The Exchanges

Q Oh my gosh. My brother's just had a, uh, his first baby. And seeing the love that a parent has so kind of viscerally for their child, and I see it in him with his daughter, it kind of, it really gives me goosebumps thinking of like a mother standing there watching in that way. What happens then? You give the thumbs up, and then the recovery process starts? Like,

A No, there was, like, a couple more days of crazy stuff that happened. After that, like, the doctors kind of rushed down, and they, they have these models, like, to assess probability of survival, and they looked at me, and it was, like, well below one percent, and so he turns to my mom to basically say, like, hey, I know this just happened, but you got to understand, like, this isn't pacing to end well, and she says, I understand. He says, you don't understand. His organs are shutting down, and she said, I understand, but two minutes ago, we didn't have a pulse. And now we have a pulse. So what are we going to do about that? And he says, okay, well, there's this thing called an ECMO machine. It's not a great option, but it's our only option, but only about half the people who touch this machine live to tell a story. But the problem is, is we only have one of these things. And then we are at UCLA Santa Monica and this machine is at UCLA Westwood and we've never transported it before. It's never been done. The other problem is there's only two doctors who do this surgery and neither of them are on call and it's father's day. Um, and then Randomly, the guy that I had, like, initially reached out to the doctor, um, happened to be at a bachelor party in Vegas, and he was with the head of cardiology at UCLA, and he said, hey, can you check your phone to see how my buddy's doing? I se…

AI assessment note: “No, there was, like, a couple more days of crazy stuff that happened.”

Q Oh, dude, that's very kind. Now, I was talking to some of your investors before, and they told me that the Genesis was actually a Magic Johnson moment. And so I want to start with Magic Johnson moment to the founding of Amaze. What's the correlation?

A Yeah, we, we were at an event that Magic was hosting for the Boys and Girls Club Where he was auctioning off the chance to play basketball with him and go to a Lakers game, but it was one of those things that was only available to the high net worth individuals sitting in the room. And me and my buddy were in the room, but not high net worth individuals. We were like the guys who get invited last minute to fill the table and come for the free drinks. And so we sat there and watched as the auction went up to 15,000. We were in grad school. We couldn't afford to participate, but Magic was our childhood hero. Like, there's nothing to this day that I would rather do than play basketball with Magic, and so we were driving home, like, that makes no sense. Magic has fans around the world, not just in that room, and celebrities weren't really on social media yet, but we're like, they're gonna be, and they're gonna be able to reach their fans in a whole new way, so if we make it so anybody can donate 10 dollars for the chance to win, you could raise so much more money, so much more awareness, open up a whole new donor base.

AI assessment note: “we make it so anybody can donate 10 dollars for the chance to win”

Q How did that realization come about? That is a big shift.

A We had done a campaign with Daniel Craig, where you got to go to New York, you got to ride around in a one-of-a-kind Aston Martin, and you got to keep the Aston Martin. And it was the first time we'd offered a prize. We thought it would raise 300,000 and it raised 2.1 million. And so I, then I went to our CFO, Nina, and I said, hey, I think we should offer a car. We should go buy a 250,000 dollar McLaren, offer it with just a maze, no talent. Because if we could do that on our own, then we would control our own destiny. We would really have something if we could raise 500,000, let's say. The problem is we only had, like, 900,000 in the bank at that time, so it was a big bet for us, but we took the bet, and then that car coincidentally launched the day before I unexpectedly went into a hospital.

AI assessment note: “We thought it would raise 300,000 and it raised 2.1 million.”

Q willing to go into private markets in this kind of extended privatization window. You're seeing companies like Stripe very publicly say, listen, if you need a 28 year old analyst at a bank to say increase your margins, You probably are not a great business anyway. The idea that you get better discipline is actually just a sign of a poorly managed company. The question then becomes, why go public?

