The Exchanges

Q Do you have the financial freedom to do roll-up plays? Like, are you structured in a way where you could actually kind of cross PE as well? Everyone is talking about roll ups today, especially if you are in beauty, spas, or vet services, by the way, that's the hottest. But like, is that something that you could do in the structure?

A So in the context of working with a private equity partner, if they were to do a roll up or invest in more traditional profitable assets that either trade from the public markets to the private or have been private the entire time, Then we're very open to, to partnering with those companies and we'll write a, you know, we typically write a hundred, hundred and fifty million dollar check into a larger buyout that those firms are doing. And, and we have had a lot of success with those partnerships. So we do it in that capacity. We wouldn't, um, um, uh, we haven't, I should say, we never say never, but we haven't, um, done a roll up on our own accord, uh, so far in our history.

AI assessment note: “we haven't, um, done a roll up on our own accord”

Q Do you have the financial freedom to do roll-up plays? Like, are you structured in a way where you could actually kind of cross PE as well? Everyone is talking about roll ups today, especially if you are in beauty, spas, or vet services, by the way, that's the hottest. But like, is that something that you could do in the structure?

A So in the context of working with a private equity partner, if they were to do a roll up or invest in more traditional profitable assets that either trade from the public markets to the private or have been private the entire time, Then we're very open to, to partnering with those companies and we'll write a, you know, we typically write a hundred, hundred and fifty million dollar check into a larger buyout that those firms are doing. And, and we have had a lot of success with those partnerships. So we do it in that capacity. We wouldn't, um, um, uh, we haven't, I should say, we never say never, but we haven't, um, done a roll up on our own accord, uh, so far in our history.

AI assessment note: “we typically write a hundred, hundred and fifty million dollar check into a larger buyout”

Q What was the most memorable first founder meeting you've had, Leila? One where you're like, that one I'll tell the kids about.

A Oh my goodness. Um, well, since you asked that, I will bring up Daniel again, because, um, when you say tell the kids about, uh, Daniel, I flew to New York, like, within weeks of coming back from maternity leave with my third, uh, child, I have three kids, uh, and chased him down to New York this time. And I remember that first meeting, not only because I was fresh off maternity leave, so I had a lot going on leaving three little kids at home. Um, but I also remember that the majority of the first meeting we talked about our upbringing, um, our families, literature, and very little about automation. So that was the, the, uh, you know, first of, uh, a very deep relationship, uh, you know, business and personal on, uh, on getting to know each other and, I think that is certainly important to me, and I think important to a lot of the founders that, that I work with, that there is, there's trust and there is, um, a relationship that, um, you know, is, uh, um, based on really liking each other as people and believing in a common dream and then trying to help support each other to get there.

AI assessment note: “I will bring up Daniel again, because... I remember that first meeting”

Q I'm actually 94. I'm Benjamin Button in disguise. But tell me, final one, what's the most recent publicly announced investment, and why did you say yes and get so excited by it?

A Most recent investment is in Webflow, and I'm incredibly excited about this. So Vlad, who's the, you know, CEO and founder there, is an incredible human, just such a thoughtful, brilliant, principled founder, and so I love the culture he's built. I love his long-term vision for how he wants to build out the And then the business is incredible. So, you know, Webflow is a, a no code application and website development platform that abstract a lot of the complexity of building websites into a no code platform. And it's just incredible. Like you look at most of the companies coming out of YC, lots of different places are built on top of Webflow because you can build amazing websites with great functionality, much quicker and much easier than you could in the past. So the market opportunity, I think there is just Massive. And the pipeline of innovation they have is really, really exciting. So that was a very easy one to say yes to in a company I'm very excited to be, to be working with.

AI assessment note: “Most recent investment is in Webflow, and I'm incredibly excited about this.”

Q So like first round says, no, we have no attribution. It's a first round. And then a lot of others obviously favor attribution and LPs like attribution. How do you think that?

