The Future Of Tech Industry With Felix Hartmann Of Hartmann Capital

The tech industry is evolving fast, and it will continue with its non-stop progress for the foreseeable future, if not forever. If you are investing in this highly innovative space, you must always be on the lookout for what’s new, what’s trending, and what’s up next. Scott Kelly chats with Felix Hartmann, an investor and founder of Hartmann Capital, a frontier tech VC firm investing in AI, Spatial Computing, and the 3D Creator Economy. Felix shares how they work with founders who take advantage of the promising world of tech, particularly in the under-allocated spaces of VR, AR, and human-AI integration. He also explains how AI will potentially shape the future, and why everyone should learn to embrace it instead of repel it.

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The Future Of Tech Industry With Felix Hartmann Of Hartmann Capital

Scott, we’ve got Felix Hartmann of Hartmann Capital. As you said to me before we started, this guy is on the bleeding edge of innovation. We talked to innovative investors all the time, but this guy knows his stuff.

This guy is so much in the future. I almost thought I was in a time machine talking to him. From 3D printing and being on the cutting edge of that, what he’s doing in gaming, and how it relates to VR and AR. I thought the whole headset thing was a thing of the past, and it was a fad. He brought a whole new perspective to where it’s going. He understands how crypto and AI played in all these things. I had to put my big hat on in my conversation with him because he knows his stuff.

It fascinated me because, since I stopped writing my Inc. column on innovation, it has probably been about three years since I last wrote any articles for them. I haven’t gotten to talk to these kinds of people in a while. When you’re talking about spatial computing, the 3D creator economy on one hand, and then you’re talking AI and Web3, you have to start to see the interconnectedness of it. That’s what he does brilliantly.

He understands the frontier. He understands what’s next, and that’s critical when investors and funds are trying to get alpha. You’ve got to be ahead of the curve. You can make money following the pack. You can make a fortune leading the pack.

That’s right. Felix Hartmann is an Investor and Founder of Hartmann Capital, a frontier tech VC firm investing in AI, spatial computing, and the 3D creator economy. Let’s hear from Felix, and let’s talk some more about this frontier tech.

I’m looking forward to having a great conversation with Felix Hartmann from Hartmann Capital. Felix, welcome to the show.

Thank you so much for having me, Scott. I’m excited to be here.

Felix Hartmann Of Hartmann Capital

Before we get to the fun of what you’re doing now, give us a little bit of background. What were you doing before leading up to what you’re doing now?

I’ve been a futurist my whole life. When I was young, I used to build robots with my brother, making websites like an eight-year-old studying the future in AI, but in books like Ray Kurzweil’s The Singularity Is Near and The Age of Spiritual Machines. I was always much drawn to the future and seeing how much things will change. I grew up on movies like I, Robot. I think it was 2004. It was based on Isaac Asimov’s novel.

As I graduated high school, I thought to myself, what’s the best way for me to express this passion? How do you utilize this passion and skill set for predicting future trends? I realized that investing was the best way to do so. Naturally, at the time, as an average eighteen-year-old, I had about $950 to my name, and so, the best way to get started was not with VC but rather public markets. The first stock I bought was Tesla. I bought it in 2012, long before much of the growth of Tesla had happened. Back then, I thought that electric cars were such a foregone conclusion with a long enough time horizon. It’s something Elon was already standing out back then because even back then, he started messing around with SpaceX, getting the first rockets to space.

Anyway, that got me into trading and investing. Just like any regular person who has investments, the prey good for me was in 2015, ‘16, and ’17. I was an entrepreneur first, where I was the CEO of a crowdfunding platform. We had integrations with Bitcoin. Essentially, people said, “We’d love to use a platform, but can we use Bitcoin as a source of payment?” I put crypto on my radar. We were working with Coinbase and BitPay at the time. This was the time when Bitcoin was maybe $200. It seemed nothing was going on.

All this time going from $200 to $300, $400, $500, $600, $700, and that’s when a trader in me, the best in me, woke up and said, “Something is going on underneath the hood of this technology. I got to look into this.” The more I looked into it, the more I realized, “This is one of those zero-to-one moments, I have to go all in and figure out how to trade this market and investment market and be early.” Essentially, that culminated in me launching one of the first crypto asset hedge funds back in 2018.