A I mean, there's a lot of reasons to not go public. You know, you don't have to deal with, like, the volatility of the yen carry trade, reducing morale in your business. And if you're Stripe or you're SpaceX, then, you know, you have access to liquidity in ways that are pretty similar to being public. Not every company though is Stripe or SpaceX. It's still the most efficient way to, in most impactful way for most companies to get liquidity for their investors and their shareholders. It's still on the margin, brings down the cost of capital. I mean, it still can be a branding moment for some companies that is important in terms of their international expansion. It's more of a question than it once was, but it's not everybody are those companies.

AI assessment note: “It's still the most efficient way to... get liquidity for their investors and their shareholders.”

Q Talk to me about that, because again, dude, I've never run a sales team. That's why these shows are successful, because I ask the questions that everyone who has no idea what they're doing ask too. How do you do that? When do you hand off?

A The reps will go through the training, and then they do a bunch of the sales simulation, then mock calls, they get certified, they get certified on the craft, and then they do an operator certification, which is like, do you know how to use Salesforce and all the other stuff? And then their first calls, the managers are on all of them, basically. And you'll give the rep More and more rope as they show competence. So maybe at the beginning, all the rep can do is open the call, ask a few discovery questions, do a little bit of the demo before they get that deer in headlights look, and then the manager can jump in and take it over. So we see a lot of like manager closed deals in that first couple of weeks.

AI assessment note: “you'll give the rep More and more rope as they show competence.”

Q When you look back at the distribution, the channel strategy, what mistake do you think you made?

A The mistake I think we made is not hiring early enough. We had super strong PMF right from the start. We had channels working right from the start, but we didn't actually have anyone focused on certain channels. So for example, affiliates, we set up over a year and a half ago, and that now is bringing in over, you know, tens of thousands of dollars of MRR Per month. But this was set up a year and a half ago by one engineer in one week, and then no one's touched it since. And what we should have done is, once we've seen signs of life, given we already have PMF overall, staff one person who can focus on growing that one product, and those one set of KPIs, and nothing else. Keep them laser focused. So yeah, overall, I wish we had staffed up more channels with more dedicated people sooner.

AI assessment note: “The mistake I think we made is not hiring early enough.”

Q Will it be in two to three years? When we see the shift in terms of users and where they come from, more and more, I think, you know, Guillermo from Vercel said it was one and a half six months ago, and now it's four and a half. In two to three years, do you think we will see a much reduced SEO presence?

A With SEO, there's different types of SEO content. The first one is blog-style content. This is, you know, long words, long-form articles. That, I think, will increasingly die over time. But actually, it's not dead yet. If you look at Zapier, over 70% of their SEO traffic still goes to their blog. That's definitely not dead yet, but I think will die because you'll be able to have ChatGPT give you a really great response, it will have scraped it, ingested it, but the part which I am confident will stick around for at least five years are tool pages, and so this is where, to give you an example, if you search text-to-speech Spanish, The first result would be 11 Labs text-to-speech Spanish, which is a text box where you can type in any Spanish you want, choose a voice, and click play. And so that, like, requires some actual engineering work to make this text box. We do the same with speech-to-text. You create these mini-tools, often with proprietary data sources or some actual engineering work, and that's going to be a while before these LLMs are, like, spinning up whole dynamic pages, and by that point, maybe even bets are off because they're kind of replacing your product on the fly anyway.

AI assessment note: “stick around for at least five years are tool pages”

Q Why is inbound SDR as a role dead?

A If you think about the actual function of most inbound SDRs, so with an enterprise sales cycle, someone fills in a form, they then need to speak to an inbound SDR who basically goes through BANT screening. So they work out, do you have the budget? Do you have the authority? Do you have the need? Do you have the timing? If yes, they then book you into another call with the AE, which actually closes the deal. And so the function of an inbound SDR is I'm sure the best ones are persuasive and they're friendly, but really the function is data collection, and so instead, one, why don't you just add that to the form in the first place? Well, the reason is people don't really want to go through this back and forth and go into more detailed questions and, you know, trying to design these complex flowcharts of forms, and so instead you can switch out to a conversational AI agent which can completely replace that role and then get The people who should be booked in with AEs much quicker. You could even clone the voice of the AEs so it's like them almost pre-screening for their own deal flow.