A Yeah. So I think it depends a lot on how the team is structured. So, you know, a capital G, the way that we've structured our team is that the general partners have a lot of autonomy to focus on areas and companies that interest them most. And that's worked really, really well for us. So like my partner, Gene, you know, he has focused a lot on cybersecurity as an example and made amazing investments in CrowdStrike and Zscaler and a number of others, Orca more recently. And David has done more consumer, so Airbnb and Lyft and a bunch of great companies. And I have done both consumer and enterprise and gone deep in a lot of these horizontal enterprise platforms, as well as companies like Duolingo, interested in online education. So it's given us a lot of Autonomy to explore different areas, and so for us, it has been more led. The investments have been more led by the general partner. We have an incredibly strong team, so it's always a team of vice presidents and associates that work with us, as well as sometimes there'll be multiple partners, but more typically, it's led by one general partner with the support of the full partnership, but I would say Capital G, like everything, it's a team effort. I mean, we have a big operations and growth Team that works with the company's post-investment that is critical to helping drive value over the long term. So I'd say it's capital G inv…

AI assessment note: “I'd say it's capital G investments first, but, you know, individual partners are often”

Q I do want to start, though, with some context. I always love a bit of backstory. So tell me, how did you make your way into what I always call a wonderful world of venture and come to be one of the GPs at Capital G today?

A Yeah, so kind of an unexpected journey. I joined Capital G about eight years ago and had spent You know, my entire career before that on the operating side. So I was at Google for a long time, helped to start and scale a couple of different businesses at Google. So I worked in video with YouTube and commerce local, a bunch of really exciting areas. And I got experience working on early stage business models and helping to build and scale out teams as well as to help with acquisitions, a few companies into Google. And so about eight years ago, David Lowey, who's my now Partner at Capital G approached me and told me he was starting this new fund called Capital G and asked if I was interested and kind of the rest is history. So I was excited to give investing a chance and to bring some of the skills I had from the operating side and to learn a bunch of new ones. And here we are eight years later.

AI assessment note: “David Lowey, who's my now Partner at Capital G approached me and told me”

Q and I've never asked, but I'm too intrigued by it. It's like, you know, Capital G is a very interesting structure as an entity in itself, because obviously, OneLP, Evergreen, what does that mean in terms of how you think about portfolio construction? Because you don't have the normal confines of, like, three-year fund investing in 25 companies. So how does one think about portfolio construction with that in mind?

A Yeah. So we are very lucky. We have an incredible structure at Capital G in that first, you know, important to note that we're an independent growth fund backed by Google and Alphabet. So the GPs, we have investment decisions. We operate entirely separate from Google and Alphabet, but Alphabet is our single LP. So we think about portfolio construction based on sort of driving our strategy, which our overall strategy is to be the most valuable partner in To every technology company that's in hyper growth through their scaling challenges. And to do that, we think the right portfolio size is for each of the GPs to invest in about two companies a year. And so what that means is that we tend to invest in about seven or eight companies a year. And we have about 45 active portfolio companies, you know, right now. And that number goes up and down a bit over the years. And, you know, as we add GP capacity, we'll expand a bit from there. But that model is Really works for us because it's the right size to get great diversity and diversification exposure to major sectors across enterprise, consumer, fintech, healthcare, and it also gives the GPs an opportunity to go really deep in those sectors, understand the trends really well, and then once they make an investment, have the time and energy to really go deep with the portfolio companies and help as much as they can. So that has really, …

AI assessment note: “we think the right portfolio size is for each of the GPs to invest”

Q And I think it'd be great to start then with a slight definition of Google capital. We, you know, often in the early stage ecosystem, we hear about Google ventures. So how, how do the two differ? For you, and what's the unique perspective of being single LP, being Google?

A Yeah, absolutely. So, Google Capital is Google's growth equity investment arm. So, we, um, like, you know, many different firms, we have different, multiple different investment arms. So, Google Capital is focused exclusively on growth stage investments, um, whereas Google Ventures focuses more on early stage investments and at different times across the investment life cycle. So, sometimes when it makes sense, we'll actually work with Google, uh, with Google Ventures and co-invest And companies, which we've done a few times, and companies like Gusto and Oscar and a few others. But most of the time, we're focused on different areas, and we're focused exclusively on the growth equity side for Google Capital. And I'd say the second question on Google as a single LP, there's, there's lots of advantages. So I think first is it makes our fundraising very efficient. Um, and, uh, we have obviously a great relationship with our single LP. It sure is. It sure is. Um, wonderful, wonderful executive support within, uh, within Google and Alphabet. So, um, it's been fantastic. And I'd say there's lots of other advantages of having Google as our single LP. So the important thing to note is that we are financially focused investment investors. So our only metric for Google capital is financial return. So we're by no means a strategic investor for Google. So we make our own decisions on Tech c…

AI assessment note: “Google Capital is focused exclusively on growth stage investments, um, whereas Google Ventures focuses more”

Q Does that mean a strong leaning towards a big ownership? How much of your investment process, investment decision-making process, sorry, is dictated by ownership? Is that a big part of the factoring for you?

