The Exchanges

Q Totally agree with you. Um, where is under invested?

A I think that there was a bit of a false negative on some of the infrastructure stack, you know, whether it's like, um, you know, uh, observability, Asian frameworks, you know, all this kind of stuff that started maybe three, four years ago. And a lot of these companies didn't end up panning out. Right. And now the problem was goes back to what you and I talked about earlier. People were very focused on like single models. So you didn't need all the surrounding infrastructure, but now as the, as the, as the kind of the whole ecosystem has gotten so much bigger and you're doing optimizations, you want to manage your, your spend. You need to, you know, uh, have much more robust observability solutions. You need something like open router. I just think, oh, we're, we're in this company called Gimlet, which is, you know, kind of like this technology layer To, uh, kind of obfuscate the underlying chips and technology stacks like CUDA, etc. So there's so much more there, and I think we started off investing in that area two, three years ago. Nothing really came out of it. Now these companies are really taking off. So that's what we're excited about. Kind of the developer stack, all the tooling above the, the foundation model.

AI assessment note: “Kind of the developer stack, all the tooling above the, the foundation model.”

Q of- Do you think that, do you think LPs understand that? Because LPs always like high ownership portfolio, uh, you know, constrained portfolio sizes, concentration, benchmark. Do you think they get that the game has changed?

A Well, I think they see the, I think they see the results, right? So like maybe not up front, but we're pretty explicit with them that we kind of have like, hey, here's a, here's a core position in a fund, And then here we call like tracker checks or starter checks, or frankly, even look like, look at our anthology fund, right? Like that's over 50 companies, somewhere between a hundred K and one million where you kind of get in a seed round and the companies that have graduated out of that have been open router, whisper, axiom math. So, you know, there's a couple of things. One that gives us a bit of proprietary, you know, quote, deal flow. Um, but it gives you the opportunity to be in the cap table, get to know the entrepreneur, and then pounce when you see something's working. And I would say if you get even a wedge into a company, you're 10 X more likely to be able to participate significantly in the next round or lead. I think LPs get that or they are getting it.

AI assessment note: “I think LPs get that or they are getting it.”

Q actually is, you know, I know Josh and Thrive very well, dear friend, and he's always said to me that, you know, people have a lot more plasticity investing across the stage than one thinks. Do you think people are like, oh, they're a growth investor? Or do you think people do have that plasticity to move across stage, and a great seed investor can be a great growth investor?

A I think you, I think you're best off if people pick a, uh, I'll use the word swim lane again, meaning Like, hey, you, it's just hard to cover everything, right? Especially in seed. Like, how am I supposed to be wandering around, you know, Stanford labs meeting with researchers and also chasing the, the 20 best growth potential investments in the world? It's just, it's just too much. And I think the pattern recognition, the, the density of the work that you apply to a certain area, Makes you better. And so that's roughly how we've split our team is, you know, uh, early stage team outlier, you know, growth kind of companies and everybody really focused. But if something comes up, that's a great fit for somebody across the fund vehicles, then fine, there's fluidity. But I really do feel like you're best off by being super, super focused with, let's say, 80% of your time.

AI assessment note: “I think you're best off if people pick a, uh, I'll use the word swim lane”

Q last few years has just been ripper. Um, I wanted to start with a relatively obvious one, which is Anthropic. I think it's at the cornerstone of, of Menlo and of the last few years for you investing. Can you actually just tell me how did it come to be? How did you get introduced? Was it obvious? How did the investment meetings go? Just, just take me to it.

A Yeah. Well, uh, he'll be mad if I don't give him a call out, but, um, Anjane, you know, Mita, uh, was the one who introduced me. So Anj worked, uh, for me, with me at, uh, at, at Kleiner Perkins when I was there as a young kind of associate, but he has, he was so spiky at the time. So he's always kind of just been in the flow. We were talking about AI and he said, Hey Matt, you gotta meet Dario and Tom. This is the one company. You know, uh, said, let's do it. Got on the phone with Dario and Tom the next day. And I, you know, I personally was like, all right, I'm in. And I'll give you the kind of like the, the broader story, but there were part, there was part of it that was really easy and part of it that was hard as you can imagine. So, you know, at the time you have like a, uh, six hundred million dollar venture fund. You kind of try to average fifteen million into, into a company and along comes a company that's like pre-revenue and, you know, uh, and wants a four billion dollar plus valuation. Too early for our growth vehicle. Uh, where does, where does it kind of fit? But, you know, the easy part was, okay, OpenAI is absolutely ripping the chat, but GPT taken off. But Dario was the creator of that within OpenAI, as you know, the reason why he left is because basically he's like, OpenAI is doing too many things. This is the one, this is the one big opportunity. So you had …

AI assessment note: “Anjane, you know, Mita, uh, was the one who introduced me.”