AI assessment note: “a conversational AI agent which can completely replace that role”

Q They did kind of change their whole AI team, I think, as a result of that. What have you changed your mind on in the last 12 months?

A The biggest thing I've changed my mind on in the last 12 months is whether voice AI agents or conversational AI agents actually work. And so when I joined at Leathernavs, we had this fantastic box where you could type in text and generate lifelike speech. And Matty was saying, like, ah, soon you'll be able to have full AI agents that you can have natural conversations, and it'll sound really human-like, and you could use that for sales, and for customer support, and for relationship coaching. And I was like, that will never work. The latency will just be too high. You won't be able to have these sub 200 millisecond interactions. I was completely wrong. And so, on about the 20th customer that Asset 11 Labs had helped build these conversational AI agents, we were like, ok, Let's actually turn this into a proper platform and build conversational AI as a feature, and now it's, I actually prefer speaking to an AI customer support agent than a real person, because they're more knowledgeable, they know exactly how to solve your problems, they can escalate, they know all the policies.

AI assessment note: “The biggest thing I've changed my mind on in the last 12 months is”

Q content's a really good example. It takes time To know if content works. And so you have to do things with no obvious gain in the short term for compounding long-term advantage. Does that make sense? It's almost a bit like the gym. You don't gain muscle day one, day two. Week one, you'd be like, Harry, quit this. This A-B test is failing. But three months in, it shows.

A Yeah, I, I, I would agree with that. I think there's like, I think the, the, the, the trap you can run into is you only run tiny experiments, right? Like on, on your purchase page or you, you run these tiny experiments on, on copy or something. And I think it's very important that you have your portfolio of changes. So you have lots of, uh, low risk, small changes, but you also have some big changes and a big change could be Adding chess or adding math. And, and that, that's how you stay innovative and relevant. Uh, you can't just, otherwise you end up in a, in a local maxima where, you know, you can't get out because you, uh, optimize yourself into that.

AI assessment note: “Yeah, I, I, I would agree with that. I think there's like, I think the, the”

Q Oh dude, that is very, very kind. Um, listen, I want to start with some news that you have. Uh, I'm thrilled that you said you'd share it with us. So what is the news that you have for us today?

A Yeah, I finally closed on my first institutional, uh, fund. Uh, we raised twenty six million dollars. Uh, I'm partnering with, uh, kind of a, uh, friend of mine. Uh, actually he invested in Mercury, uh, seven years ago. His name's Yash Doshi. Uh, he was at EQ two ventures, EQT ventures. Uh, and then in the last year, uh, yeah, I've been doing angel investing actually since 2016. Uh, so I've done about 350 investments. Uh, and, I've been working with him for the last year, and I was like, hey, I just need to bring him on full time and kind of do this a little more properly. Uh, I've so far been investing mostly on AngelList, so I had an AngelList rolling fund. Uh, so yeah, just actually just closed it, I think, last week or the week before, um, and already have invested in five or six companies.

AI assessment note: “I finally closed on my first institutional, uh, fund. Uh, we raised twenty six million”

Q Can I ask a spicy question early? Why aren't Index on your cap table at all?

A The reason about Index is simple. All of the people at Index are my friends and they were already helping me. And in a way, I already knew the way they were thinking. And so for me, it was really important to bring new people, fresh ideas to the table. And it's the same, I think for everything I do at Pigment today, it's like, I'm not hiring my friends at Pigment. I'm hiring people that I don't know about that can bring things that I don't know. And in VC, something that I think is critical is to find people that can challenge you every day. And you know, if I think about people like Martin Mignot that I absolutely love or Yann or other people, well, in a way they are more friends now than anything, and I wanted people that could be really true to me.

