Brian Smiga: Hey. Hi, it’s Brian Smiga of Alpha Partners. This is the Driving Alpha podcast, and I’m lucky to be here today with my good friend Stewart Alsop of TK Media Tech Ventures.
Stewart Alsop: Hey Brian, thank you very much.
Brian Smiga: It’s great to see you. Alright, we’re gonna cover your whole career, but I think we want to start with how I met you and then get right to what you’re doing today.
Stewart Alsop: Sounds good to me.
Brian Smiga: I met you when you were a journalist. I sat in your office and I think I was auditioning to get into Demo or Agenda, I forget which. I had a product then called Dynex, and you were so kind and generous and honest and blunt that you really made a great impression on me—as you do with everyone. And I don’t think you’ve changed a bit. I mean, we’re going back…
Stewart Alsop: I’ve been a VC for almost 30 years. I was a journalist for 20 years before that—so 50 years in business. It’s a trademark of mine that I’m really blunt. I used to think I was kind of soft and polite, but I have three markers in my life. I’m terrible at school—had to switch schools at least once. I’m a terrible employee—I’ve been fired three times. And I’m also apparently a scary board member because I’ve been thrown off more private boards than probably anyone else. It’s really hard to do that when you’re a VC and you own shares in a company. But I’ve apparently motivated several founders to get rid of me.
Brian Smiga: Well, I think a case can be made that being straight up probably in the long run is an advantage for VC.
Stewart Alsop: Yeah. Well, my fundamental take is: why bother starting companies unless you do everything you can to be successful? And so I tend to say what’s on my mind based on the experience I’ve had about how to get from here to there. But some founders, it turns out, don’t have as strong a self-awareness and constitution as I do.
Brian Smiga: Well, I think all the best of them have experienced some trauma or some problem, because no one would do what they do unless they did. They’re like actors—they have to do it.
Stewart Alsop: I have to do it.
Brian Smiga: Hopefully more successfully. So, we’re here to talk about today and then look at how the underpinnings of your career led you to your investment thesis today—to drive alpha or outperformance. Your outperformance thesis today is to be a one-of-one venture firm in media tech. And there’s some reasons for that, and there’s some things going on that we want to hear about—how media is going to be transformed more rapidly than people think. So go for it.
Stewart Alsop: The full name of the firm is TK Media Tech Ventures. We started out just calling it TK Ventures and people didn’t have any idea what that meant—which I can explain. Then we said TK Media, and they went, “So you’re going to invest in movies and video games?” And we said, “No, actually we’re investing in the technology that leads to change in the media and entertainment industries.”
That’s because my partner in our current firm, also at Alsop Louie Partners—Kevin Louie—said to me and one of our other partners, “You guys really come out of the media business. You kind of know what you’re talking about. And if you look back at your track records, you’ve done a really good job.”
That was the starting point. Leave it to my partner to figure out that the companies that have outperformed during my venture career are all technology-for-media companies—starting all the way back with TiVo in 2007 at NEA, and all the way through Twitch at Alsop Louie in our first fund, and more recently Niantic and Meow Wolf.
So here’s the thing: you’re interested in alpha. I did look up, by the way, the difference between alpha and beta—to understand what “driving alpha” means, which is performance against benchmarks.
Intellectually, we’re curious—is this just me, like I picked really good media tech companies, or is it true for any company that does technology for media? So I put a spreadsheet together. I’m sure we can find more, but we found like 35 companies that, from the beginning of the personal computer industry through today—not quite today because some are still cooking—on average, took 7.1 years from founding to exit or liquidity.
At Alsop Louie, we’ve invested in a lot of core technologies, frontier technologies, whatever you want to call them—those take a long time to get to liquidity. And so Gilman said to me at one point, “Well, 15 years is the new venture time to liquidity,” which is true if you’re investing in batteries, semiconductors, and national defense.
