The Exchanges

Q Okay, so, twenty-twenty is the year of books for me. I mean, I'm sure it won't be, but I'm trying my best. What's your favorite book and why?

A Well, I'm gonna start off by cheating and give you two books. One is Shoe Dog. I think that's a classic for me. It's the tale of how Phil Knight built Nike. It's just fascinating to see the journey he went through to build that company. And the second, so that's more of a professional, the second was Trevor Noah's Born a Crime. So, this is about his life growing up in South African apartheid South Africa was just staggering what he went through, and that wasn't even that many years ago, and I'd say the thread between the two is just how each of these individuals in totally different ways kind of overcame hardship, one massively on the personal side, the other on the professional side, so those two are my favorites.

AI assessment note: “so those two are my favorites.”

Q Okay, so, twenty-twenty is the year of books for me. I mean, I'm sure it won't be, but I'm trying my best. What's your favorite book and why?

A Well, I'm gonna start off by cheating and give you two books. One is Shoe Dog. I think that's a classic for me. It's the tale of how Phil Knight built Nike. It's just fascinating to see the journey he went through to build that company. And the second, so that's more of a professional, the second was Trevor Noah's Born a Crime. So, this is about his life growing up in South African apartheid South Africa was just staggering what he went through, and that wasn't even that many years ago, and I'd say the thread between the two is just how each of these individuals in totally different ways kind of overcame hardship, one massively on the personal side, the other on the professional side, so those two are my favorites.

AI assessment note: “One is Shoe Dog... the second was Trevor Noah's Born a Crime.”

Q And then you see companies like plant and it makes sense. I totally agree. In terms of the capital excessive nature of the ecosystem state that we mentioned, We've also just seen some quite new entrants, really, in terms of a lot of PE funds also now entering the later stage venture game. How do you think about the approach and incoming of PE firms into more traditional venture growth?

A There's a couple ways to think about it. On the one hand, you could construe it as a negative point. This is getting back to Bill Gurley's statement, because they're coming in with 50 to two hundred and fifty million checks wanting to invest in our companies, and that obviously is a big bolus of capital. I would say the flip side of that is they're playing in a certain Stratosphere that even for us, we may not necessarily play in terms of some of our companies don't necessarily need anywhere near that much capital. The other flip side of that coin is I think it's very healthy because remember, a lot of these firms are coming in not only to invest as minority growth investors, but also to buy our companies, which is a very new vein of exits for a lot of these venture-backed startups. It's really emerged, I'd say, in the last decade and much more fortunate. You see a lot of these firms, whether it's Vista or Toma Bravo or Insight. Doing that. So I actually think that it's a double-edged sword. You have to be careful about that amount of capital, but they also can be buyers of your companies in certain regards. They can also invest. So I can see both ways. We look at it as actually net positive, but you just have to make sure that doesn't happen is the ethos of the company doesn't change. Meaning with that much capital, if you were a disciplined company and you were an efficient c…

AI assessment note: “We look at it as actually net positive, but you just have to make sure”

Q Well, it's interesting you said that kind of over your career, those lessons. Can I ask, can you pick out one, and you don't have to name names or name companies or even people, but can you tell me a story of maybe a major learning in price sensitivity for you where you've realized that?

A Yeah, I'm happy to. I'm happy to mention them. It was when Workday came into our offices at NEA over 10 years ago. And if you didn't see the company, you would notice a company that's hyperscaling, but burning a lot of capital, and a lot of it was services originally, right? And they also visited us, I believe it was April of 2009, and you know what that climate was back then. So without seeing the company, you would say, wow, hyperscaling, but burning a lot of money, big price. Just on paper, though, I think, wow, you really have to think about that, but when we heard the pitch, it was probably one of the most straightforward pitches I've ever heard in 20 years of venture, meaning we just had to fund that company, and the reason for that is there's the numbers, but you really have to see what is this company doing, and they were really reinventing a whole part of the technology ecosystem, and that was a huge learning for me, is yes, You have to look at the numbers, and yes, you have to pay attention to price, but there are going to be what I call fundamental companies. And when I mean a fundamental company, companies that really are these iconic companies that completely alter and shift the entire tech ecosystem. And it used to be there would just be one or two every decade. The good news now, there's a few every generation. And for those, you just have to figure out how you p…

AI assessment note: “pay attention to price, but there are going to be what I call fundamental companies.”

