# Why AI Models are not a Moat Where Does the Value in AI Accrue; Startups or Incumbents, What the World Has Got Wrong About AI, Why AI Needs a New Story and Who is the Right People to Tell it with Cris Valenzuela, Co-Founder & CEO @ Runway 20VC · Aug 28, 2023 · 41 min · 8,719 words Speakers: Cristóbal Valenzuela, Harry Stebbings Source: https://www.996.fm/episodes/20vc--ep-b862f3db/ ## Cold open **Cristóbal Valenzuela** [0:00]: AI is not just chatbots. I think models are not a moat. Models eventually don't matter. I have so many investor emails of people telling me, love your team, etcetera, but generative AI isn't a thing. Stop saying it's a thing. It's not a thing. Good investors are the ones that are not looking for patterns. **Harry Stebbings** [0:16]: This is 20 VC ## Intro **Harry Stebbings** [0:17]: with me, Stebbings. And this week, we're doing an incredible feature week on the two hottest AI companies, Runway today and Character dot AI on Thursday. So to our show today, and I'm thrilled to welcome Chris Valenzuela, CEO and cofounder of Runway, the company that trains and builds generative AI models for content creation. To date, Chris has raised over $285,000,000 for the company from the likes of Lux Capital, Felicis, Coatue, Amplify, and Nvidia to name a few. Runway's customers include Academy nominated movies, TV shows, media companies, and creatives across industries. But before we dive into the show's ## Sponsor read **Harry Stebbings** [0:53]: day, this episode is brought to you by the go to research destination for bold investing. Curates expert insights, analysis, and financial data to give you powerful perspective for your investment decisions with lightning fast access to over 60,000 transcripts across 20,000 companies, you'll discover a wealth of unique insights to fuel your fundamental research, gain perspectives, synthesize information, and even model outcomes all on Tigus. 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You have now arrived at your destination. ## Conversation **Harry Stebbings** [3:14]: Chris, I am so excited for this. I heard so many great things from so many different people on your cap table. So thank you so much for putting up with my terrible British tones today. Thank you **Cristóbal Valenzuela** [3:24]: so much for inviting me. Huge fan of the podcast. Happy to be here. **Harry Stebbings** [3:27]: That is very, very kind of you. Now listen, I spoke to Sunil of Amplify before we started, and he said to me that you and Runway is the perfect embodiment of founder product fit. Take me to the founding moment of the company and that moment for you. Why does he say that? Sunil is too kind. **Cristóbal Valenzuela** [3:43]: Runway's journey dates back to twenty fifteen, twenty sixteen where I met my cofounders Alejandro and Anastasis in actually art school. The best way to think about it is art school for engineers and engineering school for artists. And while we were there, we were all coming from all sorts of different backgrounds and experiences from programming, engineering, business. And we started just tinkering and playing around with state of the art AI at that time. I know a lot of things have happened now, but try to imagine where models were and where research was ten years ago or eight years ago, and we just build a lot of different things. And so we started tinkering with this idea of taking AI models or research at the time and building creative tools. And so we were just building experiments and experiments over experiments and realizing that there was something here, something special. And then we started delving into image and video generation. And I think we've realized at some point that after building so many things, there was something special around both where things are were heading and how much passion we had for building these things. And so we didn't found the company. I think the company founded us. The **Harry Stebbings** [4:45]: interesting thing I spoke to many of your investors about was also your background. You're not being in Silicon Valley, and you mentioned kind of artistry being at the center of both your education and also how you think today. They called you an outsider. I'm sure in the loveliest way. Do you feel like an outsider? And how do you think being an outsider helps you be better? **Cristóbal Valenzuela** [5:06]: I've always felt a little bit like an outsider, to be honest. I have a background in econ and business, but when I was studying that, I was doing film on the side. So that was strange and I felt like an outsider on both of those worlds. And then I was doing art, but also learning programming, so also felt a bit of outsider on both of those. And then I came to The US and started our company while being in art school. That also felt like a bit of an outsider. It's been a common thread of my professional life. I think being an outsider is both a blessing and a curse in the sense that it allows you to really reason from first principles. You discover everything and ask yourself why a lot. At the same time, you take longer than other people because you're just experiencing for the first time. I think the key aspect of being an outsider is that creativity really sparks from being able to merge different domains and different languages and different professions in a coherent thing. And so Runway, I think it's the manifestation of that. It's a company that merges art and science by being able to be in between. And so you, instead of being an outsider, you create your own world. That's much more powerful, I would say. **Harry Stebbings** [6:05]: In terms of creating your own world, you do that when you kind of grow up in the world as an adult. I always think that we're all running from something, and that our past shape us in many ways. When you think about what you're running from, what would you