Q Can I ask you along the way, how do you think about when is the right time to take money off the table?

A It's tough because in this environment, obviously the markups are happening so quickly and you know, you're like, well, relative to when we invested, this multiple is amazing. But it's complicated, right? Like I, I think if you're a believer, I think more than ever, we're in an environment where your outliers, your winners will compound and drive fund returns. So those are certainly not the ones you want to sell from. Now, you know, you can argue you might have some LPs, some, you know, if it's an older fund, some dynamics like that, where you want to give, uh, liquidity, but that would be like, maybe you take 10, 20% off the table. But for the most part, Uh, if we're in a winter, we want to run. We want it to run. We want to put in more capital. Um, and then at some point, you know, you feel like the company is maturing or maybe, maybe they're waiting a super long time to go public and you'd like to say, take some, you know, chips off the table, but it's not, it's not something we spend a lot of time on. We spend more time obviously on hopefully making great investments and then being a great partner to those companies as they scale and always including capital.

AI assessment note: “it's not, it's not something we spend a lot of time on.”

Q I, I know, it's terrifying. Um, can I ask you, on the second round that you mentioned there, where you're like, okay, we really sized up. How did you think about that one, and how did that come to be?

A I mean, like, if there was a playbook that I would love to repeat, it was this. I mean, so we basically built a relationship, got into the company, and said, look, We need to go all in Menlo style, you know, our recruiting team, our, uh, you know, our BD team, and just get close to the, the founding team, see, build relationships, see how we can have value. And there's a lot of examples of that that we probably don't have time to go into, but we got to know them and we got to see them operate, right? So let's say that we in the round closed in something like March, the model was launched in April. So you start at zero and then sometime You know, through the year, you know, you'd see them adding 10 this month, eight the next, so the revenue started to build. In parallel with that, you had Amazon and Google come in, both with the big investments, as well as technical partnerships around Bedrock, Vertex, uh, and then distribution relationships. So you're like, okay, so let's, let's take a look at from when we invested to now, um, they've got a capital partner, a distribution partner, a technical partner, two of the biggest in the world. They're alternative to open AI who's kind of tied to one cloud with Azure. So it's like, Hey, this is the multi-cloud provider. And then you just saw this kind of revenue drum beat start. But the seminal event was, uh, we held our LP meeting in, uh…

AI assessment note: “we basically built a relationship, got into the company, and said, look, We need to go all in”

Q I'm incredibly naive. And so I, I don't understand something, which is like we see, um, obviously opening. I have jalapeno reportedly anthropic working with Samsung to create their own chips, some, um, deep seeker creating their own chips, uh, Meta creating their own chips. Do you have to be full stack today? Do you think? And is that why we're seeing everyone move into the chip layer?

A Well, I think, I think it goes back to, you know, what I said about, you know, optimizations. I mean, you know, uh, Google with their TPUs a long, a long time ago, Amazon with their Traniums. I mean, just at some scale, you look at your bill and you're like, I'm paying somebody way too much, you know? And, and you say, well, I'm willing to pay that for some part of, you know, my COGS because that's just so much better and different and I can't compete with that. But maybe there's some other types of activities they're doing That I can really leverage my own technology and bring my cost structure down. And, you know, I mean, uh, the chip business is hard. Good luck wading into that, right? You know, it's, um, it takes a special team, especially if you're going to compete with Jensen and a lot of other, uh, options out there right now. But, you know, these companies are smart and they're looking at like, Hey, look, there's some very specific thing that we do in our model that if we had a chip that just behaved like this from a, Uh, you know, I don't know from a memory cache, whatever, like it would make us so much better. And I'm sure for some percentage of the workload, whether it's in training or inference, that could be a big deal. So that's probably worth the swing. Um, you know, if you're, if you're a hundred billion dollar revenue company.

AI assessment note: “just at some scale, you look at your bill and you're like, I'm paying”

Q So do we think that ownership today is less relevant than it ever used to be, given outcome scenarios being so much larger than they ever used to be?

A By far. I mean, look, if you can get ownership, it's magical because, you know, just, if you own a lot and the company's worth a lot, that's going to be great. But, you know, A, there's a lot, you know, more capital coming in, so it's hard to even maintain that, that kind of ownership. But we're in an outlier business right now, right? Like, I, I think for a long time, I mean, you know, I've been in the business for 25 years now, you know, you, you were kind of saying like, hey, great outcomes are, 300,000,500 million, a billion. Like, so you're like, hey, you have to own 20% to get a, to get a hundred million or, or whatever. Like, no, that's not, those, those are like, and I know you talk about it a lot on your, you know, uh, show with Rory and Jason, all that. That's, that's not how the game is being played anymore. It's, it's like, you have to be in the big outliers to drive great returns, and you're better off being in them at a very small percent than owning a large percent of a company that exits for three to 500. Those just aren't going to move the needle.