And I’m getting a little older—I’m in a hurry to make money. So we’ve combined our experience—me and Jim Ward, my partner at TK, and my history of investing in media technologies—with the idea that we can build a fund that returns liquid results within the timeframe of a venture capital fund.
Brian Smiga: Liquidity is on everybody’s mind. I think you’re on to something. We’ll have to hear Gilman’s rebuttal to that since he’s investing in deep tech and strategic tech. Maybe we’ll get him on the show—I hope to.
So, time to liquidity in media tech—that’s very interesting. That’s one pillar of a foundation. And then you’ve got your track record, which we don’t know if it was just you picking or if there was an interpretation of those picks that we should apply today. You want to talk about that next?
Stewart Alsop: Part of this is Jim Ward’s thinking—we’re the two general partners in this fund and partnership. He and I have both been involved in the computer and media business since the early ’80s—technically since ’79 for me.
Jim’s a great brain. He just processes stuff and comes up with these points of view. He said, “What we’re really working on is the third convergence of technologies between media and technology.”
The first convergence, which was forecasted by Nicholas Negroponte in 1979 when he was running the MIT Media Lab, was that the desktop computer would converge with broadcast and publishing technologies to change the media industry.
And that happened—before the internet, even. Back then, desktop computers weren’t connected to anything else. I participated in desktop publishing because I published a newsletter starting in 1985. I wrote it, then formatted it on a Macintosh 512K using an early version of Aldus PageMaker.
Non-linear editing of video and Avid Technologies transformed how the movie business produced films.
Another guy, Hugh Delehanty, who used to work at Apple, predicted the second convergence in 2010, building off of Negroponte’s vision. He said that with high-speed internet, we’d see things like social media, cloud storage, and real-time synchronization—all of which have played out over the past 15 years.
Now we’re at the third convergence. It’s a bit like what we’re doing right now—can you tell the difference between a digital and a real person on a screen?
Brian Smiga: They got a bot to imitate you yet?
Stewart Alsop: I don’t know. It’s beginning to happen, and this is one of the things we’re looking for in this third fund—who’s going to enable the use of realistic avatars that look like you, but are digital and can become your digital twin in real time?
There’s a whole set of technologies we’re targeting. Because we’ve experienced the first two convergences, we actually know where to look. And those working on this tech know to come to us. Even though we’re still raising our fund, we have an incredible pipeline of deals. We’re doing our first investment probably this week.
Brian Smiga: Let’s go back to TiVo for one minute. You’re at NEA, you’re the first journalist probably to become a full general partner at one of the…
Stewart Alsop: Mike Moritz and I were contemporaries. He joined Sequoia at approximately the same time I joined NEA.
Brian Smiga: Alright, so what was it about the first convergence that you saw in TiVo—I think I know the answer—that made you say, “This is gonna make money. This is gonna be a one of one”?
Stewart Alsop: The founders of TiVo had been at Silicon Graphics and had been working on… I’m trying to remember exactly what it was called, because it kind of didn’t work. But they were working with cable networks to produce kind of the digital future. They left Silicon Graphics when it didn’t work.
There was a specific thing—I think it was Time Warner they were working with—and it really didn’t work because you had to basically have a Silicon Graphics workstation in your house to get the media. But it was predictive—you could see where things were going.
So, joining NEA, the very first thing that happened was my partner Mark Perry, who had been COO at Silicon Graphics and had joined the firm two years earlier, talked to the founders who had left Silicon Graphics. NEA also funded Silicon Graphics as a company. So they went over to visit Dick Kramlich and Mark Perry and said, “We want to produce a box you can watch television on with a hard disk in it.” And they went, “Huh, what’s that?”
They turned to me—I’m a media guy, right? I was a journalist and interested in this stuff—and I went, “Oh yeah, this is it.”
Subsequently, my brother, who also invested with NEA and started an NEA portfolio company, and I argued for years. He said the internet would be fast enough—you wouldn’t need the box. I said, “Yeah, maybe, but it’ll take 15–20 years.” During that time, there’s an opportunity.
