The Exchanges

Q if I was in an interview, um, and I was like, you know, starting out in the industry, I'd probably give like false answers. Do you know what I mean? Not I work too hard style, but do you find people do actually open up and engage or are there things you have to do To make them feel at ease to engage in a way that's productive for you.

A I think the smart ones figure out that this is a real conversation and they've got to give it their all. And that's the other thing, by the way, Arthur said is you cannot convince people to be an investor. They really need to want it because it is so hard over a long term. So, you know, it really, and I think the individuals that we've met, that I've met who really want this, who crave it, Who, you know, are dying to be part of a business of partnering with these founders and it's so exciting to them. I think they give it to their all and they really engage. And if they don't, that's telling you something, right? There's like, you're not really getting to them and maybe you have a follow up meeting, but generally I feel like you get a lot out of it. Look, it's not perfect, but it helped us a lot to really distill. Kind of characters. Right.

AI assessment note: “I think the smart ones figure out that this is a real conversation”

Q Can I ask, in terms of reserves, um, what have been some big lessons for you on reserves? Like, you know, I think prorata is quite a lazy one. I always think, like, you're always, you should either be all in and want to lead the next round, or not in at all. Um, what have been your lessons on, like, effective reserves management, deployment, decision-making?

A Yeah, the, you know, the challenge in this last cycle, um, was that the follow-on rounds Came so quickly that it was really hard to make the, the kind of the, the, the decision around, okay, what worked, what didn't work, et cetera, versus what, um, what we used to do, you know, if you, if you rewind a couple of cycles ago, um, I don't think it's as simple as all in or nothing. For one, the founders are looking for our support. Over a long-term period, if that makes sense. And I think we take that rule that we have on the board and the cap table very seriously and our support matters. That said, you know, we're very much for our initial investment decision. We're very much a conviction, not a consensus organization, right? It's all about, um, we get around the table as in prepared mind thinking, you know, you have to be first. That's the way we think about it, but it's about the intellect, intellectual integrity, honesty, lit all out on the table. But when it comes to a follow on, we think of the company as a we. That's also the reason why it doesn't go well. There's no like finger pointing. There's no naughty corner. It's our company. We collectively made the decision. Even if one person had the conviction, but we all asked the hard questions. There was real debate. There was real transparency. There was real trust, but we take the decision as a, we will really, um, look at it…

AI assessment note: “when it comes to a follow on, we think of the company as a we”

Q Can I ask, I have many insecurities investing. What do you think your biggest insecurities are today? Cause I think a lot of people will bluntly look at you and look at the incredible track, look at your position and go, no insecurities. And I think we all have them and it's humanizing. What do you think yours are today?

A So, you know, what's really, um, just beautiful about this business, but also quite difficult is this learning curve is so steep. It never, the slope Never goes down. You're learning every day. I was like, look, 20 years in, you could stop learning a little bit, right? You're always making mistakes. You always have insecurities. So, oh my god, there are, I think there are, there are so, so many insecurities. It's, um, it's probably around the fact that I don't know if I can always get it right in terms of the exceptional founder. I mean, that really hurts. At the seed stage, I spend a lot of time with seed companies, you know, because we exchange notes and that's so much fun. It's, um, it's difficult to get it right.

AI assessment note: “I don't know if I can always get it right in terms of the exceptional founder”

Q well building this junior team, and so if we think about what to look for, when we spoke before you said to me, it's not about can you work a spreadsheet or produce a waterfall outcome scenario plan, very good for someone like me to know, um, so when you're in those interviews, what are you looking for? And what qualities do you really want to uncover and tease out?

A Yeah. So I think we, you know, we just, we figured out a while ago that we don't have the operator pool here back in sort of the late 2000. Um, and there's a lot of investor talent, but it's later stage and given we're trying to be the first partner that didn't work either. So we really have to figure out the, the kind of the homegrown, um, nature of talent. And it's, it's what the track record was in the U S too. And, you know, I think we did pretty well in the early days, and we did do exceptionally well, maybe not on spreadsheet is a very tiny component of it, but, you know, the analytical rigor, the clarity of thought, or, you know, just being able to distill the facts down to a few elements, if you will, kind of a lot around the IQ side, and we thought when we made mistakes, we were, what we were getting wrong was kind of the emotional characteristics, and really the who As opposed to the how or the what. And so we started to think about, you know, we wrote it down on, on our, on the whiteboard. Actually, it was like a little bit of a group exercise and we actually talked to Arthur and Jim about it. Arthur in particular had himself written it down. Can you imagine when he started out, which I thought was, was exceptional. He shared it with us and it more or less matched. Thank goodness. Cause I don't know what he would have done. And we realized that, you know, what, what …

AI assessment note: “what really mattered and it seems so obvious, but we weren't testing for it... like resilience.”