A It's actually not, which I think is one of the differences in from early stage investing. Again, we don't, the reason we don't Focus as much on ownership is that we really just think about what it's in the value of our investment going to be worth. So multiple of money, because we could be coming in, um, when a company's worth thirty billion dollars and we're making the bet that they're going to be worth a hundred billion dollars in five years, or we could be coming in when a company's worth two hundred million dollars and we're making the bet they're going to be worth a billion dollars in five years. So each time you'd have, if we made a 50 or a hundred million dollar investment in each of those cases, I guess, That would be a high amount to invest in a company that's two hundred million, but you, you get the point. Um, in either, in either case, we don't focus as much on what our ownership percentage will be. We focus on what do we think the investment or multiple of money will be worth five years from the time we put the money in.

AI assessment note: “It's actually not, which I think is one of the differences”

Q In general, do companies wait too long and do it too late, or do they do it too early and lose focus?

A So I'm a growth stage investor, so I would say, um, that probably varies a bit, um, based on time. I would say in the growth stage, more often they wait too long, particularly as they're, um, ramping up in, in the couple of years prior to IPO, because it's almost always Needed, um, for a strong public company to have some sort of diversification. And again, some sort of evidence that you're going to have durable growth over time. And that usually requires expanding your market in some way, or deepening your relationship through additional product offerings with your core customer. And more often than not, all of those founders believe there are a couple years behind where they would like to be in proving to themselves that this story is True. And that this is the right investment. And then, you know, proving to public market investors that, that this really are, these really are going to be durable revenue streams.

AI assessment note: “I would say in the growth stage, more often they wait too long”

Q said there. It's like, focus, make sure we have customers that love us. And only then do we expand when we have significance and we have reliability, repeatability, And at scale and always your core market is so much bigger than you often think. I think HubSpot is a great example of that. Do you think early stage board members make that case more challenging for you preventing multi-product expansion?

A No, I think it's really a timing issue. I, I trust that that is the right advice for, for early stage companies. And I think, um, um, I think the, the best companies we've invested in have followed that advice and they have stayed extraordinarily focused. They've nailed it in their core market. Um, so this is more really advice for the growth stage companies where, you know, you get to a certain scale. You're at a 102 hundred million in revenue, a private company. By that point, you're investing a significant amount of capital in operating expenses and R and D and sales and marketing across the board. So you're starting to, and you, and you typically have a large team. You have hundreds of people, sometimes more than that. Um, by that point, you're operating with a complexity where you do have the ability to execute against multiple priorities. If you don't, you're, you're, you're probably gonna have more trouble in the longer term. So I think the same advice, uh, holds. You stay focused on your core business. You, you make sure you, um, optimize, and some have, have more opportunity, uh, for scale than others. Like, again, if we talk about the examples of, of the stripes of the world, they can, their, their, their core business is so, so large that, um, and so, so complex that there's gonna be a significant amount of investment in that core business for a long period of time. …

AI assessment note: “No, I think it's really a timing issue.”

Q What happens to the generation of companies now that is between 30 and a hundred million in revenue, but they're growing like 15 to 30%, maybe 40%. What happens to them?

A I think that's going to be a very interesting, uh, investment opportunity and a, and a good question. I mean, I do think that there are, um, that, that group of companies probably are operating in smaller markets than maybe everyone anticipated when they started the company. And, uh, and as they've, uh, they've grown, if you see, you know, companies growing at that rate, um, at that scale, it's usually Either a signal that the market size is, is not going to be big enough to build a five hundred million billion dollar business, or there could be some element of their growth. It could be a vertical marketplace or, or a vertical software company where, um, you know, they, it's a slower growth, but as you add the R and D capabilities, you can, you know, increase share of wallet and add product modules. So you can see some companies that You know, when they reached a hundred million in scale, they continue to compound at 15 or 20%, but most of the time you see a decay curve. So most of the time, if you're growing 15, 20%, you'll, you'll see that decay to single digits. Um, and I do think that those companies, it's going to be hard to remain independent. I do think many of them that I see in the market are, are trying to first, uh, figure out how to be sustainable. So figure out at that scale, Can they reach profitability or, you know, single digits profitability? Um, but that's obv…

AI assessment note: “it's going to be hard to remain independent... can they be combined into a bigger entity”

Q What do you know now that you wish you'd known when you joined Capital G?