AI assessment note: “By far... you're better off being in them at a very small percent”

Q Are we in a new venture world of SPV usage? Um, we do them for very late stage opportunities too. How do you think about that and when to go aggressive on the SPV strategy and when it moves out of fund strategy? Yeah.

A I mean, I think it's really like what, what guardrails or kind of parameters have you set on your fund in terms of how much you want to put in, in, in a fund. So if, you know, you've got a billion dollar fund, you might say, Hey, we only want a hundred million dollars max in a company. Um, but, uh, look, we, we feel super we, maybe we did 50 in the first round and we want to do a hundred in the next round. So we can't put it all in the main vehicle. So let's do, let's do an SPV. So I don't think you have, To do it. Um, I think oftentimes it's, it's, it's valuable to, to be able to do it because you can play offense if you need to write, uh, more capital, uh, to, to win a round. And, and obviously it can be helpful to a company that you come, you come with more strength. You know, I mean, there's, there's a side of it where you can say like, well, look, it's, it's kind of, uh, you know, extra economics at times to, to, to go outside your, you know, your fund mandate and, and be more full stack and not let somebody else take it. But I think for the most part for us, it's, it's just like, Let's kind of keep our fund size at a level that we think makes sense for the environment. And if a, if a amount of capital per company goes outside that, then let's bring in our LPs.

AI assessment note: “if a amount of capital per company goes outside that, then let's bring in our LPs.”

Q brand builder in AI, positioning you as one of the leading firms. Another that you've done is lovable. You know, we've spoken about it at length, you know, off scene, uh, off show. You did the round at 6.2. Can I ask, when you do a check like, like that in this specific case, what do you like underwrite lovable to? How do you think about what it can be?

A Yeah. Well, I mean, you know, that was another wild story where you see a company go from zero to something like three hundred million in a year. I think we intercepted them around, well, we, we, we, we kind of got, tried to get in when they were around 30, 30 of error, but we around, we did was around one 50. So, I mean, like you, you're kind of looking at like, this is a phenomenon. So there's, there's numbers and then there's the market and then there's the founder, right? So the numbers were just like, Ripping and you're like, all right, so this company is going to go from zero to 300 in a year. Even if you assume it decelerates to whatever, you know, a three X growth rate, that's 300 to a billion. And I'm talking about when we first made the investment. And then, you know, you compound out from there and you're like, I mean, never just certainly in the first, let's say, 23 years of my venture career, you never saw anything like that. Now there's a few more examples, but clearly this was an outlier, even amongst outliers. I think the thing that we also really Gravitated to here aside from like, you know, Anton, he's very visionary. He's kind of like the, he's kind of the voice of the, of the category. I think he's got some very unique and distinctive plans about why, you know, this kind of 99% of people, as they like to call it, everybody who was never a coder and programme…

AI assessment note: “Even if you assume it decelerates to whatever, you know, a three X growth rate”

Q and see them, uh, but it's the worst place to be. You have, like, one to three million in revenue, and you're at 200 X ARR, two to four hundred million, with little PMF. Do you agree that right now, insertion point-wise, Series A is the hardest? And that's why we're seeing everyone flock to growth and pre-seed. And how do you think about that, having seen so many cycles?

A Yeah, I mean, it, it's tough. I mean, you nailed it. But I mean, what we're doing is a barbell strategy right now, right? So it's like, hey, when, when, when is a certain company in a category established themselves as a leader? Because, you know, in that kind of one to three, you may not even know who the competitors are yet, right? And you're going to pay Pay as if they're going to be the winner, because that's just the way the valuations are in that kind of, let's say one to 10 range. So we've moved our, you know, we have a fund called inflection fund, and we always called it early growth. The reality, early growth to us meant like three to ten million of ARR. The reality is like for the good companies, that window used to last like a year, year and a half. Now it lasts like a week, or in the case of Max and Lagora, that's what they do in a day. So, uh, you know, like it's just, That, that was a hard strategy to keep pursuing. So that's kind of like the Menlo inflection classic kind of, uh, investment, but really it's been more to these outliers where they've completely, you know, broken out somewhere above 10 or, and that's kind of like market specific where you feel like, um, they've been anointed the, the winner, or you believe they will be, but to your specific question around series a, that that's the other side of the barbell. And so what we've done Is gone, you know, …

AI assessment note: “Yeah, I mean, it, it's tough. I mean, you nailed it.”

