The Exchanges

Q Kevin, bit of a weird one, but when I go across your career, there's so many incredible companies. I know it's hard. What do you consider your biggest success?

A Unfortunately, there's a couple of different dimensions that the monetary, uh, answer is Mongo by far, you know, Mongo's worth twenty five billion dollars. There's only two companies started in the last 30 years in New York that are worth twenty five billion dollars. So that is a, you know, big, big success. And still growing, and I think we'll be a fifty billion dollar company someday. You know, DoubleThink was the most impactful for me. I was 32. I had never managed more than 40 people. You know, four years after the beginning, I was managing 2000 people in 25 countries. We went public 20, 24 months after we started. We did 10 acquisitions during that time. I learned a tremendous amount and had an incredible experience. So that was the most impactful in setting up my entire career. Actually, Business Insider was probably the product I enjoyed the most, because I just love business news, I love media, and I love that challenge of, you know, if I said to you, ah, I'll give you a million dollars, you have two people, I want you to start a media company, you can never advertise. You can never spend one dollar in advertising, but ideally you'll end up with three hundred million uniques. Uh, go. I think you'd say, that's awfully hard, and that's exactly what we did. And so, uh, that was very fulfilling. And then the final answer is guilt was the most fun because I didn't know anyth…

AI assessment note: “there's a couple of different dimensions that the monetary, uh, answer is Mongo by far”

Q Did you question whether it would work three years in no revenues? I can't remember how many years you said earlier, but nine or 10 years in no profits.

A So nine years in, yeah, I knew it was working. There was no problem. Three years in, we were nervous because, uh, we just, we couldn't charge for it yet. It was getting better and better. We knew the industry was very big. We knew there was an opportunity. We knew Oracle was too expensive, and we knew that a non-relational database was a good idea. But, you know, you can also just run out of money at some point. We didn't have incredibly successful fundraisers during that time. Uh, but what you could see is that if I showed you one chart, which is how many people are downloading the Mongo database, that was just a straight line going up to the right. All over the world. And as long as that kept happening, we thought we were onto something.

AI assessment note: “Three years in, we were nervous because, uh, we just, we couldn't charge”

Q What did you, sorry, I'm just fascinated on that one. So it made up, you buy for like 10. It was like a distress sale from like a distressed seller at the time who just wanted to get rid. Did you do much to the asset or was it just a unique buying opportunity?

A So both. It was a unique buying opportunity. No one would touch the company because COVID had just started and you couldn't meet the CEO. And we weren't used to doing everything by Zoom at the time. Who buys a company when you can't meet the management team? No one. Except that the CEO, David Siegel, who's incredible, worked for me at DoubleClick 20 years before. So I knew him. And he had been reaching out to me asking about the, the business during the six months before just as a mentor. And finally he said, God, they're panicking. I don't know. I think they're gonna shut it down or give it away. I said, wait a second. You know, why don't, why don't I buy it? So I got one or two other investors Bought it. Um, but we also went from a 130 people the day I bought it to 90 people a week later, which is the right amount. Today it has probably 80, or when we sold it had 82 people, and it went from a twenty million dollar loss on thirty-two million in revenue, the, when we work owned it the year before, to now we're making five or six million dollars in profits. It's a great business. So David did a great job. Uh, team was good. We ran it well. That's not the normal thing we do. It was just a one-off situation. It was a brand I knew I'd known for 20 years. Uh, it was based in New York, and I knew David, so it made sense.

AI assessment note: “So both. It was a unique buying opportunity.”

Q Kevin, bit of a weird one, but when I go across your career, there's so many incredible companies. I know it's hard. What do you consider your biggest success?

