Jon McNeill on VC 2.0 and creating startups in house | Equity Podcast

Elon Musk's Compensation Package

• John Mcneel, a former Tesla executive, discusses Elon Musk's $56 billion compensation package.
• Mcneel believes the package aligns compensation with shareholder interests but may overlook other team members' contributions.
• Large compensation packages can discourage talented individuals from taking on leadership roles due to limited autonomy and the founder's influence.
• It's important to take care of the entire team and ensure compensation structures align with all employees' needs and contributions.

dvx Ventures

• dvx Ventures is a "company creation platform" that generates business ideas internally.
• The firm's process involves rigorous vetting and validation of ideas for viability, scalability, and profitability.
• dvx Ventures operates on a "no fee, no carry" model, where compensation is based solely on the appreciation of shares in created companies.
• This structure aims to achieve ultimate alignment of interests between the firm and its investors.

2 and 20 Structure

• The 2 and 20 structure aligns the interests of investors and venture capitalists, leading to better performance and higher returns.
• Long-term investors prefer the 2 and 20 structure for its long-term compounding and aligned incentives.
• Sequoia and other big firms have adopted the 2 and 20 structure due to investor demand for alignment and long-term compounding.
• The 2 and 20 structure may not be suitable for venture capitalists with institutional investors who need predictable liquidity.

BC20's Idea Generation and Portfolio

• BC20's idea generation process involves both outside-in and inside-out approaches.
• The outside-in approach analyzes thematic trends and identifies investment opportunities, while the inside-out approach involves serendipitous insights and orthogonal thoughts.
• BC20's portfolio companies span various sectors, including consumer tech, B2B SaaS, AI, climate tech, and others.
• The common thread across these companies is a hard technical problem within a profitable business market.
• BC20 is not afraid of hardware startups and has a clean tech business focused on energy efficiency in commercial buildings.

Cognition Controls

• Cognition Controls, led by Natalie Elliott, is developing a hardware and software solution to optimize energy usage in buildings.
• The company has achieved a 40% reduction in energy costs for buildings and is approaching 1,000 installations.
• The investment opportunity identification process involves forming an advisory board with deep domain expertise to help design products and solve technical problems.

Talent Acquisition and Generative AI

• Finding CEOs with the right technical and business acumen is challenging, but the company seeks transformative leaders who can scale the company effectively.
• To ensure diversity and access to a broader talent pool, the company strategically partners with search firms with diverse networks beyond their own circles.
• The company views generative AI as infrastructure and believes the real investment opportunities lie in what is built on top of these models, such as autonomous driving.

Cruise and Autonomous Driving

• Cruise's accident in San Francisco raised the bar for autonomous vehicle safety.
• Cruise has reset its priorities to put safety first and address regulatory concerns.
• The company is now re-entering the market with a focus on supervised driving before transitioning to commercial Robo taxi services.
• Cruise believes the US must be a player in autonomous driving and is committed to being one of the leaders in the field.
• There is no public pressure on Cruise to meet specific dates for commercial operations, as the company wants to ensure it does things the right way.