Q actually is, you know, I know Josh and Thrive very well, dear friend, and he's always said to me that, you know, people have a lot more plasticity investing across the stage than one thinks. Do you think people are like, oh, they're a growth investor? Or do you think people do have that plasticity to move across stage, and a great seed investor can be a great growth investor?

A I think you, I think you're best off if people pick a, uh, I'll use the word swim lane again, meaning Like, hey, you, it's just hard to cover everything, right? Especially in seed. Like, how am I supposed to be wandering around, you know, Stanford labs meeting with researchers and also chasing the, the 20 best growth potential investments in the world? It's just, it's just too much. And I think the pattern recognition, the, the density of the work that you apply to a certain area, Makes you better. And so that's roughly how we've split our team is, you know, uh, early stage team outlier, you know, growth kind of companies and everybody really focused. But if something comes up, that's a great fit for somebody across the fund vehicles, then fine, there's fluidity. But I really do feel like you're best off by being super, super focused with, let's say, 80% of your time.

AI assessment note: “I think you're best off if people pick a, uh, I'll use the word swim lane”

Q I'm incredibly naive. And so I, I don't understand something, which is like we see, um, obviously opening. I have jalapeno reportedly anthropic working with Samsung to create their own chips, some, um, deep seeker creating their own chips, uh, Meta creating their own chips. Do you have to be full stack today? Do you think? And is that why we're seeing everyone move into the chip layer?

A Well, I think, I think it goes back to, you know, what I said about, you know, optimizations. I mean, you know, uh, Google with their TPUs a long, a long time ago, Amazon with their Traniums. I mean, just at some scale, you look at your bill and you're like, I'm paying somebody way too much, you know? And, and you say, well, I'm willing to pay that for some part of, you know, my COGS because that's just so much better and different and I can't compete with that. But maybe there's some other types of activities they're doing That I can really leverage my own technology and bring my cost structure down. And, you know, I mean, uh, the chip business is hard. Good luck wading into that, right? You know, it's, um, it takes a special team, especially if you're going to compete with Jensen and a lot of other, uh, options out there right now. But, you know, these companies are smart and they're looking at like, Hey, look, there's some very specific thing that we do in our model that if we had a chip that just behaved like this from a, Uh, you know, I don't know from a memory cache, whatever, like it would make us so much better. And I'm sure for some percentage of the workload, whether it's in training or inference, that could be a big deal. So that's probably worth the swing. Um, you know, if you're, if you're a hundred billion dollar revenue company.

AI assessment note: “at some scale, you look at your bill and you're like, I'm paying somebody way too much”

Q Before we move to SPVs, new funds, you name it, I do just have to ask, in terms of like levels of dilution, with the increased outcome scenarios and increased outcome sizes, do you think we're just normalizing an entirely new level of dilution that's inherent within these companies, or is that exclusively for the frontier model companies?

A I think it's pretty rare, as you know, to find companies these days that don't end up raising a lot of capital that way outside of the frontier companies and look anywhere in the AI stack, even the application companies. I mean, there's, there's part of it that companies are growing faster than ever. So they want the capital to, you know, really be able to play play offense. And there's also kind of a part of this dynamic in the market right now where there's this signaling effect that every X months or a year, You know, you raise capital. That's, you know, employees want to hear that to keep up with the labs and, you know, some of the retention, you know, you have to do more secondary. So there's just the, the landscape is just very, very different than what I grew up with.

AI assessment note: “look anywhere in the AI stack, even the application companies.”

Q Can I ask you, when was the most nervous time along the last 18 months for you as an Anthropic shareholder? It looks, it's amazing today, it's a great state of play today, um, when were you like...

A Yeah, I mean, I, I'd say like, well, I'm, maybe I'll go back even, I'll expand your, your window to 24 months. Like, you know, when we did the SPV, it wasn't, Anthropic wasn't a household name yet. Like we saw everything going on and like how amazing this company was, but from the outside, it wasn't quite as obvious. So, you know, even to get, you know, the whole syndicate that we pulled together and, uh, I had to give my friend Ravi and Byron a call to bring them into the round as well, which all worked out. Um, but it wasn't, um, it, it was just, that was very nerve wracking because Menlo had never done an SPV before.

AI assessment note: “that was very nerve wracking because Menlo had never done an SPV before”

Q and see them, uh, but it's the worst place to be. You have, like, one to three million in revenue, and you're at 200 X ARR, two to four hundred million, with little PMF. Do you agree that right now, insertion point-wise, Series A is the hardest? And that's why we're seeing everyone flock to growth and pre-seed. And how do you think about that, having seen so many cycles?