A Unfortunately, there's a couple of different dimensions that the monetary, uh, answer is Mongo by far, you know, Mongo's worth twenty five billion dollars. There's only two companies started in the last 30 years in New York that are worth twenty five billion dollars. So that is a, you know, big, big success. And still growing, and I think we'll be a fifty billion dollar company someday. You know, DoubleThink was the most impactful for me. I was 32. I had never managed more than 40 people. You know, four years after the beginning, I was managing 2000 people in 25 countries. We went public 20, 24 months after we started. We did 10 acquisitions during that time. I learned a tremendous amount and had an incredible experience. So that was the most impactful in setting up my entire career. Actually, Business Insider was probably the product I enjoyed the most, because I just love business news, I love media, and I love that challenge of, you know, if I said to you, ah, I'll give you a million dollars, you have two people, I want you to start a media company, you can never advertise. You can never spend one dollar in advertising, but ideally you'll end up with three hundred million uniques. Uh, go. I think you'd say, that's awfully hard, and that's exactly what we did. And so, uh, that was very fulfilling. And then the final answer is guilt was the most fun because I didn't know anyth…

AI assessment note: “the monetary, uh, answer is Mongo by far, you know, Mongo's worth twenty five billion”

Q On the business side, what was one or two of the biggest business lessons?

A So this doesn't apply to every company, but we moved faster than everyone else, and so we started at the same time as some other people, but we were able to raise more money. People believed in what we were doing. We spent the money. We took the chance, but to open 25 offices in 25 countries before your first country is profitable, In retrospect is a bold move. Now, what was the result of that? If you were, uh, Procter & Gamble or Microsoft, and you have operations in 50 countries, we at least had offices in your 25 biggest countries, and my competitor was only in six, who are you gonna work with? You're gonna work with us. The reason today, which is literally more than 25 years later, that DoubleClick, which is part of Google, dominates the world in ad technology is because we won the battle of the first five years. By moving faster, more aggressively, took chances, made some mistakes, and have never given up that position ever since.

AI assessment note: “By moving faster, more aggressively, took chances, made some mistakes”

Q they've fucked up before as well, which means they should have learned the lessons last time. Now they'll make new mistakes, of course, but they won't make some pretty obvious ones. How do you feel about the, you said earlier, we like to back first time founders. Am I wrong in terms of my thesis on serial entrepreneurs and that heavy preference there? And how do you think about that?

A Yeah. So in, again, if we look back at consumer businesses, you know, out of the top 25 companies, how many were serial entrepreneurs? Almost zero. Almost zero. Yeah. You know, so the energy level of someone working 80 hours a week, feeling slightly nervous that they don't know how to do the job, you know, listening to other people because they've never done it before, there's a lot of value in that. By the way, you'll see in enterprise software more of a pattern of repeat entrepreneurs, also on average slightly older. You know, you don't, 24 year olds have trouble starting a database company and building up an enterprise sales force Meeting with the CEO of, or the CTO of Goldman Sachs to close that deal. It really doesn't happen that often. So, industries are different. It depends whether the industry knowledge, experience, and credibility is extremely important to success. And in consumer, it isn't because I just go look at your app and I like it. I don't really care whether you're 10 years old or 50 years old.

AI assessment note: “if we look back at consumer businesses... how many were serial entrepreneurs? Almost zero.”

Q It's a tough one. It happens. I do want to discuss the new fund, speaking of investors and putting money in. So can you share the news with us that I think came out yesterday? So let's start there.

A Sure. Yeah, no, we've, uh, first time, you know, we've been investing, uh, really my money in a, in a different structure for the last decade, and, you know, we have, uh, a 120 companies in the portfolio, uh, have made many investments, started over 20 companies, but we just announced that we, it's the first outside fund with outside investors, so we've raised a two hundred and fifty million dollar fund to continue doing what we're doing, uh, and continue to both start companies and invest in companies Largely on the East Coast in New York, but not only heavily healthcare, heavily tech, robotics, and social impact. So super excited. And, uh, it's, uh, it's, it's a great time.

AI assessment note: “we've raised a two hundred and fifty million dollar fund”

Q Okay, so we both are in the people selection business. I have this weird thesis that the best people always show early signs of exceptionalism. No one comes out of McKinsey at 28 and suddenly becomes exceptional. They show it in their early years. Do you agree with that? And do you think that the best do show early signs of exceptionalism always?