Again, because I didn’t come from crazy connections or wealth, I started very simply. I started with $217,000 out of my bedroom, a one-man show, and then I grinded that month-by-month, LP by LP, one win at a time, in roughly about $40 million to $50 million in assets under management now. It was in 2021 that the term the metaverse became pretty big in the Web3 space. We were trading those tokens, but the more I studied them, the more I realized it was mostly smoke and mirrors. There were a lot of things that were pretty worthless. Yet these virtual worlds with $10 billion, but they have 2,000 users.

Coincidentally, as I’ve started forming a thesis around this idea of a spatial internet, around the idea of gaming becoming a new social media, the more I realized there’s something true to it. The truth to it was these things like Roblox, Minecraft, Fortnite, and these platforms. Roblox alone has 350 million monthly active users, which is the population of the United States. There’s clearly something real there. It just wasn’t the Web3 version.

All these made me realize, “There’s an opportunity here, but I need a different fund. I need to become a VC and not just a hedge fund manager.” I launched my first venture fund that allowed me to play equity and not just tokens in long-term games. As a hedge fund, you report monthly. Every month on the investment side, I want to get out. I want to get in. As a VC, you need an 8 to 10-year buy-in where it’s like, we’re good at playing long-term games. I want to be early. I want to be the first check-in if possible, like the preseason stage. That’s how it launched a venture fund, but now we’re in venture fund two. We know we’ve been on this now for a few years. Fund one is fully raised and fully deployed. Now, we’re into fund two.

Success Stories At Hartmann Capital

I appreciate the enthusiasm. There are a lot of things that are attractive about my history and yours. I appreciate that background. Let’s go to fund one. Let’s talk about some of the wins from fund one, and then we’ll jump into fund two.

Fund one was launched under that specific thesis, where we said the metaverse is real. To us, the metaverse was this digitally native world where people care as much, if not more, about the digital world than the physical world. A few portfolios stand out. It’s only been a few years. There are the winners in terms of returns. One of our biggest outliers has been a company called Cookie3, which is a Web3 project that brings on-chain data, structures it, and makes it usable for AI.

We were the first investment company. We came in at a $6 million pre-seed evaluation. The company is now worth around $200 million, and it’s liquid since it’s publicly traded. That has been a massive 26X plus more markup. Not just mark up, but also some realize gains there. That’s been a big portfolio driver where we identified, “If you want to run AI agents, a lot of agents can’t have bank accounts because in a bank account, you need to be KYC.” It makes a lot of sense for agents to have on-chain infrastructure. They can have their own walls. They can do their own transactions in between each other. How do you enable agents to engage efficiently on chains, and who provides the data for that? Cookie3 was the right fit for that.

There are other companies where they’ve got incredible fundamentals and incredible growth, but it has only been 2 or 3 years, so we don’t yet have the 20X markup on paper to show for it. One of our portfolio standouts certainly is DRESSX, which is the leading digital fashion technology company in the world. What is digital fashion? Anytime you wear an outfit in a world like Roblox or your little emoji on Snapchat or Instagram. It’s Meta. You could buy outfits for them.

What’s crazy is that, back in 2022, when we first backed them, they had sold maybe 300,000 units of items. In 2023, it was about 2 million items distributed. In 2024, it was 78 million units distributed. Some of these things don’t make sense to anybody who is either over the age of 25 or under the age of having children that are 15 years old or 10 years old.

I have several LPs that fund one. They are like, “I don’t quite get it, but I trust you.” By the time fund two came around, they said, “You don’t have to tell me. I’ve got kids, and they’re on Roblox every day. Every weekend, they spend all their savings. They’re spending them on outfits, mini games, and things like that in these virtual worlds.” One of my LPs, I have even mentioned this twice on the show, but it’s such a funny story.

He mentioned his son met three of his last girlfriends on Roblox. Going back to this thesis with the metaverse with the digital world matter just as much, if not more than the physical world. It means the digital world is where we make all our relationships, and then we go offline and meet them. In the past, we’d meet offline. You meet your neighbor or schoolmates and so forth, and then you connect on Facebook. Now, you meet in the digital world, and if you like each other, you might hang out offline. On the flip side, when I was in school, kids cared about whether they were wearing the cool new Nike Jordans to school. They were signaling that. Now, it’s more about what skin in Fortnite do you have?