say you're running from, Chris? **Cristóbal Valenzuela** [6:19]: That's that's a good question. I grew up in Chile. Culturally and as a country, it's a very traditional structure, strict, tradition based country. So things are very rigid, and it's very hard to do anything that goes beyond the norm. And really, I don't feel particularly passionate about people telling me what to do and how should I, like, follow or what are the norms. I'm running away a little bit from that tradition and trying to figure out more of the things I'm passionate about, the things I'm curious about. And that was for me, like, really going to art school, it was it was a curiosity driven approach of just I wanna understand how much AI I can take and put in the art world, and that's what I did. That's what I I'm really passionate about. Would you say you're fearful of mediocrity? I think I'm I'm fearful of people not pushing themselves both intellectually and and creatively, and maintaining a status quo. That's where companies go to die and where creatives go to not really progress is when you feel you're too comfortable. I get a little **Harry Stebbings** [7:14]: bit anxious when I feel like that. David Goggins says something brilliant, which is there's nothing more dangerous than a civilized person. But I I do wanna on that, you know, it takes me to performance a little bit. As a leader today, how do you define high performance then? **Cristóbal Valenzuela** [7:28]: The first one for me has been a a vision and a motto and a value that we've embedded in the company since the very beginning, this idea of getting things done. Just figure it out. It's become so much of a thing I'd run without a make a t shirt that says just figure it out. If you learn how to learn, you can figure out anything, and that's like a superpower. Unlocking the ability to do things without complaining, without understanding, or without necessarily contextualizing things in the sense that you haven't done it before is really a superpower. And for us, at Runway, was. I've never started a company. I had to figure out how to stay in the in The US to start a company. There were so many hurdles and challenges at the very beginning that we just had to figure out stuff. **Harry Stebbings** [8:06]: If you learn how to learn, there's nothing that you can't do. I love that. Can you help me understand? How do you approach learning? Do you have a process? Do you have a preference for the types of ways to learn? How do you approach it? **Cristóbal Valenzuela** [8:20]: I'm very hands on. If there's something you wanna do, for example, when I was diving into neural networks and really understanding the field, I was coming it from a beginner's mindset. And so really what I did before trying anything was I built from the grown up a neural network. Every single layer, every single function, activation function in between, I've curated the dataset. I trained the model, and I built everything that I could get me a sense of how the inner parts of a system work, in this case, in other words. And so for a long time, I didn't knew what I was doing. You just try things. You try. You try. You hit walls, but you keep pushing yourself over and over and over and over. Go and read as many things as you can, and then find a project that you like, and then go as deep as you can on that. Being hands on and being active on on learning by doing something really helps make sense of the world, and that's something I've been trying to do in everything I'm trying to learn since then. **Harry Stebbings** [9:10]: How do you not **Cristóbal Valenzuela** [9:11]: get dejected when the learning is slow or not happening? Find brilliant people. Find people that inspire you and can help you along the way. I think that that for me has been critical. And so if you feel unstuck, there's something that you can't really come across, it's too difficult, just ask someone that is gonna help you. **Harry Stebbings** [9:28]: What's been the most recent subject that you chose to really engage in a learning process, beginner's mindset on? **Cristóbal Valenzuela** [9:35]: I mean, everything, to be honest. From fundraising to building a company to hiring top talent, everything has been a journey of learning. And I think really not being afraid to be embarrassed or mistaken because that's the only way you're gonna do it. More recently, we've learned a lot with what we're doing with Gen-one and Gen-two, which are our two latest video generation models. And there's so many assumptions that you might think about how these models actually work, but the moment you put them out, most of those assumptions are gonna be changed. And so we're learning a lot and we're learning a lot about how people are using and how creatives are using some of the research we're putting out. **Harry Stebbings** [10:09]: What assumption has changed the most from Gen-one to Gen-two? Well, it's like we assumed x and it was totally wrong. I **Cristóbal Valenzuela** [10:16]: think there's a lot. One that I've been thinking a lot about is UIs don't matter as much. A first approach to creative software comes from this idea that you have to be extremely thoughtful and extremely diligent on, like, how everything is gonna look and it's how everything's gonna work. But true is since the field is moving so fast, the assumptions that you have around how models are gonna be used in a creative context might change rapidly. And so if you build a lot of assumptions and preconceptions on really how to get the best out of these models, you might be wrong really soon. And you just need to throw it out and start again. And so keeping the value at the center and less of what you think people might get out of those models is really, really critical. **Harry Stebbings** [10:55]: How do you do that if you don't project out what they can get? It's kind of