AI assessment note: “The reason about Index is simple. All of the people at Index are my friends”

Q start with, you know, I always start with context and kind of a little bit of history, but Philman said that we should start with the first attempt at leadership, and he said actually your first attempt at leadership was challenging and had ups and downs, and he said that that would be an interesting place to start and dig in on some lessons from that. Can we start there?

A Let's do it. So hopefully I won't, I won't like get emotional, but most of my career was in the telecom industry. I worked for Sprint and I started in customer service, worked my way all the way up to the sales organization. I was running their international wholesale business, big job, global experience. I left Sprint to be a CRO of a midsize media company that was trying to go all digital. And at the time, Harry, I was the smartest guy in the room. I had a big ego. I alienated people there that could help me because it was all about my career. My results. After a year, that's just a bad way to lead. I got fired. So this was maybe eight years ago, so I was unemployed for six months, and part of the time I was a bartender.

AI assessment note: “I alienated people there that could help me... I got fired.”

Q start with, you know, I always start with context and kind of a little bit of history, but Philman said that we should start with the first attempt at leadership, and he said actually your first attempt at leadership was challenging and had ups and downs, and he said that that would be an interesting place to start and dig in on some lessons from that. Can we start there?

A Let's do it. So hopefully I won't, I won't like get emotional, but most of my career was in the telecom industry. I worked for Sprint and I started in customer service, worked my way all the way up to the sales organization. I was running their international wholesale business, big job, global experience. I left Sprint to be a CRO of a midsize media company that was trying to go all digital. And at the time, Harry, I was the smartest guy in the room. I had a big ego. I alienated people there that could help me because it was all about my career. My results. After a year, that's just a bad way to lead. I got fired. So this was maybe eight years ago, so I was unemployed for six months, and part of the time I was a bartender.

AI assessment note: “I left Sprint to be a CRO... I had a big ego... I got fired.”

Q is if you look at companies like Pinecone, They went up and they went down and fucked very, very quickly with changes in technology cycles. Squarespace, Wix, any of the website builders, I'm not picking on them or being horrible, but your lovables and your bolts are absolutely killing them on the consumer and, you know, freemium modes. Are we going to see the acceleration in that terminal decay rate?

A Short answer, of course. I mean, that's almost a given. I mean, look, one, all technology companies have obsolescence written into them from day one. You know, it's, it's sad, but it's, you know, true. I mean, anything before Microsoft and Apple at this stage isn't here and Coca-Cola has been cranking for a hundred years, right? So obsolescence is inevitable in general. On top of that, periods of acute technical disruption are going to increase the amount of, you know, technical obsolescence that companies face and then overlay that with, as we've been discussing longer hauling periods. I mean, I think I said this last week, but my number one fear is That the technology life cycle to obsolescence is now shorter than the holding period of privately held software companies, which means every company at least one time before it gets to go public will have an existential reinvent itself second product crisis. And if they fail that.

AI assessment note: “Short answer, of course. I mean, that's almost a given.”

Q Do you think when we look at the current state of venture, it is aligned sufficiently?

A I don't think it is in general. I think fundamentally the idea of collecting a two, two and a half percent management fee does not really make sense. It does not align us with the outcomes. At Plural, we charge about half the management fee, and we think we are much better aligned. And also what it enables us to do is make a few more investments per fund. So in fund one, we probably made two more investments because of this. Fund two, we think we'll make four more investments as a result. That's four more shots on goal. That is pretty damn important. And still, we have a fantastic team, we have five GPs, Everyone is being paid well, but not ridiculously.

AI assessment note: “I don't think it is in general.”

Q Do you think when we look at the current state of venture, it is aligned sufficiently?

