The Exchanges

Q Like, you know, it was like the, you know, five to ten million pre-seeds and seeds. For the last five years, we've seen twenty-five million seeds. And then the 102 50 is really very different. Like, it, it's just huge. Like, how do you think about price sensitivity at pre-seed and seed? Do you take the same list if, uh, hey, it's fine? Or are you much more sensitive there?

A Yeah. Look, our, our goal is to invest as much as we can in the company that, that we're excited to invest in. And it's not maximizing check size. So we write a 500 K, 750 K million dollar check. We do that as the core of our business. It is a target in the majority of companies that we're able to work with. Valuation is the second piece of that. So you, you get to ownership in each company. Through those two basic numbers. Is there a, a strong rule on any of this? No, but on a portfolio basis, we find a balance of all these things. Valuation is not something that is in a, a investor you actually control. I, I just don't believe that the market as a whole controls that. So if a founder Gets enough optionality for their round that they're able to raise at a valuation that you as an investor don't like. You have two options, invest or don't invest. It's, it's a binary. If, if you get the opportunity to invest and this is the deal, you can say yes or no. And so I can sit here and complain about valuations, but if I'm a founder, my job is to build a company that is a lot bigger than Then whatever valuation I'm raising my seed and pre-seed up. My job is to take the capital and create immense value so that the next round and the next round are, are bigger. If a company goes well, the pre-seed, the seed, those are the lowest points that you're ever going to be able to invest in a comp…

AI assessment note: “Is there a, a strong rule on any of this? No, but on a portfolio basis”

Q No, I agree. But what do you advise founders? Do you say, like, meet five? Because I also don't want, like, I don't want my founders to, man, we both have hot companies. They get, like, 50 inbounds. I don't want them that distracted. I want, like, a hone-tight messaging. Don't give away too, but, like, how, how do you advise them? How many the right way to play it?

A We don't see my companies. It's their company. So I think first off is just like listening to them. What do you want? How much time do you want to spend on this? How much risk do you want to take in this process? So understanding their psyche is super important. And so a lot of the time, the beginning is like, what's your style? How do you, where are you going to excel? Are you distracted by 50 conversations? There are certain founders that are not, and that's a, that's a strength for them. It's a weakness for other people that then you shouldn't push them to do. And so I think it's really helpful for us to, again, view each journey, each company and each step in the process is very specific. We, I believe very strongly that founders should consistently be building great relationships At every step of the way on their journey in every single category. So, like, long-term potential customers, long-term potential partners, long-term potential acquirers, and long-term potential investors. There is no reason why, I mean, Mark, Mark Suster, uh, you know, wrote that blog post years ago, invest in lines and not dots, right? And it's that core View of, of how the world works is like in 21, that frothy moment that we love to isolate, everything became transactional, and you could show up one day, meet six firms, and have six term sheets, and everybody spent about 18 minutes making that …

AI assessment note: “first off is just like listening to them. What do you want?”

Q I do want to ask, you know, in terms of, um, like other lessons, you know, last years we've learned a lot. If there was like, and this is personal, so this is not anecdotal generic, but this is just you. So you can say, uh, is there any lessons that you have from seeing how you invested over the last few years and what you've taken from that period?

A As entrepreneurs and founders, I think the lessons is a starting a company's heart. It's hard in In every single market because the market isn't consistent. And so even if you start a company in a hot, frothy market where you're getting overfunded and high valuations, it doesn't mean that's going to be the status quo for the extent of the company and things change and it's really hard. And you're going to go on those ups and downs. There's almost, if, if any, uh, company that's ever just sort of went up. And I think Going in eyes wide open to knowing what you're signing up for is important. And just because you can start a company doesn't mean you should, um, you should start a company because that's something you're going to see through all the way. Um, so I think that's, to me, it became very easy to raise seed funding and to start a company and everybody got to do that. And I don't think people went in as eyes wide open to the challenges that they were signing up for. And I think it will end in a lot of, uh, failure. Uh, on the investment side, um, it was very hard to not be transactional and speed became a core tenant of the market and it was at every round. And so seed A, B were happening in hours to days versus weeks and months. And, um, we, we participated in that because That's the game on the field, but the transactional nature of, uh, the industry, um, it's not the mo…

AI assessment note: “on the investment side, um, it was very hard to not be transactional”

Q I do agree with you in terms of being in the middle. You touched on that, the elements That you can use to get to know an ambassador better. You said podcasts. You also said Twitter. I'm intrigued because I really started scaling up my Twitter, and you scaled yours down. What was the thinking around the scaling of Twitter down for you?

