The Exchanges

Q Back off of next year, Jason, it's happening. I've, I heard from experts, it's happening, so stay tuned for that, but I want to start, Woody and Devin, I'm gonna hand this one on to you, which is, everyone says that growth is just dead. Is this true? Are new deals getting done?

A First of all, Growth is not dead. Let's start with underlying growth in actual companies. If you look at Q two of 20, 23, you know, insight has a hundred, had a 180 portfolio companies that grew north of 50% in, you know, Q two of 20, 23 over Q two of 2022 in, you know, what are, you know, clearly more, a more macro challenge environment than we had maybe a few years ago. So the underlying growth in companies is still there. Now that's separate from where's the growth market from as it relates to new investment. And like many people, our pace is down dramatically. Uh, we have done new deals this year, but many fewer than we did in 22, many fewer than we did in 21. The one thing I would just point out is if you look at 21 and 22, there was a lot of Series A and Series B investments that got done. And when you, when a company gets funded Series A, Series B, and you know, Jason can talk about this with more authority than me, You're not typically funding a company for three to five years. You're funding a company for 12 months, 18 months, 24 months, so kind of the next proof point. And so as we kind of get to the beginning of 24, you're going to naturally have companies that are going to need to raise capital, and some of them are going to have executed reasonably well, notwithstanding the environment. And what will happen is they'll raise capital, they just might not raise capita…

AI assessment note: “First of all, Growth is not dead. Let's start with underlying growth in actual companies.”

Q Okay, so what's the favorite book, and why?

A I read really, really widely. You can, we're sitting in my kind of library here, so I don't have a favorite. Just as an example, just to show you the randomness of what I read, the last three books I read, one is What We Know About Climate Change by Kerry Emanuel, who's like a Professor at MIT, because I don't feel like it's a topic I know enough about. It's got a little bit of a scientific tilt, but it's great because it's 50 pages, so anybody can read it really quickly, and it's a great summary of the topic. Before that, I read a book called The Book of Eels. Yes, eels as in the fish. By the way, it's a bestseller, and it's a book about the history of eels, which is fascinating, by the way, as well as the relationship of the author and his father. And then the one I'm reading right now is a book called On the Writing Process by John McAfee, who's been a thirty-year writer at The New Yorker. And he's just talking about his process of how he writes, and I think writing is such an underrated skill, constantly trying to improve how I write, and so that's a fascinating book. Those are the last three books, so I read pretty widely, and I read on pretty eclectic topics.

AI assessment note: “I don't have a favorite.”

Q You have a great memory, and yeah, I mean, sadly, I'm more on espressos these days, but, uh, totally good memory, but I do want to start, you know, you joined Insight over 21 years ago. Talk to me, how did you make your way into the world of, kind of, venture and finance, and How did you come to be an insight first? Let's start with some context.

A Well, yeah, no, this is not where I expected to be. I mean, I was a science geek in high school, went to the International Science Fair, went to Penn, was studying biochemistry. And like what happens a lot, serendipity happens. And I had a bunch of roommates that were economics majors and said, well, I guess I should take a class in economics. So I was doing research at the medical school at Penn while I was taking a class in econ. I really enjoyed the econ class. And so while I stuck with biochemistry as my major, I got a job on Wall Street After my freshman year, I really liked that. I came back my sophomore year and went back to science, and I kept kind of going back and forth, and then I had to make a decision, and I decided I was going to do both. I was going to study economics and biochemistry, and then after, I think, a semester where I took seven classes to try to meet the requirements for both, I decided that probably wasn't such a great idea. I had to make a decision, and people said, well, how'd you decide to do economics, which is what I decided to do. I think, honestly, it was impatience, which is I didn't see myself in school for how long it was going to take to be a doctor. Four years of college, four years of medical school, residency, and I figured, well, if I go into business, I can start quickly, and I wish I could give a better answer, but I really do believ…

AI assessment note: “I went to Blackstone out of college, and then I had an opportunity”

Q want to remove that from their place. I'm intrigued on that element of ownership, because it's a very different stage also for you versus Fox. How do you think about the importance of ownership today? A lot of people are going, well, markets are tenx bigger, so we don't need the ownership that we did before. How do you think about the centrality of ownership when you're investing today, Devin?