A I don't think it is in general. I think fundamentally the idea of collecting a two, two and a half percent management fee does not really make sense. It does not align us with the outcomes. At Plural, we charge about half the management fee, and we think we are much better aligned. And also what it enables us to do is make a few more investments per fund. So in fund one, we probably made two more investments because of this. Fund two, we think we'll make four more investments as a result. That's four more shots on goal. That is pretty damn important. And still, we have a fantastic team, we have five GPs, Everyone is being paid well, but not ridiculously.

AI assessment note: “I don't think it is in general. I think fundamentally the idea of collecting”

Q How do you think about concentration versus diversification across them? You can pick one from each and go down it kind of drilling in that way, or you can do all of them in each. A lot more expensive, a lot more diversified. How do you think about that?

A At any point at scale, you don't want 80 to 90% of all your paid growth coming from one channel because too much at risk, right? I would say back in my DTC days, we used to obsess over it, but we would say no more than 25 to 30% in any single channel outside of organic. Also because it's not just channel diversification, it's also the different type of audiences. Because in crypto, for example, We live and breathe on social. Crypto lives and breathes and grows on social. So the people that I will find on Discord or Reddit and Twitter are very different from the people I will find on Meta and Instagram and or Search. So it's also diversifying the audiences because not every audience and product type is going to be, is going to make sense out of all these platforms and channels.

AI assessment note: “we would say no more than 25 to 30% in any single channel”

Q always look to buy a terrestrial asset on the cheap, right? And, and, and, and tack on eight figures of revenue. This has been true since the dawn of the internet. Um, but they didn't pick you. That's the problem. They didn't pick you, did they? They're not going to, it's not durable revenue in any way, shape or form, right? So it's financial engineering is all in most cases.

A I would actually push back on both of you. One of my fastest growing companies has gone from zero to thirty million in revenue in two years with a pure roll-up play, which is helped by AI tooling. And to your point on like the customers, uh, not picking you, the customers are all pretty much identical. It's a real estate management product. Um, they are identical in the service that they require, the product that they engage with. There is zero ambiguity. And so the ability to roll out to a uniform customer base makes it a very efficient model actually. Uh, and so the things that matters most then is just acquisition price. Can you acquire it effectively at a good enough price? What's your speed of turnaround in terms of your payback? And what's your margin juicing? Like we go from five to 40% in six weeks. That's a big increase in a short time.

AI assessment note: “the customers are all pretty much identical. It's a real estate management product.”

Q always look to buy a terrestrial asset on the cheap, right? And, and, and, and tack on eight figures of revenue. This has been true since the dawn of the internet. Um, but they didn't pick you. That's the problem. They didn't pick you, did they? They're not going to, it's not durable revenue in any way, shape or form, right? So it's financial engineering is all in most cases.

A I would actually push back on both of you. One of my fastest growing companies has gone from zero to thirty million in revenue in two years with a pure roll-up play, which is helped by AI tooling. And to your point on like the customers, uh, not picking you, the customers are all pretty much identical. It's a real estate management product. Um, they are identical in the service that they require, the product that they engage with. There is zero ambiguity. And so the ability to roll out to a uniform customer base makes it a very efficient model actually. Uh, and so the things that matters most then is just acquisition price. Can you acquire it effectively at a good enough price? What's your speed of turnaround in terms of your payback? And what's your margin juicing? Like we go from five to 40% in six weeks. That's a big increase in a short time.

AI assessment note: “to your point on like the customers, uh, not picking you”

Q No way. When you think about how AI changes underwriting and what that actually means, how do you think about that?