Q Well, it's interesting you said that kind of over your career, those lessons. Can I ask, can you pick out one, and you don't have to name names or name companies or even people, but can you tell me a story of maybe a major learning in price sensitivity for you where you've realized that?

A Yeah, I'm happy to. I'm happy to mention them. It was when Workday came into our offices at NEA over 10 years ago. And if you didn't see the company, you would notice a company that's hyperscaling, but burning a lot of capital, and a lot of it was services originally, right? And they also visited us, I believe it was April of 2009, and you know what that climate was back then. So without seeing the company, you would say, wow, hyperscaling, but burning a lot of money, big price. Just on paper, though, I think, wow, you really have to think about that, but when we heard the pitch, it was probably one of the most straightforward pitches I've ever heard in 20 years of venture, meaning we just had to fund that company, and the reason for that is there's the numbers, but you really have to see what is this company doing, and they were really reinventing a whole part of the technology ecosystem, and that was a huge learning for me, is yes, You have to look at the numbers, and yes, you have to pay attention to price, but there are going to be what I call fundamental companies. And when I mean a fundamental company, companies that really are these iconic companies that completely alter and shift the entire tech ecosystem. And it used to be there would just be one or two every decade. The good news now, there's a few every generation. And for those, you just have to figure out how you p…

AI assessment note: “It was when Workday came into our offices at NEA over 10 years ago.”

Q earlier, you said, you know, about winning, and sometimes people go for being kind of the cheapest money. In terms of kind of the Capital excessive nature that we have today in the ecosystem. I have Peter Fenton on the show, and he said, never turn down a deal based on valuation. It's a mental trap. So how do you think about your own price sensitivity today, do you think?

A I think Peter is spot on for early stage. I remember him speaking, this is a decade ago, and he said something really awful. He said, you know, largely in this business, we are price takers for the best companies. And I think that's generally been the case in the last 20 years of venture with maybe one or two extreme examples. Or exceptions. Dick Kramlick, the founder of NEA, would always say that for the best deals. I think you'd have to be price takers. I think for the later stage, I think it's a little different. A case in point is seeing some of these companies that go public at prices less than their last private round. So price does matter in the later stage because you're not really thinking about, you know, when you're thinking about a hundred X, 500 X, thousand X, whatever it is, those extreme early stage wins. If you pay 50% off for Two, three X off doesn't really matter. The later stage you play in, the more that does matter. So for us, it is making sure that we can still get best in class returns. But what I have learned in my career is don't be afraid to lean in more and more on price for the elite CEOs, elite founders, and elite companies.

AI assessment note: “I think Peter is spot on for early stage.”

Q And then you see companies like plant and it makes sense. I totally agree. In terms of the capital excessive nature of the ecosystem state that we mentioned, We've also just seen some quite new entrants, really, in terms of a lot of PE funds also now entering the later stage venture game. How do you think about the approach and incoming of PE firms into more traditional venture growth?

A There's a couple ways to think about it. On the one hand, you could construe it as a negative point. This is getting back to Bill Gurley's statement, because they're coming in with 50 to two hundred and fifty million checks wanting to invest in our companies, and that obviously is a big bolus of capital. I would say the flip side of that is they're playing in a certain Stratosphere that even for us, we may not necessarily play in terms of some of our companies don't necessarily need anywhere near that much capital. The other flip side of that coin is I think it's very healthy because remember, a lot of these firms are coming in not only to invest as minority growth investors, but also to buy our companies, which is a very new vein of exits for a lot of these venture-backed startups. It's really emerged, I'd say, in the last decade and much more fortunate. You see a lot of these firms, whether it's Vista or Toma Bravo or Insight. Doing that. So I actually think that it's a double-edged sword. You have to be careful about that amount of capital, but they also can be buyers of your companies in certain regards. They can also invest. So I can see both ways. We look at it as actually net positive, but you just have to make sure that doesn't happen is the ethos of the company doesn't change. Meaning with that much capital, if you were a disciplined company and you were an efficient c…