Q That is very, very kind of you. I'm, uh, truly touched by that, but I do want to start with a little bit of context. You've been in the venture game for a number of years now, so talk to me, how did you make your way into venture first, and then come to be at Excel, obviously, for the last 10 years or so?

A 14, yeah. So maybe I'll, if you will allow me, I'll take you back A little bit longer because I think the history kind of always predicts the future. So I grew up in India in the seventies and eighties, socialist India. And what I mean by that was choices were limited. There were like two choices of soap. There were two TV stations and, you know, means were limited too. So I always knew I had to be a professional quote unquote. So that was kind of the job career market. There wasn't much business at the time. And being a professional meant, at least in my house, from a very young age, I was either going to be a doctor or hold your breath, I was going to be a chartered accountant. I had no interest in any of these two things, and I think I, you know, I got to get myself out of here. So I decided to, um, do that. The only problem being is I had no money. I had never been abroad. I wanted to go to the US. So I kind of camped out at a building, which I don't know if it exists in other countries. It was called the USIS, United States Information Service. I would literally go there every day after school. I would climb a ladder. I would pick up this big fat book with frayed edges about how to apply to America. I swear it must've been like five, 10 years out of date. I have no idea. I followed the instructions and by some miracle, I landed up on the East coast in America of America wi…

AI assessment note: “if you will allow me, I'll take you back A little bit longer”

Q well building this junior team, and so if we think about what to look for, when we spoke before you said to me, it's not about can you work a spreadsheet or produce a waterfall outcome scenario plan, very good for someone like me to know, um, so when you're in those interviews, what are you looking for? And what qualities do you really want to uncover and tease out?

A Yeah. So I think we, you know, we just, we figured out a while ago that we don't have the operator pool here back in sort of the late 2000. Um, and there's a lot of investor talent, but it's later stage and given we're trying to be the first partner that didn't work either. So we really have to figure out the, the kind of the homegrown, um, nature of talent. And it's, it's what the track record was in the U S too. And, you know, I think we did pretty well in the early days, and we did do exceptionally well, maybe not on spreadsheet is a very tiny component of it, but, you know, the analytical rigor, the clarity of thought, or, you know, just being able to distill the facts down to a few elements, if you will, kind of a lot around the IQ side, and we thought when we made mistakes, we were, what we were getting wrong was kind of the emotional characteristics, and really the who As opposed to the how or the what. And so we started to think about, you know, we wrote it down on, on our, on the whiteboard. Actually, it was like a little bit of a group exercise and we actually talked to Arthur and Jim about it. Arthur in particular had himself written it down. Can you imagine when he started out, which I thought was, was exceptional. He shared it with us and it more or less matched. Thank goodness. Cause I don't know what he would have done. And we realized that, you know, what, what …

AI assessment note: “what really mattered and it seems so obvious, but we weren't testing for it. Like resilience.”

Q if I was in an interview, um, and I was like, you know, starting out in the industry, I'd probably give like false answers. Do you know what I mean? Not I work too hard style, but do you find people do actually open up and engage or are there things you have to do To make them feel at ease to engage in a way that's productive for you.

A I think the smart ones figure out that this is a real conversation and they've got to give it their all. And that's the other thing, by the way, Arthur said is you cannot convince people to be an investor. They really need to want it because it is so hard over a long term. So, you know, it really, and I think the individuals that we've met, that I've met who really want this, who crave it, Who, you know, are dying to be part of a business of partnering with these founders and it's so exciting to them. I think they give it to their all and they really engage. And if they don't, that's telling you something, right? There's like, you're not really getting to them and maybe you have a follow up meeting, but generally I feel like you get a lot out of it. Look, it's not perfect, but it helped us a lot to really distill. Kind of characters. Right.