That’s so funny because both of my sons, God knows how many thousands of dollars they spent on skins and other in-game purchases on Roblox and Fortnite. You’re right. That’s a digital marketplace. Quite frankly, my girlfriend, I met through her aunt on Facebook. The reality is that my real-world romance came from social media. I track those two things you say.

This was the thesis for fund one, essentially. The trend is that generations now are full digital natives. They form relationships, and they do their business, and social signaling happens. So much of the economy now is moving digital because that’s where the value is perceived and created. How do we back infrastructure for that? A lot of fund one was gaming. It was virtual reality where we said, “Facebook rebranded to Meta. They’re bending the whole company to virtual reality.”

Apple, the first hardware product in twelve years, was a VR headset. I know a lot of people look at this and say, “It seems like a gaming tool. It’s very nerdy and geeky. I don’t use it. I get sick when I use it.” The reality is that when you look at the statistics, essentially, it has massive product-market fit with Generation Alpha. Generation Alpha essentially is age fifteen and down, roughly. Because they grew up on it, they don’t get sick. They can spend 2 hours or 3 a day there, and they are the first big breaker titles. For example, there’s a game called Gorilla Tag, which essentially is a social sandbox.

Kids hang out. They played the game of tag. Tag, I got you. They hang out. They go to virtual beaches and virtual jungles. They have fun and hang out. There’s no core game loop. This game has a million daily active users. There are a million kids strapping on the VR headset every single day to play this game, and this game is free. Yet it made over $150 million in revenue, selling in-game outfits and so forth. If in fund one, everybody is short VR, we are very long VR because we think it’s one of the most underpriced segments in the tech space.

Navigating The Integration Of AI In Tech

It is interesting because VR had a big run for a while, then fell out of favor, and now it’s looking for another run, which is pretty exciting. It looks like you’re expanding the thesis into fund two. I looked at the website. There’s crypto, gaming, and AI. Talk about the thesis now and how you’re expanding what you’re doing with AI and other technologies in fund two.

The evolution fund two came as a natural extension of fund one. With fund one, and I can say this, we became the most active investors. We’ve done more XR deals than any other fund in the last three years. We’ve backed most of the category champions where there’s spatial design, spatial analytics, or spatial video capture. We’ve backed 3 of the top 20 games in VR. We got that box checked, but as the technology was progressing, we started moving from VR towards smart glasses.

Even Meta is starting to pivot hard into the idea of smart glass, which is the Orion glass that they presented at the last Meta Connect. Essentially, you’re able to do everything that an Apple Vision Pro can do, but in the form of sunglasses. One of the big commercials was the Ray-Ban. They launched the Ray-Bans, which have a camera in them. You’ve got speakers, a microphone, and the AI system in it. They did this again with Oakley.

Google announced that they’re doing the Glass too with Gentle Monster, Luxottica, and all kinds of other brands. Essentially, every glass brand is going to become smart. Why is it important to us? It seems like a gadget, but the real question is, everybody uses AI every single day. Now, we’re using ChatGPT all day long, at least I am. I know team members are in companies and businesses. That’s in my family. My mom and dad might be researching something, and they say things like, “I want to learn more about a subject.”

I remember when I first showed my dad ChatGPT. He was interested in golf, and he said, “Can this coach help me improve my golf swing, or can I use it at trivia night?” Regardless of who is using ChatGPT, the numbers show this was one of the fastest-growing consumer apps in history. It was the fastest-growing consumer in history. Now, the question is, we use this on desktops and on mobile phones, but how do we take this with us truly 24/7? How does this enable us to be smarter, faster, and better? How do we enhance the world around us?

When you run the experiment and you think about it, glasses are the ultimate form factor. Why? It’s because it allows AI to see what we see. It allows AI to hear what we hear. It allows AI to talk to us and show us things, and enhance the world around us. I’ve thought about this so many times, where people say, “Glasses are stupid. We’re even getting Lasik.” I got that part, but then they said, “Why not just AirPods with the camera?”

Women have long hair, and long hair covers the AirPods, or you have a pendant, and the pendant flips around all the time, so the camera is getting covered. People were speculating that Jony Ive and Sam Altman were doing a little puck that you put in the front pocket. Not every shirt I have has a front pocket. You put it down on the desk, but then if I put it down on the desk, I might as well use my phone because the phone also has a microphone. When you experience this, you realize, “Glass isn’t just ideal.” Why? It’s because this thing always goes back to the ears. You can always have good audio, and it sees what we see.

