The Exchanges

Q Is there anything you'd do differently on that fundraise when you look back now?

A Oh yeah. So I got this advice from Mike Maples, who, who said, do not do a fundraise for a size of the fund. Do a fundraise for time of the fund. So in other words, give yourself 90 days, whatever you get, go start investing. You're a smart guy. You can figure out how to do portfolio construction with a smaller amount of money or a bigger amount of money. Go deploy it. Go put points up on the board. Go prove that those investments are actually really good, and then go back into the market to go raise more capital. Now again, Floodgate had four big LPs. Princeton, Yale, Horseline, I forget who, and I think Notre Dame was the fourth. And now it was a seventy-five million dollar first time fund. So to me, it was like, this is great advice, but it's like kind of luxury advice, right? Because look at your LP base, and look at the size of your fund. So I, I ignored it. But the advice I give every emerging manager is Mike's advice. Which is, that's what you ought to do. Like, give yourself a finite amount of time. Do not do what we did. 39 months to basically do nothing with your life.

AI assessment note: “Do not do what we did. 39 months to basically do nothing with your life.”

Q You mentioned that obviously, you know, BBB or BPC. Should governments be funding venture?

A I think in Europe they've had to, but I have a controversial take on this, which is the worry about governments funding, especially at those kinds of concentrations, is you end up with governments having market power. And I am a big believer in capitalism. I'm a big believer in the markets. I think if you have someone like the EIF where there's 30% of the aggregate capital of the LP commits, it's too big. What you should really have is what happened with, with, with, uh, with AT&T in the US where they broke it down into the bells. You had five different bells kind of competing with each other in telecom. You probably need five EIFs competing with each other in the market. If, if the government's gonna step in to help, you don't want it concentrated in one big power because then you end up with Weird terms, like you said, that may not be market, and it's really hard for the market to then function the way it needs to function. So if you're gonna do it, do it in a competitive way.

AI assessment note: “if you're gonna do it, do it in a competitive way.”

Q Why do you think that is? Why have we shifted to this heavy momentum?

A Well, we went into a market where money was effectively free. And the way you get promoted inside of most firms, remember, we are, we are, we're, we're exceptions to the rule, right? Because we own our own firms. Like, these are our businesses, so we think like business owners, not like employees. If you're the general employee, you optimize for getting to the next career ladder, and how do you show that you can get to the next career ladder? You do a deal, and then General Catalyst, or Index, or Kleiner, or Sequoia, or Andreessen, I mean, there are so many of these great firms, mark it up at a significant premium, and then someone else, Tiger, et cetera, marks it up after that, and all of a sudden, Doesn't make a difference if you've not made any money. You look like you've picked a hot company.

AI assessment note: “we went into a market where money was effectively free. And the way you get promoted”

Q Is there anything you'd do differently on that fundraise when you look back now?

A Oh yeah. So I got this advice from Mike Maples, who, who said, do not do a fundraise for a size of the fund. Do a fundraise for time of the fund. So in other words, give yourself 90 days, whatever you get, go start investing. You're a smart guy. You can figure out how to do portfolio construction with a smaller amount of money or a bigger amount of money. Go deploy it. Go put points up on the board. Go prove that those investments are actually really good, and then go back into the market to go raise more capital. Now again, Floodgate had four big LPs. Princeton, Yale, Horseline, I forget who, and I think Notre Dame was the fourth. And now it was a seventy-five million dollar first time fund. So to me, it was like, this is great advice, but it's like kind of luxury advice, right? Because look at your LP base, and look at the size of your fund. So I, I ignored it. But the advice I give every emerging manager is Mike's advice. Which is, that's what you ought to do. Like, give yourself a finite amount of time. Do not do what we did. 39 months to basically do nothing with your life.

AI assessment note: “Do not do what we did. 39 months to basically do nothing with your life.”

Q You mentioned that obviously, you know, BBB or BPC. Should governments be funding venture?