AI assessment note: “We look at it as actually net positive, but you just have to make sure”

Q with transferring 30 ownership rights stocks across multiple different companies and jurisdictions, and so I'm thrilled that that wasn't me doing that, because it would not have been smooth or seamless in any way. But having had this experience, it's a very rare experience raising any first-time fund, let alone a first-time fund like this. Chathan asked, what would your core advice be to managers contemplating raising their first-time fund?

A Yeah, it's a great question. You know, I would say that if you look at the limited partners, they are literally getting inundated with hundreds of firms that are raising capital. Many of whom are incredibly established firms that have decades and decades of experience in track records and returns. And then there's tons of new firms also trying to hit the market. And I would probably say to any of these managers, you know, we talk to our companies, our portfolio companies about getting product market fit. I would probably have each of these firms say, what is your product market fit in the VC ecosystem? How will you differentiate? How are you novel, unique, and how can you convince LPs you're going to get best in class returns? Because that's what they're after. Now, the good news for these new emerging managers is LPs are increasingly getting excited about fresh new ideas as it pertains to venture, so I think that's a big positive, but I'd say the biggest thing is just recognize the sea of other firms that are doing the exact same thing you are, and try really hard in figuring out how you're going to win.

AI assessment note: “what is your product market fit in the VC ecosystem? How will you differentiate?”

Q earlier, you said, you know, about winning, and sometimes people go for being kind of the cheapest money. In terms of kind of the Capital excessive nature that we have today in the ecosystem. I have Peter Fenton on the show, and he said, never turn down a deal based on valuation. It's a mental trap. So how do you think about your own price sensitivity today, do you think?

A I think Peter is spot on for early stage. I remember him speaking, this is a decade ago, and he said something really awful. He said, you know, largely in this business, we are price takers for the best companies. And I think that's generally been the case in the last 20 years of venture with maybe one or two extreme examples. Or exceptions. Dick Kramlick, the founder of NEA, would always say that for the best deals. I think you'd have to be price takers. I think for the later stage, I think it's a little different. A case in point is seeing some of these companies that go public at prices less than their last private round. So price does matter in the later stage because you're not really thinking about, you know, when you're thinking about a hundred X, 500 X, thousand X, whatever it is, those extreme early stage wins. If you pay 50% off for Two, three X off doesn't really matter. The later stage you play in, the more that does matter. So for us, it is making sure that we can still get best in class returns. But what I have learned in my career is don't be afraid to lean in more and more on price for the elite CEOs, elite founders, and elite companies.

AI assessment note: “don't be afraid to lean in more and more on price for the elite CEOs”

Q the distance. And there's the murky mechanics of actually, I'm raising a second fund, I need to return liquidity to my LPs, I haven't delivered any cash on cash, whatever that kind of factor may be that's murky in the mechanics of actual funds and fundraising. Would you agree that that's a misalignment? And how do you think about that potential misalignment between founder and VC given that liquidity point?