If you turn your head, the camera automatically turns with you without you needing to use your hands. To us, that is very exciting because there’s a big trend now with humanoids, for example, with their complex figure. Aptronix raised a $40 billion valuation. Tesla with Optimus is getting big into that, but the reality is that their production capabilities are very limited. The figure says that they think they’re going to deploy 100,000 humanoids by 2029. That comes out to less than 25,000 a year. You’re not going to replace the human workforce with that any time soon.

Meanwhile, these things commercially cost $300. If you do the enterprise, you probably can buy them for $100 a pop or less. It means if you want to make your existing workforce smarter, more connected, and more efficient, you can do that with smart glasses. The thesis for fund two, to bring it all back essentially, is human AI integration. How do we merge those two? There’s also the idea of human-machine interfaces and interaction. This includes things like smart glasses and brain-computer interfaces. For example, being able to have sublingual communication, meaning you don’t have to speak anymore. You just think words, and essentially, the electronic emissions that your muscles create are enough for technology to pick them up and then communicate to your device. This might all sound Sci-Fi.

Most Deciding Factors In The World Of AI

It is. It’s interesting. I love all these because, like you, when I was a kid, I was a big Star Trek fan and all that leading technology. The things that we saw in fiction generations ago are now facts, which is fascinating. You’ve done a deep dive into the tech, and you’re passionate about the tech. I always ask investors, “Everyone has an AI company. Everybody puts an AI extension at the end of their name.” It’s like the dot-com in the ‘90s. How do you pick the winners in this field of AI? Is it the entrepreneurs or the tech? What are some of those deciding factors?

There are two different buckets for this. The first bucket is you want to back companies that are creating entirely new categories. There are two examples I can give. There’s one company we back. It’s called Mentra Labs. We backed them in March 2025. Probably they haven’t announced it. They’re going to announce it. By the time this comes out, it’s public. They raised over $8 million seed round, and probably one of the biggest seed rounds of the year, backed by Y Combinator, the Founder of Android, Rich Miner, and Toyota. There are some Asics and so forth.

We’re one of the few VC funds in this round because they are building the operating system for smart glasses. There are maybe a dozen different smart glasses out there, but they all have their own little software product that is underwhelming. It’s like, “We’re not going to make the hardware. We’re going to create the actual developer SDK, so anybody can build apps for smart glasses, and we can power all the hard work.” We’re agnostic. How does this tie into AI? All the AI apps live on this.

For example, they will have apps. There’s an app called Mentra Merge. If I wear this, it listens to a conversation. You mentioned something. Maybe you mention a jargon that I don’t know. It will give me a quick definition without me asking for it. It intuitively knows what would be a good enhancement to our conversation. Here, we’re not backing one app because the app layer, to some degree, is getting condensed, where agents can do most of that work themselves.

We’re batting a whole operating system. We’re batting on a whole app store. It’s a platform play. With this, you create a whole category, and we’re looking at similar things in BCI, where we come back to Neurable. It’s creating an operating system for the brain where it collects all your brain data, and then you can do all kinds of cool apps around that. These are category creators. The other bucket for AI is that you have to find this in the Venn diagram, this sweet spot in between a product that has a large enough venture scale returns, but it has yet to be so niche that the foundational models will not come after it.

That is a shortcoming that most AI startups suffer from. They go off to something that makes sense intuitively. Let’s say an AI voice. I would go as far as predicting that there is a double-digit chance, like a 30% or 40% chance, that a company like ElevenLabs, a unicorn company, will eventually go out of business. Why? It’s because it is such a core functionality that likely an incumbent foundational model will just offer in-house. You saw this a few years ago. You had a lot of video models, whether it’s Runway, for example.

Runway was one of the frontrunners or even Midjourney for image creation. I don’t have the stats in real time now, but it’s my understanding that Midjourney traction is declining now that people can do it directly inside OpenAI. You’re creating an image versus jumping over to Discord and using Midjourney, or you can now use Sora or Google Veo 3, instead of having to use Runway. If you’re going after a very broad use case, like generating video and generating voices, to me, that’s very tricky.