A I've only been thinking about it in one way is what's the consumer benefit to this, and the benefit is more credit approvals and higher credit limits are approved because of AI. When you think of how we do it, Dave, if you want to access credit within minutes of joining our app, that's sort of our, our, uh, you know, our, our key go-to-market for the company. Our ad, if you see an ad for Dave, it's get up to 500 bucks in five minutes or less. We can do that because a customer comes in, We have them link their existing bank account via Plaid, and Plaid gives us access to six months of a customer's past transaction history. We have twelve million connected accounts roughly on the platform at this point, and so twelve million accounts times six months of account history, and then we get a connection on an ongoing basis, we have access to nearly a billion transactions. And when we launched the business, it was just a rules-based model, you know, when do you get paid, Our confidence, your ability to keep a positive balance over a certain amount of time. Our loss rates when we started the company were north of 10%, and at that time, we were only offering people 75 dollars of credit, the average being around 50. You fade to twenty-twenty-four, at the end of the year, we reported the average amount we're giving out is a 180, and our loss rates are 1.2%. And you think about the power of…

AI assessment note: “the benefit is more credit approvals and higher credit limits are approved because of AI”

Q You've had so many interesting elements to the journey. One I really wanted to dig in on, and one that I'm thinking a lot about, is why does anyone go public today? In a world of extended private markets, where we have such large capital supplies willing to come in and extend that window, why does any private company want to go public today? How do you think about that?

A Well, one, there's the dynamic of the, there's too much press capital going out there, which I would argue is not great for founders. And so the benefit of being public is you erase all the prep. I mean, Dave, we have no preferred equity on our cap table. We have no debt in our business. We, we trade a hundred million dollars a day of volume, which means we have great liquidity to have employees get, uh, liquid on their, their equity. You know, it's, it's a real rich person's sort of, uh, not problem, but it's a rare air for companies like a Stripe to be in where they have a true public comp in an Adyen. There's really no point in them going public because they have such vast access to capital for secondary markets, but that's only a select few companies. If you can be one of those businesses and not have to be public because you have such a clear comp, you don't need to have the distraction to live with of being public, then sure. But I think that also works well if you're an enterprise business. If you're a director of the consumer company like Dave, I think you leave a lot on the table and for the potential retail swing that the investors can drive with people that are really passionate about your brand. Like Tesla, I'd argue would not be a trillion dollar private company, but because of sort of the, the cult generation they've developed, the Tesla owners that buy the stock,…

AI assessment note: “the benefit of being public is you erase all the prep”

Q Was that a good move, do you think? Like now that would be considered like vulture VC. I love Mark. You love Mark. So I don't mean that badly on him, but that would be considered really bad form. Was that actually helpful?

A There's no way that would happen again today, but honestly, it was an amazing forcing function to try and build a profitable business and not raise too much capital. We never actually raised any capital beyond the seed round as a result of that. So it taught us just a lot about persistence and perseverance to try and come up with a scalable business model without burning a lot of capital, without hiring a lot of people. And interesting enough, the 30,000 dollar salary cap led to me overdrafting my checking account a lot, which pissed me off enough to start Dave as my next company after this one. So in a funny way, it sort of led us to that, and then Mark ended up leading the, the seed round for Dave as well. So, um, it was really an interesting story.

AI assessment note: “honestly, it was an amazing forcing function to try and build a profitable business”

Q are putting a lot of money into compute and hardware and compute and hardware startups. And I wanted to ask you, should I be following them? What should I be looking for in them? I'm seeing some incredibly young founders. I was with a nineteen-year-old founder trying to take on NVIDIA this morning, um, raising twenty million dollars for a pre-seed. How, how should I be thinking about this, Andrew?

A Well, I, if you don't know a lot about hardware, I wouldn't invest in hardware. I think, uh, Harry, it's probably the same in many things, is that, um, I think hardware is not an easy place to make money. It's a place that has historically rewarded experience, both from investors and from entrepreneurs. I think the number of different technologies involved in designing a chip, Uh, is extraordinary. Not just the, the logic, which is what most people think about. When, when you think about chip design, that's just the front end part that that that's writing in very low level software. Um, but the, the selection of tools, right? We pay millions of dollars a year in tools, selection of geometry, right? Which fab and having a relationship with a fab, you're going to pay 20 or thirty million in NRE. And if you have a bug in your, in your chip, you got paid again.