A I think in Europe they've had to, but I have a controversial take on this, which is the worry about governments funding, especially at those kinds of concentrations, is you end up with governments having market power. And I am a big believer in capitalism. I'm a big believer in the markets. I think if you have someone like the EIF where there's 30% of the aggregate capital of the LP commits, it's too big. What you should really have is what happened with, with, with, uh, with AT&T in the US where they broke it down into the bells. You had five different bells kind of competing with each other in telecom. You probably need five EIFs competing with each other in the market. If, if the government's gonna step in to help, you don't want it concentrated in one big power because then you end up with Weird terms, like you said, that may not be market, and it's really hard for the market to then function the way it needs to function. So if you're gonna do it, do it in a competitive way.

AI assessment note: “I think in Europe they've had to, but I have a controversial take on this”

Q Now, we always like to start off on the 20 Minute VC with a little background, so can you give us a quick snapshot of your past and how you got into the wonderful world of venture?

A Yeah, so I think with, as is the case with a lot of venture folks, it's, it's accidental. It's a series of circumstances, so I, uh, I moved out to London in 2005 to go to graduate school here, and I think the second week of graduate school, uh, one of my colleagues from the Bay Area, uh, who knew the Accel partners pretty well, and specifically one of the partners made an introduction, uh, on my behalf, uh, to them, saying, you know, smart guy in London, you guys should connect, uh, you know, obviously top tier VC, you guys should connect. Um, we had a conversation. One thing led to another. I met most of the other partners at Accel, uh, And then I ended up taking a job while I was still a student, uh, working for the firm. Um, as soon as I graduated, which is about two years later, um, I joined the firm full time, and I became a VC. And, you know, VC was something that I thought I'd do, or venture is something I thought I'd do, you know, in kind of the, you know, kind of the later years of my career. Uh, it was, it was kind of an, an interesting thing. I didn't know that much about it, but I thought it was interesting and curious about it. Most of my life has been building companies, uh, whether inside of very large companies like Microsoft, So building new products there, or in many cases, building startups right from the ground, right, right from ground zero. So venture is k…

AI assessment note: “joined the firm full time, and I became a VC”

Q And with Hoxton then, Why did you decide to leave the security of Axel? Obviously, Axel, incredibly prominent fund. What made you believe that there was an opportunity with Hoxton?

A Yeah, great question. So, you know, I think, you know, Axel's a great firm. I mean, it's probably one of the best in Europe, if not the best, alongside of Index. Um, I think the, the challenge is when you're a very, very large fund, and this is just kind of the economics of funds, uh, and, and Axel's more than half a million, half a billion per fund, so 500 something plus Per fund. Um, writing a one, two or three million dollar check is reasonably difficult for the firm, and the reason being is, you know, even if you get 20, 30, 40 times your money back, say off of two million dollars, so, you know, you return eighty million back into the fund, you know, you have 420 more to go just to be able to break even on the fund to return capital. As we know, there are not that many 40 X's in the world out there every single year. So the firm made a conscious decision to do more later stage investing, which made a lot of sense. Um, which meant that they were writing 10, 20, thirty million dollar checks in addition to the early stage checks. And I think a lot of people back in 2009 were doing this, and this is, you know, kind of post-recession, they were looking for more of a, more of the safety of kind of growing businesses, which left a vacuum on the early stage side. Um, that was kind of observation number one. Observation number two is, you know, me and my partner Rob became very bull…

AI assessment note: “which left a vacuum on the early stage side”

Q And why do you think institutional investors asset allocation is much greater towards venture in the US and the UK?