The only way to compete with that is to be at the highest tier of quality. For example, the average user will use a Gemini product to create a voice. If you’re a movie studio or you will be creating a song and you want the best of the best quality, there’s probably a very fine-tuned and also a very White club enterprise service level product. We try to operate again in these segments where we don’t believe the foundational models will try to expand to.

For example, we went back to a company called Ludus AI. They’re essentially a full developer toolkit for Unreal Engine. Everything that Cursor does and so forth for developing apps and writing code with AI assistance, they’re doing all of that, but for game development and for 3D creation. What are the odds that OpenAI or Google is going after game development? The odds are pretty low, and even if they do, the company at least probably has a 2 to 3 Runway to build, grow, and become relevant enough. If the incumbents choose to go into the space, the odds are pretty high that they might acquire Ludus.

How Hartmann Chooses Their Founders

You make a good point because AI has been around for quite a while. It was all about LLM, and now it’s about building clearly defined applications to solve niche problems, as you mentioned. How are you getting deal flow? Where are you finding the companies? What’s the background of some of the founders that you backed?

We try to come in extremely early. About 33% of the deals, we are the first investor ever, even before any VC Angel. About 50% of the time, we are in the first round. We might not be the first person to put on the map, but we’re in the first price round. How do we find them? There are three cores. We’ve got many channels, but in terms of where most of the deals come from, one, funding a network has been huge. At this point, we’ve back over 30 founders, and good founders tend to know each other.

Those also are the highest signal ones because you have somebody very smart who knows the space in and out, and for them to put their own name on the line. They diligent themselves a little diligence and then they send it. We found some great deals that way. The two other ones that have been the most fruitful have been much more from other VCs, because other VCs, a lot of times, try to keep the companies funded more so than sending the best deals. It’s top-down, bottom-up. Top-down would be spending some serious time thinking about, with all the shifts happening, what new areas are now about to be unlocked that weren’t possible before?

What is the thing that everybody talks about now? Instead of betting on the thing that everyone talks about now, what is the thing that opens up and unlocks? The way I visualize this, it may make sense to somebody and not to others, is like in a video game. There’s a skill three. You can’t jump to this skill. You first have to unlock this one. Once this becomes open, new pathways open up. I always try to think one to two degrees out. You only have to think one degree out and say, “Now that there are things like Cursor, what could come next?”

Now that there is something like MicroLEDs, what does it mean for glasses? Now that there are the first commercial smart glasses, what apps could be built on them? It’s taking this top-down approach and forming a thesis. For example, back in fund one, we realized VR is having a moment, but for it to grow materially, there needs to be industry-standard design apps. What is the Figma of XR? We need to find it. What is everybody using to design their apps and prototype them?

We looked at everybody in the market space and we identified a company called ShapesXR, where we realized that it is used by virtually everybody, from the biggest fitness apps like the biggest meditation apps to the enterprises like Meta, Bite, Accenture, and Microsoft. That is the horse we need to be betting on because when spatial computing takes off, everybody will be using this product. This is the top-down.

The other way is bottom-up, which is particularly useful for pre-seed, which means you have to be in the weeds. You have to be a super user of everything you invest in. I have discovered VR apps by playing every single app on the App Store. There are a thousand of them. We probably tried over 300 of them. One of my analysts, Daniel, is big in AI. Every month or every two months or three months or so, Daniel makes a market map of all the start-ups building an AI. His marketing maps get quoted everywhere.

They are in newspapers. They get shared around, and what that leads to is people then reaching out to him like, “We have a start-up. Please include it in the next market map. You should learn about us.” Also, he becomes a little bit of a focal point where he tries everything out and thereby, knows the founders. Companies like Ludus, for example. The one I mentioned, the co-pilot for Unreal Engine development. He met because he became friends with one of the top content creators in the Unreal Engine development space. The guy said, “I tried this tool out. You should take a look at this and diligence it.” We became the first investor, even though they had never raised before.

I’m so glad you said that because many investors that I’ve talked to over the years invest in companies, and they’ve never even tried the product or service. I am so glad that you started with that, because you understand the product and you’ve already confirmed some product market fit, then you make that investment, which is great.