A I wish I knew just how important Getting the really big things right would be. Venture is a business of, you know, eighty-twenty outsized returns, so you have to make a few big, big decisions, bold bets right, and, um, I wish I knew to really focus all of the small activities, because you have to do a lot of work and a lot of small activities sort of along the way that build into those big bets that you step up to at the right time, but I wish I, I wish I really knew, um, the power law and how strongly it existed and to, um, to sort of stay focused on that and stay focused and prioritize my time accordingly.

AI assessment note: “I wish I knew just how important Getting the really big things right would be.”

Q Are people really leaning in more now? Like it feels like seed never adjusted, seed pricing never adjusted, volume Maybe adjusted a little bit, but pricing definitely didn't adjust, but everyone is in unison that growth is dead, which is a bit of a morbid statement, obviously. Do you disagree? And do you say that growth isn't dead at all?

A Yeah, I don't think growth is dead. I think it depends how you define, um, uh, volume and activity. Yeah. I mean, volume and activity is definitely down from the peak, 20, 20, 21, for sure. If you exclude the AI deals that, if you add in AI deals, the number, the, The volume and dollar amount actually looks quite high. Um, so definitely volume is down, but that is different from being dead. Um, I think there are still, um, you know, I started investing in 2014, 2015. Like you see, um, there, there are activity levels where there are, where there are great companies that are growing quickly and opportunities to, to invest. And then there's the later stage and that's early growth, the later stage of sort of pre IPO companies where, Um, I think you're starting to see some interesting rounds where, um, they're not going public because of, you know, the, the macro reasons we've talked about, but, uh, they want to raise a little bit of primary capital and some early stage investors want to sell some secondary capital and those companies are being priced, um, in line with public comps. So there are some, I think, good investment opportunities in what we believe are going to be, you know, franchise type, um, Companies in large markets. So you maybe have to work a little harder than the, some of the heydays of when we're at a peak market opportunity, but, um, or peak market activity. Uh…

AI assessment note: “Yeah, I don't think growth is dead. I think it depends how you define”

Q I hold all my companies that go public because I have asymmetric information and I should hold those positions, not my LPs. Do you agree with that statement or do you disagree that actually just because you're a private investor, you have asymmetric information and you should hold the public stock?

A You know, LPs have a lot of different incentives that, that they're managing and they have, they have, you know, full-time investment professionals, many of them managing their public positions and public investors tend to have different access to data and insights and decision-making that help them decide when is the right time to hold and sell in the broader context of their portfolio. So I could see the case why that could be more important than an early stage investor who has, Uh, you know, information from when the company was private that they think is going to, you know, inform the right decision to buy or hold, uh, when a lot of other things are going on in the public markets. So I've been surprised by some, not you, Harry, because you're, you're, you're particularly talented, but there's a lot of private state private, um, early stage investors that don't understand a lot of the dynamics of public markets and valuations and pricing and how, Um, and, and portfolio management at that scale. So it's not just about understanding the ins and outs of the company. It's understanding a lot more, um, you know, have a lot more context into that decision-making.

AI assessment note: “I could see the case why that could be more important”

Q In general, do companies wait too long and do it too late, or do they do it too early and lose focus?

A So I'm a growth stage investor, so I would say, um, that probably varies a bit, um, based on time. I would say in the growth stage, more often they wait too long, particularly as they're, um, ramping up in, in the couple of years prior to IPO, because it's almost always Needed, um, for a strong public company to have some sort of diversification. And again, some sort of evidence that you're going to have durable growth over time. And that usually requires expanding your market in some way, or deepening your relationship through additional product offerings with your core customer. And more often than not, all of those founders believe there are a couple years behind where they would like to be in proving to themselves that this story is True. And that this is the right investment. And then, you know, proving to public market investors that, that this really are, these really are going to be durable revenue streams.