A So it started off earlier, uh, and it became very self-reinforcing. So, you know, it started off in the, in the sixties. That's probably when the industry started in the US. You had a bunch of successes in the sixties and then the seventies and then the eighties. And more and more institutional money flew, you know, flew back in. Um, people tried to do the same thing in the UK back in the seventies and eighties. I mean, you had the pioneers like Apex and you had three I, you know, the founder of Apex Ron Cohen wrote a book. Um, and you know, in the book, he explains that venture doesn't work in, in, in, in the UK. And the reason being is you never got companies that, that really scaled up to those same sizes. And Apex became much more of a private equity firm than it became a venture firm. And three I became much more of a growth equity firm. And so Because we didn't see these massively scaling companies the way we did in the U.S., you know, the money pulled out of, uh, out of venture in the U.K. and broadly out of Europe as well, and a lot of this was because the playing field, like I was saying, was just not level. It was very, very difficult to build a global business out of these places because, you know, you would try and go international, and the American company would go internationally, and they'd compete with you, and they were, you know, America's a bigger country tha…

AI assessment note: “So it started off earlier, uh, and it became very self-reinforcing.”

Q Talking then of the money then going into venture and the difficulties, was it difficult to raise the fund?

A Oh, yeah. It was, it was downright impossible. So, you know, you had, you had different, different reasons for, different reasons for why people said no, and we kind of bucketed up. So, first of all, it took us about three years, right? So, everyone told us, it generally takes about 12 to 18 months to establish a new fund. And, you know, if you're not that great, you know, it might take you 24 months. I mean, obviously, if you're not very good, you may never do it. But, you know, 24 months is probably the very high end. Um, so we thought, you know, we would budget for 24 months. You know, 24 months in, we realized we were nowhere close to getting to our goal, and our goal was pretty humble compared to Axel. We were only gonna raise a twenty-five million dollar fund. It was, you know, that's tiny in comparison to them. It took us 39 months to do this. Um, and, you know, we got a bunch of different reasons for why people said no. So we talked to the Americans, and most Americans that we talked to said, you know, we don't understand, you know, you guys are smart guys. We have no idea what you're doing in Europe. You know, nothing comes out of Europe. Why don't you come back home to California and get, you know, get jobs at good venture funds and go build your careers the right way. So, you know, they just couldn't see what was going on in the ground in Europe. So that was, you kno…

AI assessment note: “Oh, yeah. It was, it was downright impossible.”

Q I think everyone was thinking, who the fuck is this Harry kid? Why won't he leave us alone? Um, listen, I want to dive right in. I remember Keith Raboy telling me in a show Every fund needs, like, a right to exist. When we think about Hoxton, how do you think about your answer for what our right to exist is?

A Yeah, it's a good question. Um, I mean, when we, when we first, by the way, I think the venture world does not need yet another fund. Like, we have a lot of them, right? They're coming down in numbers, but the world, we have a lot of, like, a lot of people playing VCs. 1113 years ago when we first started, we're 11 years old, but we started fundraising a little bit before then, the world did not have that many VCs in Europe. Had a lot of them in the US, had a lot of them in China, had a lot of them in India. But nobody was here in Europe. In fact, the seed funds of record here, you won't even remember the names. They were Eden and Pond. They're like a bygone, right? The people raised money in the dot-com boom, mismanaged their capital all the way through the collapse, and kind of left. And so the world really needed a venture player in Europe, and that was the thesis of Hoxton. And then if you look at where we are today, the world now has quite a bit of venture funds in Europe, but there are not that many old-fashioned venture funds. Left in this industry. I think most of us become momentum investors in this industry. We write the check largely to get the next markup, not to build the long-term, durable, big company of tomorrow. And I don't think there are that many people in Europe who do those kinds of things.

AI assessment note: “the world really needed a venture player in Europe, and that was the thesis”

Q So, like, Keith Raboy, who's a friend and been on the show a couple of times, he always says, like, the best founders don't need your help. Simple. Do you agree?

A Yes, until there's a hiccup. And there are hiccups. Like, you, people forget, like, even some of the massive outcomes in our industry have had hiccups. Some of them did not. Google did not have any hiccups. Maybe now it has a hiccup with some regulatory challenges, but did not have a hiccup. Facebook had hiccups. Like, that was not easy to raise some of the rounds of Facebook. Like, there's a reason why Microsoft ended up on the cap table. Like, companies, they, they don't have a linear path from, like, zero to success. It looks like that because you, you, you stretch out the curve and you miss all the volatility. It's like your glucose monitor. You see ups and downs on your glucose monitor, and then you see the trend line, and the trend line, you know, when you eat starts going up, but you do see ups and downs. You, you forget about the ups and downs with history, but it's in the ups and downs where you actually need someone around To have the call, and maybe not on the ups, but definitely on the downs.