A Once we've decided we like something, we like to own as much as we can. That being said, we don't have, like, a minimum threshold. We don't have a minimum percentage we have to own. You know, we have companies where we own as little as three, four percent, and we have companies where we own north of 90%. One of the things that's different about us is that we're willing to, as you know, we also have like a buyout business where we do kind of full control transactions where we use leverage. But I think what's less known is that we also do control deals where we're buying control of companies that you would define as a venture company, where a set of existing investors For whatever set of reasons, wants to get liquidity. And we're excited about the growth profile of the company. They don't need to be profitable. We'll go by control. So we own 70 and 80% of companies that if I just showed you the income statement, you'd say, well, that looks like a venture company. That doesn't look like a buyout. And you'd be right. And we wouldn't be using any leverage. We would do an all kind of equity deal. So we come at it as once we build conviction on something, we want to own as much as we can. That being said, if you've got an asset that's growing a hundred percent a year as a seller, you might decide that selling 80% of that doesn't make sense because the value is going up too quickly. So…

AI assessment note: “Once we've decided we like something, we like to own as much as we can.”

Q Back off of next year, Jason, it's happening. I've, I heard from experts, it's happening, so stay tuned for that, but I want to start, Woody and Devin, I'm gonna hand this one on to you, which is, everyone says that growth is just dead. Is this true? Are new deals getting done?

A First of all, Growth is not dead. Let's start with underlying growth in actual companies. If you look at Q two of 20, 23, you know, insight has a hundred, had a 180 portfolio companies that grew north of 50% in, you know, Q two of 20, 23 over Q two of 2022 in, you know, what are, you know, clearly more, a more macro challenge environment than we had maybe a few years ago. So the underlying growth in companies is still there. Now that's separate from where's the growth market from as it relates to new investment. And like many people, our pace is down dramatically. Uh, we have done new deals this year, but many fewer than we did in 22, many fewer than we did in 21. The one thing I would just point out is if you look at 21 and 22, there was a lot of Series A and Series B investments that got done. And when you, when a company gets funded Series A, Series B, and you know, Jason can talk about this with more authority than me, You're not typically funding a company for three to five years. You're funding a company for 12 months, 18 months, 24 months, so kind of the next proof point. And so as we kind of get to the beginning of 24, you're going to naturally have companies that are going to need to raise capital, and some of them are going to have executed reasonably well, notwithstanding the environment. And what will happen is they'll raise capital, they just might not raise capita…

AI assessment note: “First of all, Growth is not dead. Let's start with underlying growth in actual companies.”

Q I mean, in terms of supporting the company, we mentioned gear checkout. I also spoke to Thomas at Vinted. One area where obviously you're very instrumental in supporting the companies is on boards. You've sat on countless boards now. I'd love your thoughts on, like, how do you think about your style of board membership, and how has that changed over the years, Devin?

A I still remember one of my first boards back in 2002, maybe. I was with my wife. We're visiting schools for my Son for pre-kindergarten, which of course in New York is like, you're applying to Harvard. And the rule is when you're going on your school interview, you can't look at your phone, you can't do anything. And I got a call from the CEO of this company I was on the board of saying, I think CIO was quitting. I remember, I still remember the feeling I had because it's one of my first boards. I just thought it was a total disaster. I was like, emotionally just wrecked by this. My wife was glaring at me saying to put my phone away, which I did. Thankfully, my son got in. And one of the things you realize is that companies have lots of ups and downs, and you can't get that affected by individual ups and downs. So early on, I think I probably overreacted to the negative and probably overreacted to the positive. So I think the biggest thing for all those years is you kind of get a little bit more even keeled about both bad news and good news, and you realize every company, even the most successful company, is going to have bumps. You generally work through them, and you have confidence in your team. So that's one. Number two, I think when you're early on, you sometimes forget that you're a board member. You're not an operator. You're not there to run the company. You're there to…

AI assessment note: “the biggest thing for all those years is you kind of get a little bit more even keeled”

Q I spoke to Jeff before the show, and he said one of the most brilliant skills that Devon has is his ability to negotiate. And so I thought that's such an interesting thing. He said it's like your single biggest strength. So what do you think makes you such a good negotiator? And when you think about, like, the art of negotiation, what do you think its core essence is?

A Well, I think that people, unfortunately, they view negotiating as a game, and I don't really think it's a game. I think negotiation that works, to me, is one where you actually build a trust-based relationship with somebody. That they believe that what you're saying is true. That you believe what they're saying is true. You both have certain needs to satisfy your constituency. In my case, it can be my investment committee. In their case, it can be their co-founders or their company or whatever it might be. There's things that are important to them, and there's things that are important to us. And I think in a good negotiation, you're actually sensitive to what you need, but you're also very sensitive to what they need. You try to bridge that gap, and you try to bridge it in a way that's honest. And I think people feel like, oh, in order to negotiate, you have to have this brinksmanship style. Actually, honestly, don't think that works. And I think that, you know, I've done multiple deals on a handshake. I mean, you've got to be at checkout. I mean, we did that deal on a handshake. We never signed a term sheet. I knew what was important to him. He knew what was important to us. We shook hands. And, you know, my kind of, my view was, and I'm going to say this, everybody's going to say, let's do term sheets by a handshake, but if the handshake's not good enough, maybe I don't wan…

AI assessment note: “negotiation that works, to me, is one where you actually build a trust-based relationship”

Q ARR companies be a 1,000,000,005 in valuation, and I'm just scratching my head going, I feasibly, I don't want to be pessimistic. I want to see the brilliance, but I can't see this growing into the valuation at the rate it needs to. Do you think we are going to see this kind of dislocation in the next few years, or do you think actually they will grow into it?