A So we have to define exceptionalism, and we have to think about also not just a job. I think people make a mistake in only looking at the extreme. So yeah, like, oh, Mark Zuckerberg, age 19, you know, dropped out of Harvard, was entrepreneurial. You know, the vast majority of successful CEOs of, of companies are people who, you know, went to good colleges, did well, exceptional, exceptional in that way, may have done two years at McKinsey, um, But were truly interesting. They weren't necessarily crazy entrepreneurial. I'll give you an example. I was the first investor in Walla, which is a mobile bank in Argentina. And there's a guy named Pierpaolo Barbieri. It's a, people thought a bank in Argentina is an insane idea. This is six, seven years ago. It's currently worth about two billion dollars. I've been on the board since many. He is, you know, was Phi Beta Kappa at Harvard, did work at McKinsey, was truly exceptional. And then now is managing a 1500 people. I wouldn't use the McKinsey example that you use. I would say that no one just, you know, Is a surfer for five years, and then at 26, all of a sudden launches a billion dollar company. That doesn't happen as much. They, they showed drive and focus and success before.

AI assessment note: “They showed drive and focus and success before.”

Q Has your investing style changed over the years, Kevin?

A I'm not sure it's changed dramatically. The one thing I've changed, you know, when I was, had a small team, we weren't industry focused. So now that we have a 24 person team, I am a big believer in having more industry focus. So, for example, we have, you know, five or six full-time people in healthcare, and so we're really seeing everything. We have relationships with payers. We have relationships with hospitals. There's a whole bunch of things that make us a more valuable investor. In, in, in twenty-twenty-one, we did not focus on robotics, and, uh, we saw probably 20 robotics deals just randomly. Then I brought on a, now a two-person full-time team on robotics. They have visited Stanford and MIT and Georgia Tech and Carnegie Mellon, Bendham Robotics Conferences. We saw a thousand robotics deals last year. That makes you a better investor. When, when, if I show you the fifth company that is making salads, you, that just makes you a better investor than seeing one and having to figure out how it works. What is the salad industry like? It puts you up to speed. So seeing everything is helpful.

AI assessment note: “I'm not sure it's changed dramatically. The one thing I've changed”

Q Do you think investors add value? You mentioned there about being a more valuable investor. I just had Trey on from Founders Fund who was like, Investors don't have value. How do you think about that?

A So, um, having been on both sides of that, you know, easily 90% of the value of a company comes from the CEO and, uh, the team. Now, having said that, making sure you have the right CEO, which is the board slash investors responsibility, is the single biggest decision. I mean, you know, if you said, why is Mongo a very successful company? You could say, well, because Dave's been running it for the last seven years. I let the previous CEO go and hire Dave because we're getting to a new phase and the, and the, and the board as well, and I think that single decision, you know, was extremely important and well executed, even though Dave has done, obviously, 99% of the work. Um, the other thing I would say is in the early stages of, uh, a company, the investors play a much bigger role. So, you know, we've had companies that, uh, we, you know, we start so many companies, we're early stage, Often you have a, a CEO that has literally never raised money before. So when we get them in front of 50, you know, venture capital firms, that is adding value. When they are hiring a CFO, uh, for the first time, because they were headed business development, they never actually managed a CFO before, having a perspective on that is important. The other thing I would say, I had incredible investors at DoubleClick, uh, Bain and Greylock, for example, I had just remarkable partners. When you are a CEO…

AI assessment note: “in the early stages of a company, the investors play a much bigger role”

Q What did you, sorry, I'm just fascinated on that one. So it made up, you buy for like 10. It was like a distress sale from like a distressed seller at the time who just wanted to get rid. Did you do much to the asset or was it just a unique buying opportunity?