AI assessment note: “in the growth stage, more often they wait too long”

Q said there. It's like, focus, make sure we have customers that love us. And only then do we expand when we have significance and we have reliability, repeatability, And at scale and always your core market is so much bigger than you often think. I think HubSpot is a great example of that. Do you think early stage board members make that case more challenging for you preventing multi-product expansion?

A No, I think it's really a timing issue. I, I trust that that is the right advice for, for early stage companies. And I think, um, um, I think the, the best companies we've invested in have followed that advice and they have stayed extraordinarily focused. They've nailed it in their core market. Um, so this is more really advice for the growth stage companies where, you know, you get to a certain scale. You're at a 102 hundred million in revenue, a private company. By that point, you're investing a significant amount of capital in operating expenses and R and D and sales and marketing across the board. So you're starting to, and you, and you typically have a large team. You have hundreds of people, sometimes more than that. Um, by that point, you're operating with a complexity where you do have the ability to execute against multiple priorities. If you don't, you're, you're, you're probably gonna have more trouble in the longer term. So I think the same advice, uh, holds. You stay focused on your core business. You, you make sure you, um, optimize, and some have, have more opportunity, uh, for scale than others. Like, again, if we talk about the examples of, of the stripes of the world, they can, their, their, their core business is so, so large that, um, and so, so complex that there's gonna be a significant amount of investment in that core business for a long period of time. …

AI assessment note: “No, I think it's really a timing issue. I, I trust that that is the right advice”

Q be to discuss kind of the rise of the private IPO and the extension of private funding, uh, that we've seen recently. And I'm intrigued to hear your thoughts on whether this is a cause for concern for you in terms of it's an extension of time till cash on cash returns, or is it an opportunity for you to deploy further capital in a kind of elongated funding environment?

A Yeah, so I see it as a bit of both. I mean, at the stage that we enter, we definitely care about, um, exit strategy, and that the company will have a, some liquidity event at a point that makes sense for them, but we actually feel that one of our advantage as investors is that because we have a single LP, who is a very patient LP, that we can have a longer than average hold period, um, compared to maybe some other funds in the market that might be Be more constrained on this point. So we're strong believers in all the companies we've backed that they know the right time for them to, to go public or not. And we've, we're sort of been very supportive of our entrepreneurs and CEOs in that decision. And, you know, for all the companies in our portfolio feel like they're, they're making the right call on that. So I think, and we all, we go, we go through different cycles in the, in the public market and relative, uh, Attractiveness and IPO windows, as we all talk about, there's lots of different, different chatter about. And so I think these things change relatively quickly. So I don't see any long-term structural issues with what's going on in the market right now. And I think that there have been the fact that there have been companies that have stayed private longer than maybe they have historically has meant that there's been an incredibly large amount of capital deployed in the…

AI assessment note: “Yeah, so I see it as a bit of both.”

Q there. Just in terms of each of the three, uh, you mentioned market size, obviously. For Google and for, for such a dominant fund, is there a market size that is an attractive amount? You know, a hundred million dollar exit doesn't cut it. Is it a billion dollar market like his conventional wisdom in venture? Or does it need to be more given the growth nature of Google Capital?

A Yeah, it's a great question. So I wouldn't say we have Any minimum we've never defined, it has to be, you know, XYZ billion or trillion in market size. What we typically look at when we make a decision is we want to understand what our multiple of money will be in our IRR from, from an investment perspective. So a lot will depend on what's the entry valuation that we were likely to come in at. And then what do we believe this business will be worth in five years is typically what we model. So we actually are a long-term investor. So we're very open to holding businesses for, For much longer than five years, but as we model investment returns, we typically do it over a five-year horizon. So it's not that we have a predefined definition of the size of the market, but we find that by the time most companies have established their product market fit, have some basic, you know, revenue traction and information around unit economics, and we're coming in to do a substantial growth stage investment, that that company needs to increase in value by a pretty substantial amount to hit those return thresholds, and that It's going to require a sizable market, so it ends up kind of backing into a similar thing, but we have no sort of predefined minimums, and we really think about each investment as a return on that capital.

AI assessment note: “I wouldn't say we have Any minimum we've never defined”

Q And then you said also about, sorry, I'm, I'm picking each one, which is very rude of me, but I'm just too intrigued. You said about product differentiation there. I'm always, Intrigued, particularly with consumer, uh, startups. Is brand IP, is that significant enough IP to be considered product differentiation sustainably in the long term, do you think?