like a free for all. It's almost like product marketing to a horizontal audience. So if you don't guide the user, how do you give a great UX? **Cristóbal Valenzuela** [11:08]: You test a lot. Like, if you think about it, the thing people do when they come across this idea of video generation is they assume that everything they know about film and cinema and film will replicate itself to this new medium. And the thing is this is a new medium. It's a new tool. It's a new set of narrative possibilities. So it's very different from everything we used in the past. The most challenging thing is uncovering those things because we haven't had the chance of doing it in the past. It's like you find yourself in front of a camera, the first camera ever. And everything you've been using in the past are paintbrushes and paint tubes. A camera doesn't work in the same way as a paintbrush, and the things that you can do with it are only gonna be uncover and tap the moment where people get their hands on it. That's how cinema was born. You have so many people trying this device and coming up with new forms that are beyond your comprehension or beyond what the creators even imagined. I think that's in part a lot of what we do. We need to build this camera. We need to put this device into the hands of more people so we can collectively, as an artistic community, figure out all the primitives and UIs and narratives that will emerge from it. **Harry Stebbings** [12:10]: Can I ask you why I think straight away to Dylan Field at Figma with this? And what I mean by that is, like, they have really heavy build outs technologically. And you chose to kind of build in public where bluntly, you know four seconds is short, but it's better to be out in the wild and have people use it. Dylan almost took the other side, which is really didn't release for two to three years until it was much more perfect. Why did you decide to release knowing that maybe it was challenging for people to use in full? **Cristóbal Valenzuela** [12:39]: In our case, this is something new. The idea that you can generate video, create video with nothing more than words, for example, has never been tested out before. So you can, for years, build assumptions on how people are gonna use it and the value and opportunities on the market, but the truth is that you might be wrong and really wrong. And if you build with that assumption for too long, you're going to miss really getting feedback and really understanding and learning from use cases and from people who are going to be using it. In other cases where domains and perhaps the value is a bit more defined, you can spend a bit more time and build in private and then release. It was pretty much the realization that the only way to move forward the field and the intersection of creativity and and artificial intelligence was we build by as close as we can with the community that we're building towards, which is artists and filmmakers. And we're gonna gain a lot more from being there than being too silent or too private about what we're doing. **Harry Stebbings** [13:34]: You mentioned experimentation being key to the workflows of artists and creators. So many are scared that AI will replace them. You know, we're seeing the strikes. You always say that it's an enabler. Has the media got AI wrong in terms of replacement, not enabler? And is enabler not just an intermediary step to replacement? **Cristóbal Valenzuela** [13:53]: You know, I think a lot about this. I think on the one end, language models have dominated the discourse, the public discourse, and the whole field of AI has been reduced to this idea that AI is just language models. Part of it has been due to the success, of course, of ChatGPT, which has been on the minds of everyone. And AI is not just chatbots. I think the reductive view of thinking about what AI is bringing to the table and how revolutionary and and how much change is gonna do is just not an interface where you can chat with a system. And so a lot of the discourse I feel sometimes comes from the place of extrapolating the current state of language models and the challenges they have, which are true, to other domains, which divert and are very different from just building chatbots. And so in the one end, I think the core realization for me and really what I mean trying to emphasize more is that we need better stories. We need better narratives. We only hear one story these days, which is horror stories. And I think part of it has been heavily influenced by fiction, by movies we watch, by books we read. But that's one story. That's one way of seeing the world. There's other stories and other narratives that can help us really untap another set of possibilities. And so with Runway, we're untapping those possibilities of, hey, not everything is a language model. It's more and more complex than that. **Harry Stebbings** [15:07]: Why do screenwriters, like, strike if it's an enabler? What do they not see? **Cristóbal Valenzuela** [15:13]: A lot of the discourse around our replacements comes from this rather unsophistic view of the world that you're gonna type in something just write me a script or write me a movie, click enter, and you get an entirely the exact same script that you did a month, a year ago. And for me, that's come from a place of maybe maybe we never use these tools. Like, writing a book and writing a script is way more than just pressing enter. It's a process. I go back to experimentation. It's about feedback, and it's about people, and it's about using these tools in the context of more a macro project. And so I think I would invite more of those more people who are very skeptical about these tools about to use them and to experiment with them and see where they are and see how they provide value to your creative process and understand that this is not a zero sum