A Yeah, I mean, it, it's tough. I mean, you nailed it. But I mean, what we're doing is a barbell strategy right now, right? So it's like, hey, when, when, when is a certain company in a category established themselves as a leader? Because, you know, in that kind of one to three, you may not even know who the competitors are yet, right? And you're going to pay Pay as if they're going to be the winner, because that's just the way the valuations are in that kind of, let's say one to 10 range. So we've moved our, you know, we have a fund called inflection fund, and we always called it early growth. The reality, early growth to us meant like three to ten million of ARR. The reality is like for the good companies, that window used to last like a year, year and a half. Now it lasts like a week, or in the case of Max and Lagora, that's what they do in a day. So, uh, you know, like it's just, That, that was a hard strategy to keep pursuing. So that's kind of like the Menlo inflection classic kind of, uh, investment, but really it's been more to these outliers where they've completely, you know, broken out somewhere above 10 or, and that's kind of like market specific where you feel like, um, they've been anointed the, the winner, or you believe they will be, but to your specific question around series a, that that's the other side of the barbell. And so what we've done Is gone, you know, …

AI assessment note: “Yeah, I mean, it, it's tough. I mean, you nailed it.”

Q Yeah, I, I, I think, yeah. Um, where is overheated right now, do you think?

A Oh, um, robotics and Neolabs, you know, and maybe, maybe defense tech, but just because there's so much going in, but, you know, I like all three of those sectors, but I like Neolabs. Didi put out a, my partner Didi put out a text, I mean, a tweet yesterday on how there's like 60 Neolabs. I told you we're in seven, but, but, you know, some of them are very in a generic, like we're building, we're getting a band together. We're going to build something really cool, researchy. And we'll see what happens. And then others are like chai where it's like, Hey, we're, we're, we're going to be very focused on creating drugs and antibodies and, and, or axiom focused on math and things like that. But, you know, there's 60 plus of these and, uh, you know, when the dust settles, uh, that that's, I, I don't know what's going to come to that. You can't, you can't expect all of these companies to have great acquihires and there's no way in hell that, you know, we're going to have 60 independent model companies in addition to all the open source and everything. So I think that's Way too big of rounds they've raised for where they are. Huge concentrated positions for some firms, so I think that's a challenge.

AI assessment note: “robotics and Neolabs, you know, and maybe, maybe defense tech”

Q Can I ask you along the way, how do you think about when is the right time to take money off the table?

A It's tough because in this environment, obviously the markups are happening so quickly and you know, you're like, well, relative to when we invested, this multiple is amazing. But it's complicated, right? Like I, I think if you're a believer, I think more than ever, we're in an environment where your outliers, your winners will compound and drive fund returns. So those are certainly not the ones you want to sell from. Now, you know, you can argue you might have some LPs, some, you know, if it's an older fund, some dynamics like that, where you want to give, uh, liquidity, but that would be like, maybe you take 10, 20% off the table. But for the most part, Uh, if we're in a winter, we want to run. We want it to run. We want to put in more capital. Um, and then at some point, you know, you feel like the company is maturing or maybe, maybe they're waiting a super long time to go public and you'd like to say, take some, you know, chips off the table, but it's not, it's not something we spend a lot of time on. We spend more time obviously on hopefully making great investments and then being a great partner to those companies as they scale and always including capital.

AI assessment note: “if it's an older fund... maybe you take 10, 20% off the table.”

Q didn't really get it in the nicest way. You've got Anthropic, you've got Lovable, you've got Ligora, you've got Open Router, you've got Fireworks, you've got, the list goes on and on and on of great companies. You could raise way more. Why did you raise three? And is the future of venture not much bigger platforms like GC and Lightspeed and all the big names we know so well?

A When you take on more capital, like You, there's implications of that in terms of how you run the firm, culture, how many people you have, and we love to be a relatively small and mighty machine with, you know, roughly, let's say, 12 partners and a great set of, you know, principals, associates, things like that that make us better and stronger, but like when you go full, full stack and you have like five different teams, you start doing sector, like everybody's kind of out for a pass and Sometimes I've seen this in other places where you feel like, well, I could do whatever I could do great things, but, but I can't really index on this small group of people. There's too many of the, if one group doesn't do as well, then they kind of drag down, you know, how this, this other group. So it kind of leads to a bit of, um, less, less feeling of like alignment, uh, agency collaboration together. And that's what we've really wanted to, to keep at Menlo. And despite having two funds and kind of two ICs, We have a very fluid, uh, amount of work across those two groups where partners from the venture fund can lead investments in our, in our growth fund, et cetera. So it's really more like, how do we want Menlo to be, to meet the market? Um, how do we want to run internally? How do we want to keep our team relatively small with great people and not feel like we're, you know, more, more co…

AI assessment note: “we love to be a relatively small and mighty machine with, you know, roughly, let's say, 12 partners”

Q What was the most controversial deal inside Manlo that you remember?