A Look, I think, by the way, I think there was a company we were just talking about internally This week that we're looking at that I think has four million of ARR that went for one and a half billion dollar valuation with kind of well-known funds. Look, I think that are every one of those deals going to work? No. But the converse is also true. Like when we do our analysis of the deals that worked and the deals that didn't work, we often find is when we did something that we thought was cheap, those didn't work particularly well either. And I think that where we've generally had misses, they've been more because we said no on valuation and the company actually executed incredibly well at a very, very large market. So I'm not going to sit here and tell you that every company that raises money at a one and a half billion dollar valuation of four million of ARR is going to work, but you're going to have a subset that are definitely going to work. Our job is to make sure that we're getting in the right ones, and that the ones that we're paying up for are the ones where our long-term growth underwriting is correct. And we won't always be correct, obviously, but we need to be correct enough.

AI assessment note: “you're going to have a subset that are definitely going to work.”

Q Can I ask a tough one, which is like, you know, I've spoken to founders before who have offers from inside, and they say, one amazing, obviously, and very excited, but one concern is the signaling risk. Given your ability to invest across stage, it's what if they don't invest next round, and how is that perceived? How do you advise and answer that question with the insight had on?

A The reality is the markets, I think David talked about this in his interview, right? I mean, the market has shown that the signaling risk is not that significant of a risk. That is entirely possible for us to invest in something earlier, for us to not pursue the next round, and for the companies still have to be able to raise capital. As a practical matter in our case, it hasn't happened very often. We don't think of ourselves in an early stage fund, so if we're going into something on the earlier phase, we have pretty strong convictions. And generally, when the company is raising that next round, it's very rare that there's a sufficient amount of data where you're ready to say, oh, I liked it six months ago. I really don't like it now. Generally, there's been progress, but there hasn't been enough progress for you or not progress for you to make the decision to not continue to support the company. So I'll answer the question in a theoretical sense. It hasn't proven to be a big issue in the market more broadly. Certainly hasn't been that big an issue in our portfolio because it's not been very common for us to not Continue to support the company.

AI assessment note: “the market has shown that the signaling risk is not that significant of a risk”

Q to touch on time allocation across the portfolio, because like traditional thinking would suggest, hey, you spend all your time with the winners, that's what drives the returns, and bluntly, you minimize time on underperforming companies, just in terms of how you're going to optimize fund performance. How do you think about time allocation across the portfolio? Have there been any big lessons for you from the 21 years now?

A Yeah, I mean, you missed the category, which is that you've got clear winners, you've got the middle, which are meaningful for the fund performance. And then you've got the ones that are going to return capital or potentially lose money. How should people allocate? If you said, I'm a robot, and I'm going to allocate my time in a way that totally optimizes fund returns. Actually, you spend almost no time with the winners. The market's great. The management's great. You're a cheerleader. You're not adding as much value as you think you are. The middle, you actually probably can influence the outcome. Maybe it requires making some changes in the strategy. Maybe it requires upgrading the management team, but there's probably ways that you can influence that outcome. So spending some meaningful time in the middle actually makes sense. And then spending almost no time on the capital returners or the losers. That's how an optimized machine would spend their time. I don't know of anybody who's actually spends their time that way, and I certainly don't. Why? Well, one, spending time with winners is a lot cheaper than therapy. We spend a lot of time looking for companies. It feels good to be around companies that are doing great, even if you're not adding a lot of value. And I don't know a single investor who doesn't want to spend time with their winners, even if they're not adding value…

AI assessment note: “I do force myself to spend more time, call it, in the middle”

Q Can I ask, on the flip side of that, if that's like the board member side, on the founder side, you've worked with some of the best founders over the last decade. How do the very best founders run their board meetings, and I guess, what do they do to extract the most value from them, from your perspective?