A It's a great question. It's also, you just articulated a slide in our, in our deck, which is one of the areas where we have played a role. And you're dead right. If you think about the gestation period of a venture-backed startup, it's about a decade. If you think about the length of a fund, it's generally a decade. You can extend that by a year or two, but let's just say a decade. And how many years do you have to invest in a fund or commit capital? It's about four or five years. So you could invest in the second half of your commitment period in a fund, an early stage deal. And when it's really starting to take form and take shape, you're already getting to the end of your fund life. So I think that there is a misalignment, but I think that's where you could have a secondary sale at scale where some of these investors need to show liquidity. The founding team, they feel like they really want to keep this going. And I think it's very, very healthy to effectively switch out some of these earlier investors, give them a return, a really high quality return, and then in their shoes, other investors can step in. By the way, the private equity folks have been doing this for many, many years. They just call it Sponsor-to-sponsor deals where they buy a company, they build it, and then they take it public, or many, many times they just sell it to another firm, and that cycle repeats it…

AI assessment note: “I totally agree that there is a misalignment, but I think that's where solutions”

Q landscape that we're really into Being different than ever. There's more billion dollar funds. There's more hundred billion dollar rounds. When we had Bill Gurley on the show, he said the sheer quantum of capital state is his biggest challenge. So I guess first, how would you assess the state of the ecosystem today? And would you agree with Bill in saying the quantum of capital is the biggest challenge?

A Yeah. As with most things, Bill Gurley says, I generally tend to agree and tend to agree. And I think he's dead right. If you look at the history of ventures, at least the modern era, I'd say the last 25 years. In 2000, I think a hundred million was either raised or invested, and that movie did not end well, as we all know. So I just think any time you have an influx of capital into any asset class, just a sheer volume of capital coming in much more by a multiple, usually what you see is returns degrade. So I do think that that is an issue. Having said that, there are incredible companies getting started. If you look at innovation, I mean, our good friend Jathan talks a lot about The SaaS revolution and the fact that we're still in the early innings. There's just, there's a ton of companies to be built, and there's a ton of innovation that's happening, and we've only scratched the surface on many areas in the technology landscape, so I do think there is a lot of companies to be built, but I absolutely agree that sheer amount of capital is a concern, and you just have to figure out how you win, and I think differentiating yourself and making yourself top of mind with these entrepreneurs is critical.

AI assessment note: “I absolutely agree that sheer amount of capital is a concern”

Q we still accept consultants as VCs, so have no fear there. I do want to start on Nuvia itself, because it's a first-time fund, and it's also a billion-dollar one at that, and the question that Chathan asked, kind of very poignantly, was first, given the extremely large size for a first-time fund, or for any fund, but especially for a first-time fund, how was the fundraising process for you?

A I would say it was a pretty unique process. It was really helped By the fact that this was a spinoff from NEA. And we're also, we were spinning off with a set number of companies that these companies, if you talk to the LPs, the limited partners, they believe them to be a very high quality. I also knew a lot of these LPs for many, many years. And so the vast majority of my investors in Nuvi were actually NEA investors. So it was definitely a long process. And I think I probably spoke to every lawyer on planet earth in that process, or at least it felt that way. But it was a wonderful process, and it was a ton of help, by the way. It was just, it was myself and a bunch of folks within NEA and a lot of other folks helping us out.

AI assessment note: “I would say it was a pretty unique process. It was really helped By”

Q that kind of 500,000 X's that you can get with the incredible wins at early stage. When you think about kind of the multiple required on every check you write, what does that desired multiple look like? Is it, if it has a chance of being a 10 X, is it a five X? Just help me as an early stage manager understand the mentality of a later stage manager.

A The standard that a lot of people throw around is kind of a, let's make sure that the company is in that three to five X range, but every company we invest in, there has to be a thread or something where, you know what, this actually can get outsized returns and it can approximate Some of those 10 X type returns, because we do invest largely at the hyper growth stage where there is risk. They're generally unprofitable and they're investing for growth. So you are taking on risk. You want to make sure you get compensated. And the compensation is you have this base return, but there's something about this company where it's the CEO, their own product market fit, how they're reshaping an entire ecosystem that it can really be outsized beyond that.

AI assessment note: “let's make sure that the company is in that three to five X range”

Q Can I ask also, my business partner, Fred, says it's the duty of the board member to build this kind of relationship of intimacy with the founder, where they can really tell you anything about their business or their life, and just having that True, honest, and direct relationship. How do you think about creating such close-knit relationships with those founders at the board level?