A The obvious answer is, is, is anthropic in some ways, but I'm, I'm trying to think about, and, and by the way, there was two, two controversial points around that. One was, you know, the first just like, is this really what a venture fund does? And then the second was like, we've never done an SPV before. Are we really going to go down this path? Um, You know, I mean, I don't, I can't really remember offhand anything like that was that, uh, you know, um, um, profound and felt like, wow, we're kind of putting the, the reputation of the firm, especially the, you know, the, the, the bigger SPV, uh, on the line to, to kind of pull this off and, and, and, you know, breaking, breaking new ground. I think, you know, the great thing about our partners, um, we've got a very technical group. We're small enough to have high alignment. We respect each other a lot. It's easy to make, you know, we listen to each other, make a decision. So I don't find things that controversial. I don't really ascribe to this point of view where you need like a bunch of no's and there's one person who's a yes, and that leads to an outlier. I know there are examples of that, but that's not really been my experience in the firms I've been part of or with our team.

AI assessment note: “The obvious answer is, is, is anthropic in some ways”

Q Before we move to SPVs, new funds, you name it, I do just have to ask, in terms of like levels of dilution, with the increased outcome scenarios and increased outcome sizes, do you think we're just normalizing an entirely new level of dilution that's inherent within these companies, or is that exclusively for the frontier model companies?

A I think it's pretty rare, as you know, to find companies these days that don't end up raising a lot of capital that way outside of the frontier companies and look anywhere in the AI stack, even the application companies. I mean, there's, there's part of it that companies are growing faster than ever. So they want the capital to, you know, really be able to play play offense. And there's also kind of a part of this dynamic in the market right now where there's this signaling effect that every X months or a year, You know, you raise capital. That's, you know, employees want to hear that to keep up with the labs and, you know, some of the retention, you know, you have to do more secondary. So there's just the, the landscape is just very, very different than what I grew up with.

AI assessment note: “pretty rare, as you know, to find companies these days that don't end up”

Q sake, it's like Friday morning. I wanted a chilled interview. You can put me back down, but everyone tells me, oh, Anthropics, the real threat. And I'm like, are you kidding me? This is like a heavy GTM business focused on building relationships with lawyers, doing legal deployments, With, I mean, it's, it's completely different. How do you answer that statement when everyone's like, well, anthropic legal's gonna beat them?

A Yeah. Well, first of all, Max, Max is special, as you know, part of my diligence was watching, uh, you know, your, your interview with him, but he, he's, he's just an execution machine and, uh, just a lovely person to be with. I think, you know, there's always, for a while here, we're in this period of, for a long time, it felt cleaner, like, Hey, there's a model and there's an API, and then there's application companies. And, and obviously that's kind of gotten blurrier and blurrier. And there was a period a couple of months ago, it's like Sasspocalypse, you know, Everything's going away. And I think some of a lot of that has kind of faded and now we're kind of sorting out like, okay, well, which, which applications really deserve to live and why? And I think, you know, not speaking for Anthropic, but my, my view is they're kind of like, look, if the model just kind of does something and your application isn't distinctive enough, the workflow, the value built on top of it, and the model takes that market away, well, then it probably wasn't that, you know, defensible anyway. I think in the case of Max and Lagora, you know, they have Lawyers and FDs getting in there and understanding these, these workflows. Um, it's kind of like crosses organizational boundaries. Like I think it's very hard for a model just to come in and be like, oh, you know, there's multiple constituents here…

AI assessment note: “I think it's very hard for a model just to come in”

Q Okay. Okay. Totally understand. Two to three. Two is a very big number. How do you think about firm sustenance when there is such a big win? We have seen firms candidly struggle to maintain dominance when everyone makes so much money, bluntly. How do you think about sustenance post such success?

A You know, I think Menlo has always had a challenger mentality since myself and Venki came over a little over 10 years ago, and kind of, Sean Carrollin came back, and, and, you know, Mark Siegel was the partner who was there who kind of put the band together, and ever since that moment about 11 years ago, it's just been a grind, a fight, a, a build exhilarating to kind of get to this point, and I feel like everyone we've brought along has kind of felt Menlo Move up that stack and be more and more successful. So I think what's driving us is what you would expect less about that monetary outcome. And holy shit, we've put ourself in a place to be one of the hopefully leading firms in AI. And how do we really compound and double down on that advantage? And that's the energy I feel every day, certainly from myself and all my partners. And I, I just can't see that going away. It's kind of like, it's kind of like we arrived, we're here. What we, what do we do with that? And you know, the money's great, but that's not what, that's not why we did all this.