AI assessment note: “if you don't know a lot about hardware, I wouldn't invest in hardware.”

Q need great assets to invest in. How this is, um, why are so many companies not choosing to list in the UK? Well, I interviewed Nick at Ravni, I think about the fastest growing technology companies, and I asked him, are you going to list it? I want them to list it. I love London, I walk past here with my mum, and they go, no, no, America, all day.

A Yep. So, the honest answer is that the perception and the reality are not the same thing. So, in the last 10 years, only 20 UK companies have listed in the US that have raised over a hundred million. Ok. Of those, nine have already delisted, only four are trading up and the rest are trading down by over 80%. That's the data as of today. Ok. So the idea that the grass is always greener in the U.S., not true. The challenge for a company under a certain size in the U.S. is the U.S. market works incredibly well for the Mac seven. It doesn't work as well when you're smaller. The investor base is predominantly domestic. Um, they will, if you're not in a major index where 60% of the US market is now tracking a major index, then the risk is that you'll get forgotten. You'll get sold on a headline because something happens in the UK or something happens in Europe or another one of your major markets, but you won't have that indexation dragged back, which is half why we've seen the performance that we have in terms of the companies that have gone to the US. Um, I understand why that's not the perception. I understand why the media narrative is different. I understand why there's some investment banks who want People to go to the U.S. because they make double the fees. I get it. The simple reality is that the narrative that we've pushed in the media and the actual data as to what the expe…

AI assessment note: “the perception and the reality are not the same thing.”

Q How did that happen? Like, what were the core moments that that was the disconnection?

A Well, I think in, in retail, I think it's been a combination of regulatory reform. Um, we've created a challenging environment for our regulators, where if something goes wrong, they wind up in front of Parliament. Their natural instinct as a consequence is to make the things that they're responsible for harder and harder to do. They put higher and higher walls up. And so under the guise of protecting retail, we've arguably disenfranchised them a bit. We've made it harder to access advice. We've made it harder for them to access regulated markets, um, and yet our user journey in the cryptocurrency world is incredibly straightforward, you know, and actually I want people to feel that they've got a stake in their economy, in the companies that are going to create the jobs, the innovation, the growth, the productivity that pays for the NHS and pays for our defense. That's what we all, I think, care about as Brits, and yet we've sort of disconnected people from that. So that's sort of one leg. The other leg is What we did on pension reform many, many years ago. So after the mirror pension scandal, um, we basically did two things. We brought a company-defined benefit pension schemes on balance sheet. You're probably not old enough to remember when we used to refer to British Airways as a small airline with a large pension fund attached. But we did. Um, and we then put an accounting …

AI assessment note: “a combination of regulatory reform... The other leg is What we did on pension reform”

Q Exactly. Listen, I loved it because I also got so much context that I wouldn't normally get, even in like, you know, prep calls, which I think are generally bullshit, to be honest. Um, but I wanted to start with Zoom. This was your first deal at Emergence, and I just wanted to start there. Talk to me about Zoom. How did it come to be?

A We aspire to be a thesis driven firm. And before I even joined Emergence in 2014 and 20 13, the firm had developed a thesis around the fact that there was an opportunity to replace Webex, that Webex was a tired product that didn't, wasn't very good. In fact, when I was interviewing Emergence, the case they gave me to interview Emergence was for a company called Fuse. Fuse was video conferencing software, an early competitor to Zoom. And I was supposed to diligence that case and then make the recommendation should or shouldn't invest, and they were going to hire me based upon that. Did a bunch of work, ultimately concluded we shouldn't invest, made that case. Fortunately, I made the right call. That was also a decision they made, and they hired me. Fast forward a few months, I joined the firm, and the very first deal that we're pursuing, where I'm tapped to lead diligence, ism. So the good news was we had a prepared mind around the space. We also saw incredible early product-led growth. The company was around two or three million in revenue, was growing very quickly, but obviously very, very early. And we believed in Eric. Eric was the VP of Eng at WebEx before, so knew a lot about the space, and he'd rebuilt the core technology called the Codec, and it worked really, really well. My partner Santi, who ultimately led the deal, is from Argentina, and he used the product to call h…

AI assessment note: “We had a prepared mind around the space. We also saw incredible early product-led growth.”