A That's kind of a great lesson. It's kind of a younger me, 1520 years ago serving on boards, and the older me now, is what I tell people is build really close personal relationships with the CEOs and the founders. The reason you do that is they're going to share more, you're going to develop this trust, you're going to cross that chasm where you actually become a trusted partner. And so when you go through tough times, and most every company does, If not all, and you need to make tough decisions, they view you as a partner, not just as an investor. And the tough calls, and you'll actually, what you should endeavor to be is the first call. Something happens, they call you, whether it's a funding issue or a strategic issue or a team issue, and you're able to add a lot more value. So I think that would be something that I totally agree. And every time I get on board, first, I try to build a strong relationship even before we invest, just to make sure that we're all simpatico in terms of how we think. Our value systems are aligned. And next, after getting on the board, make sure that you're able to build a great relationship with the CEO and the exec team.

AI assessment note: “I try to build a strong relationship even before we invest”

Q we still accept consultants as VCs, so have no fear there. I do want to start on Nuvia itself, because it's a first-time fund, and it's also a billion-dollar one at that, and the question that Chathan asked, kind of very poignantly, was first, given the extremely large size for a first-time fund, or for any fund, but especially for a first-time fund, how was the fundraising process for you?

A I would say it was a pretty unique process. It was really helped By the fact that this was a spinoff from NEA. And we're also, we were spinning off with a set number of companies that these companies, if you talk to the LPs, the limited partners, they believe them to be a very high quality. I also knew a lot of these LPs for many, many years. And so the vast majority of my investors in Nuvi were actually NEA investors. So it was definitely a long process. And I think I probably spoke to every lawyer on planet earth in that process, or at least it felt that way. But it was a wonderful process, and it was a ton of help, by the way. It was just, it was myself and a bunch of folks within NEA and a lot of other folks helping us out.

AI assessment note: “I would say it was a pretty unique process. It was really helped”

Q landscape that we're really into Being different than ever. There's more billion dollar funds. There's more hundred billion dollar rounds. When we had Bill Gurley on the show, he said the sheer quantum of capital state is his biggest challenge. So I guess first, how would you assess the state of the ecosystem today? And would you agree with Bill in saying the quantum of capital is the biggest challenge?

A Yeah. As with most things, Bill Gurley says, I generally tend to agree and tend to agree. And I think he's dead right. If you look at the history of ventures, at least the modern era, I'd say the last 25 years. In 2000, I think a hundred million was either raised or invested, and that movie did not end well, as we all know. So I just think any time you have an influx of capital into any asset class, just a sheer volume of capital coming in much more by a multiple, usually what you see is returns degrade. So I do think that that is an issue. Having said that, there are incredible companies getting started. If you look at innovation, I mean, our good friend Jathan talks a lot about The SaaS revolution and the fact that we're still in the early innings. There's just, there's a ton of companies to be built, and there's a ton of innovation that's happening, and we've only scratched the surface on many areas in the technology landscape, so I do think there is a lot of companies to be built, but I absolutely agree that sheer amount of capital is a concern, and you just have to figure out how you win, and I think differentiating yourself and making yourself top of mind with these entrepreneurs is critical.

AI assessment note: “I generally tend to agree and tend to agree. And I think he's dead right.”

Q that kind of 500,000 X's that you can get with the incredible wins at early stage. When you think about kind of the multiple required on every check you write, what does that desired multiple look like? Is it, if it has a chance of being a 10 X, is it a five X? Just help me as an early stage manager understand the mentality of a later stage manager.

A The standard that a lot of people throw around is kind of a, let's make sure that the company is in that three to five X range, but every company we invest in, there has to be a thread or something where, you know what, this actually can get outsized returns and it can approximate Some of those 10 X type returns, because we do invest largely at the hyper growth stage where there is risk. They're generally unprofitable and they're investing for growth. So you are taking on risk. You want to make sure you get compensated. And the compensation is you have this base return, but there's something about this company where it's the CEO, their own product market fit, how they're reshaping an entire ecosystem that it can really be outsized beyond that.