A Ah, it's a great question, and this is, this is something we've debated, uh, quite a bit. We do believe that there are different forms of differentiation that can sustain and drive businesses in the long term, so I did sort of simplify it by calling it product differentiation, but Would agree that there could be a thesis around brand differentiation driving sort of value in the long term. We find, we debate that. We find at times in our stage of investing, it can be harder to underwrite, but it's something that we think about the company sort of continuing to build on over time. And the reason I say it's harder to underwrite at our stage is often still the channels that Companies are focused on making work are much more organic growth and driving sort of word of mouth, which is obviously a big component of brand, and then making performance marketing channels scale to drive sort of the business in the, in the early years. And then the hope is that through those, those channels, you establish market leadership position and get greater brand awareness and In your core markets, and that will continue, um, in the longer term to be a very important part of your differentiation, but typically it's harder to underwrite that, uh, with certainty at the stage that we enter a lot of our companies.

AI assessment note: “Would agree that there could be a thesis around brand differentiation driving sort of value”

Q Now, I'd love to get started today by discussing a bit about you and how you made the transition from operations at Google to VC with Google Capital. So what was that story?

A Maybe I'll start even before that. Earlier in my career, before I was at Google, I worked at a company called Bain & Company, a management consulting firm. And I actually spent a lot of my time at Bain working with some of our big, large private equity clients, so I first got exposure to the investment world through that time, and I absolutely loved it. I loved the process of diving into a new company, developing a thesis about the market, and the company's sort of competitive positioning, getting to know the management team, and evaluating strengths and weaknesses there, and just the process of trying to find data and information to validate a thesis. So I got kind of hooked on investing then, but the only catch was that the industries I was spending time in were, um, from my perspective, uh, fairly random and old school. So, I mean, I did a deal on packaged salad and rental cars and manufacturing and just industries that I had sort of less inherent interest in. And I found, you know, the, the, certainly the desire inside of me that I really wanted to get into tech and I'd gone to business school at Stanford and sort of been immersed in the, in the tech scene during that time and really felt that that was where I wanted to be spending my time. So I left Bain and joined Google. That was about 10 years ago and had a fantastic ride at Google. It was a really fun time to join the …

AI assessment note: “Maybe I'll start even before that. Earlier in my career, before I was at Google”

Q we had Dalian on the show and he said about the best companies are always founder led companies, very kind of seriously. And I said, well, you know, Satya Nadella and I pushed back in that way and the great leadership that Microsoft had under Satya. I'm intrigued. Would you invest in every non-founder led company? And given the founder-led focus, is early stage really that different to growth stage?

A So I would invest in a non-founder-led company. You point out, Satya, um, I know, um, you know, dozens of incredible CEOs that were not founders and have that, have same but different mix of special sauce that makes them the right person to lead that company and often to lead the company through different stages. Some founders Only want to do the early stage nature of the companies in their, in their genius really is in the more entrepreneurial pursuits and they want to bring in a partner that has more strengths in scaling or large company building. Um, and I think you get a different set of trade-offs for that. I think there are examples that we could point to in so many different areas where, where both can be true, but you often, uh, you know, they're real trade-offs and, um, I think we try to support founders To scale into the best CEOs that they can be as their company scales for as long as they want to and, um, you know, believe and have seen it been extraordinarily successful a bunch across a bunch of companies.

AI assessment note: “So I would invest in a non-founder-led company.”

Q I hold all my companies that go public because I have asymmetric information and I should hold those positions, not my LPs. Do you agree with that statement or do you disagree that actually just because you're a private investor, you have asymmetric information and you should hold the public stock?

A You know, LPs have a lot of different incentives that, that they're managing and they have, they have, you know, full-time investment professionals, many of them managing their public positions and public investors tend to have different access to data and insights and decision-making that help them decide when is the right time to hold and sell in the broader context of their portfolio. So I could see the case why that could be more important than an early stage investor who has, Uh, you know, information from when the company was private that they think is going to, you know, inform the right decision to buy or hold, uh, when a lot of other things are going on in the public markets. So I've been surprised by some, not you, Harry, because you're, you're, you're particularly talented, but there's a lot of private state private, um, early stage investors that don't understand a lot of the dynamics of public markets and valuations and pricing and how, Um, and, and portfolio management at that scale. So it's not just about understanding the ins and outs of the company. It's understanding a lot more, um, you know, have a lot more context into that decision-making.