A So both. It was a unique buying opportunity. No one would touch the company because COVID had just started and you couldn't meet the CEO. And we weren't used to doing everything by Zoom at the time. Who buys a company when you can't meet the management team? No one. Except that the CEO, David Siegel, who's incredible, worked for me at DoubleClick 20 years before. So I knew him. And he had been reaching out to me asking about the, the business during the six months before just as a mentor. And finally he said, God, they're panicking. I don't know. I think they're gonna shut it down or give it away. I said, wait a second. You know, why don't, why don't I buy it? So I got one or two other investors Bought it. Um, but we also went from a 130 people the day I bought it to 90 people a week later, which is the right amount. Today it has probably 80, or when we sold it had 82 people, and it went from a twenty million dollar loss on thirty-two million in revenue, the, when we work owned it the year before, to now we're making five or six million dollars in profits. It's a great business. So David did a great job. Uh, team was good. We ran it well. That's not the normal thing we do. It was just a one-off situation. It was a brand I knew I'd known for 20 years. Uh, it was based in New York, and I knew David, so it made sense.

AI assessment note: “So both. It was a unique buying opportunity.”

Q No, I, I totally agree, and actually, I, I didn't, yeah, I, I love Pierpaolo. I think he's fantastic, and so that's incredible to hear. How do you think about the difference between luck versus skill? People often talk about it on the show, and I'm never quite sure where to weigh it. How do you think about that?

A It, look, it definitely plays a role. You know, because there are things that are out of your control, and the reason you know that's true is that, you know, if you have people like me who've started 20 companies, no one has 20 successes. They may have more successes than your average person, but, you know, it's, it's not a perfect process, you know, uh, and so there's some things out of your control, some things in the industry. If you remember a long time ago, I started a company called Gilt, and Gilt, after four years, was doing five hundred million dollars in revenue. So, crazy success. We did a hundred and seventy-five million dollars in revenue in our second year, which I don't think anyone in New York City's ever done. So you'd say, oh, God, you're killing it. What happened? Then everyone in the industry started discounting their merchandise online. So, Marc Jacobs started selling discounted merchandise on their site, Macy's did, Farfetch did, everyone did. It became very difficult, out of our control, to make money. And so it ended up being less successful than you would have thought. And I didn't like the industry dynamics, and so I sold the company.

AI assessment note: “It, look, it definitely plays a role. You know, because there are things that are out of your control”

Q Do you not think we're going to get worse from here?

A I do. I mean, right now the economy is very good. I think that there's, if we look over 30 years, uh, on average, if the stock market's at an all-time high and unemployment is at an all-time low, if you said, are the odds that things are gonna get better or worse, by definition, there's a reversion to the mean at some point. I don't plan for that. Things right now look, uh, pretty good, pretty stable. There's another characteristic in our business is there's actually a lot of VC money. You know, there's tons of cash sitting on the sidelines. That money is not going to be given back. That money is going to be spent. We're only debating whether people are going to spend it over two and a half years, which they were doing four years ago, or over five years, which they're probably going to do now. But there's a lot of money out there that is going to keep this industry going. And the second thing that independent of any macro factors you're talking about or thinking about, you know, most things happen at a micro level. So we started a company in assisted fertility. It says fertility is going to grow. I can guarantee you that 10 years from now, more women will have egg freezing, more women will be doing IVF than they do it today. That's just going to grow regardless of the economy. And so there's a lot of things like that that are going to happen and are going to be fine.

AI assessment note: “I do. I mean, right now the economy is very good.”

Q Has your investing style changed over the years, Kevin?

A I'm not sure it's changed dramatically. The one thing I've changed, you know, when I was, had a small team, we weren't industry focused. So now that we have a 24 person team, I am a big believer in having more industry focus. So, for example, we have, you know, five or six full-time people in healthcare, and so we're really seeing everything. We have relationships with payers. We have relationships with hospitals. There's a whole bunch of things that make us a more valuable investor. In, in, in twenty-twenty-one, we did not focus on robotics, and, uh, we saw probably 20 robotics deals just randomly. Then I brought on a, now a two-person full-time team on robotics. They have visited Stanford and MIT and Georgia Tech and Carnegie Mellon, Bendham Robotics Conferences. We saw a thousand robotics deals last year. That makes you a better investor. When, when, if I show you the fifth company that is making salads, you, that just makes you a better investor than seeing one and having to figure out how it works. What is the salad industry like? It puts you up to speed. So seeing everything is helpful.