A I'm scared of getting yelled at, and there's a lot of people that yell at you on Twitter. The real answer, I think, I do this job because I'd love to be part of the founder's dream. I feel like we are so lucky to be able to work with people who Want to go build something and build something to a scale that has such a wide impact. And sometimes you can sort of use these pithy statements like change the world, but some of these companies do change the world. And if you're not changing, quote, the world, you are changing an industry. You're impacting a lot of customers, a lot of users at the end of the day. And that's an incredibly powerful thing. And I think we've gotten to the point where the romanticism of startups is gone. That was sort of the era we lived in from I think the tone changed. So as the sort of word unicorn got spread, what to me has happened is we've seen the development of the unicorn hunter. And so as somebody gets deemed a unicorn, out come the claws and the people trying to kill that unicorn. And to me, if I'm part of the echo chamber of either promoting the romanticism of startups, you are looked at as a promoter and somebody that's just overly positive. And what I'm not interested in doing is shitting on other people's companies. The people that are building these companies are working day by day, night by night to get these to a point where they're able to…

AI assessment note: “what I'm not interested in doing is shitting on other people's companies.”

Q Someone asked this and they said, you know, your family is very successful. And they said, were you running from the perception of like being one of the family members and wanting to strike out on your own?

A I mean, I, I think it's a, there's, there's a lot of nuance in that answer. I'm an individual, and I have my own ambition and desires and goals that are not necessarily attached to the history of my family. At the same time, I have an immense appreciation for, uh, the blessings of, of coming from a group of people that worked really hard and found success, and so it's not this Rebellion or desire to, to strike out on my own as much as it's like, I love what I get to do, and it happens to be in a different world than what other people, uh, have done. And so it's, um, it's not a negative lens of it versus a sort of positive one.

AI assessment note: “it's not this Rebellion or desire to, to strike out on my own”

Q long-term relationships, I'm very much, again, with you on that, and I find it very difficult when I'm forced to make a ten-year commitment predicated on One meeting and then maybe a second meeting a day or two later. I find it very, very challenging in a way that Series A allows you a little bit more luxury. How do you do that then, given the preference for long-term relationships?

A So, see, pick, win. You have to see it in order to pick it, in order to win it. Seeing it, the earlier you see a founder, the better your relationship is when that transactional moment comes into play. And so, if you can meet people Before they're starting a company, before they're thinking about starting a company, if they're at a university, if they're working at a different company and thinking about starting one, that is the best time to meet them and to build a relationship that you can have conviction when they do show up for that transactional moment to say yes. I think that that is the, the essence of seed investing. The hardest part is getting Exposure to founders at a scale that allows you to see in a given year, in a given fund cycle, enough of those potential great opportunities and great founders and the pick. I don't know. I, we, we debate this internally at our firm. I don't know how to get better at picking when you don't find out the results of your picks for like five to 10 years. And so how do you wake up tomorrow and do work to be better pickers? You can be prepared in markets. You can be prepared in the businesses and the types of businesses that you're trying to fund. You can sort of try to find better people, but I don't, Really know what that is. So I come back to it of like, can you build relationships that you get excited enough about to say yes, becau…

AI assessment note: “the earlier you see a founder, the better your relationship is when that transactional moment”

Q I do agree with you in terms of being in the middle. You touched on that, the elements That you can use to get to know an ambassador better. You said podcasts. You also said Twitter. I'm intrigued because I really started scaling up my Twitter, and you scaled yours down. What was the thinking around the scaling of Twitter down for you?