A That's a great question, because I'm still on many boards, and board meetings, there are still definitely board meetings I look forward to, and I won't name companies now, and board meetings I really don't look forward to. And to me, the board meetings I don't look forward to, I talk about a profile of a board meeting, is kind of a recitation of facts. What I say to people is, I like to read history for fun, but I don't like people reading the history. So the board meetings I enjoy the most, where I have enough influence to be able to do this, I've broken up the board meeting into two separate board meetings. So one's a Financial overview of performance where the CFO just presents the financial performance. People have any questions they can ask. And then the main board meeting where there's one slide on financial performance, but then the rest of the meeting is really about highlights and lowlights. What's working? What's not working? Generally having one or two functional areas come in and present so that you get better exposure to the rest of the management team. And then kind of what are the key strategic issues that the CEO is kind of focused on? And those are my Favorite board meetings. I also think that long board meetings tend to lead to recitation of facts, and tighter board meetings tend to focus the conversation on the things that matter.

AI assessment note: “the rest of the meeting is really about highlights and lowlights”

Q What do you know now that you wish you'd known at the start of your career in venture?

A That you're never going to know the answer. I mean, I think there's a tendency to feel like with diligence, you can get to a hundred percent. There is no hundred percent. And we were talking earlier about getting people's opinions. One of my favorite things I do when I'm talking to people on my team and we're looking at a deal is I say, well, would you wire the money today? And they're like, well, but we haven't really done the customer calls yet. I'm like, right. I'm not, we're not going to wire the money today. I just want to know, would you wire the money today? With no additional information, what would you do? And people hate that question. And it's my favorite question because it forces you to think of, okay, do we have enough information to make the decision? Because we're never going to have, we could always do another five customer calls. We could always talk To five more employees. But at some point you get to diminishing returns. Is that 80%? Is it 70%? Is it 60%? I don't know. But training people to think about making decisions with the information that you have when the information is not complete, including myself, by the way, is I think really important.

AI assessment note: “That you're never going to know the answer.”

Q Can I ask a tough one, which is like, you know, I've spoken to founders before who have offers from inside, and they say, one amazing, obviously, and very excited, but one concern is the signaling risk. Given your ability to invest across stage, it's what if they don't invest next round, and how is that perceived? How do you advise and answer that question with the insight had on?

A The reality is the markets, I think David talked about this in his interview, right? I mean, the market has shown that the signaling risk is not that significant of a risk. That is entirely possible for us to invest in something earlier, for us to not pursue the next round, and for the companies still have to be able to raise capital. As a practical matter in our case, it hasn't happened very often. We don't think of ourselves in an early stage fund, so if we're going into something on the earlier phase, we have pretty strong convictions. And generally, when the company is raising that next round, it's very rare that there's a sufficient amount of data where you're ready to say, oh, I liked it six months ago. I really don't like it now. Generally, there's been progress, but there hasn't been enough progress for you or not progress for you to make the decision to not continue to support the company. So I'll answer the question in a theoretical sense. It hasn't proven to be a big issue in the market more broadly. Certainly hasn't been that big an issue in our portfolio because it's not been very common for us to not Continue to support the company.

AI assessment note: “the market has shown that the signaling risk is not that significant of a risk”

Q What do you know now that you wish you'd known at the start of your career in venture?

A That you're never going to know the answer. I mean, I think there's a tendency to feel like with diligence, you can get to a hundred percent. There is no hundred percent. And we were talking earlier about getting people's opinions. One of my favorite things I do when I'm talking to people on my team and we're looking at a deal is I say, well, would you wire the money today? And they're like, well, but we haven't really done the customer calls yet. I'm like, right. I'm not, we're not going to wire the money today. I just want to know, would you wire the money today? With no additional information, what would you do? And people hate that question. And it's my favorite question because it forces you to think of, okay, do we have enough information to make the decision? Because we're never going to have, we could always do another five customer calls. We could always talk To five more employees. But at some point you get to diminishing returns. Is that 80%? Is it 70%? Is it 60%? I don't know. But training people to think about making decisions with the information that you have when the information is not complete, including myself, by the way, is I think really important.

AI assessment note: “That you're never going to know the answer. I mean, I think there's a tendency”

Q ARR companies be a 1,000,000,005 in valuation, and I'm just scratching my head going, I feasibly, I don't want to be pessimistic. I want to see the brilliance, but I can't see this growing into the valuation at the rate it needs to. Do you think we are going to see this kind of dislocation in the next few years, or do you think actually they will grow into it?

A Look, I think, by the way, I think there was a company we were just talking about internally This week that we're looking at that I think has four million of ARR that went for one and a half billion dollar valuation with kind of well-known funds. Look, I think that are every one of those deals going to work? No. But the converse is also true. Like when we do our analysis of the deals that worked and the deals that didn't work, we often find is when we did something that we thought was cheap, those didn't work particularly well either. And I think that where we've generally had misses, they've been more because we said no on valuation and the company actually executed incredibly well at a very, very large market. So I'm not going to sit here and tell you that every company that raises money at a one and a half billion dollar valuation of four million of ARR is going to work, but you're going to have a subset that are definitely going to work. Our job is to make sure that we're getting in the right ones, and that the ones that we're paying up for are the ones where our long-term growth underwriting is correct. And we won't always be correct, obviously, but we need to be correct enough.