AI assessment note: “Yes, until there's a hiccup. And there are hiccups.”

Q for founders, though? They get a 10 to fifteen million dollar check from a Series A player who's got a billion to 4,000,000,005 billion even, Um, and yeah, you're a total cool option. We're gonna give you 10,000,015, and just get out of the way, see if you are interesting, and we'll come back and give you 50 if you are interesting. Is that good or bad for founders, actually?

A So, if you'd asked me this question in 21, I said it was good. Because if the market's on the way up, if everything is pulling you up, all you need is money from the investors. You don't need all that much more, right? It's nice if they invite you to things, but like, you don't really need very much out of them. If the market stumbles, Market stumbled in 22. There's a whole bunch of companies out there. By the way, if you look at the public markets today, and you go look at all the SaaS companies, between the first decile all the way up to the 10th decile, if you break it up, everything other than the first decile is both growing and profitable. Both. Not either or, both. Which means that if you're a hundred million dollar vertical SaaS company that's private today, and you're at that kind of stage, and you're not one or the other, sorry, you are one or the other, but not both, You have a long way to go before you can go public, and those companies need to be, like, work needs to go into them, and you probably need, even if it's just a sounding board, someone to sit down and have that conversation with, and that's probably your venture person. And if you're in a call option business, it's not worth the venture fund's time to do all that stuff. So I think it depends if you're in bull cycles or bear cycles or kind of in between cycles, and I think we're kind of sort of in between…

AI assessment note: “So I think it depends if you're in bull cycles or bear cycles”

Q You can't even do that. You do five emerging managers at 10. Great. Now you've got another 50 out. You've got one 70 left on the small side. So then you've got to do 40 into Andreessen, because it's like, where the fuck else am I going to put it?

A I thought the Tiger playbook was actually really fascinating in 21, which is, let me just go, let me, let me not sell a product that's designed for returns. This is how I viewed Tiger at the time. I will sell a product for a capital deployment, And I'll just buy the index, and I'll hoover up not fifty million dollar commits, but two hundred million dollar commits, who have to deploy into tech, and I'll just buy the index. It didn't work, right, because I think they were overpaying on the market, but I could understand the appeal to the LP base, which is, look, where am I going to put this money? I've got a group that's going to take not a little bit of money, a lot of money, and be able to play the market for me.

AI assessment note: “understand the appeal to the LP base... where am I going to put this money?”

Q So, like, Keith Raboy, who's a friend and been on the show a couple of times, he always says, like, the best founders don't need your help. Simple. Do you agree?

A Yes, until there's a hiccup. And there are hiccups. Like, you, people forget, like, even some of the massive outcomes in our industry have had hiccups. Some of them did not. Google did not have any hiccups. Maybe now it has a hiccup with some regulatory challenges, but did not have a hiccup. Facebook had hiccups. Like, that was not easy to raise some of the rounds of Facebook. Like, there's a reason why Microsoft ended up on the cap table. Like, companies, they, they don't have a linear path from, like, zero to success. It looks like that because you, you, you stretch out the curve and you miss all the volatility. It's like your glucose monitor. You see ups and downs on your glucose monitor, and then you see the trend line, and the trend line, you know, when you eat starts going up, but you do see ups and downs. You, you forget about the ups and downs with history, but it's in the ups and downs where you actually need someone around To have the call, and maybe not on the ups, but definitely on the downs.

AI assessment note: “Yes, until there's a hiccup. And there are hiccups.”

Q for founders, though? They get a 10 to fifteen million dollar check from a Series A player who's got a billion to 4,000,000,005 billion even, Um, and yeah, you're a total cool option. We're gonna give you 10,000,015, and just get out of the way, see if you are interesting, and we'll come back and give you 50 if you are interesting. Is that good or bad for founders, actually?