A I'm scared of getting yelled at, and there's a lot of people that yell at you on Twitter. The real answer, I think, I do this job because I'd love to be part of the founder's dream. I feel like we are so lucky to be able to work with people who Want to go build something and build something to a scale that has such a wide impact. And sometimes you can sort of use these pithy statements like change the world, but some of these companies do change the world. And if you're not changing, quote, the world, you are changing an industry. You're impacting a lot of customers, a lot of users at the end of the day. And that's an incredibly powerful thing. And I think we've gotten to the point where the romanticism of startups is gone. That was sort of the era we lived in from I think the tone changed. So as the sort of word unicorn got spread, what to me has happened is we've seen the development of the unicorn hunter. And so as somebody gets deemed a unicorn, out come the claws and the people trying to kill that unicorn. And to me, if I'm part of the echo chamber of either promoting the romanticism of startups, you are looked at as a promoter and somebody that's just overly positive. And what I'm not interested in doing is shitting on other people's companies. The people that are building these companies are working day by day, night by night to get these to a point where they're able to…

AI assessment note: “I'm scared of getting yelled at, and there's a lot of people that yell at you on Twitter.”

Q Now, can you get the ball rolling by telling us a little about you and how you made it into startups and the investing industry?

A Sure. I, uh, I, I have a quirky story like most people probably do, and, um, I was a, I was a nerd my whole life, and I, uh, You know, able to code when I was a kid, and then lost my way, and sort of stopped, uh, programming computers, but kept using the internet, and so I've had an internet obsession, uh, I think from, you know, the day I got my first modem, which was a 2400 baud modem, um, and, and used AOL, and it sort of grew from there, and so AOL for me was this, this entryway into the internet, and, uh, how the internet was just going to take over the world, and software, and, you know, wherever that's That's extended to. I never thought about it as an investor, and so it was always about, you know, what's, what's the next thing? And so in reality, that is the perspective that an investor has, is trying to predict the future and guess what's next, and more importantly, be part of a, an amazing team that's building what's next. And so I went to college. I ended up going to law school after that, became a lawyer. After law school, I joined a real estate firm, and I was sitting there for a year doing real estate finance and mergers and acquisitions in New York. It wasn't what I felt. It wasn't what I wanted to do. And, uh, at the time in, in 2006, uh, the startup scene was super nascent in New York and just started going, but, uh, there was a lot of activity bubbling in the…

AI assessment note: “I was a nerd my whole life, and I, uh, You know, able to code”

Q But is it, I'm just, I'm just really intrigued. Like generally, is it positive sentiment or are there sometimes spaces where it's like, how long?

A We don't operate, we don't operate our firm in a way that We actually try to extract that sentiment. We operate with the, the people who are spending time on that deal should make that decision, and if by people I mean one or two people, that's great. It does not need to operate at a firm level. I think seed investing, to Terrence's point, cannot be about consensus or groupthink or safety. It has to be on the edges. It has, like, Everyone on our team thinks about people differently. We think about spaces differently. We get excited about different things. And my job at Box Group and our job at Box Group is to have people here who we believe can make great decisions. And so Terrence, Terrence takes that model and in essence runs the same thing. He just does it. We're not going to talk about it because it's a secret, so I don't want to touch on it, but Terrence takes That decision making and distributes it to other people outside of the room, founders. We do that in the same room in some way, but we're still distributing the gut to the individuals at the firm who we think are all of us capable of making a decision.

AI assessment note: “We don't operate our firm in a way that We actually try to extract that sentiment.”

Q So you said there's two variables there in terms of seed round. Totally agree with you. How would you advise founders? Founders that listen may have hundreds of thousands. What, which one's right for me?