AI assessment note: “I'm not sure it's changed dramatically. The one thing I've changed... industry focused”

Q It's a tough one. It happens. I do want to discuss the new fund, speaking of investors and putting money in. So can you share the news with us that I think came out yesterday? So let's start there.

A Sure. Yeah, no, we've, uh, first time, you know, we've been investing, uh, really my money in a, in a different structure for the last decade, and, you know, we have, uh, a 120 companies in the portfolio, uh, have made many investments, started over 20 companies, but we just announced that we, it's the first outside fund with outside investors, so we've raised a two hundred and fifty million dollar fund to continue doing what we're doing, uh, and continue to both start companies and invest in companies Largely on the East Coast in New York, but not only heavily healthcare, heavily tech, robotics, and social impact. So super excited. And, uh, it's, uh, it's, it's a great time.

AI assessment note: “we just announced that we... raised a two hundred and fifty million dollar fund”

Q When we think about that early founder analysis, do you prefer a founder who's an insider to a business? Someone who's worked in that industry for years and is approaching it with relatively large levels of domain expertise, or do you prefer the Naive outsider who's approaching with a fresh perspective.

A It's gonna be a little in the middle there. So, uh, I would say that a lot of the people we back are first time founders. We would never, almost never back someone who comes from Procter and Gamble, a large company and seems like a smart person, but they don't know startups. I once looked through the top hundred, uh, consumer internet companies. And the one pattern was that most of the people Who are very successful, had actually not come from that vertical, but they had come from another startup. And in the same way that, uh, Henry and I had not been in media, thought we could do media different. When I went out to ask people at the Wall Street Journal about my idea, they all said it was a terrible idea. Because they were too close to it. And so, you know, the guys from Airbnb, did they come from the hotel industry? No, they didn't. They came from outside and as a consumer thought, hey, why can't we do it better? Did the guys from, you know, Uber come from the taxi industry? No. So many, many, many examples, the vast majority of examples in the consumer space. I will tell you that in the B to B space, there aren't that many people that come into enterprise software And weren't in enterprise software. So it's a little bit harder there. And actually, when we started Mongo, the reason we had trouble, uh, raising money, even though we had already had a very successful company, was…

AI assessment note: “It's gonna be a little in the middle there.”

Q Doug Leone said recently to me that we have turned from a high boutique, uh, high margin industry to a low margin commoditized industry. Do you agree with that transition statement?

A No. Um, What is true is that when you are a late stage investor, uh, writing fifty million dollar checks, that you are what we used to call private equity. So you're competing on price. There's already an established board. You're not adding that much value. It's just a different world. You know, it's changed so much. When Apple went public, when they went public, they raised nine million dollars in the IPO. And, uh, so it's very different today. In the early stage business that Union Square Ventures does, that we do of, you know, the first check-in, um, that's not a commodity business. You have huge wins. You have some, a bunch of losses, and by the way, I was on the board of Yale and on the board of the Yale Endowment, so we were the lead investor in many of the best firms. And as you know, in VC, there's a huge difference between Returns that let's say a benchmark and a Greylock have, and I'll, 90% of the rest of the, uh, industry.

AI assessment note: “No. Um, What is true is that when you are a late stage investor”

Q We haven't seen anything really great in consumer in the last five years. Do you think that will change in the next five years? Or do you think incumbent advantage is so embedded now that enterprise is just where we make money?

A I think it's less about incumbent advantage than it is that it's just an extraordinarily mature business. So unless there is a step function, you know, where consumer businesses came in was an awesome mobile cane. And Uber made sense. You know, when the internet came, that made sense. Uh, we may have, we're gonna have some consumer businesses in AI. We don't know five years from now if Google's gonna be the number one search engine. Uh, there's a chance that's a disruptive technology that allows it to change. So, uh, I just think that media and, uh, and e-commerce are both sexy and accessible industries. So, 50,000 entrepreneurs have gone after them, and so the next guy right now just probably isn't gonna come up with a good idea. Whereas in the B to B that you're talking about, there are some things that have changed fundamentally either because they're science-driven, You know, there are breakthroughs in regulation or in science that are allowing, I don't know, gene editing or psychedelics or something else, and so that's different than just another consumer application.