A So, if you'd asked me this question in 21, I said it was good. Because if the market's on the way up, if everything is pulling you up, all you need is money from the investors. You don't need all that much more, right? It's nice if they invite you to things, but like, you don't really need very much out of them. If the market stumbles, Market stumbled in 22. There's a whole bunch of companies out there. By the way, if you look at the public markets today, and you go look at all the SaaS companies, between the first decile all the way up to the 10th decile, if you break it up, everything other than the first decile is both growing and profitable. Both. Not either or, both. Which means that if you're a hundred million dollar vertical SaaS company that's private today, and you're at that kind of stage, and you're not one or the other, sorry, you are one or the other, but not both, You have a long way to go before you can go public, and those companies need to be, like, work needs to go into them, and you probably need, even if it's just a sounding board, someone to sit down and have that conversation with, and that's probably your venture person. And if you're in a call option business, it's not worth the venture fund's time to do all that stuff. So I think it depends if you're in bull cycles or bear cycles or kind of in between cycles, and I think we're kind of sort of in between…

AI assessment note: “So I think it depends if you're in bull cycles or bear cycles”

Q We're gonna get to that. So, but the contrarian, even in the partnership, we're partners. Dude, I wanna do this deal. You really don't. You think I'm nuts. Can I do this?

A So we do it on the basis of, is there a, is there a red line? Like, is there some flag? I mean, red lines are on work. Is there a flag that we can throw down that says it doesn't make sense? Which is, I looked at the cohorts. I looked at the early cohorts. And, and, you know, all of those cohorts are deteriorating. So you thought it was really good. It's growing exponentially, but the data suggests that maybe that's not the case. By the way, that's a real world scenario. I got super excited about a company in Portugal, and one of my partners looked at it and was like, Hussein, like, you missed the trick here. And, and by the way, this is why I love working in partnerships. Like, I think partnerships are way better Than solo GPs, because you get this error correction mechanism from other smart people. But if the error correction mechanism is they're blocking you for no good reason, like as in they're just running interference on you, then it's really, it's obnoxious.

AI assessment note: “we do it on the basis of, is there a, is there a red line?”

Q I haven't seen these before, so, um, you said 2000 dollars. You split up with your partner, Rob. What actually happened?

A That, that's also an easy one. So, 10 years in, We grew apart. That's what happens. I think as we've gotten success, the nice thing about having success, and we made real money on fund one, even though it was a twenty million dollar fund, we did really well for ourselves personally. You get to build the firm in the way that you want to build it, and the big difference between Rob and myself is Rob wants to build a different type of firm, and we can think about how to make that work within the constructs of Hoxton, but it would be hard, right? You'd have to change the character of the firm You'd almost be like a millennium, where you have people, like, or PMs running their own book, or you could say, go gracefully, go build it, by the way, I'm LP, and Rob's fun, and go do your own thing, and I'll be the first, I'll be the first check in the fund, and you've got the full support, you have no restrictions on trade, et cetera, et cetera, like you, you keep your track record, you keep the LP base, and go do it the way you want to do it, and that's basically what we ended up deciding. It took a, it took us a while to be able to do that, but like, We very much want to build the next generation, bigger, earlier stage firm. Like, we want to be one of those dominant five to 10 firms. I think Rob does not want to do that, and Rob very much wants to build a very science-oriented deep tech …

AI assessment note: “10 years in, We grew apart. That's what happens... Rob wants to build a different type of firm”

Q Now, we always like to start off on the 20 Minute VC with a little background, so can you give us a quick snapshot of your past and how you got into the wonderful world of venture?