So that was the opportunity I saw when Mike Ramsey and Jim Barton pitched NEA. I ended up on the board because of my media background.
I was also looking at music deals and other things—one of my favorite stories is looking for an online bank and being recommended to talk to Elon Musk on his second company, which was called x.com.
Brian Smiga: Did you have a shot on goal with either eBay or the online classifieds or x.com?
Stewart Alsop: All that happened before I became a VC. I became a VC in ’96. eBay was ’94, I think, and classifieds—if you’re talking about classifieds.com—that was like ’83. That was before the web. That was when you could dial in.
Brian Smiga: Alright, so now today we’re at the onset of the third convergence. Are you and Jim among the prophets of this third convergence?
Stewart Alsop: Yeah. That’s what we’re predicting. It’s a pattern. All venture capitalists do is recognize patterns and try to figure out how to get there before everybody else.
After 30 years of being a VC, and for Jim, 30 years in media, advertising, and 10 years at Lucasfilm, we look at each other and say, “We know what’s going to happen.”
You can’t really tell a prospective LP, “Just trust us, we know.” But there is evidence—we both have track records. We pitch our firm as investor and operator. He’s predicted the future as an operator in media, and I’ve done so as an investor.
Brian Smiga: So it’s the accurate representation of reality in digital twins and digital technology—so good, so high fidelity, you can’t tell the difference. And this is going to open up tons of…
Stewart Alsop: Right. A lot of people say, “Oh, so you’re going to invest in AR glasses.” No, not exactly. That’s only a piece of it. Everyone assumes it’s about putting on glasses and seeing characters in the real world—like Niantic, one of our portfolio companies.
That’s a piece of it. Then you have video games—you put on a VR headset and are fully immersed. That’s really the only true application of VR right now.
Brian Smiga: I think you can even argue that the founder of that fantastic new company, Lattice, is a digital representation of reality that had never been accomplished before for the DOD, right?
Stewart Alsop: Yes, in real time and totally accurate. You can’t equip soldiers on the front line with stuff that doesn’t work.
One of the issues is: is it persistent? There’s a name for it—“denied environment.” I just watched an interview with Palmer Luckey. In a denied environment, the tech has to work. If Elon Musk decides to turn your signal off, you’ve got to still be able to operate and understand what’s going on in real time. That’s the most extreme version, but it will bleed back into the consumer business.
Brian Smiga: So that’s a business, industrial, GovTech application of this reality twinning or digital representation. Is TK going to invest in both B2B and consumer-facing?
Stewart Alsop: Yeah. I mean, I have ideas—some of which are pretty good. One of them is: you have to start with the target market. You have to develop consumer technologies for consumers and B2B tech for enterprises.
People say, “We’re going to do this cool consumer thing,” like Vision Pro, and then pivot to businesses. That doesn’t work. Once successful, it can bleed over, but you have to know where you’re starting.
Enterprise technology is huge with AI right now. AI is everything these days. We believe in AI, but we’re a little fund. We’re not going to invest hundreds of millions. We’re targeting a few tens. But every company we invest in has to know how AI affects what they’re doing and use the tools effectively.
The big players—Meta, OpenAI, Anthropic—are in a geopolitical war over who controls AI. We’re cool with that, but we know how to apply it to our domain.
Brian Smiga: Couldn’t agree more. I think it’s the applications of general AI that are going to win. It’s a big investment thesis at my fund, Alpha—AI in radiology, autopiloting planes and drones, etc. And it’s always these vertical applications. So the vertical applications of AI in media tech—give some examples, please.
Stewart Alsop: Well, obviously, and this is what most people are focused on, you can use generative AI to develop images and video and music at a much lower cost. How does that affect the copyright business and the ability to copyright works of art?