AI assessment note: “you're going to have a subset that are definitely going to work.”

Q I spoke to Jeff before the show, and he said one of the most brilliant skills that Devon has is his ability to negotiate. And so I thought that's such an interesting thing. He said it's like your single biggest strength. So what do you think makes you such a good negotiator? And when you think about, like, the art of negotiation, what do you think its core essence is?

A Well, I think that people, unfortunately, they view negotiating as a game, and I don't really think it's a game. I think negotiation that works, to me, is one where you actually build a trust-based relationship with somebody. That they believe that what you're saying is true. That you believe what they're saying is true. You both have certain needs to satisfy your constituency. In my case, it can be my investment committee. In their case, it can be their co-founders or their company or whatever it might be. There's things that are important to them, and there's things that are important to us. And I think in a good negotiation, you're actually sensitive to what you need, but you're also very sensitive to what they need. You try to bridge that gap, and you try to bridge it in a way that's honest. And I think people feel like, oh, in order to negotiate, you have to have this brinksmanship style. Actually, honestly, don't think that works. And I think that, you know, I've done multiple deals on a handshake. I mean, you've got to be at checkout. I mean, we did that deal on a handshake. We never signed a term sheet. I knew what was important to him. He knew what was important to us. We shook hands. And, you know, my kind of, my view was, and I'm going to say this, everybody's going to say, let's do term sheets by a handshake, but if the handshake's not good enough, maybe I don't wan…

AI assessment note: “negotiation that works, to me, is one where you actually build a trust-based relationship”

Q I mean, in terms of supporting the company, we mentioned gear checkout. I also spoke to Thomas at Vinted. One area where obviously you're very instrumental in supporting the companies is on boards. You've sat on countless boards now. I'd love your thoughts on, like, how do you think about your style of board membership, and how has that changed over the years, Devin?

A I still remember one of my first boards back in 2002, maybe. I was with my wife. We're visiting schools for my Son for pre-kindergarten, which of course in New York is like, you're applying to Harvard. And the rule is when you're going on your school interview, you can't look at your phone, you can't do anything. And I got a call from the CEO of this company I was on the board of saying, I think CIO was quitting. I remember, I still remember the feeling I had because it's one of my first boards. I just thought it was a total disaster. I was like, emotionally just wrecked by this. My wife was glaring at me saying to put my phone away, which I did. Thankfully, my son got in. And one of the things you realize is that companies have lots of ups and downs, and you can't get that affected by individual ups and downs. So early on, I think I probably overreacted to the negative and probably overreacted to the positive. So I think the biggest thing for all those years is you kind of get a little bit more even keeled about both bad news and good news, and you realize every company, even the most successful company, is going to have bumps. You generally work through them, and you have confidence in your team. So that's one. Number two, I think when you're early on, you sometimes forget that you're a board member. You're not an operator. You're not there to run the company. You're there to…

AI assessment note: “you kind of get a little bit more even keeled about both bad news and good news”

Q Can I ask, on the flip side of that, if that's like the board member side, on the founder side, you've worked with some of the best founders over the last decade. How do the very best founders run their board meetings, and I guess, what do they do to extract the most value from them, from your perspective?

A That's a great question, because I'm still on many boards, and board meetings, there are still definitely board meetings I look forward to, and I won't name companies now, and board meetings I really don't look forward to. And to me, the board meetings I don't look forward to, I talk about a profile of a board meeting, is kind of a recitation of facts. What I say to people is, I like to read history for fun, but I don't like people reading the history. So the board meetings I enjoy the most, where I have enough influence to be able to do this, I've broken up the board meeting into two separate board meetings. So one's a Financial overview of performance where the CFO just presents the financial performance. People have any questions they can ask. And then the main board meeting where there's one slide on financial performance, but then the rest of the meeting is really about highlights and lowlights. What's working? What's not working? Generally having one or two functional areas come in and present so that you get better exposure to the rest of the management team. And then kind of what are the key strategic issues that the CEO is kind of focused on? And those are my Favorite board meetings. I also think that long board meetings tend to lead to recitation of facts, and tighter board meetings tend to focus the conversation on the things that matter.

AI assessment note: “I've broken up the board meeting into two separate board meetings.”

Q to touch on time allocation across the portfolio, because like traditional thinking would suggest, hey, you spend all your time with the winners, that's what drives the returns, and bluntly, you minimize time on underperforming companies, just in terms of how you're going to optimize fund performance. How do you think about time allocation across the portfolio? Have there been any big lessons for you from the 21 years now?