A Amount of money. Valuation. Who? And if you go to a multi-stage firm and feel like they are the right fit for you in terms of who, I don't think it's, it's a general wrong thing to do. Like there's not a generic answer to any of these questions. It's so founder specific. What are you working on? What are the capital needs? What's the Background of the investors that you're working with. I do think it's important to surround yourself with a group of people, group, not individual people that can be a bit different in their perspective. So what we do at Box Group and what we hone ourselves in on is being aligned with founders. We, we say we want to be a friend to the founder and we mean that in The longest term, most authentic way possible. So if you work with a multi-stage firm and they write the lead check, we're happy to be the second biggest check in the round. If you want to work with a seed lead, a traditional seed firm, we're also happy to be the second biggest check in that round. If you want to do a pre-seed or a small seed, and you want us to write a term sheet and write a, you know, adorably nice check alongside a group of amazing Angels. We're also happy to do that. And our job is to help you get to the next round and then help you get to the next round and the next round. And in doing so, there's some operational stuff that an investor can help with, but that is alway…

AI assessment note: “there's not a generic answer to any of these questions. It's so founder specific.”

Q And as you, as you kind of alluded to there, Spring's done immensely well, and obviously part of that is to you, and part of that is to Alan, and you've said before that Alan's the perfect leader for the company. So what do you think it is about Alan's character and Box as a product that's contributed to the massive success that it's turned into?

A Yeah, I, I, um, I think what Alan's done, and, you know, what the company's done is built an amazing group around him, and I think that's the most important thing. Thing at every one of these, uh, companies is to build a depth of a quality team, and so, uh, it's not the first person, it's not the second, It's the, the, you know, every single person you bring into your company in those first couple years has to be able to do things, uh, outsized and, and sort of, uh, you know, better than expected because they're carrying so much weight. And, and as a startup, you have limited resources, limited head count, and you're expected to do so much. And so, Uh, what Alan's done is build a great team around him and given them, uh, the ability to, to solve problems and build, uh, software and, and build the business side out. And, um, I think his style as leader is very different than mine. He's much more reserved, uh, from like, uh, an outwardly emotion. I'm, I'm up and down and erratic and, uh, spew nonsense. And I think Alan's more careful and Alan, Alan's a lot more thoughtful with his approach. And I think what that's done is Enabled him to empower his team to do some amazing things. And so, as I look across our organization, our engineering team, run by our co-founder, Vivi. Incredible. I think they've built an incredible amount of talent within the team. The way they communicate. W…

AI assessment note: “Alan's more careful and Alan, Alan's a lot more thoughtful with his approach.”

Q Given our agreement that the best companies or the highest caliber companies are not always obvious, David, what have been some lessons for you in terms of most effective resource deployment on reserve allocations?

A I think our, our Our strategy on reserves is to try to put capital into companies right before the market realizes how good a company is. Is that easy to do? No, but nothing's easy. And so all of these questions and answers, the, the goal is to take everything and make it a soundbite and take everything and make it a tactic or a, or an easy to learn lesson. But it's not. It's this nuance. So a company, and, and not every story is that. Not every company takes a long time to figure itself out. Some companies start, and they just work, and they work from the beginning, and yes, there might be a hiccup late, late, later on. Series D, Series E, but the path from C to D actually might be smooth. You should probably lean into that company if it's a great one. And equally, The company that raises a seed, takes a long time to figure out how to get product market fit, how to get revenue, how to get traction. You wanna sense that they are moving towards that great opportunity, and you wanna sense it before an outsider realizes it, or other insiders realize it. And do I have many examples of each of those, like, cases? Yes. Can I Figure out what the next one looks like because of the history? No, I don't think you can. I think you have to view, we have a, in our seed portfolio, we have about a 150 companies. I truly don't believe in pattern recognition at scale. I think there's nuanced pa…

AI assessment note: “Our strategy on reserves is to try to put capital into companies right before”

Q But is it, I'm just, I'm just really intrigued. Like generally, is it positive sentiment or are there sometimes spaces where it's like, how long?