game, which I think a lot of people think about it in that way, which is you're gonna type in, get me a movie, click enter, and you're gonna get a movie out of it, a perfect movie, exactly the way we've been making movies for the last hundred years. And of course, it doesn't work like It's much more nuanced, it's much more complicated, and it involves a lot of feedback processes within. **Harry Stebbings** [16:12]: Can I ask, I'm always stuck here? What's more important, data size or model size? And how do you think about the importance of size of model? I **Cristóbal Valenzuela** [16:21]: think size of model matters in the sense that we've seen that larger models parameter wise are gonna get better at doing more things in multimodalities, but at the same time, it depends. It depends what you're trying to do. And there's opportunities to get smaller get models to be smaller, perhaps more specific to the type of thing that they're trying to accomplish. And we're already seeing approaches like this in the language domain. We'll start to see this as well in the image and video domain. **Harry Stebbings** [16:46]: You think we'll see the verticalization of models or, like, Richard Socher with you.com very much pronounces the importance of a single model to rule them all, which is much more horizontal? **Cristóbal Valenzuela** [16:57]: Yeah. I don't think there's gonna be a single model to rule them all. That's like saying that the Internet would only have one ecommerce site. There's many. You have something like Shopify where everyone can build their own website and their own ecommerce site, and you can sell anything. If you think this is a tool and as a general purpose tool, and I say tool AI in general, there's so many opportunities to build different type of models and different ways of working with those models. And it's still very early to be so specific to say, oh, we're gonna only use that thing or that other thing. **Harry Stebbings** [17:25]: How do you think about model lifespan? Do you have to continuously update models? How do you think about that? **Cristóbal Valenzuela** [17:31]: I found myself hearing a lot about models as the mode, and mode has been something that Silicon Valley has been discussing for for some months now. I think models are not a moat. Models eventually don't matter. What matters most is the people building those models, and how fast can you change and learn from those models. And so I don't think that's why I go back. There's no one singular model that's gonna rule them all. What impacts how fast you can learn and change? Getting to the hands of people and understanding how it works. What are their values that they're getting out of it? Pushing the boundaries of both training, research, and figuring out improvements. Four or five years ago, state of the art in language was totally different from where we are right now. Same with images. The basic assumptions of how image generation worked just a couple of years ago was completely different from where are today. So if you find yourself trying to optimize an engineer's love tool, optimize things, that was the wrong thing to optimize for. And so be very humble, be very clear that whatever you have right now today might change and just ship it as fast as you can, learn as much as you can and continue to writing from there. **Harry Stebbings** [18:35]: Can I ask you, you know, when we think about creativity, someone once described hallucinations to me as students who kind of are brilliant, but go off their meds, which is a form of creativity in some How do you think about hallucinations as a feature or a bug, especially given the artistry and creativity that's inherent in what Runway is? **Cristóbal Valenzuela** [18:54]: This is a great example of being a bit more nuanced because hallucinations in language models are different from perhaps what we might understand as hallucination in video models. If you're asking for a fact, if you're asking a language model to give you the capital of Chile and the model gets it wrong and starts rumbling and hallucinating other things, I wanted a fact and you gave me a creative interpretation of of the answer, but in a video domain, in an image domain, in a creative context, maybe you want to have the model rumble a little bit or go off the charts, so maybe you can control the temperature to see where you wanna go. Because again, it's a creative process. And so it depends. I think in some cases, it's actually a feature and it will actually help you uncover more. And in some other cases, you can afford to have a hallucination if you're getting and you need facts. **Harry Stebbings** [19:40]: On the artistry and the artisan element, I had Yan Makun on the show, and he spoke about how unwaveringly this will be an open ecosystem and the benefits that will come from that. With Artisan, developers, creators, do you agree with him on the open, beating, close model? And how do you think about that? **Cristóbal Valenzuela** [19:57]: I think open is always better in the sense that allows you to get to a broader audience faster, and you also get different perspectives because people can build on top of models, and we've seen this. I think, again, it's more than once once you start defining where you wanna build products for people. And so open source versus closed source is only one part of that stack. You're not gonna build an entire company just by being open source or closed source. There's way more than that. And so it really depends. Some companies, I think, are gonna go into open source more and more because it helps their value prop. Some others are gonna go closed source if you wanna build other types of products. I think we're we're always striving to be in between. We've already opened some of the most relevant models in the space that have been game changers, and at the same time, we