AI assessment note: “let's make sure that the company is in that three to five X range”

Q and then you get given a large sum of money. I often find the mental transition to actually going for growth being a challenge for the founders. How do you think about and advise founders on the transition from extremely lean, iterative, fast approaches to really pouring fuel on the fire when they have a model that works? What advice would you give them in terms of that mental transition?

A You see it really in smaller markets where there isn't as much venture. You know, we've done deals in Toronto and Atlanta and Chicago where they're used to actually operating with a very lean mindset because there just wasn't so much venture out there. Now, when these firms get a lot more capital, I think for us, really, it is they're coming from a good place. That's the first thing. If you're coming from an efficient mindset, that's always a good place to come from. It's really thinking about, all right, where is the stickiness of this? Again, I keep saying product market fit and how do you scale that efficiently? There's two ways to think about it. You get this capital and you just flush it in marketing, right? Whereas the other way to think about it is really have metrics say, okay, this is where the efficiency metrics are such that you can spend more and still grow profitably. And that's what we spend a lot of time with our management teams thinking through. And then the overlay on that is, How big a market they're going after and where they are positioned. So if you're going up to a big market and you are a leader, then you actually want to lean in more with capital. Whereas if you get a lot more capital, but it's still very murky in terms of the competitive intensity, what you don't want to do is just flood the market with capital because your competitors will probably do…

AI assessment note: “have metrics say, okay, this is where the efficiency metrics are such that you can spend more”

Q with transferring 30 ownership rights stocks across multiple different companies and jurisdictions, and so I'm thrilled that that wasn't me doing that, because it would not have been smooth or seamless in any way. But having had this experience, it's a very rare experience raising any first-time fund, let alone a first-time fund like this. Chathan asked, what would your core advice be to managers contemplating raising their first-time fund?

A Yeah, it's a great question. You know, I would say that if you look at the limited partners, they are literally getting inundated with hundreds of firms that are raising capital. Many of whom are incredibly established firms that have decades and decades of experience in track records and returns. And then there's tons of new firms also trying to hit the market. And I would probably say to any of these managers, you know, we talk to our companies, our portfolio companies about getting product market fit. I would probably have each of these firms say, what is your product market fit in the VC ecosystem? How will you differentiate? How are you novel, unique, and how can you convince LPs you're going to get best in class returns? Because that's what they're after. Now, the good news for these new emerging managers is LPs are increasingly getting excited about fresh new ideas as it pertains to venture, so I think that's a big positive, but I'd say the biggest thing is just recognize the sea of other firms that are doing the exact same thing you are, and try really hard in figuring out how you're going to win.

AI assessment note: “what is your product market fit in the VC ecosystem? How will you differentiate?”

Q the distance. And there's the murky mechanics of actually, I'm raising a second fund, I need to return liquidity to my LPs, I haven't delivered any cash on cash, whatever that kind of factor may be that's murky in the mechanics of actual funds and fundraising. Would you agree that that's a misalignment? And how do you think about that potential misalignment between founder and VC given that liquidity point?

A It's a great question. It's also, you just articulated a slide in our, in our deck, which is one of the areas where we have played a role. And you're dead right. If you think about the gestation period of a venture-backed startup, it's about a decade. If you think about the length of a fund, it's generally a decade. You can extend that by a year or two, but let's just say a decade. And how many years do you have to invest in a fund or commit capital? It's about four or five years. So you could invest in the second half of your commitment period in a fund, an early stage deal. And when it's really starting to take form and take shape, you're already getting to the end of your fund life. So I think that there is a misalignment, but I think that's where you could have a secondary sale at scale where some of these investors need to show liquidity. The founding team, they feel like they really want to keep this going. And I think it's very, very healthy to effectively switch out some of these earlier investors, give them a return, a really high quality return, and then in their shoes, other investors can step in. By the way, the private equity folks have been doing this for many, many years. They just call it Sponsor-to-sponsor deals where they buy a company, they build it, and then they take it public, or many, many times they just sell it to another firm, and that cycle repeats it…

AI assessment note: “So I totally agree that there is a misalignment, but I think that there's solutions”

Q That is very, very kind. I promise to pay you later, but I do want to start with a little on you. So venture is your third hurrah in the professional world. So how did you make your initial entry first? And then how did you come to found Nuvi most recently?