A We don't operate, we don't operate our firm in a way that We actually try to extract that sentiment. We operate with the, the people who are spending time on that deal should make that decision, and if by people I mean one or two people, that's great. It does not need to operate at a firm level. I think seed investing, to Terrence's point, cannot be about consensus or groupthink or safety. It has to be on the edges. It has, like, Everyone on our team thinks about people differently. We think about spaces differently. We get excited about different things. And my job at Box Group and our job at Box Group is to have people here who we believe can make great decisions. And so Terrence, Terrence takes that model and in essence runs the same thing. He just does it. We're not going to talk about it because it's a secret, so I don't want to touch on it, but Terrence takes That decision making and distributes it to other people outside of the room, founders. We do that in the same room in some way, but we're still distributing the gut to the individuals at the firm who we think are all of us capable of making a decision.

AI assessment note: “We don't operate our firm in a way that We actually try to extract that sentiment.”

Q Given our agreement that the best companies or the highest caliber companies are not always obvious, David, what have been some lessons for you in terms of most effective resource deployment on reserve allocations?

A I think our, our Our strategy on reserves is to try to put capital into companies right before the market realizes how good a company is. Is that easy to do? No, but nothing's easy. And so all of these questions and answers, the, the goal is to take everything and make it a soundbite and take everything and make it a tactic or a, or an easy to learn lesson. But it's not. It's this nuance. So a company, and, and not every story is that. Not every company takes a long time to figure itself out. Some companies start, and they just work, and they work from the beginning, and yes, there might be a hiccup late, late, later on. Series D, Series E, but the path from C to D actually might be smooth. You should probably lean into that company if it's a great one. And equally, The company that raises a seed, takes a long time to figure out how to get product market fit, how to get revenue, how to get traction. You wanna sense that they are moving towards that great opportunity, and you wanna sense it before an outsider realizes it, or other insiders realize it. And do I have many examples of each of those, like, cases? Yes. Can I Figure out what the next one looks like because of the history? No, I don't think you can. I think you have to view, we have a, in our seed portfolio, we have about a 150 companies. I truly don't believe in pattern recognition at scale. I think there's nuanced pa…

AI assessment note: “try to put capital into companies right before the market realizes how good a company is”

Q We mentioned, like, my mistake, they're trying to beat other people. Um, I, I also made mistakes in the last years with liquidity. I could have and should have sold in some big winners that were winners and probably now are not winners. How do you think about when to take cash off the table?

A Carefully. It's, again, it's not a black and white generic answer. It's so nuanced. So we try hard and, and really align ourselves with founders long-term. And so our goal isn't to Look at the secondary markets constantly, uh, in private companies. At the same time, my job is not to manage public stock. I have investors who are very capable of making their own decisions in the public markets that I don't feel the need to try to say I know better. So I think, you know, that's a easy lesson is, is let your LPs own the thing that they own when you can. Um, and in between there is like all this gray, ton of gray. I don't have a, I don't have a soundbite for you that you can go put on TikTok.

AI assessment note: “let your LPs own the thing that they own when you can”

Q I do want to ask, you know, in terms of, um, like other lessons, you know, last years we've learned a lot. If there was like, and this is personal, so this is not anecdotal generic, but this is just you. So you can say, uh, is there any lessons that you have from seeing how you invested over the last few years and what you've taken from that period?

A As entrepreneurs and founders, I think the lessons is a starting a company's heart. It's hard in In every single market because the market isn't consistent. And so even if you start a company in a hot, frothy market where you're getting overfunded and high valuations, it doesn't mean that's going to be the status quo for the extent of the company and things change and it's really hard. And you're going to go on those ups and downs. There's almost, if, if any, uh, company that's ever just sort of went up. And I think Going in eyes wide open to knowing what you're signing up for is important. And just because you can start a company doesn't mean you should, um, you should start a company because that's something you're going to see through all the way. Um, so I think that's, to me, it became very easy to raise seed funding and to start a company and everybody got to do that. And I don't think people went in as eyes wide open to the challenges that they were signing up for. And I think it will end in a lot of, uh, failure. Uh, on the investment side, um, it was very hard to not be transactional and speed became a core tenant of the market and it was at every round. And so seed A, B were happening in hours to days versus weeks and months. And, um, we, we participated in that because That's the game on the field, but the transactional nature of, uh, the industry, um, it's not the mo…

