Mike Maples Jr. is a prolific angel investor and co-founder of early-stage venture firm Floodgate.

Over the years, he’s taken a lot of bets. Some have paid off handsomely (Twitter, Twitch, Lyft and Bazaarvoice, for example). Others have not.

I interviewed him for a recent episode of Equity Podcast, and we dug into a number of topics, including some of his most memorable investments, the one that got away, what he looks for when evaluating startups that pitch him and his new book that he co-authored with Peter Ziebelman called “Pattern Breakers: Why Some Startups Change the Future.”

This interview has been edited for clarity and brevity:

TechCrunch: You coined the term “Thunder Lizards,” a metaphor from Godzilla for the tiny number of truly exceptional companies that are wildly disruptive capitalist mutations. How did you come up with that?

Mike Maples: I was looking for a term that wasn’t too jargony sounding. Thunder Lizard — the metaphor does come from Godzilla, and Godzilla was hatched from radioactive atomic eggs and swam across the ocean and emerged with an attitude and began breathing fire and swiping holes in buildings and eating train cars like sausage links. And I always just thought that was a good metaphor for a startup — these capitalist mutations that appear seemingly out of nowhere and change the rules, whether you like it or not. My job is to spot them when they’re at the atomic eggs phase.

Is it harder now to find these atomic eggs than it was, say, 10 or 15 years ago?

It might be. I think there’s roughly the same number, but there’s a lot more noise. A friend of mine, Andy Rachleff, who helped start Benchmark, tried to understand how many companies a year are created that ever get to $100 million in revenue as independent companies. It’s on the order of about 30 in the United States, plus or minus five. Not that many. 

There are lots of startups that have good exits. But there are not that many that truly change the future. So 15 years ago, it was easier to bet that an entrepreneur was doing their startup for authentic reasons, rather than they thought they wanted to be a high-status founder.

So it’s much more competitive now to invest, is it? 

Yes. And ironically, when a startup opportunity is competitive from an investment point of view, usually that’s a bad sign. Usually that’s a sign that everybody likes it, which means it’s too similar to what’s already come before. And so the best startups that I’ve been involved with are radically different from anything that’s ever happened.

The great startups are sort of an affront to the present. They’re a disagreement with the present. And as a result, most people don’t like them, and if too many people do, it’s not enough of a breakthrough. It’s off-putting [when there’s too much other investor interest]…It’s the ideas that polarize that win. It’s the ones that most people dislike. But a small number of people say, ‘Oh my gosh, where have you been all my life? I’m desperate for this.’ And so that’s what we’re really looking for. 

We talk about risk, we talk about bets, we talk about successes. But I’m sure along the way, there were some of those bets that didn’t exactly pay off. Can you think of any that memorably stood out to you where you learned a lot?

Warren Buffett invests in corporations, and Warren used to say, and still does say, rule No. 1, don’t lose your money. Rule No. 2, don’t forget rule No. 1. Rule No. 1 in my business is don’t pass on Airbnb, because you can only lose 100% of your money. So Brian Chesky offered me a chance to invest, and it would have been at a $1.5 million valuation, and had I invested, I would have made 6,000 times my money. 

That may have been a miss, but you’ve had a ton of success stories, like Lyft. How did you come to invest in the company?  

Some of it was instinct and luck and timing and a bunch of other things. Lyft harnessed an inflection of GPS chips and the iPhone 4s. Inflections matter a lot because they let the founders fight unfair. So business is never a fair fight. The advantage goes to the incumbents by default. So the startup has to have a mechanism to make the fight unfair on their terms. They need a weapon, an asymmetric weapon, to wage warfare on the present. The inflection is a new thing that provides new empowerment that an entrepreneur can harness to create something radical. 

So you mentioned that in areas like genomics, AI, there’s still numerous opportunities for major shifts. In your opinion, have we reached an inflection point in AI, or is that still coming?

AI is one of these things that it almost seems more than just an inflection. It almost seems like a sea change, right? It’s like, when I was a kid, the IBM PC and the Apple II ushered in the era of mass computation. And you know, you had Moore’s Law and computers proliferating, and then you had this era of mass connectivity with the internet and the smartphone, where you’re connecting everybody in the world in these networks. And now it feels like we have this era of mass cognition, where cognitive operations are starting to become cheaper and cheaper and more powerful. And so what I’m seeing is inflections every week. Every week there’s a new LLM that leapfrogs the prior one, or Sam Altman does a new demo that makes what just seemed remarkable, obsolete.

So in your opinion, this AI sea change, is it? Is it a legitimate one, or do you feel like it’s overhyped at all?

I think that both could be true at the same time.

I think that AI will be directionally transformative, and I think that the believers in it are right, but there will be some massively overvalued companies.

Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Wednesday and Friday. Subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

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