A Yeah, I mean, you missed the category, which is that you've got clear winners, you've got the middle, which are meaningful for the fund performance. And then you've got the ones that are going to return capital or potentially lose money. How should people allocate? If you said, I'm a robot, and I'm going to allocate my time in a way that totally optimizes fund returns. Actually, you spend almost no time with the winners. The market's great. The management's great. You're a cheerleader. You're not adding as much value as you think you are. The middle, you actually probably can influence the outcome. Maybe it requires making some changes in the strategy. Maybe it requires upgrading the management team, but there's probably ways that you can influence that outcome. So spending some meaningful time in the middle actually makes sense. And then spending almost no time on the capital returners or the losers. That's how an optimized machine would spend their time. I don't know of anybody who's actually spends their time that way, and I certainly don't. Why? Well, one, spending time with winners is a lot cheaper than therapy. We spend a lot of time looking for companies. It feels good to be around companies that are doing great, even if you're not adding a lot of value. And I don't know a single investor who doesn't want to spend time with their winners, even if they're not adding value…

AI assessment note: “I don't know of anybody who's actually spends their time that way, and I certainly don't.”

Q You have a great memory, and yeah, I mean, sadly, I'm more on espressos these days, but, uh, totally good memory, but I do want to start, you know, you joined Insight over 21 years ago. Talk to me, how did you make your way into the world of, kind of, venture and finance, and How did you come to be an insight first? Let's start with some context.

A Well, yeah, no, this is not where I expected to be. I mean, I was a science geek in high school, went to the International Science Fair, went to Penn, was studying biochemistry. And like what happens a lot, serendipity happens. And I had a bunch of roommates that were economics majors and said, well, I guess I should take a class in economics. So I was doing research at the medical school at Penn while I was taking a class in econ. I really enjoyed the econ class. And so while I stuck with biochemistry as my major, I got a job on Wall Street After my freshman year, I really liked that. I came back my sophomore year and went back to science, and I kept kind of going back and forth, and then I had to make a decision, and I decided I was going to do both. I was going to study economics and biochemistry, and then after, I think, a semester where I took seven classes to try to meet the requirements for both, I decided that probably wasn't such a great idea. I had to make a decision, and people said, well, how'd you decide to do economics, which is what I decided to do. I think, honestly, it was impatience, which is I didn't see myself in school for how long it was going to take to be a doctor. Four years of college, four years of medical school, residency, and I figured, well, if I go into business, I can start quickly, and I wish I could give a better answer, but I really do believ…

AI assessment note: “it was my impatience that led me to end up majoring in economics”

Q Okay, so what's the favorite book, and why?

A I read really, really widely. You can, we're sitting in my kind of library here, so I don't have a favorite. Just as an example, just to show you the randomness of what I read, the last three books I read, one is What We Know About Climate Change by Kerry Emanuel, who's like a Professor at MIT, because I don't feel like it's a topic I know enough about. It's got a little bit of a scientific tilt, but it's great because it's 50 pages, so anybody can read it really quickly, and it's a great summary of the topic. Before that, I read a book called The Book of Eels. Yes, eels as in the fish. By the way, it's a bestseller, and it's a book about the history of eels, which is fascinating, by the way, as well as the relationship of the author and his father. And then the one I'm reading right now is a book called On the Writing Process by John McAfee, who's been a thirty-year writer at The New Yorker. And he's just talking about his process of how he writes, and I think writing is such an underrated skill, constantly trying to improve how I write, and so that's a fascinating book. Those are the last three books, so I read pretty widely, and I read on pretty eclectic topics.

AI assessment note: “I don't have a favorite. Just as an example, just to show”

Q Totally. Gay, can I ask, Jason's hypothetical example mentioned, you know, the fifty million ARR company. There's a large group of SaaS companies that a hundred million, even two hundred million ARR with, with decent-ish growth. Will PE activity pick up here, and what happens to that?

A I think you're gonna see, and we've done a bunch of these deals, others will have done some of these deals, I mean, those are going to be companies are, they're not all perfect public candidates, but some of them are not necessarily perfect strategic candidates either. Meaning there's not a logical strategic who wants to own the asset for whatever set of reasons. And I think you're going to see, uh, firms by those firms can get bought by, uh, sponsors, uh, or firms like us. And I think there will be a market for those types of assets. And I think the challenge is going to be, in my view, Is those assets that are not growing that fast. And the lower left quadrant is crappy growth, high burn. Okay. Like if you've got crappy growth, high burn, like

AI assessment note: “those firms can get bought by, uh, sponsors, uh, or firms like us”

Q Okay, we said the hell yeah to the would you want the money to stay. What was the most recent hell yeah that you made, and then obviously subsequently made the investment on, and why did you feel the hell yeah?

