The Exchanges

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 Do you buy venture value add from venture platforms? The BD teams, the hiring teams, the, all the teams that come. I think they're bluntly an excuse for management fees.

A Uh, I think depends what type of company. I mean, I would say, you know, Andreessen Horowitz, uh, was our seed investor. So they invested like basically on a deck for Mercury and a lot of their kind of value add wasn't Super useful. But at the end of the day, I think the two most valuable things to, from like one of these, or any VC firm is, you know, who's the partner, right? Like, is this someone that, you know, every conversation you have, you know, I've been talking to Alex Rampal as our partner over at Andreessen Horowitz. I've been talking to him since 2017, like once a month-ish, right? So imagine doing that with someone who's not value-add, uh, or like annoying to talk to, uh, whereas, you know, he's smart, he's, you know, I love Hearing his take on things and riffing off ideas of him. So, uh, those are the types of people you want as investors. And I think that is by far the biggest thing you're choosing, uh, as an entrepreneur. Uh, and then the second thing, which I think is like under understood by people is you do get like a founder network with the, you know, with the portfolio companies off that VC film, like there's, yeah, Andreessen Horowitz. And I guess now Sequoia actually was just at a, uh, founder networking event with some Sequoia companies. Uh, like these people have valuable networks and. The best VC firms do make us situations where, like, founders can c…

AI assessment note: “a lot of their kind of value add wasn't Super useful”

Q Ok, so I get all those reasons. And so why do we decide to raise twenty six million? Can you talk to me about the thinking behind that?

A So, you know, what's a little unusual about the fund is it's a, it's a fairly diversified fund. The idea is to invest into 60 companies, um, and The reason that works is, you know, we're doing these non-lead checks. You know, that makes sense. Like I'm active CEO. I can't, you know, in all fairness, um, lead around because I just won't have that time, uh, for the company. But also on the other side, I get a lot of deal flow, uh, and the best entrepreneurs want me on their cap table. Uh, but you know, isn't it better if like Sequoia or Founders Fund is leading around and, and I get to invest alongside them because I'm not competing with them. Um, so the average, you know, check size is going to be a 150 K. Um so if you do the math, if you're doing non-lead checks, uh, with, you know, a smallish kind of average check size, you don't want to have a, you know, at least we're targeting a 60, 60, uh, company portfolio. It doesn't make sense to have like a 102 hundred companies in one fund.

AI assessment note: “if you do the math, if you're doing non-lead checks”

Q Iman, what have you strategically not done with Mercury, that with the benefit of hindsight, you think you should have done?

A The data we had at the time, I don't know if we would have done any differently, is, you know, we launched Mercury Banking in 2019, ah, and at that point, you know, I thought the, you know, Brex was the main player in the credit card space, and I was like, hey, we'll do banking, you do credit card, we're all good, and then what happened is, you know, Brex then entered the banking space, ah, And then later Ramp came along and they launched a new credit card. And at that point I was like, okay, that was a little silly that like, we didn't just launch a credit card because you know, it wasn't in some ways the credit card was, was easier than banking because we already had debit cards. So we didn't end up launching our credit card until 2022. Uh, because I was like, let's just focus on banking and like, let's go really deep here. Uh, and I think that was a mistake. Like we could have launched our version You know, in 2020 probably, uh, like we, we instead worked on some other products. Um, so in hindsight, I think we, we waited too long to, to launch that second product, and we decided to kind of focus longer on banking, and you know, it wasn't like a mistake that couldn't be corrected, like we did launch in 2022, and now Mercury, uh, for Mercury customers, Mercury credit card is bigger than, um, all the other kind of corporate credit cards, uh, on the platform, but it was, you kno…

AI assessment note: “in hindsight, I think we, we waited too long to, to launch that second product”

Q Do you prefer it when they are new to a market, bringing fresh ideas, naivety in some respects, or when they are seasoned pros coming out of the market with 10 years experience?