A Yeah, so I think with, as is the case with a lot of venture folks, it's, it's accidental. It's a series of circumstances, so I, uh, I moved out to London in 2005 to go to graduate school here, and I think the second week of graduate school, uh, one of my colleagues from the Bay Area, uh, who knew the Accel partners pretty well, and specifically one of the partners made an introduction, uh, on my behalf, uh, to them, saying, you know, smart guy in London, you guys should connect, uh, you know, obviously top tier VC, you guys should connect. Um, we had a conversation. One thing led to another. I met most of the other partners at Accel, uh, And then I ended up taking a job while I was still a student, uh, working for the firm. Um, as soon as I graduated, which is about two years later, um, I joined the firm full time, and I became a VC. And, you know, VC was something that I thought I'd do, or venture is something I thought I'd do, you know, in kind of the, you know, kind of the later years of my career. Uh, it was, it was kind of an, an interesting thing. I didn't know that much about it, but I thought it was interesting and curious about it. Most of my life has been building companies, uh, whether inside of very large companies like Microsoft, So building new products there, or in many cases, building startups right from the ground, right, right from ground zero. So venture is k…

AI assessment note: “moved out to London in 2005... joined the firm full time, and I became a VC.”

Q And you mentioned the importance of the network there. I mean, how have you then managed to maintain your incredible network in Silicon Valley in San Francisco? Where, where it seemed previously impossible to do so.

A Yeah, so, you know, the, you know, a lot of this network is built on, on very longstanding relationships, right? So when you go to undergrad with someone, when you work in the trenches at a startup with someone, and you, you know, we were lucky, you know, you go to Stanford, you work for good quality companies, you know, a lot of the people who are around you will go on to do really exceptional things, and that's because they're exceptional people, and so a lot of those exceptional people are now decision makers, and a lot in, across, across the industry in California, and they're, Kind of, they were the right age group, right? They've kind of come up through the ranks, and, you know, I've ended up in Europe, but they've ended up in really senior positions at companies or venture funds, and so I've known them since, you know, the early, you know, since my early twenties. It's very easy to pick up the phone. Now, the one caveat is, I think when you're really disconnected or far away, you need to spend time face-to-face with folks, because people forget, right? You know, there's a lot of human interaction that just happens face-to-face, and a lot of information sharing. This is what makes Silicon Valley such a great ecosystem, because this happens very naturally. Naturally, because it's so dense, and it's such a mono-industry town, but when you're out in Europe, you kind of need …

AI assessment note: “for us, we go there every, like, six to eight weeks”

Q When we think about, like, preserving ownership, how did the preservation of ownership look like in that?

A So we followed, but, you know, as a twenty-eight million dollar first fund, which is what we were, it's hard to follow your capital, and then we had a weird scenario in that particular company where our pro rata rights got taken away from us, and in the legal documents, they changed the definition of who would get the pro rata, To basically, I mean, basically singling us out. There weren't that many other seed investors that owned above that bar and below the number that they set, and they forgot that we bought common stock from angels, so we kind of politely didn't comment on the legals. And then the next round, we said, we're going to exercise our prorata, and then we were told, you can't, and I was like, yes, we can. Like, you know, and then they realized a mistake, and then they changed it. So, like, we did our prorata in the, the seed round was called an A, so it was named by the letter A, so we did the B and the C. And then we didn't do the D, which is when DSD came in.

AI assessment note: “we did the B and the C. And then we didn't do the D”

Q Why do you think that is? Why have we shifted to this heavy momentum?

A Well, we went into a market where money was effectively free. And the way you get promoted inside of most firms, remember, we are, we are, we're, we're exceptions to the rule, right? Because we own our own firms. Like, these are our businesses, so we think like business owners, not like employees. If you're the general employee, you optimize for getting to the next career ladder, and how do you show that you can get to the next career ladder? You do a deal, and then General Catalyst, or Index, or Kleiner, or Sequoia, or Andreessen, I mean, there are so many of these great firms, mark it up at a significant premium, and then someone else, Tiger, et cetera, marks it up after that, and all of a sudden, Doesn't make a difference if you've not made any money. You look like you've picked a hot company.

AI assessment note: “If you're the general employee, you optimize for getting to the next career ladder”

Q When we think about, like, preserving ownership, how did the preservation of ownership look like in that?