AI assessment note: “less about that monetary outcome... how do we really compound and double down on that advantage?”

Q Biggest miss, and what was your lesson from it?

A The things that I would look back on at the time as the biggest, biggest miss, no longer feel that way. So that's like, like, I'll, I'll give you one. You know, we were at the, like, the one-inch line, um, winning plaid back in the day, and I've, I have the utmost respect for Zach and the company and what they've done, but at the point in time, I felt like when I lost that, that that was, like, existential to You know, my, my career and ability to, to win and, and, you know, they're, they're, they're a great company. But I guess what that did is just more conditioned me around like, you know, um, one loss doesn't define anyone. Now, okay, if you didn't win Anthropic, that would have been extra painful. But the point is like, you just got to keep, keep going and finding that, that, you know, next big one. And if you, if you focus on the right big trends, like we did around AI, And get out ahead of it, that these cycles come along. And, um, uh, that's what I've been more focused on than worried about a loss.

AI assessment note: “we were at the, like, the one-inch line, um, winning plaid”

Q You can invest in one seed fund, one series A fund, and one growth fund. Which fund do you invest in? And they can't be your own.

A All right. Seed fund. Um, you know, I'm, I'm, I'm less like plugged into the seed fund world for reasons that you and I have already discussed. I don't follow a lot of seed funds around. Um, but I, I, I've had a great relationship with Chad at SUSE for a long time. You know, brick buyers was a, you know, one of the quasi mentors of me when I was a Kleiner and we got to know each other and seeing him kind of grow and thrive. And I, I really appreciate his perspective on things. Uh, you know, I mean, series a, um, you know, benchmark I've worked with, uh, Chathan and Eric a ton and, you know, a great respect. Um, hard to say, not, not say Sequoia as well, but anyway, since you asked for one and then growth funds a little trickier, um, you know, uh, there's so many great full stack firms. So it's like, there used to be a very clear set of growth funds. Like when we were talking about swim laces, it used to be like, okay, well there's IVP and, and, you know, there's Meritech and, and I have high respect for both of those folks. But now the reality is that the growth funds that you look at, it's like, well, it's, uh, Lightspeed, uh, you know, Thrive, you know, folks like that, that we, you know, you know, partner with a lot and even Sequoia and Andreessen. So it's harder to just kind of pinpoint one growth fund because it's, it's like, it's like a blend of a dollar. There's not, the…

AI assessment note: “Chad at SUSE... series a, um, you know, benchmark... and then growth funds a little trickier”

Q you look forward to 10 years? So for me, you know, my mother's got MS. I'm incredibly excited to think about medical breakthroughs for, you know, diseases where we always kind of just accepted that, oh, it's a chronic condition, and you're like, okay, I'll just live a much worse quality of life with that then. I'm excited for breakthroughs there. How do you think about where you're most excited?

A Yeah, I mean, well, I'll just pick on that one and then riff from there, but like, we're totally excited about that. We have about eight of these models. I mentioned Chai, but we have a company I can go down the list of companies building specific models to do drug discovery. So I think, and then we did something like a sword health for very, you know, for better healthcare delivery, right? So like the whole medical system, which we all know is kind of broken, even though the U S has great healthcare, there's so much more that can happen and come to us from both from therapeutics, um, as well as just kind of workflows and how the medical system operates. And of course, you know, that's a very near and dear mission to Anthropik and Dario. Um, but aside from that, like the thing I'm most excited about probably goes back to like where Menlo is now and watching, uh, how we really lean into and take advantage of this opportunity with the team we have now that we've assembled. Um, that to me is probably the most rewarding thing in my career is kind of where the firm is and the people we have to execute going forward. I'd say from like, um, you know, Trend of AI and all that. These things only come around, as you know, every 10 years, and this one feels like the biggest. I've been through four or five in my career, and so I am just completely fascinated to see what this looks like, be…

AI assessment note: “the thing I'm most excited about probably goes back to like where Menlo is now”

Q didn't really get it in the nicest way. You've got Anthropic, you've got Lovable, you've got Ligora, you've got Open Router, you've got Fireworks, you've got, the list goes on and on and on of great companies. You could raise way more. Why did you raise three? And is the future of venture not much bigger platforms like GC and Lightspeed and all the big names we know so well?

