they build, and having this business model innovation is being forced upon them. If they’re the incumbent. And that’s why it’s always great to not have it be forced upon you, but to do the forcing. Right. And and so I think the quicker people adopt this agent first framework of outcomes and charging and clever ways that aren’t just seed based, the better off they’ll be.

42:45 – 43:02

Max: Yeah I agree. What’s one thing you’ve learned from raising kids that’s helped you become a better investor? I’ve had a lot of people on the show that have kids, but I ask you that because you are very you post a lot about your kids and it’s awesome. Like outline looks like a lot of fun. We’ve talked about it separately.

43:02 – 43:18

Max: You know, we’ve looked at potentially moving to a mountain town either there or somewhere like it, but I feel like there’s always so much that I learned from having kids that it’s so applicable to this, this job. And even as an operator, probably similar like managing people, but want to get your $0.02 on there.

43:18 – 43:37

Tyler: Yeah. One thing you learn, so we have four kids and you learn pretty quickly that one approach for my oldest boy, maybe I come down on him really hard. If he struggles in something and I like, I know that that’ll do. He’ll respond well to that because he actually likes to be challenged and he likes when I come after him.

43:37 – 43:56

Tyler: A little bit. Whereas if I do that with my other boy, he shuts down, his confidence is zapped and he actually withdraws from me. And so I think you kind of learn that this is just a leadership principle, not in VC per se, but people are different and that you better adjust your approach to every person if you’re optimizing for your intended outcome.

43:56 – 44:15

Tyler: If you’re not optimizing for an outcome, just do whatever you want to do and then let the chips fall. But you can’t really do that in parenting, and I don’t think you can really do that as a leader either, because people respond differently. So you have to adjust if your goal is to help them reach potential, you’ve got to be the one adjusting and you can maybe guide them to be tougher over time.

44:15 – 44:24

Tyler: But people move maybe an inch at a time. And I see parents, I see myself make this mistake a lot, where I maybe don’t adjust between the two and it hurts the relationship.

44:24 – 44:45

Max: It’s certainly like a delicate relationship between investor and founders and especially like early in your career. Like, I don’t know if you see this the same way that we do. You know, we’re a pretty new fund on the block. Like for us, reputation is everything. And so you need to make sure you balance kind of the challenge and the approach with being founder friendly and all that type of stuff.

44:45 – 45:02

Max: And ultimately, you know, your founder friendly and your founder focus, but you want to do what’s best for the company and, and make sure the company grows and scales the way that it does. But it’s sometimes tough to strike a balance in your Ace fund now, but you’re still pretty early in your venture career, so do you think about that at all?

45:02 – 45:05

Max: You know, when you’re approaching investments and you’re approaching founders?

45:05 – 45:24

Tyler: Yeah, for sure. I think the two assets that a venture capitalist has is their network and their reputation. And those two things play off of each other like a flywheel. I think the better your reputation is, the more your network will grow and the more your reputation will get. As long as you meet that reputation with every new node in the network.

45:24 – 45:47

Tyler: And if you look at the winners in the venture capital game that we play, they generally have the best network and the best reputation, and there’s many subcomponents of what causes that reputation. I tend to think it’s if you’re the most helpful and the most trustworthy, which is why I pitched it Trusted Advisor and Helping Machine. Those are the subcomponents of building your reputation, I think, which then creates a bigger network for you.

45:47 – 46:07

Tyler: And I think about my day in terms of that. What am I doing to improve my reputation in reality? Not my like, like fake reputation, but maybe my character so that I am more worthy to attract a great partner. Whether it’s a partner, a Pelion, or whether it’s a future founder, I think the best way to do it is to be good enough to attract them.

46:07 – 46:27

Tyler: Same as a spouse, right? How do you find a great spouse? Well, you deserve a great spouse. It’s the Charlie Munger quote. And so I think that’s the best way to play this game is how do I attract the next Sam Altman or Dario or whomever be worthy of someone like that, which means work very hard to earn their trust and to be in a spot where you can help them.

46:27 – 46:44

Max: Well, we certainly appreciate your outspokenness on Twitter and everything. I think I strive to to be as good at that as you are. We probably need to prioritize posting more on. There was a LinkedIn guy, myself for a long time, and now I think I need to be a friend.

46:44 – 46:48

Tyler: Sterling LinkedIn is like being the king of the trailer park, so just keep doing that, man.

46:48 – 47:04

Max: I got to move over. I got to get I’m still call out Twitter. I got to get over to X and step my game up for sure. Yeah. Well I appreciate you coming on the show. This was awesome. We we picked apart a couple different things here. Definitely wanted to get your take on kind of the parenting piece of it.

47:04 – 47:23

Max: You know a huge respect for a lot of my Utah friends, lots of kids, great parents, also great employees. And hard workers and colleagues. And so, whatever, whatever they put in the water over there, everybody should be, having a sip at least. It’s pretty cool out here.

47:23 – 47:27

Tyler: Open invite any time you’re in town, come by. Pelion. We’d love to have you.

47:27 – 47:39

Max: Definitely, definitely appreciate it. Yeah. That was another fantastic episode of the VC series on the GTM. Now podcast. Head over to Apple, Spotify, or YouTube and give us a like and subscribe and we’ll see you on the next one.

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