A quick comment on this because it just came up. I find you get the highest signal by being a super user for two reasons. One, you get to see through the bullshit. You’ve got to see the smoke and mirrors. No matter how much tech babel somebody has, if the product sucks, it doesn’t matter. Secondly, by being a super user, you know it works. The irony is that some of the best investments that could have been made had never been made, with things I was an early adopter of. The biggest story I have is that I was on the prelaunch waitlist of Robin Hood because I was the creator. I was trading back in 2013.

I still got the emails from maybe 2014 or so, that Robin Hood was about to go live. And I checked, and I could have invested in Robin Hood instead of being a user. If I had just invested in things I used, I would have invested in Robinhood at $40 million seed round. Now, it’s worth $80 billion or $70 billion. Being a super user and investing in things that work and the industry loves is how you win.

You come in early on these new technologies. What’s the average check size for this?

Fund one, where we were still a little bit finger in the sky. It’s how much we like this company, and how much we want to bet on it. Since then, we’ve very much structured this super cleanly, where on fund two, the first check is always $300,000 to $500,000. That’s our entry size ticket, which is big for a pre-seed round. In a pre-seed round, that means it gets us 6% to 10% ownership already because we come in at a $5 million valuation. It might get us less if the company is raising fifteen-plus.

That allows us to get some exposure and some skin in the game, and then we get to know the founders and see who is the game player, who can navigate market cycles, build and pivot, and deliver on the milestones they are setting. Anytime you’re being pitched, it’s a dance. It’s a presentation, but the true colors show after you’ve invested.

After we invest, we try to build a relationship over at least a year and a half, and then the goal is to follow on materially with $1 million to $2 million in the next round. They even lead the round. To us, that is the way to get meaningful exposure. I’m talking 10%, 15% or 20% of the best of the best companies by the time the seed round is over.

How Hartmann Picks Their LPs

Let’s flip. Let’s talk about LPs and potential LPs. What’s the makeup of some of your investors? Who are they? Not by name, but you can if you want, in fund one and fund two. Who are your co-investors in these?

We have about six funds at this point, depending on the number of LPs or the amount of capital. In terms of LPs, we got 64 pieces in fund one, which means 10% fund of funds, and then maybe not the 10% to 20% family option, then a lot of high net worths. If you talk in terms of capital, it’s materially higher till the family office and fund of funds. I built this one step at a time. We do have a lot of individuals who found us along the way, who believed in us, and are investing alongside us.

Also worth mentioning is that the biggest allocator is me. I’ve done well with the hedge fund. We are on quite a lot back in 2021. I’m putting my own skin in the game, not just symbolically, but rather, most of my net worth is in my own funds because I believe in what we’re doing. That has a much higher return than owning the S&P 500. It is a much higher return and doing something passively. I put about 10% of the capital into all my funds.

In fund one, fund of funds was mostly raised with individuals. Fund two, we are in an institutional raise, where we’re talking to some of the biggest fund of funds names and all the names you probably know, different diligence to see because we’re trying to raise a full $50 million. Fund one was $15 million, and now we’re raising $50 million.

Why Choose Hartmann Capital

Talk to me about the current fund. To the potential investors, LPs, family offices, and RAs that recommend all. The question I like to ask everybody is, why your fund? Why now?

Two reasons. One, in the age of AI, very few companies will generate most of the returns. The way you generate outside returns is by investing outside the app. You invest in new platforms. That’s something we’re chasing. We’re looking to bet on whether that is the next category leader or category creator in XR or the next category creator in BCI. Those are actual deca unicorn outcomes, where there aren’t that many anymore. Who is capable of pulling off something like that?

While everybody is chasing the next Cursor, look at your portfolio of fund managers. Look at most of the VCs. Look at the most recent batch of Y Combinator. They have the term Cursor for. It was mentioned twenty times. I discussed this with somebody, where I said, “When Facebook came out, everybody was chasing the next Facebook.” They deploy billions of dollars into Clubhouse, for example. When Uber becomes successful, they’re looking for the Uber app. The reality is that the next Facebook doesn’t look like Facebook. The next Uber doesn’t look like Uber. The next Cursor or OpenAI doesn’t look like OpenAI.

We’re planting the seed in the categories that are able to essentially win in the age of AI, because we’re one step ahead. We’re saying, “In the age of AI, two things will happen. If humans want to continue to be able to compete, they will need to upgrade themselves.” How are you going to upgrade yourself in the next five years? It is going to be AR, new form factors, and BCI. That’s what we’re betting on.