AI assessment note: “I think the smart ones figure out that this is a real conversation”

Q We were talking beforehand a little bit about kind of what we're seeing in markets and how it's impacting my frail nerves. Um, talk to me, how did seeing the booms and busts, I mean, you saw it first with, you know, the dot-com early in your career, and then in 2008, 2009, how did seeing that impact your investing mindset first, before we get on to advice for me?

A Yeah, I'm sure you have advice for me. I think, I think we're much more a version in a version of 2000 than we are in, in a version of 2008. I sort of contrast it with sort of 2000, it was more wall street, 2000 was more main street. I think this is a version of more mainstream, clearly technologies at the epicenter. But if you, if you, if you allow me, I'll give you two anecdotes that sort of, I have imprinted Um, on my brain, one for each sort of downturn, if you will. So in 2000, you know, I joined in, in the summer of 2000, the, the, the, it was choppy, right? We had a big downturn, but it really, the bubble deflated in 2002, and things were really grim at that point in time. And so I was asked to go work with a group of founders, mostly e-commerce founders. This is the time of pets.com. Cosmo, boo.com. It was, it was all about eyeballs. And so it was us to sort of go into the trenches and I loved it, you know, working with these founders and really trying to figure out what did we do now? There was no follow on capital. There was not a drop of money available. So you either had to get to break even if you had a revenue model or you have to, um, frankly, give the cash back. Can you imagine? Or you have to sell the business. So this is what I was doing. And I was working with one particular company, an Irish company. The founder had done a nice job. He got the company to a f…

AI assessment note: “I'll give you two anecdotes that sort of, I have imprinted Um, on my brain”

Q What do you do when you lose faith in the founder, when you don't trust them anymore? I've had this and I don't know what to do either.

A That's hard. It's the other lesson I've learned because it's happened to me, and I spend all my time before I invest in it. It's something we talk a lot about. We always ask when somebody is presenting, who's the founder in the room, or when somebody's talking about partnering with someone investing in a company, you say, who's the founder? How do you feel about it? We all know this. We talk about it, but I think the questions around the founder, around their ambition, it's something that is the core piece of the discussion. When going in, I only mentioned that because if you put a spotlight on that, you can maybe make less mistakes. The speed at which we all went in the last cycle wasn't conducive to that, to some of those discussions, but you can still try, and we did. I think when you lose faith in the founder, I think it's very hard because as we all know, it's all about backing the founder, and I think you are able to have open discussions with the founder to, To ask them, you know, where are we going? Um, what do you think? I think you have to be open if you feel like you have the support of the board, and you actually can have an open, non-defensive chat with the founder. I've certainly had to do it. It's not easy. The way to mitigate that is not get into that situation in the first place. But I think we owe it to our LPs. We owe it to ourselves to be able to have open a…

AI assessment note: “have an open, non-defensive chat with the founder”

Q What do you do when you lose faith in the founder, when you don't trust them anymore? I've had this and I don't know what to do either.

A That's hard. It's the other lesson I've learned because it's happened to me, and I spend all my time before I invest in it. It's something we talk a lot about. We always ask when somebody is presenting, who's the founder in the room, or when somebody's talking about partnering with someone investing in a company, you say, who's the founder? How do you feel about it? We all know this. We talk about it, but I think the questions around the founder, around their ambition, it's something that is the core piece of the discussion. When going in, I only mentioned that because if you put a spotlight on that, you can maybe make less mistakes. The speed at which we all went in the last cycle wasn't conducive to that, to some of those discussions, but you can still try, and we did. I think when you lose faith in the founder, I think it's very hard because as we all know, it's all about backing the founder, and I think you are able to have open discussions with the founder to, To ask them, you know, where are we going? Um, what do you think? I think you have to be open if you feel like you have the support of the board, and you actually can have an open, non-defensive chat with the founder. I've certainly had to do it. It's not easy. The way to mitigate that is not get into that situation in the first place. But I think we owe it to our LPs. We owe it to ourselves to be able to have open a…

AI assessment note: “have an open, non-defensive chat with the founder”