A When you take on more capital, like You, there's implications of that in terms of how you run the firm, culture, how many people you have, and we love to be a relatively small and mighty machine with, you know, roughly, let's say, 12 partners and a great set of, you know, principals, associates, things like that that make us better and stronger, but like when you go full, full stack and you have like five different teams, you start doing sector, like everybody's kind of out for a pass and Sometimes I've seen this in other places where you feel like, well, I could do whatever I could do great things, but, but I can't really index on this small group of people. There's too many of the, if one group doesn't do as well, then they kind of drag down, you know, how this, this other group. So it kind of leads to a bit of, um, less, less feeling of like alignment, uh, agency collaboration together. And that's what we've really wanted to, to keep at Menlo. And despite having two funds and kind of two ICs, We have a very fluid, uh, amount of work across those two groups where partners from the venture fund can lead investments in our, in our growth fund, et cetera. So it's really more like, how do we want Menlo to be, to meet the market? Um, how do we want to run internally? How do we want to keep our team relatively small with great people and not feel like we're, you know, more, more co…

AI assessment note: “we love to be a relatively small and mighty machine”

Q just on geography, we've spoken about Lovable, we've spoken about Lagora, two companies based in, obviously, Sweden, and then you have Anthropik and you sitting on the west coast. How do you think about the centrality of power with AI moving back to San Francisco, all the brightest minds, all the best researchers are there, being the common theory, with also a portfolio that's very global in terms of winners?

A Yeah. San Francisco was a weird place for a few years, you know, like all the cool kids wanted to be in New York and, and San Francisco felt a little bit like a, you know, a ghost town, very concentrated in sass, not like that much interesting stuff going on. And I love seeing it have its mojo, have its mojo back, right? That's like when these waves come, the Bay Area usually leads. And so it's just giving so much more energy and people who are like, Lifetime New Yorkers who would never think about leaving, you know, living in the Bay are now coming out here. I think more college grads are saying, yeah, New York's cool, but I got to get out there and be part of this AI thing. So I think it's great for, um, the Bay Area. I think the, the, the concentration of that talent is what has always made the Bay special. You know, you just kind of, you, you're, you're just constantly talking and meeting entrepreneurs and understanding how everyone's pushing themselves, not just like their work ethic, but more like, Technically what they're working on your context that you have by living in the Bay area is probably like 10 or a hundred X. If you're just some really great company somewhere else now, you know, uh, kudos to you and not, you know, just you personally, but like, you know, what's going on in Europe right now, like that whole, um, deep mind diaspora, you know, you mentioned a cou…

AI assessment note: “what's going on in Europe right now, like that whole, um, deep mind diaspora”

Q What was the most controversial deal inside Manlo that you remember?

A The obvious answer is, is, is anthropic in some ways, but I'm, I'm trying to think about, and, and by the way, there was two, two controversial points around that. One was, you know, the first just like, is this really what a venture fund does? And then the second was like, we've never done an SPV before. Are we really going to go down this path? Um, You know, I mean, I don't, I can't really remember offhand anything like that was that, uh, you know, um, um, profound and felt like, wow, we're kind of putting the, the reputation of the firm, especially the, you know, the, the, the bigger SPV, uh, on the line to, to kind of pull this off and, and, and, you know, breaking, breaking new ground. I think, you know, the great thing about our partners, um, we've got a very technical group. We're small enough to have high alignment. We respect each other a lot. It's easy to make, you know, we listen to each other, make a decision. So I don't find things that controversial. I don't really ascribe to this point of view where you need like a bunch of no's and there's one person who's a yes, and that leads to an outlier. I know there are examples of that, but that's not really been my experience in the firms I've been part of or with our team.

AI assessment note: “The obvious answer is, is, is anthropic in some ways”

Q Biggest miss, and what was your lesson from it?

A The things that I would look back on at the time as the biggest, biggest miss, no longer feel that way. So that's like, like, I'll, I'll give you one. You know, we were at the, like, the one-inch line, um, winning plaid back in the day, and I've, I have the utmost respect for Zach and the company and what they've done, but at the point in time, I felt like when I lost that, that that was, like, existential to You know, my, my career and ability to, to win and, and, you know, they're, they're, they're a great company. But I guess what that did is just more conditioned me around like, you know, um, one loss doesn't define anyone. Now, okay, if you didn't win Anthropic, that would have been extra painful. But the point is like, you just got to keep, keep going and finding that, that, you know, next big one. And if you, if you focus on the right big trends, like we did around AI, And get out ahead of it, that these cycles come along. And, um, uh, that's what I've been more focused on than worried about a loss.

AI assessment note: “one loss doesn't define anyone. Now, okay, if you didn't win Anthropic”