AI assessment note: “on the investment side, um, it was very hard to not be transactional”

Q No, I agree. But what do you advise founders? Do you say, like, meet five? Because I also don't want, like, I don't want my founders to, man, we both have hot companies. They get, like, 50 inbounds. I don't want them that distracted. I want, like, a hone-tight messaging. Don't give away too, but, like, how, how do you advise them? How many the right way to play it?

A We don't see my companies. It's their company. So I think first off is just like listening to them. What do you want? How much time do you want to spend on this? How much risk do you want to take in this process? So understanding their psyche is super important. And so a lot of the time, the beginning is like, what's your style? How do you, where are you going to excel? Are you distracted by 50 conversations? There are certain founders that are not, and that's a, that's a strength for them. It's a weakness for other people that then you shouldn't push them to do. And so I think it's really helpful for us to, again, view each journey, each company and each step in the process is very specific. We, I believe very strongly that founders should consistently be building great relationships At every step of the way on their journey in every single category. So, like, long-term potential customers, long-term potential partners, long-term potential acquirers, and long-term potential investors. There is no reason why, I mean, Mark, Mark Suster, uh, you know, wrote that blog post years ago, invest in lines and not dots, right? And it's that core View of, of how the world works is like in 21, that frothy moment that we love to isolate, everything became transactional, and you could show up one day, meet six firms, and have six term sheets, and everybody spent about 18 minutes making that …

AI assessment note: “listening to them. What do you want? How much time do you want to spend”

Q David, what's been your biggest reserve allocation mistake, and what did you learn from it?

A I think the hardest part in an early stage model Is when to switch funds. So how much of the fund should be deployed into initial dollars versus how much of the fund should be saved for reserves. And as a fund manager, our goal is to invest as much money as we can into companies versus into management fees. And so if you take a hundred million dollar fund just to make the math easy and you have a two percent fee, twenty million of your hundred is management fees. And so, if we only invest 80 of the hundred, we don't have enough dollars at work. Our goal is to get a hundred, or a 110, or a hundred twenty million dollars of that hundred into companies. And yet, at seed, recycling is gonna happen at an egregiously later date. And so, how do you figure out how to get that extra 20, thirty million dollars back into investments? I think that's really tricky. And so, that's one.

AI assessment note: “I think the hardest part in an early stage model Is when to switch funds.”

Q uh, about kind of Keith Raboi, David, and you know, very good at seed investing. Um, Keith said on the show with me recently, every investor needs to be able to answer the question, why do the best founders in the world choose you? When you think about that question, why do the best founders in the world choose otherwise, or Box over other people. What's your answer to that?

A It's important to, to meet the best founders. So the first step is, do you see them? Do you get to know, uh, who they are and what they're working on as early as you can in that journey? A relationship starts ideally well before, uh, the sort of transactional portion of raising capital and Uh, I've been doing this a long time. I think repeat founders come to you, uh, if you've provided the level of relationship that they're looking for as they raise capital. So first off is, you know, the first time you work with somebody, did you do well enough by them for them to come back? I think that is a foundation of a long career in venture is building repeat relationships. I think for first time founders, You have to find them where they are, and you have to get to know them in a, in a style that meets them versus a product that, um, I think can differentiate. I think at the end of the day, for the most part, all VCs offer the same product. We are giving money and we are taking equity. What comes after that is obfuscated in a sales pitch. It's this pick me for all of these reasons. When you are a Amazingly unique lead investor of multi-stage rounds a la Sequoia, uh, you know, Andreessen, Founders Fund, uh, Keith Nowak-Kosla. You have a history and a track record of a brand and of an individual that I think is really hard to compete with. And it's not saying that you can't compete somet…

AI assessment note: “repeat founders come to you, uh, if you've provided the level of relationship”

Q We mentioned, like, my mistake, they're trying to beat other people. Um, I, I also made mistakes in the last years with liquidity. I could have and should have sold in some big winners that were winners and probably now are not winners. How do you think about when to take cash off the table?