A I think both can work, but my preferences on naivety, I feel like, um, you know, I, when I did Mercury, I didn't know anything about fintech or banking. And, uh, yeah, I knew that entrepreneurs would use this product and I would use the product, but, but I was like, how does one go set up a new bank? Right. And that's what most of my first kind of one year of education was, was just going super deep on like, how do you even do this? But I genuinely think actually like my seed round, uh, and recent Horowitz invested, but It was very hard. Even after Andreessen had come in with a lead check, it was so hard to get any fintech fund to invest alongside them because all fintech funds saw was like all the problems. They were like, this doesn't work for this reason and that reason. And I was like, I was like, I really wanted them as well because I was like, oh yeah, they're going to have like this deep fintech expertise that I really am lacking, but super hard to get them on board. I mean, I did get a bunch of fintech entrepreneurs on board, but could not get a fintech and a dedicated seed fund on board, which like in hindsight is ironic. Uh, But yeah, you really need to have like that outsider perspective most of the time to be successful.

AI assessment note: “I think both can work, but my preferences on naivety”

Q That's a miss for many of those investors. When you reflect on your angel misses, what's the biggest miss for you? And how did that impact how you think about investing?

A Um, actually, like I talked about it earlier, uh, you know, looking at young founders and saying like, why don't they have these things figured out? Uh, yeah, I looked, I was, I was a part-time partner at the time. So, you know, I, I saw scale AI, uh, and I was like, okay, you know, like good idea, but these people are so young. I think they were like 19 and 20 at the time or something. I was like, yeah, this is like, I was like, I think I could run this company better if I was doing it and I don't see how they're going to figure it out. And I was just So wrong, uh, because obviously there was, yeah, they proved me wrong, but also, like, I think there is, like, some power to that youth that, like, I think it's, like, hard to judge, to be honest. Like, you kind of have to yourself suspend belief to say, okay, you know, this person's gonna figure out how to run, like, a huge company.

AI assessment note: “I saw scale AI... you kind of have to yourself suspend belief”

Q Totally agree with you there. So yes, you mentioned space tech. Dude, you're literally having to go to another planet. To find the deal. I mean, literally, and I know nothing about space tech. No offense. Do you know much about space? I feel like, can you help me actually? Just fuck it. Help me.

A How I think about is when I enter a new space that I don't know that much about, I will make a couple of investments and I'll try to learn from them. So I made my first space investment, I think, 2016 or 17. It was momentous space. Uh, they ended up doing a SPAC that didn't work out, but, but when you make a few investments and you, you know, to make one or two investments, you end up speaking to maybe 10 people, right? So, uh, and these people tend to be like, you know, they're at the edge of their space. Uh, yeah, it's like people from SpaceX and Blue Origin. So you, you end up like learning quickly about like, okay, what are the markets? Uh, and the thing about space that, you know, maybe is unobvious is like, it's, it's no longer that hard to get into space, right? Like SpaceX is very repeatable. Like these people are not doing space. Well, they are doing difficult hardware things, but they're not doing scientifically impossible things, right? They're literally saying, like, hey, I'm going to put a computer in, like, in a satellite, I'm going to put it on space. So, it is tricky, though. Like, there's three, I don't know how deep you want to go in space tech here, but there's, like, basically three existing markets in space tech. There's rockets, right? Like, getting things up and down, which obviously SpaceX dominates. There's taking pictures from space, um, and That's act…

AI assessment note: “there's, like, basically three existing markets in space tech. There's rockets”

Q Iman, what have you strategically not done with Mercury, that with the benefit of hindsight, you think you should have done?

A The data we had at the time, I don't know if we would have done any differently, is, you know, we launched Mercury Banking in 2019, ah, and at that point, you know, I thought the, you know, Brex was the main player in the credit card space, and I was like, hey, we'll do banking, you do credit card, we're all good, and then what happened is, you know, Brex then entered the banking space, ah, And then later Ramp came along and they launched a new credit card. And at that point I was like, okay, that was a little silly that like, we didn't just launch a credit card because you know, it wasn't in some ways the credit card was, was easier than banking because we already had debit cards. So we didn't end up launching our credit card until 2022. Uh, because I was like, let's just focus on banking and like, let's go really deep here. Uh, and I think that was a mistake. Like we could have launched our version You know, in 2020 probably, uh, like we, we instead worked on some other products. Um, so in hindsight, I think we, we waited too long to, to launch that second product, and we decided to kind of focus longer on banking, and you know, it wasn't like a mistake that couldn't be corrected, like we did launch in 2022, and now Mercury, uh, for Mercury customers, Mercury credit card is bigger than, um, all the other kind of corporate credit cards, uh, on the platform, but it was, you kno…

AI assessment note: “in hindsight, I think we, we waited too long to, to launch that second product”

Q Final one for me, Imad. Can you paint the bull case for Mercury being a hundred billion dollar company?