AI assessment note: “I could see the case why that could be more important than an early stage investor”

Q Are people really leaning in more now? Like it feels like seed never adjusted, seed pricing never adjusted, volume Maybe adjusted a little bit, but pricing definitely didn't adjust, but everyone is in unison that growth is dead, which is a bit of a morbid statement, obviously. Do you disagree? And do you say that growth isn't dead at all?

A Yeah, I don't think growth is dead. I think it depends how you define, um, uh, volume and activity. Yeah. I mean, volume and activity is definitely down from the peak, 20, 20, 21, for sure. If you exclude the AI deals that, if you add in AI deals, the number, the, The volume and dollar amount actually looks quite high. Um, so definitely volume is down, but that is different from being dead. Um, I think there are still, um, you know, I started investing in 2014, 2015. Like you see, um, there, there are activity levels where there are, where there are great companies that are growing quickly and opportunities to, to invest. And then there's the later stage and that's early growth, the later stage of sort of pre IPO companies where, Um, I think you're starting to see some interesting rounds where, um, they're not going public because of, you know, the, the macro reasons we've talked about, but, uh, they want to raise a little bit of primary capital and some early stage investors want to sell some secondary capital and those companies are being priced, um, in line with public comps. So there are some, I think, good investment opportunities in what we believe are going to be, you know, franchise type, um, Companies in large markets. So you maybe have to work a little harder than the, some of the heydays of when we're at a peak market opportunity, but, um, or peak market activity. Uh…

AI assessment note: “Yeah, I don't think growth is dead.”

Q Do you think those insights have a shorter life than ever before today, given the fast moving nature of our business? AI has changed so much of it. It will continue to change so much of it. PLG has changed in many ways. It is moving so much faster than it has ever moved. To what extent does insights decay?

A I think insights will always be important, but if you rely entirely on insights, rely entirely on the past predicting the future, you'll never be a great investor. I think it's the combination of insights with an open mind. So the first time that I invested in, in Stripe back in 2017, it was that same insight around understanding S&B, um, scale as, you know, Stripe's early customers were inception customers. They were startups getting, getting off the ground. Um, and the, the new learning had to be, how do you think about, uh, an S&B channel expanding into, to enterprise sales, and what will be different about a developer-led Sales motion compared to a, you know, compared to a, a decision maker led sales motion and what would, what would look differently? The AI example that you bring up today, I think we're, we're looking at the same things, which is enterprise AI customers. You're still going to have, you still in the existing, um, world, you have companies that are going to buy software or buy AI, but you may have to think differently about their pace of adoption. Or the risk to their core business. So everyone thinks that time is different. This is faster. This is gonna, you know, it's, and it's gonna break sooner. This is a bigger trend, which I think to some extent is true, but the core in taking the important insights from the past, taking the important insights across i…

AI assessment note: “everyone thinks that time is different. This is faster... which I think to some extent is true”

Q What did we get wrong there? There weren't people on the ground.

A In a lot of places, the, the way companies scale are quite different. So I'll use India as an example. I mean, you know, you looked at, at the typical size and number of employees of, um, an Indian tech company, and it was significantly higher than a lot of the U S counterparts, just. The operational complexity of running those types of, uh, of markets really understand, or those types of businesses really understand the consumer landscape and GDP per capita, all those purchase behaviors and getting market timing right and getting the overall business models right, I think have been, um, they're just harder bets, um, and, um, require sort of a different understanding of the risks you're getting into. And I would argue in some of those markets during the, the peaky bubble, um, points in the global tech markets that that risk wasn't necessarily priced in on the valuations. So I think you found, um, in some of the cases, at least on a deal by deal basis that we made, I think there were more mistakes there than areas where we really understood the industry, the locale, the market.

AI assessment note: “there were more mistakes there than areas where we really understood the industry, the locale”

Q we had Dalian on the show and he said about the best companies are always founder led companies, very kind of seriously. And I said, well, you know, Satya Nadella and I pushed back in that way and the great leadership that Microsoft had under Satya. I'm intrigued. Would you invest in every non-founder led company? And given the founder-led focus, is early stage really that different to growth stage?