have more proprietary models as well than we might never open source. **Harry Stebbings** [20:41]: Chris, what is the biggest rate limiting factors to the Runway product today? If I had a magic wand for your product team, for your tech team, and could take away a problem, what would it be? I **Cristóbal Valenzuela** [20:51]: think speed, I mean, and I say this because we're moving very fast, but speed really matters. The rate limit, I would say sometimes for us is being able to move even faster. And those things come in place with sometimes compute. There's a limitation of compute that the industry has at the moment, and so sometimes you're constrained because of compute. Sometimes you're constrained about use cases or deploying those models and making them efficient. I think it depends, but speed as a constant thing that you're thinking about when deploying models and training models is for us really critical. **Harry Stebbings** [21:21]: So many on your camp table told me about the performing element of your small team. What have been your biggest lessons on hiring a performance first, speed **Cristóbal Valenzuela** [21:30]: first, but small team? Focus on, again, what we're discussing before, people that can figure things out and get things done. I think a lot of the mistakes I've done in the past on hiring is that we focus too much on credentials or past experiences or people who came from all these lofty universities or companies and not on the folks who are hungry and who just wanted to do things. How do you test for that in the interviews? We've iterated a lot. We've learned a lot. We have a interview process now that I think is one of the best, of course, unbiases, but it measures your productivity and your level of of course, there's a baseline level for every position and domain, but at the same time, it measures your ability to get things done. And there is a bunch of experiments and exercise we run and interviews, and then we'll get together the whole folks, the team that was interviewing, and try to make sure that the values of what makes Runway really special are there in that person. **Harry Stebbings** [22:22]: When you look at your interview process today, what would you like to know as a founder listening that you could share with them? What can someone learn from your interview process? **Cristóbal Valenzuela** [22:32]: Doing is more than talking. There are there are a lot of great people who are great at interviewing and are great at saying what you wanna hear. I've been cautious about that now and and really understanding, okay, I I get it, but can you do this? Can you show me how to do it? Can you do it right now? And so focus on **Harry Stebbings** [22:48]: actions more than than words. What would you say are your biggest mistakes in hiring other than credentials? Credentials **Cristóbal Valenzuela** [22:55]: and people that are not I think humbleness is a key component of of a company. The rate of earning as a company building a company is about just pushing every single day. You're quit. You're you really wanna quit every single day. You need to push it again and again and again, and and it's mad process. You need to have a lot of tenacity to be able to do it every time, but at the same time, recognize that some things you're gonna do are gonna be wrong, and it's fine. You might spend months working on something, and the next day you're gonna throw it to the trash, and it's fine. Don't worry about it. Have a very stoic approach to it and continue moving on. So people who have very definitive worlds, views of their world, perhaps, what I was running away from before you asked me, don't really match and work in Runway. People that feel like that's the way, that's the only way are not gonna be able to learn as much on a field that's ever changing. And so humbleness for us has been a core value. Look for people who are asking questions, who are knowing and are have always thought of embracing change, which I feel is the only constant these days. **Harry Stebbings** [23:52]: I find people who are boring and capable. That's my two things that I and you know why? Because people are never as boring as they come across in an interview process. They're always more fun. You're obviously your most boring self, but boring people are rarely arrogant. Dude, what do you think are others, like, complete startup BSs? You're outside of the ecosystem. What do you think are some other, like, crap advice that you see given about building companies now? I'm very cautious **Cristóbal Valenzuela** [24:17]: about recipes and rules and algorithms in the sense of company building. I think there's no rules. There's no algorithm. You just have to do it. You just have to do it. I think if you've never been to a city, you can read everything about that city, and you can read everything everyone else wrote about that city. If you've never been to Paris, you can read everything about Paris. Every writer that has ever been to Paris, you can do everything you know and find and and understand about Paris, but nothing will beat like being in Paris for ten minutes. You're gonna learn so much by being there than by reading anything else. And so for me, is similar. If you wanna know about something, don't read recipes, don't read blog posts, don't absorb, don't like try to build on the ideas of someone else, just do it yourself. And you will build a much more coherent process and idea of how things work. And so I'm very skeptical about people who are like writing or suggesting or advising of like, here's how you do things. It's like, No. No. That's good. That's a good sign. But just if you wanna figure out stuff, just do it yourself. What recipe did you follow that did not work out? So many. We structure teams runway in this thing called ensembles that we came up with. It works for our team. It doesn't