AI assessment note: “I think it's less about incumbent advantage than it is that it's just an extraordinarily mature business.”

Q Final one for you, Kevin, uh, when you think about the 10 to 20 year time horizon for you and for the funds now, what does that look like?

A The business we're in does not scale infinitely. We're not trying to accumulate assets, so I don't want to be a two billion dollar fund. Um, I want to continue doing what we're doing. We may Uh, go bigger in some areas. Like we have a deep tech practice. I would like that to get bigger over the next couple of years. So next time we raise a fund, if we could, you know, I might, I might increase the size a little bit just to increase verticals, but we're going to continue doing what we're doing. And look, I, I lead my life because I want to be enjoying it, having fun, you know, doing athletic pursuits, going to Burning Man, uh, making great investments, helping entrepreneurs, spending a lot of time with my kids. You know, out there having fun.

AI assessment note: “We're not trying to accumulate assets, so I don't want to be a two billion dollar fund.”

Q Do you know which companies will get funded fast and well when they go out? I'm just intrigued. Is it the ones you think, or is it actually a wide dispersion?

A You have a sense of two things ahead of time. One, you know whatever fundamental numbers, how they're doing, which that helps. I mean, you know, I don't have any companies going out that have quadrupled their revenues in the last year that don't get funded. The second thing you know is you can have a sense of how your CEO does in fundraising, because there are, you know, I've had examples of CEOs who are incredible CEOs, great managers, visionary, but just don't present that well, aren't just confident, and, you know, are worse at fundraising than they are at running the business, and they'll, they get penalized often in the market for that. Especially in the beginning when it's less about numbers and more about the vision. So those two things, you know, and then sometimes you're, you're surprised. I mean, I have one example of a company that just couldn't raise money and I, I thought it was gonna be, uh, easier for them than, than it turned out to be.

AI assessment note: “You have a sense of two things ahead of time... and then sometimes you're surprised.”

Q On the business side, what was one or two of the biggest business lessons?

A So this doesn't apply to every company, but we moved faster than everyone else, and so we started at the same time as some other people, but we were able to raise more money. People believed in what we were doing. We spent the money. We took the chance, but to open 25 offices in 25 countries before your first country is profitable, In retrospect is a bold move. Now, what was the result of that? If you were, uh, Procter & Gamble or Microsoft, and you have operations in 50 countries, we at least had offices in your 25 biggest countries, and my competitor was only in six, who are you gonna work with? You're gonna work with us. The reason today, which is literally more than 25 years later, that DoubleClick, which is part of Google, dominates the world in ad technology is because we won the battle of the first five years. By moving faster, more aggressively, took chances, made some mistakes, and have never given up that position ever since.

AI assessment note: “we moved faster than everyone else”

Q When we think about that early founder analysis, do you prefer a founder who's an insider to a business? Someone who's worked in that industry for years and is approaching it with relatively large levels of domain expertise, or do you prefer the Naive outsider who's approaching with a fresh perspective.

A It's gonna be a little in the middle there. So, uh, I would say that a lot of the people we back are first time founders. We would never, almost never back someone who comes from Procter and Gamble, a large company and seems like a smart person, but they don't know startups. I once looked through the top hundred, uh, consumer internet companies. And the one pattern was that most of the people Who are very successful, had actually not come from that vertical, but they had come from another startup. And in the same way that, uh, Henry and I had not been in media, thought we could do media different. When I went out to ask people at the Wall Street Journal about my idea, they all said it was a terrible idea. Because they were too close to it. And so, you know, the guys from Airbnb, did they come from the hotel industry? No, they didn't. They came from outside and as a consumer thought, hey, why can't we do it better? Did the guys from, you know, Uber come from the taxi industry? No. So many, many, many examples, the vast majority of examples in the consumer space. I will tell you that in the B to B space, there aren't that many people that come into enterprise software And weren't in enterprise software. So it's a little bit harder there. And actually, when we started Mongo, the reason we had trouble, uh, raising money, even though we had already had a very successful company, was…

AI assessment note: “It's gonna be a little in the middle there.”