A So I would invest in a non-founder-led company. You point out, Satya, um, I know, um, you know, dozens of incredible CEOs that were not founders and have that, have same but different mix of special sauce that makes them the right person to lead that company and often to lead the company through different stages. Some founders Only want to do the early stage nature of the companies in their, in their genius really is in the more entrepreneurial pursuits and they want to bring in a partner that has more strengths in scaling or large company building. Um, and I think you get a different set of trade-offs for that. I think there are examples that we could point to in so many different areas where, where both can be true, but you often, uh, you know, they're real trade-offs and, um, I think we try to support founders To scale into the best CEOs that they can be as their company scales for as long as they want to and, um, you know, believe and have seen it been extraordinarily successful a bunch across a bunch of companies.

AI assessment note: “So I would invest in a non-founder-led company.”

Q When they don't scale, why don't they scale?

A You know, a wide variety of reasons. I think, um, sometimes it just comes down to, I'm a big believer that you have to really love and want to be doing what you're doing to, to, to be the best in your field. And I think sometimes it's just a match for personal passions and, and, um, some people just like to build zero to one more than they want to build one to a hundred. Um, they like more Dislike the people management and the team complexity side of things. And then time, then I think there are just some attributes around running a larger, uh, scaled company that are important. Some operational skills. It's a better match to bring someone else in. But I think typically, and almost always we've seen in our portfolio that even when a founder doesn't have those skills, he or she has extraordinary talent again, that, and passion and drive that got them to that point. And they can hire in the right executive team to build out The team needs those skills. No one person ever needs a particular experience set or particular skills. That's why company building is a team sport. It's not an individual sport.

AI assessment note: “some people just like to build zero to one more than they want to”

Q that fundamentally good for the entrepreneur? Entrepreneur. Cause a lot of people say, Hey, the more money on offer, the better for the entrepreneur. But I'm like, actually, if the expectations are misaligned, the price is actually way too high that they can't grow into it. It may not be like, how do you think about whether that recent proliferation of capital is actually good for the entrepreneur or not?

A Well, great question, Harriet. I think it's a complicated question, which deserves this sort of somewhat complicated answer, which is it really varies. So, I mean, I think in the simple way, if you think of for entrepreneurs, it's a There's lots of capital out there. The cost of capital is lower than it's ever been. What that means is lots of great things. It means you can focus on operating the business and you can raise money really quickly. It means you can take risks. Some things that require a significant amount of capital. If you're a great team and, you know, have both a vision and the execution, you can raise that capital easily and be able to invest way ahead of where you would have even a couple of years ago, where you probably would have had an To prove so much more out. Great teams can now get access to that capital much earlier and start building their vision even sooner. So that's fantastic. But of course, not everything is always rainbows and unicorns and up and to the right. So I think there are some costs like it, you know, there are complications. If you raise too much capital too quickly, I think sometimes the discipline of being doing things in a more methodical way and learning a bit, running and crawling and walking before you run type of metaphor is Really helps build out a stronger team. I think you have seen some companies not build and get too much cap…

AI assessment note: “it really varies. So, I mean, I think in the simple way, if you think”

Q Now, I'd love to get started today by discussing a bit about you and how you made the transition from operations at Google to VC with Google Capital. So what was that story?

A Maybe I'll start even before that. Earlier in my career, before I was at Google, I worked at a company called Bain & Company, a management consulting firm. And I actually spent a lot of my time at Bain working with some of our big, large private equity clients, so I first got exposure to the investment world through that time, and I absolutely loved it. I loved the process of diving into a new company, developing a thesis about the market, and the company's sort of competitive positioning, getting to know the management team, and evaluating strengths and weaknesses there, and just the process of trying to find data and information to validate a thesis. So I got kind of hooked on investing then, but the only catch was that the industries I was spending time in were, um, from my perspective, uh, fairly random and old school. So, I mean, I did a deal on packaged salad and rental cars and manufacturing and just industries that I had sort of less inherent interest in. And I found, you know, the, the, certainly the desire inside of me that I really wanted to get into tech and I'd gone to business school at Stanford and sort of been immersed in the, in the tech scene during that time and really felt that that was where I wanted to be spending my time. So I left Bain and joined Google. That was about 10 years ago and had a fantastic ride at Google. It was a really fun time to join the …

AI assessment note: “Maybe I'll start even before that.”