Then there’s far more. We’re looking at a company—which we probably won’t invest in because we won’t have enough money or time—called Kubrick. There’s been a progression over the last 40 years in how you film movies with backgrounds, what they call B-roll. There’s been this evolution to improve the ability to film backgrounds.
I live in New Mexico, and the entire state is a background for a lot of movies—which is why there’s a lot of movie business here. But this company has a base of LLMs that have been trained to produce backgrounds. They can produce absolutely perfect digital representations of a background. So when you’re watching the movie, you have no idea that it was just produced in a computer as opposed to using big LCD screens or even traditional B-roll.
So there’s a category of tools—VFX is what it’s referred to in the movie business. But this can be applied across all different forms of media, and in fact, is already being used for video games.
Brian Smiga: So investors should get in touch with you to have you lead them into Kubrick.
Stewart Alsop: Yes, exactly.
Brian Smiga: Alright, so on that note—the founders you’re going to find. Let’s turn to those two things: the fund itself—classic venture fund—headquartered in LA and New Mexico, right?
Stewart Alsop: No, no headquarters. Why do we need a headquarters? This is venture capital—it’s the most virtual business you could do. You talk to people on the phone, you get on airplanes, you send them money digitally.
Brian Smiga: As an LP, how are you going to operate? We know what you’re going to invest in—this new wave of reality twinning or reality representation digitally. It’s obvious to you, and I think to us, once we think about it—but you’re first. You’re in the pole position, I would say.
Stewart Alsop: Yeah, I think so. And it’s because of our experience.
Brian Smiga: How do you operate? How do you source, how do you win, how do you add value, and how do you get out in seven years?
Stewart Alsop: First of all, you’ve got to pick the right deals to get out in seven years. I’ve never been in a media tech company longer than ten years. Twitch was an eight-year run—we invested in 2006 and got out in 2014 when it was sold to Amazon.
This is what happens: once technology takes hold and people go, “Oh yeah, that’s it,” then other people want to buy it. Or if you’re lucky, it goes public, like TiVo and Glu Mobile.
So the whole premise is based on that track record—my track record, and the broader track record of media and tech companies.
Then the problem is: how do you find the deals? Well, I’ve been doing this for 30 years. Everyone knows I do this. They all know my companies—throw in Sonos and…
Brian Smiga: Right. People are going to come to you.
Stewart Alsop: Yeah. They know who I am. They know who Jim is in the media business. We get it from both sides. If you’re inside the media industry, you know who Jim Ward is from his career in…
Brian Smiga: So you’re writing first—you’re early, right?
Stewart Alsop: Here’s the thing—this is my most recent learning from Alsop Louie. We go, “Hey look, we’re going to be early investors in frontier technologies.” So we have a battery company, a semiconductor company—that one got sold because it was too expensive for us to do alone.
We’re in these core technology areas, and it takes forever to make money. There’s a liquidity problem in the industry in general—not only because companies are staying private longer, but because it takes a long time to establish a profitable business that looks attractive for a public offering.
And I’m getting kind of old. I don’t want to spend 15 years trying to make money in a company.
So, people come to us. We probably have 30 companies in our pipeline already. We’ve done a small first close, and we’re making our first investment. I can tell you about that investment because it is emblematic.
Plus, we’re looking for a company that we want an entrepreneur to start. We’ve been talking to people about that, and we’re hoping we raise enough of the fund to do that company next.
We’ve got it mapped out. We don’t need to know something we don’t already know in order to figure out which 15 to 20 companies we’re going to own.
The thing I’ve learned is: invest at the inflection point. At Alsop Louie, we had plenty of experience finding a crazy founder who’d already been working on something for 10 or 15 years. We’d think, “Okay, this is the inflection point.” And then it takes another 10 years to get there.
We have a company doing waveguides—that company is over 20 years old, and we’ve been an investor for eight years. We’re going, “Okay, how long is this going to take to make money?”
It’s both sides of my brain—I see the pattern from my past and I know what’s going to happen in the future. So we’re out there, and if the company doesn’t come to us, we’ll go find it.