A So we followed, but, you know, as a twenty-eight million dollar first fund, which is what we were, it's hard to follow your capital, and then we had a weird scenario in that particular company where our pro rata rights got taken away from us, and in the legal documents, they changed the definition of who would get the pro rata, To basically, I mean, basically singling us out. There weren't that many other seed investors that owned above that bar and below the number that they set, and they forgot that we bought common stock from angels, so we kind of politely didn't comment on the legals. And then the next round, we said, we're going to exercise our prorata, and then we were told, you can't, and I was like, yes, we can. Like, you know, and then they realized a mistake, and then they changed it. So, like, we did our prorata in the, the seed round was called an A, so it was named by the letter A, so we did the B and the C. And then we didn't do the D, which is when DSD came in.

AI assessment note: “we said, we're going to exercise our prorata”

Q Do you think it was a fair response?

A I do not. I, I reached out to the person who wrote the LinkedIn post multiple times to grab coffee. Before that went out, the day that it went out, after it went out, and I've chased afterwards, and she's never met me. And I feel that's, that's where society has gotten a little bit more toxic. I would have much rather had that debate You can have the debate on LinkedIn, like, and, and call me out. Like, look, if I say something stupid, call me out. Like, I have no problems with that. I can, I can take it. Like, and, and it was a fair criticism, I thought. Um, but then sit down with me and have coffee and let's break bread.

AI assessment note: “I do not. I, I reached out to the person who wrote”

Q I haven't seen these before, so, um, you said 2000 dollars. You split up with your partner, Rob. What actually happened?

A That, that's also an easy one. So, 10 years in, We grew apart. That's what happens. I think as we've gotten success, the nice thing about having success, and we made real money on fund one, even though it was a twenty million dollar fund, we did really well for ourselves personally. You get to build the firm in the way that you want to build it, and the big difference between Rob and myself is Rob wants to build a different type of firm, and we can think about how to make that work within the constructs of Hoxton, but it would be hard, right? You'd have to change the character of the firm You'd almost be like a millennium, where you have people, like, or PMs running their own book, or you could say, go gracefully, go build it, by the way, I'm LP, and Rob's fun, and go do your own thing, and I'll be the first, I'll be the first check in the fund, and you've got the full support, you have no restrictions on trade, et cetera, et cetera, like you, you keep your track record, you keep the LP base, and go do it the way you want to do it, and that's basically what we ended up deciding. It took a, it took us a while to be able to do that, but like, We very much want to build the next generation, bigger, earlier stage firm. Like, we want to be one of those dominant five to 10 firms. I think Rob does not want to do that, and Rob very much wants to build a very science-oriented deep tech …

AI assessment note: “10 years in, We grew apart... Rob wants to build a different type of firm”

Q But that like four is the fun, right?

A Yeah, yeah, yeah. We, we made a lot of money on, on Darktrace, but, but we, you know, we, we should have probably programmatically sold. And so I think the formula that we now have is at the time of the IPO, as soon as you're out of lockup, A third of it you sell, a third of it you sell six months later, and then a third of it you sell another six to 12 months after that. Just make it a formula, because I think there's too much human error in this. Like, and by the way, long term, like, I was right, but the markets and what you think long term don't always like, they don't always map one to one.

AI assessment note: “We made a lot of money on Darktrace, but we should have probably programmatically sold.”

Q Do you not mean there's always a reason to say no to a company? Like there's always a cohort that's off. There's always a conversion rate that's not there. There's always a retention metric that's down. I could, I could throw it down.

A Correct. Which is why we look at like on the aggregate, like if all the cohorts, like if you've missed something, And someone flags it, we generally have a lot of humility inside the firm to be like, yeah, I didn't catch that piece. Like, I get it. I don't know if I really want to do it. But most of our cases go down to the following. I don't think that person's gonna be hired, he's gonna be able to hire very well. It's like, okay, that's like super gray zone, right? How to, how the heck do you disprove, like that, there's no null hypothesis to prove. And in those kinds of cases, we give each other the rope.