come from any of other more traditional scrums or or or ways of organizing teams. At some point, we thought, oh, we need, like, OKRs and systems because some an investor told me once that that's the way companies do it. We tried it. Was like, this is no. This is the worst thing you can do right now. It's like, you don't need this. But I could see the appeal of it because it gives you a way of making sense of the world, and it's easy, and you don't have to think too much. You just follow a process, but you're not really getting a lot of it. You're perhaps it worked for someone else, but not for you right now. And so there's so many, but team organizations and finding objectives and ways of defining those objectives, I will be skeptical about those very thoughtful frameworks. **Harry Stebbings** [25:59]: I do wanna ask. You mentioned learning the fundraising process earlier. It's a weird ass world, I have to admit, especially if you're not kind of trained in Silicon Valley casting school. What have been some of your biggest lessons in fundraising for Runway? That was from Zavane. **Cristóbal Valenzuela** [26:13]: There's so much there. You asked me about being now an outsider, and I felt that my first years of fundraising, I felt totally like an outsider. I didn't knew anyone in Silicon Valley. I didn't knew any investor in Silicon Valley. I wasn't connected to anyone either, so it was a very, like, hard start, cold start. I have to figure it out, and so that's where I go back as to that mentality of just, okay, you wanna do something, just do it. One of my biggest learnings on fundraising has been, I would say, focus on the right investors and ask questions to the investors the same way they ask questions to you. And you should be much more inquisitive in the type of things they wanna build and they wanna see in the company. **Harry Stebbings** [26:46]: What questions do you ask for founders listening? Because I totally agree with you. No founders ever ask questions bluntly. Like, 99% don't. What questions should they ask? For **Cristóbal Valenzuela** [26:56]: us, something I've been always trying to strive and find in my investors is really making sure that we're both on the same direction. Because an investor might come to understand your company for a completely different vantage point from the one you have, and that's not gonna work. Long term, it's not gonna work. You're gonna be with these people, with this team, with that investor for years, so you really need to be aligned. So have them pitch to you, the company, and see if you're figuring out and saying the same things. And that's what I've realized sometimes that, like, I had a room with an investor that gave us a term sheet, and we had them describe what runway was, and we're like, that's not what we're doing. I love your term sheet, beautiful valuation, everything else, but that's not gonna work. I don't think we're aligned. And so I realized that just by having that conversation and asking them questions. **Harry Stebbings** [27:43]: Many would say, I don't mind. It's the best deal. My question to you is, do you think investors really add value and, like, no offense. Isn't it all just you anyway? **Cristóbal Valenzuela** [27:52]: I think no one is gonna care about your company, about what you do more than you. And so if you try to think that an investor is gonna change everything you do or it's gonna bring something that you never thought of doing, I think you're wrong. The role in the investor is not to build a company. It's to trust that you will build a company and that you will build a gerational product. They might help you with intros and with other things, but it's not gonna make a big difference in the sense that the success of what you're building comes from grinding and the tenacity of waking up every day and doing it for multiple days in a row even when things are very hard. And so don't rely on, like, some magical solution or helpfulness of just one person because that's how how things actually work. **Harry Stebbings** [28:34]: What was the hardest round to raise, Chris? You've had multiple rounds down, quite quick succession, and the company's actually close to five years old. What was the hardest round to raise? **Cristóbal Valenzuela** [28:43]: I think the hardest round for us was our Series A. So the company was started on late twenty eighteen, 2019, and then we raised a seat. And since then, every twelve months or so, we've raised a different round. We we we just raised Series C. Our Series A was, I would say, the most challenging in the sense that we were pitching again, this is twenty nineteen, twenty twenty. We were pitching building a generative AI company. We were we wanted to build, and we still are obsessed with this idea that journey models are gonna change how we think about media entertainment. So we we went to investors, and we showed them the state of the art research that we had at the time for image generation and told them, hey. That thing that you see here is gonna be the future of media. And if you search for an image that you could generate using a model in 2020, you will be like, Chris, come on. Of course not. We're so far away. I mean, I have so many investor emails of people telling me, love your team, etcetera, but General Atlantic AI is not a thing. Stop saying it's a thing. It's not a thing. And so realizing that after so many rejections, because hundreds of rejections, you're, like, still mad or, like, still obsessed with making it **Harry Stebbings** [29:49]: work until it works. Did you ever doubt it? You know, Marc Andreessen says there's no such thing as a bad idea, only a bad time. When a 100 people tell you, no. It's not the right time. No. It's too early. Do you doubt it? **Cristóbal Valenzuela** [30:00]: I think, of course, you doubt it at some point. You were like, well, am