Q Tell me, how do you think about price? I'm intrigued. You've invested in like so many businesses now. Peter Phantom once said to me, price is a mental trap. How do you think about price and your own price sensitivity?

A Here's the thing that I don't think about, which is our ownership. Meaning, you know, if you were going to buy a piece of an apartment and you said, I really want to own 10% of this apartment, uh, does that mean, and you have a certain amount of money, that means you're just never going to buy a really good apartment because the price is higher. So if I see three startups that just started six months ago, One of them has an incredible team going after an incredible market. That company is worth more than the other ones, and if I put a million dollars in, I'm going to get less of that company, but that doesn't mean it's a worse investment. At the end of the day, you're just trying to figure out is this going to work or not, and you know, sometimes we're paying a big price, uh, and we're paying a big price because it's an incredible team and an incredible opportunity.

AI assessment note: “sometimes we're paying a big price, uh, and we're paying a big price because”

Q 100%. My fear is that we, we've just seen, like, multi-stage firms commoditize seed so efficiently that everyone has a seed strategy. I'm always asked by LPs, like, which funds on the west coast should we do? Because you meet everyone, Harry. And I'm like, honestly, Sequoia, Andreessen just come in and bid up every great round at seed. You might as well just be in Sequoia and Andreessen.

A No, we don't see in, uh, the last, you know, 20 seed deals, uh, they're not in there very often. They don't, they're not, they don't have the coverage of the, you know, two million dollar checks, and also a lot of entrepreneurs are very nervous about taking their money. On the west coast, people just take their money regardless, but here, here's the risk. If a huge fund puts a million dollars into your initial round, and if they don't lead the next round, your company's dead. Whereas if a seed investor invests in your first round, it's understood that you're gonna go out to someone else. But the negative signaling that occurs, and it's happened to me. I had a big, big, big firm, uh, join in. Everyone was very excited, and then they lost faith, partly because the guy who invested in our company left the firm. And they were like, ah, we don't really, we're not really into it. We're going to pass. And then the company was dead.

AI assessment note: “No, we don't see in, uh, the last, you know, 20 seed deals”

Q I agree with you. Do you think venture is more competitive than it has ever been?

A Yes. Look, the reason one should be concerned about venture today Is that, um, there are, there's probably four times as much money in funds today as there was in 2017. And the question is, are there four times as many opportunities? And I don't think there are. I think it's shifted. There's more opportunities in AI, but frankly far fewer opportunities in e-commerce and media as we discussed. I think there's actually even fewer opportunities in straight enterprise software. You know, does Bank of America need new software products this year that they didn't buy last year? You know, they've already purchased a lot. So I think there's just a bubble of money. There's more money than the industry needs. As we've discussed later, they'll spread it out. Uh, but, and, and, and, and unlike in the hedge fund industry, our money doesn't leave very easily. It takes a long time. It's sticky. Now, you'll see Tiger, which had a fund that was whatever, a hundred and now is now 50. Um, so you'll see new funds being smaller, but that takes time to work through the system.

AI assessment note: “Yes. Look, the reason one should be concerned about venture today Is that”

Q And the thesis is that they will pivot to something Something adjacent that works?

A No, because, yeah, there are examples where that happens, and you assume a good founder will do that, but if you are going into an industry that ends up just not happening, You know, you can't pivot and you won't be able to get the money to do that. If you're going to pivot into something that's slightly different, that's okay, but you're not going to start a lab grown meat company and then decide to go to solar energy. That's just not going to happen. So you just got the industry right or wrong, and that will happen. E-commerce, there's been probably net, you know, no value created in five years. Same with media, uh, you know, with the exception of actually podcasts, hardly anything has worked. In the last five years in media. Well, that's why it's not as simple to say just back good people. Um, you're looking for a combination of a very good person and a thesis that you believe in, ideally a sector growing or an opportunity to create a better product.