A The most recent one that I've done is a company called Tetra Science. Tetra Science, if you think about Viva is to snowflake. Tetra science would be to snowflake. So it's kind of verticalized data around the life sciences category. And you can think about a category that I think is going to have the same type of growth over the next 10 to 20 years and has had the same type, if not more, Moore's law effects. It's life sciences, biotech, pharma. I mean, just think about how quickly we got a vaccine. Couldn't imagine that 10 or 15 years ago. And so I think that industry is going to see just an incredible amount of innovation and I think TetraScience is one of the more exciting software bets around that category, but as a firm, we've probably made seven or eight different bets around different software applications, different layers of the pharma life sciences industry.

AI assessment note: “The most recent one that I've done is a company called Tetra Science.”

Q and what a 21 years it has been. I do want to ask you, because, you know, I've never seen a macro crash. We've had the most wonderful bull market for the last However many years, you know, you've seen two very prominently, you know, one very close after you were joining Insight, and then obviously in 2008. How did seeing those crashes impact your investing mentality stage, you think?

A Yeah, and interestingly, there's been a third that we all just lived through, which is COVID, which was an economic effect, even if we didn't see it in the stock market. If you look at those three, I think they were very, very different. Back in 1999, you had high stock market valuations, but you had a lot of companies that weren't really companies. You know, 2000, while you had a massive contraction, a lot of the contraction was businesses didn't really have a model, and when the tide came in, it was clear they didn't have a model, and so you saw a lot of those companies never make it. 2008, you saw a very significant economic contraction, but you had companies that were real companies, and while they had to make radical changes in their business and cut expenses and do all those things, generally what you find is software were still pretty resilient, and it kind of came back. And then the last one, which was in some ways the most interesting one, which we all got Certainly I and others got pretty wrong was COVID, where we all met with our LPs. We said, you know, we're probably not going to deploy any capital. Valuations are going to go down dramatically. Get ready for probably our worst performance in a really long time. And of course, none of that came true. And I think that one of the things that many of us learned through that is software, even though we're obviously big b…

AI assessment note: “turns out that's even better than we thought it was”

Q of the amazing successes you and the firm have had. One big question I always have is, like, how do you prevent Past successes or failures impacting your future decision making, and I guess with the many IPOs that you've had, a certain space or vertical can inherently seem more attractive than others because you've seen how good it can be. How do you prevent past impacting future decision making?

A Well, for one, if you sat in on our partners meetings, or we had a first in-person outdoor lunch, I guess, of our investment committee earlier this week, you would not come out at lunch feeling like, Boy, these guys know how to celebrate. We spend way more of our time beating ourselves up on the things that we missed, and why didn't we look at that area, or are we not being aggressive enough in that area, or why didn't we do that deal when we saw it? So I think the first thing is you constantly have to focus on the things you can do better rather than celebrating the successes. I can tell you that's very much of our culture, and there's emails that go around when a deal gets announced, and we talk about, do we look at it? Do we spend enough time on it? Who won it? What did they see that we didn't see? We do a lot of that, and so I think that part of it is, what's the culture? Everybody loves what they do, and everybody really wants to win. If you talk to anyone who's a competitive athlete, what do they do? They watch videos of their competition. They see what the competition's doing. They try to learn from what they're doing. How are they going to compete against that? That's what we do. We don't watch videos, obviously, but we spend a lot of time studying what others are doing and where we can learn from it.

AI assessment note: “you constantly have to focus on the things you can do better rather than celebrating”

Q and what a 21 years it has been. I do want to ask you, because, you know, I've never seen a macro crash. We've had the most wonderful bull market for the last However many years, you know, you've seen two very prominently, you know, one very close after you were joining Insight, and then obviously in 2008. How did seeing those crashes impact your investing mentality stage, you think?

A Yeah, and interestingly, there's been a third that we all just lived through, which is COVID, which was an economic effect, even if we didn't see it in the stock market. If you look at those three, I think they were very, very different. Back in 1999, you had high stock market valuations, but you had a lot of companies that weren't really companies. You know, 2000, while you had a massive contraction, a lot of the contraction was businesses didn't really have a model, and when the tide came in, it was clear they didn't have a model, and so you saw a lot of those companies never make it. 2008, you saw a very significant economic contraction, but you had companies that were real companies, and while they had to make radical changes in their business and cut expenses and do all those things, generally what you find is software were still pretty resilient, and it kind of came back. And then the last one, which was in some ways the most interesting one, which we all got Certainly I and others got pretty wrong was COVID, where we all met with our LPs. We said, you know, we're probably not going to deploy any capital. Valuations are going to go down dramatically. Get ready for probably our worst performance in a really long time. And of course, none of that came true. And I think that one of the things that many of us learned through that is software, even though we're obviously big b…

AI assessment note: “one of the things that many of us learned through that is software”

Q of the amazing successes you and the firm have had. One big question I always have is, like, how do you prevent Past successes or failures impacting your future decision making, and I guess with the many IPOs that you've had, a certain space or vertical can inherently seem more attractive than others because you've seen how good it can be. How do you prevent past impacting future decision making?