I seeing something not clear enough, or am I mistaken? At the same time, I think a lot of really good investors are the ones that are not looking for patterns. They're not looking for the norm, the average, the middle of the curve. You need to be able to understand that there's risk and things are going to not play out in the way that you thought every company will will work. When it comes to doubting, doubting is actually good. Like, you need to be able to be the way. So everyone is thinking one way, and I'm thinking in another way. That's really interesting because it's different. That's not patterns. Everyone's finding the same patterns. I'm thinking about something else. If it works, it's gonna be huge. If it doesn't, I'll learn something. So I think actually doubting is a sentence something's good. **Harry Stebbings** [30:43]: When you look back over the rounds, you mentioned kind of raising every year from the seed in '28 or late twenty eighteen. What would you have done differently looking back on the rounds knowing all that you do now? Something I've I've learned a little **Cristóbal Valenzuela** [30:53]: more over time has been always emphasizing the vision of the company. I think products and models don't really matter in the sense that what really matters in our company is the people that you have and the collective tissue of what brings them together. But I sometimes, like, didn't have to mention that because I thought everyone knew that, but, of course, they didn't. And reminding myself of, like, hey, the product that you have today is gonna change. It's gonna change because these people are changing it all the time. So here's the vision, and here's what we're building it. Four years ago, we were like, hey, media and entertainment, every company will be using these models to create everything from movies to short films. It's gonna happen. And I didn't spend enough time emphasizing that because I thought it was obvious. And then I realized, of course, it's not that obvious. So always emphasizing and reminding yourself of, like, the vision for me has been a good learning. Yeah. Your **Harry Stebbings** [31:40]: last round of Series C, it was a high price. When you think about, like, scaling into valuations, many startups, they have to scale into their valuation. From a business and a money standpoint, it's a scale into. Do you think you need to scale into your valuation? Mean, it's underpriced? **Cristóbal Valenzuela** [31:57]: I think it's very early, I would say, for Runway and for the industry advice. And I don't tend to overemphasize or focus on valuations, to be honest. I think valuations are if you're optimizing for evaluation, you're optimizing for the wrong thing. Evaluation is just the market giving you a price based on multiple considerations and elements and variables. But if you think of optimizing to grow into evaluation, you're gonna miss so many things because the incentives are put in the wrong place, and you might do things that are gonna be great for the valuation, but not great for the company long term. And so always striving between, I would say, short term or long term vision of, okay, valuation is a great sign in terms of where the market values what we're doing, but really, where we're right now, it's not even, like, close to our final shape and form in ten years. Let's work towards that because if we do succeed at doing that, the companies are worth a 100 times more than what it is right now if we try to just grow into that small valuation. **Harry Stebbings** [32:48]: When you think about your views on being a venture backed startup, I think this was Sunil who asked this, how have your views on what it is to be a venture backed startup? How have they changed since the founding of the company? **Cristóbal Valenzuela** [32:59]: I think for us, it was it was slightly different. There wasn't really another option, to be honest. The three founders are immigrants. We didn't have friends or families. We didn't have savings. There was nowhere to start building a company. And so sometimes I feel so privileged in being able to do internal rounds or not raise to be able to build and hire an excellent team. We had four months to figure out how we're gonna, like, stay in the country, build a company, hire a team, build a product, do everything we need to do. And really, best way of doing that is by working alongside some of the best investors. Raising capital and being a venture backed startup was really the only way of really achieving our goals and realizing our vision. **Harry Stebbings** [33:38]: Can add anyone to your cap table, anyone in the world. It could be a Christopher Nolan, you name it. Who would you add? **Cristóbal Valenzuela** [33:45]: You know, I'm gonna do a boring answer. I don't think there's anyone that's gonna change your company in the sense that the only people who are gonna change it are are you and your team. I could add people for the sake of being close to them or having fun with **Harry Stebbings** [33:58]: them or having Let's play a game. If you have Bob Iger or the CEO of Disney, and they said, hey, we're gonna commit creating all of our assets through Runway. That would fundamentally change the nature of cartoons. That's a great business enterprise **Cristóbal Valenzuela** [34:09]: deal, but but we need more Disney's. We need many more of those. I don't have favorites. I don't think there's one single person or people that are gonna be so radically different to everything you do. Just trust your instincts and and build a great team. **Harry Stebbings** [34:21]: You've done interviews before. I've listened to most of them on the treadmill. What question are you not asked that you wish you were? Oh, that's a good one. I think people tend to ask very pattern like questions, and I try and get away from that. I like questions like, what