AI assessment note: “No, because, yeah, there are examples where that happens”

Q We haven't seen anything really great in consumer in the last five years. Do you think that will change in the next five years? Or do you think incumbent advantage is so embedded now that enterprise is just where we make money?

A I think it's less about incumbent advantage than it is that it's just an extraordinarily mature business. So unless there is a step function, you know, where consumer businesses came in was an awesome mobile cane. And Uber made sense. You know, when the internet came, that made sense. Uh, we may have, we're gonna have some consumer businesses in AI. We don't know five years from now if Google's gonna be the number one search engine. Uh, there's a chance that's a disruptive technology that allows it to change. So, uh, I just think that media and, uh, and e-commerce are both sexy and accessible industries. So, 50,000 entrepreneurs have gone after them, and so the next guy right now just probably isn't gonna come up with a good idea. Whereas in the B to B that you're talking about, there are some things that have changed fundamentally either because they're science-driven, You know, there are breakthroughs in regulation or in science that are allowing, I don't know, gene editing or psychedelics or something else, and so that's different than just another consumer application.

AI assessment note: “I think it's less about incumbent advantage than it is that it's just an extraordinarily mature business.”

Q What do you think is the biggest determination of whether a company gets product market fit from zero to one? Everyone always says speed is the single biggest determinator or determining factor. Do you agree with that?

A No, no, I don't think that speed is the most important thing. You do need to get out your product, you know, pretty quickly. But it has to be pretty good. I mean, if it's terrible, we'll never hear from you again. It needs to be good enough that some people are using it. It's starting to grow. You're getting feedback and you're going to make it much better. Um, by the way, you know, it depends on the product. You know, if you use a database and it's, it's doesn't function and you lose all your revenues, then we're in a lot of trouble. That's a much more mission critical product. And so it just can't be terrible. So for example, we had no revenues after three years at Mongo. Which is not great because we had to go slower. It had to work. It had to scale. It had to be secure. Whereas for consumer apps, it can be, you can, you can make mistakes.

AI assessment note: “No, no, I don't think that speed is the most important thing.”

Q Tell me, how do you think about price? I'm intrigued. You've invested in like so many businesses now. Peter Phantom once said to me, price is a mental trap. How do you think about price and your own price sensitivity?

A Here's the thing that I don't think about, which is our ownership. Meaning, you know, if you were going to buy a piece of an apartment and you said, I really want to own 10% of this apartment, uh, does that mean, and you have a certain amount of money, that means you're just never going to buy a really good apartment because the price is higher. So if I see three startups that just started six months ago, One of them has an incredible team going after an incredible market. That company is worth more than the other ones, and if I put a million dollars in, I'm going to get less of that company, but that doesn't mean it's a worse investment. At the end of the day, you're just trying to figure out is this going to work or not, and you know, sometimes we're paying a big price, uh, and we're paying a big price because it's an incredible team and an incredible opportunity.

AI assessment note: “sometimes we're paying a big price because it's an incredible team”

Q I agree with you. Do you think venture is more competitive than it has ever been?

A Yes. Look, the reason one should be concerned about venture today Is that, um, there are, there's probably four times as much money in funds today as there was in 2017. And the question is, are there four times as many opportunities? And I don't think there are. I think it's shifted. There's more opportunities in AI, but frankly far fewer opportunities in e-commerce and media as we discussed. I think there's actually even fewer opportunities in straight enterprise software. You know, does Bank of America need new software products this year that they didn't buy last year? You know, they've already purchased a lot. So I think there's just a bubble of money. There's more money than the industry needs. As we've discussed later, they'll spread it out. Uh, but, and, and, and, and unlike in the hedge fund industry, our money doesn't leave very easily. It takes a long time. It's sticky. Now, you'll see Tiger, which had a fund that was whatever, a hundred and now is now 50. Um, so you'll see new funds being smaller, but that takes time to work through the system.

AI assessment note: “Yes. Look, the reason one should be concerned about venture today”