A Well, for one, if you sat in on our partners meetings, or we had a first in-person outdoor lunch, I guess, of our investment committee earlier this week, you would not come out at lunch feeling like, Boy, these guys know how to celebrate. We spend way more of our time beating ourselves up on the things that we missed, and why didn't we look at that area, or are we not being aggressive enough in that area, or why didn't we do that deal when we saw it? So I think the first thing is you constantly have to focus on the things you can do better rather than celebrating the successes. I can tell you that's very much of our culture, and there's emails that go around when a deal gets announced, and we talk about, do we look at it? Do we spend enough time on it? Who won it? What did they see that we didn't see? We do a lot of that, and so I think that part of it is, what's the culture? Everybody loves what they do, and everybody really wants to win. If you talk to anyone who's a competitive athlete, what do they do? They watch videos of their competition. They see what the competition's doing. They try to learn from what they're doing. How are they going to compete against that? That's what we do. We don't watch videos, obviously, but we spend a lot of time studying what others are doing and where we can learn from it.

AI assessment note: “constantly have to focus on the things you can do better rather than celebrating”

Q best funds in the world, and they said the way that they determine ultimate success is how much market share of unicorn companies do they have? So of the total available market of unicorn companies, they want to have north of 25% in their portfolios. How do you ultimately define, like, insight and your success? Is that one of those kind of meta questions, which is the guiding North Star?

A Look, ultimately, obviously, we measure ourselves by what our LPs measure us by, which is by having good returns, which we've been fortunate enough to have had. But what the person you spoke to yesterday said is another way of saying the same thing, meaning if you actually have a high market share in kind of unicorn companies, which, by the way, I don't think we do. And that's why I think our market opportunity is so large, which is that our market share in unicorn companies isn't that high relative to what I think it could be. In many cases, companies that we looked at and decided not to pursue, which means we have to get better as a firm on how we get comfortable with deals like that. But I think those things are related, right? So how do you get the best returns in this space? It's by being in the best companies. And when you're in the best companies, price generally didn't end up really mattering that much. Of course, you'd always rather own something cheaper than But generally, there's a clearing price, and the decision point isn't whether you'd like to do the deal at a lower price. Of course, you'd rather do the deal at the lower price, but we're not in a market where that's possible. I think the bigger challenge today, to be honest with you, Harry, is less around price. It's more on how quickly decisions are having to get made, and I think that, I think, might have, you …

AI assessment note: “we measure ourselves by what our LPs measure us by, which is by having good returns”

Q Totally. Gay, can I ask, Jason's hypothetical example mentioned, you know, the fifty million ARR company. There's a large group of SaaS companies that a hundred million, even two hundred million ARR with, with decent-ish growth. Will PE activity pick up here, and what happens to that?

A I think you're gonna see, and we've done a bunch of these deals, others will have done some of these deals, I mean, those are going to be companies are, they're not all perfect public candidates, but some of them are not necessarily perfect strategic candidates either. Meaning there's not a logical strategic who wants to own the asset for whatever set of reasons. And I think you're going to see, uh, firms by those firms can get bought by, uh, sponsors, uh, or firms like us. And I think there will be a market for those types of assets. And I think the challenge is going to be, in my view, Is those assets that are not growing that fast. And the lower left quadrant is crappy growth, high burn. Okay. Like if you've got crappy growth, high burn, like

AI assessment note: “I think there will be a market for those types of assets.”

Q Yeah, that's, that's it. So it's going to be, what is that? That's 51?

A Yeah, but like, see, like, the underlying, like, the question to me is what should be the underlying return in growth, right? Like, that's really the question. The company's public, in theory, their growth rate, unless the market really inefficiently priced them, should kind of compound it, kind of where the market, where the market compounds. And I don't have differentiated knowledge to say it should compound less or more, because I haven't studied it, just to be Just to be honest, but I'm probably not going into any company assuming that I have a 50% IRR. Like, I'm just not gonna, like, I would have to really know something specific that would make me feel like there's a something I know the market doesn't know that would make me have conviction that something was gonna have a 50% IRR. I don't know anything. That doesn't mean it won't, but since I don't know anything, I'm going to assume that it won't have a 50% return because I'm not going to assume the public market is going to have a 50% return.

AI assessment note: “I'm probably not going into any company assuming that I have a 50% IRR.”