A Um, I mean, we're in like these two huge markets, right? Like banking in the U S is a two trillion dollar market. Uh, and then kind of financial software tools is like another five hundred billion dollar market. Uh, and to me, these two markets should be the same market. Like you, you have your bank account. That's where you do invoicing. That's where you do bill pay. That's where your credit card and employee spend tools are. I think it's the only reason these markets are separate markets is because Banks don't know how to build software, right? So I think in 10 years time, it'll be obvious that like, oh yeah, your, your bank is really powerful, and it can do all of these things, and it's all fully integrated. So, uh, yeah, that's just a freaking huge opportunity, and I, you know, that's, like, that's just the US, right? Like, there's, there's a global opportunity around it. There's, like, lots of different types of businesses, lots of consumer kind of, uh, financial stuff as well. So, yeah, I think this opportunity is, like, so, uh, Ridiculously huge. That's why I like, you know, when you are like, oh, it's so competitive. I'm like, I don't know. I mean, I like for how big this opportunity is. I'm always like, this seems very uncompetitive, right? If you think about like all the B to B SaaS companies out there, there's like thousands and that market is smaller than this marke…

AI assessment note: “banking in the U S is a two trillion dollar market”

Q Do you prefer it when they are new to a market, bringing fresh ideas, naivety in some respects, or when they are seasoned pros coming out of the market with 10 years experience?

A I think both can work, but my preferences on naivety, I feel like, um, you know, I, when I did Mercury, I didn't know anything about fintech or banking. And, uh, yeah, I knew that entrepreneurs would use this product and I would use the product, but, but I was like, how does one go set up a new bank? Right. And that's what most of my first kind of one year of education was, was just going super deep on like, how do you even do this? But I genuinely think actually like my seed round, uh, and recent Horowitz invested, but It was very hard. Even after Andreessen had come in with a lead check, it was so hard to get any fintech fund to invest alongside them because all fintech funds saw was like all the problems. They were like, this doesn't work for this reason and that reason. And I was like, I was like, I really wanted them as well because I was like, oh yeah, they're going to have like this deep fintech expertise that I really am lacking, but super hard to get them on board. I mean, I did get a bunch of fintech entrepreneurs on board, but could not get a fintech and a dedicated seed fund on board, which like in hindsight is ironic. Uh, But yeah, you really need to have like that outsider perspective most of the time to be successful.

AI assessment note: “you really need to have like that outsider perspective most of the time to be successful.”

Q If I were to push you to give one piece of advice to another founder who wants to start angel investing, what would that piece of advice be? So, for example, I'd say, hey, make sure you write the same size check every time. You don't have different levels of conviction just every time.

A I mean, you know, one thing, um, is, yeah, this is a rich person's game, sadly. Like, I didn't start investing until I had made an exit, and I think Doing like one or two is not going to make a difference. Like I think, so mostly I say to people, hey, if you have enough money, I mean, we're not talking about a ton of money, but if you have enough money to do at least 20 or 30 investments, that's when you start entering the game. Because, uh, A, you learn a lot by like doing subsequent ones, and you know, uh, if you're only doing like five, you're not going to have this kind of iteration. Uh, B, you just, You need a diversified portfolio to have any return in this space because, like, what we're really doing as seed investors is unicorn hunting, or I would say even, like, at these current evaluations, like, you're, you're hunting for decacorns, and that doesn't, yeah, even if you're great at picking and you have a great, um, network, et cetera, uh, you're not gonna get to them with, like, five pets, uh, like, you need a portfolio of pets.

AI assessment note: “if you have enough money to do at least 20 or 30 investments”

Q My question to you, my friend is the angel investing is going so well. Amazing track. 350. And then we're like, you know what, we're gonna do a fund. Why is that? What was the decision making process for you from transitioning from angel to fund?