The second piece to the thesis that we didn’t talk about earlier was that in the age of AI, we’re going to be working less. We’re going to have more time and more disposable income, which means we won’t be chasing meaning, challenge, and connection. That is where the virtual world is coming. That’s where gaming comes in and so forth. Both of these spaces tend to be something the most underdeveloped and underallocated spaces in the tech space.

Most of us have very little data allocated. Why now? We spent the last three years building expertise, networks, and a founder of ecosystems in the space and became a leading brand, being the biggest alligator in XR in the last few years. We’re best equipped to win in this upcoming revolution and have our stake in the next step at unicorns.

How AI Will Shape The Future

Any final thoughts? Anything you want to say? Any breaking news or theories about the future that you want to share with our audience?

This is more like macro commentary. The world seems to have been very crazy in the last few weeks or few months and so forth. A lot of times, you think about how everything plays out in between Iran and Israel, Ukraine and Russia, or the US. All these various complexes are going on, but the much bigger play over, like if you’ve questioned the five-year time horizon, is AI. Everything else will seem like noise, and the much bigger war to win to say is the AI revolution.

This also applies to things like inflation. I’ve been writing about this since 2022, when the whole market was in a downtrend. I said, “Everybody is talking inflation. That’s the biggest story in the world, but we will laugh at this in a few years.” Why? It’s because the real question will be unemployment, because AI is going to take more jobs, and deflation, because AI is deflationary. AI will try to push the price of goods and services down, and we’re already getting into the 2% range of inflation, and it’s tapering off.

If you put some AI accelerationism in there, we’re going to be deflationary. You’re going to see interest rates come all the way down, and that changes the whole funding environment. The funding environment is almost an opposite mirror image, so to speak. It’s a 180-degree change. That is what I’m trying to say. In 2020 and 2021, everybody was saying, “Shoot for growth, shoot for form factors, and shoot to grow as fast as possible and win our potential.”

We now flip completely the opposite, where everything is a revenue multiple. We’re very strict when it comes to revenue multiples. In VR, you can get 3X revenue multiples, which you don’t get anywhere else, but completely discarding revolutionary new technologies, whether that is XR, BCI, and so forth, because everybody is so diverse. There’s an all-time high in money that is seen in the treasury fund, $7 trillion is the amount. All that is going to be shifting back in my eyes in the next 3 to 4 years, and it’s going to chase growth.

You have to ask yourself, “What are pockets of growth that have not been explored in the last few years?” That is where you have to be allocated, particularly, to those things that are not going to be disrupted in the age of coding, where any sixteen-year-old can recreate your app in no time. There are modes in deep tech. There are modes of having an actual IP. There are modes in creating network effects, for example, having thousands of developers build on your platform that can simply be replicated with the click of an AI query, essentially.

That’s a way to think about the world. You have to think about how defensible your portfolio is when AI changes a lot of these things, when it changes how businesses are built, products produced, how people are employed, and how people are spending the money. All these questions need to be answered for you to have a defensible portfolio.

Get In Touch With Felix

Felix, where can people learn more about Hartmann Capital and learn more about you?

The best places for the website. It’s HartmannCapital.com. You’ll find everything about our funds and our portfolio. You can learn about a company we’ve backed. I’ll say Twitter is pretty good. On Twitter, I’m at @FelixOHartmann. I share some insights there. If somebody wants to learn more, you can find our email on the website. You can send me a DM on Twitter, and I’d love to chat more.

Felix, this is fascinating. I love this conversation. I feel my head exploding with all the new tech. I feel like I’m already in 2055 or something like that. Felix, thanks for being on the show. For everyone reading, make sure you listen to Felix. Be on the cutting edge of what’s happening in all things tech. Again, thanks for being on the show.

Thanks for having me, Scott. Take care.

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There was so much stuff to unpack there, Scott. You touched on everything. There was a part where you were talking about Minecraft, Fortnite, Roblox, and spatial internet, which is the 3D creator economy going on there, too, then you’re heading to crypto and all kinds of other areas.

It’s interesting. It’s great when you pick up some information from time to time. I remember it had to be maybe 8 or 9 years ago. I was sitting in my house, and my then fifteen-year-old son walked up there knowing very cursory amounts about what I do for a living. He’s like, “Dad, you’ve got to get into eSports.” I go, “What the hell is that?” That same weekend, I’m watching the league of legends championship, and there was a $14 million prize money. Three weeks later, I joined the eSports team, but he understood it from a total global interconnected standpoint.

