Speaker
David Frankel
Appearances over time
1 episodes
Episodes
1
Podcasts
Quotes & moments
Of all companies created in the last 25 years, fewer than 100 have sustainably maintained a valuation over $10 billion.
Founder Collective's analysis of the top 500 companies created in the last 25 years shows a median valuation of $2.6 billion — meaning 5% ownership returns a seed fund.
In recent Founder Collective funds, the GP (David Frankel and partners) are the single largest LP — more than any external investor — ensuring deep alignment with entrepreneurs.
Founder Collective has held its SeatGeek position since the 2010 investment and has never sold a single share, calling it 'spiritual' at this point.
Frankel says he has never seen secondary markets as liquid as they are now, with top-50 names trading at or above last-round price — sometimes at a premium when insiders know another round is coming.
Frankel says another dot-com-style crash is definitively coming — 'if' is not a question, only 'when' is unknown — driven by the massive capital and valuation inflation in AI.
In the 1820s, China accounted for 25% of global economic output, making it the world's largest economic machine — a historical precedent for its current AI superpower ambitions.
Frankel says it is 'unequivocal' that OpenAI and Anthropic will be disrupted, and that China has an excellent chance of being the disruptor.
Frankel argues Microsoft has done a 'crappy job' of AI generally, and that their AI products feel second-rate compared to the top 3 or 4 players, making recovery unclear.
Olo, backed by Founder Collective from the very beginning with Noah Glass, was taken private by Thoma Bravo at approximately a $2 billion valuation after a 17-year journey.
Founder Collective will not invest in any company unless they believe there is a credible path to a 10x return — a non-negotiable framework used to open every team investment meeting.
Frankel predicts photonic (optical) computing — using photons instead of electrons — will be the key disruptor to Nvidia's dominance in AI chips, with major energy efficiency implications for data centers.
Mikey Schulman, CEO of Suno, told Frankel he spends 30–40% of his time on recruiting — echoing Jeff Bezos's famous claim that he spent 50% of his time on hiring.
The $50M–$100M seed funds are caught in a brutal no-man's land: too large to write the friendly $100–$250K collaborative checks, and too small to lead a competitive $8–$10M seed round. David Frankel agrees with Harry's thesis and argues these funds will be the worst performers of this vintage.
Forget trillion-dollar outcomes. Founder Collective's internal analysis shows the median valuation among the top 500 companies created in the last 25 years is $2.6 billion. Own 5% of one of those, and you've returned your fund. Seed isn't dead — it's just math.
Smart founders are increasingly taking $8–10M from multi-stage funds while quietly keeping Founder Collective in at $500K–$1M. They know the big fund's junior associate might leave, and FC is patient capital that won't orphan them. It costs very little to have a real insurance policy.
The GP is the largest LP in every Founder Collective fund. That single fact explains why they've never raised a growth vehicle. When you eat your own cooking, optimising for management fees becomes impossible — you only care about DPI.
Pro rata rights sound like a founder-friendly perk, but Frankel calls it 'the original sin.' It's a call option against the entrepreneur — not for them. Founder Collective has always had to work to earn the right to put in more money, and they've never led a follow-on round in their entire history.
Twenty times a $50M post used to be the dream. Now you're entering at $1B and hoping for $20B. Cursor sold for $60B. Cognition is at $26B. The math has shifted so dramatically that refusing to enter at unicorn valuations might mean missing the entire category. A billion is the new Series A.
Top-50 AI company secondary positions are trading at or above last-round price — sometimes at a premium when insiders know a new round is coming. Frankel recommends taking 20% off the table even in your winners: returning 25% of a fund early is almost always better than waiting for a potential double.
Frankel is looking for one specific combination: a CEO who is a great salesperson and a CTO who is a genuine magician. The alchemy between them — not identical, not finishing each other's sentences, but deeply aligned — is what separates fundable companies from great companies. In 18 years, he's seen it five times.
Conventional wisdom says Microsoft's OpenAI investment put them at the front of the AI race. Frankel disagrees sharply. Google is actually in pole position — they come from an AI-native background, and search with context is where AI creates the most value. Microsoft's AI feels second-rate. Recovery is unclear.
Nvidia looks invincible today — just as Intel once did. Frankel believes photonic computing, chips using photons instead of electrical signals, will be the disruptor. Optical fiber already handles all connectivity in data centers. The last frontier is the chip itself. When it arrives, the energy consumption argument against AI collapses.
Forget trust-fund kids — Frankel's 'nepo babies' are founders who grew up inside the vertical they're now disrupting. TJ Parker worked in his dad's pharmacy at 14. The Suno founders built their entire careers on audio AI at Kensho. Evan at Rebar watched his uncle's HVAC business get rolled up by PE. That embedded knowledge is an edge no amount of funding can buy.
Shield AI was a defense drone company in 2016 — controversial, unfashionable, and misunderstood. Today it's one of the most important defense technology companies in the world. Frankel's core thesis: the best investments are never in the hot theme of the moment. Applied AI in 2016 was off-piste. The job is to be there 5–10 years ahead.
The driverless car promise that seemed '5 years away' for 20 years is finally tipping. Frankel believes the children of today's founders will never need a driver's license. And with AI accelerating medical compute, treatments like chemotherapy will look as barbaric to future generations as bloodletting looks to us.
Every technology wave has produced bigger bubbles than the last — internet, SaaS, mobile, AI. The AI wave is the biggest yet, and Frankel has no doubt there will be enormous roadkill. But the survivors — OpenAI, Anthropic, SpaceX — will be the Googles and Metas of this era.
Every dominant technology platform has eventually been displaced — mainframes, Microsoft, Google, now OpenAI and Anthropic. Frankel says their disruption is 'unequivocal.' The most likely source? China. And the speed of the innovation cycle means they may not even have time to establish their incumbency first.
Analysis
What they talk about
- Business 54%
- Technology 23%
- Society & Culture 15%
- Health & Fitness 8%
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