A There was kind of two factors for me that drove it, um, maybe three. Um, number one, I had a bunch of LPs recently approached me saying, you know, like, we're not gonna put money in your angel list thing, but if you set up a fund, we will back you. Secondly, I, you know, my deal flow kind of went up another level when like, you know, now that like, 30 to 40% of, like, all startups use Mercury. Like, everyone knows about me, and then, you know, that, that tends to mean that a lot of people want me to invest, and, you know, I got to a level where I just can't look at all of these things, so I really wanted to work with someone, ah, on, on the, on the deals and on the fund. Like, I, I don't like doing things badly, and I felt like I was being a bad angel investor, because if I can't even look at all the things that are coming, coming at me, like, how can I do a good job of it?

AI assessment note: “There was kind of two factors for me that drove it, um, maybe three.”

Q Do you think we have no defensibility anymore? And what I mean by that is you see people very quickly moving from, you know, a cursor to a windsurf, and it seems like the moat or switching cost is almost replaced now. Do you think we've lost moats?

A I mean, we're still in the kind of flashlight slash fart apps era of, of AI, if you know what I mean. There's going to be so much change and churn in the next few years, but Yeah. Eventually things will settle down and then we'll have the same defensibility that like SaaS apps and other things have had forever, which is like, you know, what's the strongest brand? Uh, and like, who do people say like, Hey, I love this thing. I used it forever, et cetera. Uh, and that brand and is going to be able to continue investing more and more in the product because they've, you know, they've consolidated the market position and they can like keep improving the product and they'll become multi-product. And now, now you're getting like two or three things from the same place. Uh, and you know, that's sticky in its own way. And they built up the enterprise connections, et cetera. We're just in this place right now where like, no one knows anything. Everyone's trying to try everything, but I don't see why like the, the same things that like allowed people to create like big companies like HubSpot and Salesforce, et cetera. I think most of those things will exist with, with the modern AI stuff. Uh, we're just in this like moment of like extreme change.

AI assessment note: “Eventually things will settle down and then we'll have the same defensibility”

Q Did you take cash off the table on any of them, and any thoughts on proactive secondary selling?

A Well, I guess I won't name the company, but there was a company where, like, SoftBank came in with, like, this crazy number, and, you know, they offered everyone a secondary, and I was like, you know, if SoftBank's doing it, I should probably take some money off the table. So I did do it. In hindsight, I probably should have done more. But, you know, I'm really aligned with, like, let's go long. Like, I don't, I don't need the money. I'm in it for I'm in it for the game as it was, and I do think, you know, these kind of compounders, uh, like Airtable, uh, you know, like, like there's companies I'm in where I'm like, okay, I can see this being a fifty billion dollar company, and if I just stick with it for, you know, maybe it's 15 years instead of, uh, 10 years, uh, yeah, that return will, will be worth it.

AI assessment note: “So I did do it. In hindsight, I probably should have done more.”

Q Unbelievable angel portfolio. What are the biggest lessons that you have from 350 angel investments?

A You know, number one, I think this is kind of something that, uh, entrepreneurs that have been, that are, especially if you're active entrepreneur, but once you become an investor, you think you, you, you're used to running a company, used to having your ideas. And what you do at the start is you're like, okay, you know, yes, you're talking about something really interesting, but here's another idea that I think is way better. And then, and then the other entrepreneurs, especially if they're young, they're like, yeah, I love this. Yeah. You know, like, please invest. You know, we love what your idea is. And then you invest, and obviously, like, that's not their idea, and, you know, it's not even fair to push an idea on other people, but you really have to actually remove your ego and your ideas and really listen to what they want to do, and, you know, you're much more, you're much more along for their journey rather than, like, a major part, and actually, when I first started investing, so I sold my company in I started investing and that's kind of what was my approach. I was like, oh, I'll be really hands on. I'll be really helpful. Uh, and then I realized actually Rappi was one of my first investments. Uh, Rappi is like a door dash for LADAM. Yeah. I literally invested and they did not talk to me again. Like they were just so busy and they grew that thing like crazy. And it w…

AI assessment note: “you really have to actually remove your ego and your ideas and really listen”

Q What do you know now that you wish you'd known when you started?

