How AI Impacts Software Businesses

My guest today is Dan Sundheim. Dan is the founder and CIO of D1 Capital Partners.

He thinks about markets and businesses constantly, and has built a career entirely around that obsession. He manages over $30B across both public and private markets, with investments in SpaceX, OpenAI and Anthropic, and a public portfolio of names you may never have heard of.

Dan shares the story of the short case he wrote on Orthodontic Centers of America and posted on Value Investors Club, which crashed the stock, and helped him land his first job.

He shares why he backed Anthropic at a moment when many people told him it was the Lyft to OpenAI’s Uber, what reading Dario Amodei’s essays reminded him of Jeff Bezos, and how he thinks about LLM business models through the lens of Netflix and Spotify.

We spend time on the extraordinarily stressful moment in early 2021 when GameStop hit the firm, and what Dan believes is the single biggest tail risk facing the global economy right now.

For the full show notes, transcript, and links to mentioned content, check out the episode page ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠. 

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Editing and post-production work for this episode was provided by The Podcast Consultant (⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://thepodcastconsultant.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠).

Timestamps:

(00:00:00) Welcome to Invest Like the Best

(00:02:43) Intro: Dan Sundheim

(00:03:58) The State of Public & Private Investing

(00:07:32) Investing in OpenAI and Anthropic

(00:10:22) LLMs Business Model

(00:14:13) How LLMs are like Netflix and Spotify

(00:17:08) Focus v. Scope

(00:22:43) The Bear Case for Hyperscalers

(00:26:36) The Software Sell-Off

(00:31:08) If Scaling Laws Stopped

(00:32:18) Advice to a 12-Year-Old Investor

(00:33:54) GameStop: D1’s Darkest Hour

(00:37:14) The Pivotal Dinner with LPs

(00:40:56) Staying Calm and Confident

(00:42:08) Economic Optimism vs. Societal Uncertainty

(00:44:26) Investing on SpaceX and Rivian

(00:48:09) Why Dan Loves Shorting

(00:48:51) Sources of Inefficiency in Today’s Markets

(00:51:45) The Importance of Loyalty

(00:53:11) Dan’s Group Chat for Founders

(00:55:39) What Motivates Dan

(00:57:28) Posting on Value Investors Club

(01:01:46) What Dan Learned at Viking

(01:04:22) The Beauty of Art

(01:06:49) Under-appreciated Parts of the Global Economy

(01:08:00) The US-China-Taiwan Collision Course

(01:12:10) Good Leaders vs. Good Businesses

(01:13:15) The Kindest Thing