belief do you hold that you are scared to admit you hold? **Cristóbal Valenzuela** [34:40]: That's a good one, a profound one. I think a belief that I hold that I'm perhaps scared to to admit that I'm hold. I don't think we yet realize how transformative AI is gonna be. Like, whatever thought we might have, it's completely wrong. People are thinking about it in ways that might not even make sense in a couple of years. And it's very hard because it's very hard to understand that magnitude of change. People are obsessing or or engineering things right now, and I think it might not matter in a few more years. **Harry Stebbings** [35:10]: Chris, do you have children? I don't. Do you worry that when you're changing an industry as you are, what it takes to do that is unwavering commitment, unwavering. To be a good father, a good parent, you have to actually give a little. Do you worry that you're gonna be able to sustain the performant element of Chris with being a father? **Cristóbal Valenzuela** [35:30]: That's a good question. I think you can if you care a lot about what you do. I mean, for me personally, I don't see a separation between work and life. They're one. If you're passionate about what you're doing, if you need to lit give a little when you're raising a family, of course, you can find the time, be thoughtful, and care a lot about the people around you. Like, we have four values, and one of them is care. Just care a lot. And when you care a lot, you're gonna be able to do stuff like that. **Harry Stebbings** [35:53]: Listen, Chris. I wanna do a quick fire round. So I'm gonna say a short statement. You give me your immediate thoughts. Does that sound okay? That sounds great. So what do others not know that **Cristóbal Valenzuela** [36:01]: you know to be true? My cofounder, Anastasis, has this beautiful quote, the best movies are yet to be made, and the best stories are yet to be told. I think that's where we're heading. Do all AI founders need to be in the valley? **Harry Stebbings** [36:13]: No. I'm in New York, and I've been into the in the self, like, just a couple of times. I mean, I was slightly teeing myself up with that one. What do people not understand about Runway that you wish they did? It's very early. We're a five year old company, but I think we're we're just a baby. What single **Cristóbal Valenzuela** [36:30]: element would you most like to change about the AI community? We need better stories. We need more nuanced stories. This is not about horror stories or fairy tales. It's about humans, and so let's focus back on people. What is the strongest belief you had which turned out to be wrong? Fancy UIs don't matter. It doesn't matter if you think about building beautiful UIs. What matters is using these models to just do great things. Everything else will follow that. What's the most painful lesson you've learned that you're pleased to have learned? Building anything is painful. It's hard, and you wanna quit. Just don't. Does it get easier over time? It doesn't get easier. You get more used to the pain. How so? You start building a skin. You you build an intuition, and things as you grow and scale are gonna be different. You're gonna have different challenges. Scale of the challenges are gonna be different. But if you keep a stoic mindset and just understand that there are things you can control and things you can control, you can do good stuff. **Harry Stebbings** [37:27]: You can have dinner with anyone, dead or alive. Who do you have dinner with? My mom. I haven't seen her in a while. I love that answer. Most people go for, LeBron James, so that's a lot more fulfilling. Tell me, what role does AI play in society in ten years? You said we can't comprehend it. How do you project Forward Plan AI's role in society? **Cristóbal Valenzuela** [37:45]: We're gonna stop referring to it as AI. We're just gonna think about it as tools. Think I'm really looking forward to the moment in time where there's no discussion around AI in the same way that today we don't discuss the Internet as a as a thing. It's just so ingrained in everything we do. When you go to the bank and you do a wire transfer, you're not saying, I'm gonna log into the Internet to do a wire transfer. You know that's the way you do it. And I think we're heading to a world where everything we do is gonna be built and powered by models. You you forget about it and you just continue your life. **Harry Stebbings** [38:14]: Final one, ten years time, 2033, where's runway then? Making movies, the best movies. Chris, as I said, I did 17 reference schools on this. It's been such a pleasure to do this with you, so thank you so much for joining me. Thank you so much for having me here. Was a great conversation. You are a star, my friend. Thank you so much for that. I mean, what an amazing guest Chris wants to have on the show there, and we have a stellar, stellar show with you coming on Thursday this week. Another of the hottest AI companies in the business. We have Noam Chazir, founder and CEO at Character dot AI on the show on Thursday. But before we leave you today, ## Sponsor read **Harry Stebbings** [38:49]: this episode is brought to you by Tigas, the go to research destination for bold investing. Tigas curates expert insights, analysis, and financial data to give you powerful perspective for your investment decisions. With lightning fast access to over 60,000 transcripts across 20,000 companies, you'll discover a wealth of unique insights to fuel your fundamental research, gain perspectives, synthesize information, and even model outcomes all on Tigus. A twenty minute VC listener, try it for free at tigus.com/growth. 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As always, I so appreciate all your support, and stay tuned for an incredible episode with Noam Shazir and Character dot AI on Thursday this week.