A Yeah, one thing that has been really powerful at Mercury, and I tell every entrepreneur to do this, is like first thing when there's like three or four people, write down what is your company culture. And like, you know, we wrote down like six attributes and these things have to be like things that, you know, have some trade-offs to them. Like, you know, and you're going to go, like the hardest one is, you know, we, we look for humble people, uh, and Often, yeah, especially, like, really successful people aren't very humble, uh, and you have to kind of make that trade-off. You're like, oh, this is, like, a successful exec, and they seem great, but, like, they just have a massive ego, and we never hire those people, uh, but we wrote that down, like, day one, and we've always talked to it, and we came up with, like, you know, we had these six attributes, and we came up with, like, interview questions against them, and we've always encouraged them internally, and it's really helped build, you know, even at, like, a Yeah. Near a thousand people. We have this like really strong cohesive culture, but it's because we did a day zero and it's very hard to do it later.

AI assessment note: “first thing when there's like three or four people, write down what is your company culture”

Q vision on them too forcefully or too, um, actionably. I would see it as a big red flag in If I put my views across and they're like, oh, that's a good idea. That's a better idea. And they run with it. I want someone to say, no, no, you're wrong. And here's three reasons why. Do you agree that if they listen too much, it's almost a red flag?

A So this is actually another mistake I made. I think sometimes we, um, If you're a second time entrepreneur and you, you have experience, you, when you talk to an entrepreneur investor, you're like, yeah, well, what the fuck are you talking about? Like this is obviously wrong for these reasons, but there's a lot of young entrepreneurs out there that have great ideas, right? Like I think, I mean, I was young once obviously, but, uh, I have actually like not invested in companies because I was like, okay, you know, these people are not pushing back on me and they're not, you know, they're not coming up with like a ton of experience and ideas and actually, Yeah, they were just young entrepreneurs and they were often as young entrepreneurs, you're intimidated by investors. So I think, I think you have to kind of judge people by what their life situation is and like, you know, how they are approaching the situation. And you do have to kind of cut some slack to kind of people who are new to their career rather than saying like, oh, you know, they didn't push back on me and they should have, et cetera.

AI assessment note: “So this is actually another mistake I made.”

Q You said about Rappi, brilliant, fast growing company to a unicorn status, and they didn't call you. It makes me think of Keith Raboi, who's like the best founders. They don't need you. And he's talking specifically about that. Do you agree with that statement?

A Yeah, I mean, they definitely don't need me. Uh, I think it's very rare. And, you know, I have at Mercury, I had like seven or eight, uh, kind of unicorn founders that invested in Mercury and, you know, I didn't need them, but because they are active entrepreneurs and, you know, every now and then I have a question. I'm like, I'm hiring a CFO. How do I hire a CFO? I've never done this before. Or like when I did a series B, I was like, I don't know what are the multiples in like series B spaces and like, you know, tell me about it. So I did, I did contact them. So, uh, and this is kind of how I see my role as an investor. It's like, you don't need me, but you know, I'm an active entrepreneur. I've got a big company. I've dealt with a lot of issues. If something comes up, you know, send me a text. Now, if I have time, I'll talk to you. Uh, uh, So that's kind of the, you know, the balance to it.

AI assessment note: “Yeah, I mean, they definitely don't need me.”

Q Do you buy venture value add from venture platforms? The BD teams, the hiring teams, the, all the teams that come. I think they're bluntly an excuse for management fees.

A Uh, I think depends what type of company. I mean, I would say, you know, Andreessen Horowitz, uh, was our seed investor. So they invested like basically on a deck for Mercury and a lot of their kind of value add wasn't Super useful. But at the end of the day, I think the two most valuable things to, from like one of these, or any VC firm is, you know, who's the partner, right? Like, is this someone that, you know, every conversation you have, you know, I've been talking to Alex Rampal as our partner over at Andreessen Horowitz. I've been talking to him since 2017, like once a month-ish, right? So imagine doing that with someone who's not value-add, uh, or like annoying to talk to, uh, whereas, you know, he's smart, he's, you know, I love Hearing his take on things and riffing off ideas of him. So, uh, those are the types of people you want as investors. And I think that is by far the biggest thing you're choosing, uh, as an entrepreneur. Uh, and then the second thing, which I think is like under understood by people is you do get like a founder network with the, you know, with the portfolio companies off that VC film, like there's, yeah, Andreessen Horowitz. And I guess now Sequoia actually was just at a, uh, founder networking event with some Sequoia companies. Uh, like these people have valuable networks and. The best VC firms do make us situations where, like, founders can c…

AI assessment note: “a lot of their kind of value add wasn't Super useful.”