Brian Smiga: Well, there’s a lot to like here—especially the shorter duration, which is bound by both your track record and those 35 firms. That’s really interesting. Your ability to invest at inflection is interesting. Your ability to see all the deals—interesting. Forcing the founders to have a target market…
Stewart Alsop: We don’t force founders to do anything. If you have good founders, they’re not going to do what you tell them to do anyway.
Brian Smiga: Fair enough.
Stewart Alsop: We call them pigs. We’re just looking for a few good pigs.
Brian Smiga: Yeah, yeah. So let’s dwell on the pig story real quick. This is all Scott’s take on how to evaluate a…
Stewart Alsop: Let me say—this is Jim Ward’s take. He’s the one who surfaced it in our quarterly meetings at Alsop Louie.
We were at an offsite, talking about how to find the right entrepreneurs. That’s always the hardest thing. Even someone you think is going to be great might not work out.
He goes, “Well, it’s like breakfast. You’ve got bacon and eggs. The chicken was involved in making your breakfast. The pig died for it.”
So what we want to find are pigs—entrepreneurs who are willing to die for what they want. Who hold a vision of true north and can talk in tongues.
What we mean is, the entrepreneur has to actually know what they’re doing—that’s holding true north. And they need the domain experience and work experience to know that’s the path.
And then they have to talk in tongues—meaning they speak the language of their business, not of venture capital.
If you find pigs who hold true north and speak in tongues—that’s a really promising indicator you’ve got an entrepreneur who can scale.
Brian Smiga: Okay, so if you’re a founder in media tech that looks like that—you’re seeing founders now, right?
Stewart Alsop: Yeah, we’re talking to them. As I say, we’ve got like 25 to 30 companies we’ve talked to, because we’ve been working on this for a while.
Brian Smiga: Where can they find you? Substack?
Stewart Alsop: Allssop@gmail.com. ssop.substack.com. If you can’t find me, you’re not worthy of being an entrepreneur.
Brian Smiga: There you go. Those are the founders. Now, the LPs—they’re not going to look as hard, right? Here’s how I see it as an LP and a very small LP in a few funds, and a general partner at my fund: I really want to diversify into sectors I don’t understand personally well enough to invest in them—but somebody does. And I think this is what we have here.
I also think LPs need to know about this space. If they don’t invest in TK Fund I, they need to know about this space because they’re going to put dollars into it sometime soon. So, thank you so much for the education about this digital twinning wave.
I know you call it the “reality disturbance wave.”
Stewart Alsop: Yeah, we’re trying to lose that term—because it’s disturbing.
Brian Smiga: I think the bet is that everything that’s represented in media can be replicated with a high degree of fidelity and accuracy.
Stewart Alsop: Right. So, I mean, you talk about driving alpha—in my mind, how can you take a billion dollars as a venture capitalist and drive true alpha?
You have to return at least $3 billion—and really, better is $5 to $10 billion. I know numbers have inflated over my lifetime, but I still have trouble thinking that way. And that requires a completely different structure.
So, I’m a believer in traditional venture capital, which is: you start with a small amount of money, and you make a lot of money on that small amount of money. And that’s the fundamental truth about alpha.
Brian Smiga: Great. So you’re on the way. As someone who started with a $10 million fund and now has a $153 million fund—that’s music to my ears.
And this is Stewart Alsop at TK Media Tech Partners, right? Did I get it?
Stewart Alsop: TK Media Tech Ventures. But really, we just want everybody to know us as TK—which means, by the way, it’s an editing mark that means “to come.” So we’re investing in what’s to come in the media technology business.
Brian Smiga: It’s when you have to add a bit more. Yeah—it’s what’s coming next.
Alright, so here’s what’s coming next from Driving Alpha. And this is Brian. Thank you, Stewart, for joining us—great sitting with you.
Stewart Alsop: Thank you, Brian—as always, total pleasure.