AI assessment note: “Correct. Which is why we look at like on the aggregate”

Q Okay. Let's do it. Um, you caused a bit of a furore on, on social with a post about hiring women. What did you say? And what did you mean?

A It is hard to find people to come into a partner only organization, and you require people to be reasonably well-trained. You're taking a chance on them, but you expect them to kind of be able to hit the job running. There are some great women who are very capable. It is hard for me to poach them because they're very well taken care of in their existing funds for very good reasons, because there's a shortage of them. One of my LPs is a woman sat down with me. She's an individual entrepreneur, like, and she's like, the one thing that I didn't think about, and this is a genuine thing that, that, that she really made me reconsider, is I always used to think of us as like a two-year scrappy startup as a fund. Brand new fund, like, 39 months to go raise fund one. It's like, Sketched, and it's like etched in my brain, right? It is like hard, hard yards. You know what? We're 11 years old. We managed a two hundred million dollar fund. As much as I don't like to admit it, like, we're one of the establishment now. Like, we're no longer the scrappy startup. Like, we're establishment. And if there is a shortage of women that I can't recruit from laterally, because they're well taken care of, and there's a shortage of women in the industry, and we know this, it is incumbent upon me, like, morally, like, I have a responsibility To grow the next generation. Because if I can't recruit laterall…

AI assessment note: “if there is a shortage of women that I can't recruit from laterally”

Q Do you think it was a fair response?

A I do not. I, I reached out to the person who wrote the LinkedIn post multiple times to grab coffee. Before that went out, the day that it went out, after it went out, and I've chased afterwards, and she's never met me. And I feel that's, that's where society has gotten a little bit more toxic. I would have much rather had that debate You can have the debate on LinkedIn, like, and, and call me out. Like, look, if I say something stupid, call me out. Like, I have no problems with that. I can, I can take it. Like, and, and it was a fair criticism, I thought. Um, but then sit down with me and have coffee and let's break bread.

AI assessment note: “I do not. I, I reached out to the person who wrote the LinkedIn post”

Q And then your most recent investment, and why you said yes?

A So our most recent investment, uh, is a digital healthcare company that we backed, um, you know, that wants to change the way healthcare works on your phone. It's kind of the same idea as what WebMD and Healtheon did way back in the day. We, we love this kind of stuff. There was a bunch, there were a bunch of great ideas in the nineties that everyone had, which just weren't possible. I mean, we think of Deliveroo and in many ways you think of Cosmo back in the day in New York, which is very well backed company that didn't quite get there. But you know, that was, Pre-smartphone. They couldn't run the logistics network with pagers and with, with, you know, phone calls and pay phone calls. Uh, you can do a lot more with smartphones, but kind of same directional idea. This one's in the healthcare space doing a bunch of artificial intelligence and then a bunch of live video, uh, with physicians, um, basically triaging so you don't actually have to go see your, your NHS GP. You can just simply use an app, uh, and the app will tell you whether something's wrong with you or not. You know, we think this is going to be pretty transformative. If it works, and that's, oh, there's always that big F in, in venture, right? So we're early stage guys. We don't know definitively if something's going to work, but we think, we think the market's definitely there for something like this.

AI assessment note: “our most recent investment, uh, is a digital healthcare company that we backed”

Q Do you not mean there's always a reason to say no to a company? Like there's always a cohort that's off. There's always a conversion rate that's not there. There's always a retention metric that's down. I could, I could throw it down.

A Correct. Which is why we look at like on the aggregate, like if all the cohorts, like if you've missed something, And someone flags it, we generally have a lot of humility inside the firm to be like, yeah, I didn't catch that piece. Like, I get it. I don't know if I really want to do it. But most of our cases go down to the following. I don't think that person's gonna be hired, he's gonna be able to hire very well. It's like, okay, that's like super gray zone, right? How to, how the heck do you disprove, like that, there's no null hypothesis to prove. And in those kinds of cases, we give each other the rope.

AI assessment note: “Correct. Which is why we look at like on the aggregate”