Q If I were to push you to give one piece of advice to another founder who wants to start angel investing, what would that piece of advice be? So, for example, I'd say, hey, make sure you write the same size check every time. You don't have different levels of conviction just every time.

A I mean, you know, one thing, um, is, yeah, this is a rich person's game, sadly. Like, I didn't start investing until I had made an exit, and I think Doing like one or two is not going to make a difference. Like I think, so mostly I say to people, hey, if you have enough money, I mean, we're not talking about a ton of money, but if you have enough money to do at least 20 or 30 investments, that's when you start entering the game. Because, uh, A, you learn a lot by like doing subsequent ones, and you know, uh, if you're only doing like five, you're not going to have this kind of iteration. Uh, B, you just, You need a diversified portfolio to have any return in this space because, like, what we're really doing as seed investors is unicorn hunting, or I would say even, like, at these current evaluations, like, you're, you're hunting for decacorns, and that doesn't, yeah, even if you're great at picking and you have a great, um, network, et cetera, uh, you're not gonna get to them with, like, five pets, uh, like, you need a portfolio of pets.

AI assessment note: “if you have enough money to do at least 20 or 30 investments”

Q Totally. Does revenue mean less than ever before? Given the transience of it, the lower quality of revenue that we apply to kind of revenue today, does revenue mean less than before?

A I think it really matters on what's, what type of revenue it is, right? Like, I think, I think the revenue that What I am like most skeptical on right now is, uh, this kind of labor replacement revenue, right? Like you, uh, you take AI and it's like, Hey, we're going to be a third of your labor cost. Just install us. Uh, and, and, you know, initially people see the ROI. They're like, Oh wow. Like, you know, I get something for a third of the price and maybe it's slightly worse in some situations, but I still have like humans as back off. Uh, but it's just like an obvious cost saving. Everyone will do it. Uh, the reason that's particularly transient is, you know, Especially in this environment, you're going to have three or four competitors also selling you that same thing. Uh, and eventually a company is going to go like, okay, this actually worked, right? But this competitor is doing it half the price because like the cost basis of the software is way lower than a third of the cost. So, uh, yeah, the sell that like VCs get and entrepreneurs are making is, oh, we're replacing your labor costs. Therefore, we should charge a third of that. But the reality is, once you have a competitive market dynamic, like, the actual margins are going to compress massively, and we'll end up on, like, a 10th, or maybe even a 20th of the labor cost as, like, actual eventual revenue. And, you know…

AI assessment note: “I think it really matters on what's, what type of revenue it is”

Q Do you think we have no defensibility anymore? And what I mean by that is you see people very quickly moving from, you know, a cursor to a windsurf, and it seems like the moat or switching cost is almost replaced now. Do you think we've lost moats?

A I mean, we're still in the kind of flashlight slash fart apps era of, of AI, if you know what I mean. There's going to be so much change and churn in the next few years, but Yeah. Eventually things will settle down and then we'll have the same defensibility that like SaaS apps and other things have had forever, which is like, you know, what's the strongest brand? Uh, and like, who do people say like, Hey, I love this thing. I used it forever, et cetera. Uh, and that brand and is going to be able to continue investing more and more in the product because they've, you know, they've consolidated the market position and they can like keep improving the product and they'll become multi-product. And now, now you're getting like two or three things from the same place. Uh, and you know, that's sticky in its own way. And they built up the enterprise connections, et cetera. We're just in this place right now where like, no one knows anything. Everyone's trying to try everything, but I don't see why like the, the same things that like allowed people to create like big companies like HubSpot and Salesforce, et cetera. I think most of those things will exist with, with the modern AI stuff. Uh, we're just in this like moment of like extreme change.

AI assessment note: “Eventually things will settle down and then we'll have the same defensibility”

Q How do you think about competition? You are in the most competitive environment now, as you see with Brax, with Ramp, and with you, all very well funded, all doing very well. Like, ironically, there's not one that's like, Not doing well. How do you think about competition when you go to sleep at night?