A Carefully. It's, again, it's not a black and white generic answer. It's so nuanced. So we try hard and, and really align ourselves with founders long-term. And so our goal isn't to Look at the secondary markets constantly, uh, in private companies. At the same time, my job is not to manage public stock. I have investors who are very capable of making their own decisions in the public markets that I don't feel the need to try to say I know better. So I think, you know, that's a easy lesson is, is let your LPs own the thing that they own when you can. Um, and in between there is like all this gray, ton of gray. I don't have a, I don't have a soundbite for you that you can go put on TikTok.

AI assessment note: “I don't have a soundbite for you that you can go put on TikTok.”

Q Do you, how are you trying to build your pattern recognition?

A Um, again, right at that long term, you try to, you try to look at everything, and so it's really hard because there's no, There's no great data, right? You can't listen to the media. The media is not going to tell you what's really going on in a company. And you only have a limited insight, uh, either, you know, especially into companies you're not involved with, and that's just sort of hearsay. And the companies you are involved with, you, you're closer with some than not. And, and the way that we invest, we, you know, invest in about 40 companies a year. There are certain companies that we're going to have a closer and tighter relationship with. Uh, and there are other ones where, you know, we try to be helpful when they ask us to do something, but our sort of day-to-day knowledge of how things are going is less, and so you're trying to build from an insane amount of signals something that cuts through the noise and becomes a pattern recognition.

AI assessment note: “you're trying to build from an insane amount of signals something that cuts through”

Q David, what's been your biggest reserve allocation mistake, and what did you learn from it?

A I think the hardest part in an early stage model Is when to switch funds. So how much of the fund should be deployed into initial dollars versus how much of the fund should be saved for reserves. And as a fund manager, our goal is to invest as much money as we can into companies versus into management fees. And so if you take a hundred million dollar fund just to make the math easy and you have a two percent fee, twenty million of your hundred is management fees. And so, if we only invest 80 of the hundred, we don't have enough dollars at work. Our goal is to get a hundred, or a 110, or a hundred twenty million dollars of that hundred into companies. And yet, at seed, recycling is gonna happen at an egregiously later date. And so, how do you figure out how to get that extra 20, thirty million dollars back into investments? I think that's really tricky. And so, that's one.

AI assessment note: “I think the hardest part in an early stage model Is when to switch funds.”

Q uh, about kind of Keith Raboi, David, and you know, very good at seed investing. Um, Keith said on the show with me recently, every investor needs to be able to answer the question, why do the best founders in the world choose you? When you think about that question, why do the best founders in the world choose otherwise, or Box over other people. What's your answer to that?

A It's important to, to meet the best founders. So the first step is, do you see them? Do you get to know, uh, who they are and what they're working on as early as you can in that journey? A relationship starts ideally well before, uh, the sort of transactional portion of raising capital and Uh, I've been doing this a long time. I think repeat founders come to you, uh, if you've provided the level of relationship that they're looking for as they raise capital. So first off is, you know, the first time you work with somebody, did you do well enough by them for them to come back? I think that is a foundation of a long career in venture is building repeat relationships. I think for first time founders, You have to find them where they are, and you have to get to know them in a, in a style that meets them versus a product that, um, I think can differentiate. I think at the end of the day, for the most part, all VCs offer the same product. We are giving money and we are taking equity. What comes after that is obfuscated in a sales pitch. It's this pick me for all of these reasons. When you are a Amazingly unique lead investor of multi-stage rounds a la Sequoia, uh, you know, Andreessen, Founders Fund, uh, Keith Nowak-Kosla. You have a history and a track record of a brand and of an individual that I think is really hard to compete with. And it's not saying that you can't compete somet…

AI assessment note: “for the most part, all VCs offer the same product”