Q I do want to go back to the element you mentioned about Zoom, which was freaking nuts, which was a hundred X revenue. 10 years ago. I mean, a hundred dollars revenue today is more normal. I still think it's crazy, and a lot still think it's crazy, but then it was completely unheard of. And so my question to you is, have the best always been expensive?

A They are not always expensive, but they are often expensive. So if I look back at our portfolio, Gusto was expensive. Zoom was expensive. Yammer was expensive. A lot of the good ones, Ironclad was expensive. But some of them weren't. Viva wasn't expensive because that was non-consensus at the time. Um, Sales Loft was also non-consensus at the time and was not expensive. More recently, my partner Loti led an investment in a company called Federato that's AI software to help insurers underwrite better. But she made that investment before the Zeitgeist, before people were like, oh, this is obvious and this is going to happen. And to her credit, there was a lot of, you know, questions and she pushed through and she got that deal done and she got it done at a pretty good price. And then the zeitgeist hit, and the company did a series B at a much higher price. So I do think that it is possible still in this world to be non-consensus and right and get a good price, but it is also true that there are increasingly higher, you know, more and more and more consensus deals, and you want to be in, you want to be in both.

AI assessment note: “They are not always expensive, but they are often expensive.”

Q What's been your worst deal and what did you learn?

A Thus far, I haven't had any zeros. I'm sure I will. Um, the exit I've had that was the worst exit was a company called Comfy, um, which was building energy efficiency software. So basically it provided employees within an office, the ability to change the lighting and temperature from their phone, wherever they were, and would actually follow them around and remember their preferences and change the building accordingly. It's actually quite cool. The business grew really quickly from a bookings perspective. Um, they would have these big seven figure contracts from Salesforce and others. Um, but the people in charge of deploying the product didn't care. And so there was a huge incentive issue between the buyer and the implementer in that business. And so we have huge bookings and we didn't have great deployed ARR and that gap bit us in the ass. We ended up selling the business to Siemens. We actually made a little bit of money on the deal and Andrew, the CEO and I stayed close. He actually bought me A gift certificate, um, to, uh, to the French Laundry, which I still haven't been able to use because the reservations are so hard to get, to thank him for helping navigate through the, the outcome he ended up making a good amount of money.

AI assessment note: “the exit I've had that was the worst exit was a company called Comfy”

Q How do you think about the specialization or verticalization, more importantly, of sales teams? And what I mean by that is one password is a horizontal product. Amazing because you can serve so many different people, but also difficult because you can serve healthcare, banking, consumer, you name it. Um, I like verticalized sales teams. How do you think about verticalized sales teams?

A I, I think there's a time and place. Um, and again, it'll, it'll vary from company to company. Uh, we're not verticalized today. And the main reason for that is we looked at our success across every vertical. We look at win rates, ACV, time to close. Um, and we found very, very little difference, um, across these different segments. Um, and we have yet to reach any sort of saturation, um, in any one segment really. And so we're not yet at the stage where We need to hire individuals who have built a career selling to specific verticals and have deep vertical and specialized knowledge yet, but we're absolutely going to get there. Um, I think our journey is such that, you know, we're looking at segments first and foremost, because SMBs buy very, very differently than large enterprise companies. Um, territory based splits are sort of where we're at right now, making sure that we've got the right people, right language, right time zone, and so on and so forth. The next step will be to verticalize the team. So that we go deeper and wider.

AI assessment note: “we're not verticalized today. And the main reason for that is”