A I have two responses. Number one, yeah, I've been doing startups since 2006 and every single year there's been some competitor that was like better funded, that was, you know, seemed really scary. And honestly, 99% of the time it didn't matter. Like what mattered is just like focusing on customers, building a great product and Uh, you know, most of the time, if we failed, we all failed because it was a bad market, and, and if we succeeded, it's because we did our own thing, and we just, like, listened to customers and had that long-term vision. Uh, so I think it's really dangerous to be very competitor-focused. Like, I don't, you know, I actually don't let our team speak about competitors very much. I'm just like, hey, you know, if you have something you want to do, tell me why the customer wants it. Tell me why it's, like, part of the long-term vision of the product. But if, if anyone says, like, we should do this because, like, Someone else did it. I'm like, I don't care. Like, it's not, this is not a reason we do anything at Mercury. Uh, so that's one thing. I think most of the time it really doesn't matter. And if you're copying someone, you're copying their mistakes as well as the, the successes.

AI assessment note: “I think it's really dangerous to be very competitor-focused.”

Q programming language element there. But I do want to touch on one other thing that's changed since the first time, and it's when I spoke to Tom at Augusto, He said, when you started Hayes Act, you were single. Today, you're married with two children. So how is that different, and what advice would you give for parent entrepreneurs in terms of navigating that entrepreneurship journey as a family man?

A Yeah, I mean, it was definitely hard. I had a kid relatively early. I guess I was like, 27, and especially in San Francisco, that's extremely early to have a child, and it felt abnormal, and it felt like, oh, you know, I was sacrificing my startup for my child or something. Like, It felt like a comparison, but one thing that really helped me was we were funded by Union Square Ventures, and the average founder at Union Square Ventures is older, and more than half of them already had kids, so getting outside San Francisco, Y Combinator, at the time Y Combinator was very young as well, so getting outside that and seeing these other founders with kids and it being completely normal helped a lot. You know, at the end of the day, especially if you're thinking of this as a long-term journey, and has that been on for eight years, I think Mercury will go on for hopefully longer, and Then people are going to go through all sorts of life situations, and it's not about working 10% more hours or working the weekends. It's much more about having a sustainable level where everyone's productive, everyone's leveraged. And the reality is, you know, at Hazel, I'm sure I woke up at nine a.m., and I was on my computer, and I went to sleep at midnight, and I was on my computer, but it wasn't a hundred percent productive, right? There's only so much programming or work you can do that's productive in…

AI assessment note: “It's much more about having a sustainable level where everyone's productive”

Q piece, and it was going to be in the quick fire, but I thought it was too good a moment to actually not take advantage of. You mentioned the investor update there as kind of that great inflection point where you can learn from the founder themselves and the company. In terms of investor updates, what makes the best and what makes the worst? What are your thoughts towards this?

A I think with investor updates and talking to investors, especially, like, ones that are already in, like, Honesty and transparency is like the bad things that make it good. I think it's just, and I did this a lot in my early entrepreneurial career. It's just very tempting to sugarcoat things, portray the best kind of view on things. And at the end of the day, how can someone be helpful if they don't know the full picture, right? So I think if you're not starting from the initial view of I'm going to be honest, transparent, say actual problems, then you've like already failed. So that's part one. I think doing it at a consistent frequency, I do every two months. I like every two months, but every month is fine. Everything Three months, I think is okay, although it feels like people get disconnected. Consistency is important, and then being consistent with metrics you could give and being, delivering the right metrics. And then part of the honesty, I think I like a framework of, like, what's going right, what's going wrong, and a discussion and, like, some of the things that are important to you. That's the framework I like, but there's lots of ways to do it, as long as you can convey that kind of thing.

AI assessment note: “Honesty and transparency is like the bad things that make it good.”

Q Is the age of chasing unicorns over? You said they're hunting for dacacorns.

A Yeah, I mean, you can do the math, but like, if your entry price is like, 20, 25 mil, uh, you know, after you get that dilution, uh, you know, unicorn, like, sometimes it's like, I've seen as low as, like, eight X return from, like, a seed stage investment to unicorn, which I'm like, this is awful. I mean, obviously, there's also, you can get, like, 30, 40 X there, uh, but yeah, I think if your entry price, Price is like that. You're mostly like unicorns, like you need a few of those, but you really want to get like a ten billion plus to, to have like an outsized return. Like I want, you know, I'm not happy to get like a two X or three X. Like I want to have a 10 X fund. Uh, and that's not going to happen with unicorns.