He understands Web3 as it applies to gaming. He understands AR and VR as they apply to gaming. He understands crypto as an opportunity to better monetize and be more efficient with this technology. Obviously, AI is the flavor of the month, but it’s going to be the flavor of the next generation, and he understands that, too.

I thought that his take on AI comes from this place of having been watching VR companies. It comes from watching that segment of the gaming market, where he has his eye on that already. When he’s talking about Neurable, ElevenLabs with voice, which they do a killer job over there, and developer toolkits for Unreal Engine. All of those little things, but they interact in a way that makes the AI space functional. Make it useful. Make it work.

I agree. AI has been around for quite a while. It’s becoming the next thing for the next several generations and probably forever. He understands how to apply AI, and that’s the key going forward. In the beginning, this whole AI journey in the last couple of years it’s been about the large language model. It’s about what engine you can build. Now, it’s what you can build with that engine. He understands that from a gaming standpoint and an AR and VR standpoint.

He mentioned that he called it the bottom-up approach, which I thought was great. I haven’t heard that one in anyone we’ve been interviewed so far, but they’re super users of the stuff that they invest in, and that’s rare.

The reality is that he doesn’t have to worry about product market fit. It’s already there. There are billions of gamers. There are all kinds of people who are usually VR and AR. Based on the date this was released, we had a major crypto bill passed in our government. We’re legitimizing the industry from a national standpoint versus a sector standpoint. He understands. I like to tell people not to build a product and try to find the customers. Find the customers and build a product for them. He understands that.

Even his check-size funding model and all of what he was outlining fit with that understanding. You don’t hear much when somebody writes a half-million-dollar check that they only take 6% to 10%. Usually, you hear that as an outsized, which then hampers the future rounds. That’s not what they do because they know they’re in it for that big future round.

That’s the key. As we’ve been learning over the course of several episodes, I bet your capital is changing, the nature of it, and how people invest and why they invest. Sometimes, there’s a turning point in venture capital and words going forward. Understanding that to be in the right place, but also to do it the right way, is critical going forward.

There were some interesting things to watch that I hadn’t thought of. I did an AI conference. I was doing a case study about some of the work we’re doing, and so much of it was like, “Here’s the automation we’re doing.” It’s like taking little tiny pieces of AI and only using them to do one thing. There’s all this money flowing through that. I’m thinking that is not where it’s going. That is not where the big money is. There’s a platform play. He’s talking about these brain-computer interfaces. There’s a bigger play here, and somebody needs to be working on it and thinking as Hartmann Capital is.

He understands that a lot of money is flying into AI. I was around when a lot of money was flying into that combo. You have to invest in more than a domain for the extension. You have to invest in companies doing real things with this technology. Felix understands that.

The idea that you’re a super user of something makes it critical to understand what’s missing in the process. When we were super users of 3D printing, for example, we could see very clearly that no investment was flowing into the model creation side of things. That was where we got to hamper the growth, and we could see that. He can see that.

From being a fan of gaming, he can invest from a user consumer standpoint. I think that’s critical. Sometimes, if you’re in an ivory tower and invested in a company, you don’t know who the ultimate customer and consumer is. He is one of those customers and consumers. He comes in like, “This is what I would like, or you’ve created something that I would like because I’m like my millions of friends around the world doing the same thing online.”

He’s always realistic about it. These investments take the time that they take. They may need other companies and surrounding companies, which is why you need a portfolio of them to grow. You might go through an actual dip in the marketplace and all of these things, and you’ve got to get through that. When you get on the other side, you’re the player.

The reality is that gaming and eSports had their day, fell back, and are coming back now. I have two old sets of VR glasses that I used five or six times, and they’re relics. Now that’s coming back. You have to understand that there’s going to be dips and trends, and understanding those dips and trends is important to be successful.

Felix Hartmann certainly has his finger on the pulse of what’s going on in this tipping tech, if you want to call it that way. I look forward to seeing and following him. If you want to follow him, all the links to follow him are at EmergingManagersPodcast.com.

Important Links

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• Hartmann Capital
• The Singularity Is Near
• The Age of Spiritual Machines