AI assessment note: “you really want to get like a ten billion plus to, to have like an outsized return”

Q Um, and it's six, six, six companies in that. You're a pretty busy guy. You run an amazing company already. When a founder takes the check from you, they do expect to be able to have you return their calls. How do you think about gating IMAD and preventing a free-for-all?

A Honestly, I am so surprised how considerate people are. And I wish they would actually ask more for help. So normally I'm like, Hey, here's my phone number. Just text me if anything comes up. Uh, and most of the time you can actually be pretty helpful in like a 10 minute conversation. And, you know, I can slot that in most times. So I would say I ended up speaking to an entrepreneur maybe three or four times a week. But like, I think one thing that people don't understand about time is like, time is about energy, not time. Right? Like, there are things that, like, drain your energy, and those are hard to do, and they, like, suck up time, and then there's things that are fun. Like, I, I love talking to entrepreneurs and helping them out. So, like, it doesn't, like, I can do that, like, I'm literally, like, I'll go for a walk to, like, go get lunch, and I'll just, like, talk to an entrepreneur, and it's, like, so easy, and it's, like, it's just, like, having a chat with a friend.

AI assessment note: “Honestly, I am so surprised how considerate people are.”

Q What was the biggest surprise of fundraising for a fund?

A Maybe this is a little harsh. It's, it's boring. It's very boring, uh, because you, like, obviously, when you're pitching a company, you're saying the same story again and again, but, like, you do learn something from the questions you get asked, and, like, you kind of do change the story over time. Like, I would feel, I feel like pitching a fund, like, there's not much to learn in the process. It's very much, like, do a bunch of, like, very repetitive, repetitive meetings. I don't know if that's Surprising. I'm sure you know this, but yeah, I was like less fulfilling than I wanted it to be. Like, I wanted to go like, oh yeah, I'm going to speak to some smart people and learn something, but I was like, okay, you know, it's like, I didn't feel like I really got that much out of it beyond like doing the process.

AI assessment note: “It's, it's boring. It's very boring”

Q Did you feel you had something to prove after your first?

A Oh yeah, a hundred percent. I mean, our exit was forty-five million, but it was a real struggle. We pivoted four times. Uh, and for me, like, I just really wanted to build a big company. Like, I just, like, I've been an entrepreneur forever. Like, I want to, I want to have the biggest impact possible, but it is irrational, right? I, you know, there's, being an entrepreneur is irrational, but being a serial entrepreneur is especially irrational because at least the first time you can kind of blame your naivety. Uh, but yeah, if you, if, That's actually one of the qualifying criteria, right? Like a zero entrepreneur like knows how hard it's going to be, but they're willing to do it again, right? That is like so unusual by itself, uh, that like you have to, you have to kind of go, okay, you know, like they must really want to do this.

AI assessment note: “Oh yeah, a hundred percent. I mean, our exit was forty-five million”

Q How do you expect venture to change in the next five to 10 years?

A I mean, it seems inevitable that a few of these multi-stage funds will IPO and be public companies, right? Like we had some, some stuff about GC doing it. Yeah. I think that's just going to happen. And yeah, I actually think more and more money is going to come to this space, which like ironically, you know, we all, I think we as investors are like, oh, be better if there's less competition, less money. But, but I think the big changes, right? Like these companies are huge now. Right? We have trillion dollar companies, right? When I started investing, a hundred billion dollar company was huge. Uh, so the end results are so big that people want, uh, want to put money, more money in the space. And yeah, I know we're in a current liquidity glut, but that, I think that will work out through the system. So yeah, probably bigger multistage funds and, uh, more, uh, and they're public. Uh, Yeah. I don't, I think the, the bit that's probably hard is, you know, there's this kind of idea of like the barbell kind of stuff, right? The people like, uh, me that are investing kind of smaller checks, like we'll do fine and the multistage ones will do fine. I don't know what happens in the middle. Uh, I think the middle will have more of an issue.

AI assessment note: “it seems inevitable that a few of these multi-stage funds will IPO”