A For sure. My journey to venture was a pretty circuitous one. So a little bit of background. So I was born in India, grew up on the East coast. And at college, I went in the East Coast to Penn, and I studied bioengineering. And at the end of my time there, I really was fascinated by science and technology and really the research. And there was this burgeoning field of material science that I wanted to explore more. So I went to grad school, went to grad school at UC Santa Barbara, and got a PhD in material science and chemical engineering. And I really loved it. And back then, that was the early innings of a field that's now known as nanotechnology. Back then, it was called molecular engineering. So I thought it was really interesting. So I finished that in the mid nineties, 1994, came up actually to the Bay Area and got a job at a company called Raycam, which people probably don't know the company. It's been bought a couple of times, I think, bought and sold. It's for material scientists. It's a wonderful sandbox, a ton of innovation, ton of science. So I joined Raycam. This is in the mid nineties and I like to play soccer. So I play soccer with friends at a Robley field in Stanford on the weekends. And I got to meet new friends that were working at these crazy companies called Netscape and whatnot. And that really was a trigger for me. I said, wow, science is great and innovat…

AI assessment note: “My journey to venture was a pretty circuitous one. So a little bit of background.”

Q it makes sense to do it if you're Andreessen and you have 50 people in recruitment, 20 in marketing, 20 in product, and really, I mean, you can invest at such large scales into really building out that operational team. How do you think about that and ensuring that that operational team is effective if you don't have the resources to deploy and the structure to deploy that Andreessen does?

A Yeah, for sure, we have nowhere near that. I think it's just picking and choosing your spots. One of our operating partners has been a product veteran for 2030 years, and he gets It's embedded in the companies and really helps, but helps in a way that's more advisory versus kind of taking over. You also don't want to do that for two important reasons. Whenever that happens, usually the companies degrade pretty quickly. And the second is you want to make sure you help the companies, not do it for them. So for us, it's like I mentioned, just really picking and choosing where we can be helpful and value add. And a lot of it really is making sure that they have the right folks in terms of recruiting. The danger is you start getting operational in your companies and they see, oh, this has helped From our VCs, that's awesome. You're really not helping the company. Where you help the company is, you really help diagnose, or where can we be helpful, and who's the right person to put in that seat? Again, getting back to what I said, so much of this business is just making sure the right people, starting at the CEO, are in the right seats, and letting them execute.

AI assessment note: “we have nowhere near that. I think it's just picking and choosing your spots.”

Q it makes sense to do it if you're Andreessen and you have 50 people in recruitment, 20 in marketing, 20 in product, and really, I mean, you can invest at such large scales into really building out that operational team. How do you think about that and ensuring that that operational team is effective if you don't have the resources to deploy and the structure to deploy that Andreessen does?

A Yeah, for sure, we have nowhere near that. I think it's just picking and choosing your spots. One of our operating partners has been a product veteran for 2030 years, and he gets It's embedded in the companies and really helps, but helps in a way that's more advisory versus kind of taking over. You also don't want to do that for two important reasons. Whenever that happens, usually the companies degrade pretty quickly. And the second is you want to make sure you help the companies, not do it for them. So for us, it's like I mentioned, just really picking and choosing where we can be helpful and value add. And a lot of it really is making sure that they have the right folks in terms of recruiting. The danger is you start getting operational in your companies and they see, oh, this has helped From our VCs, that's awesome. You're really not helping the company. Where you help the company is, you really help diagnose, or where can we be helpful, and who's the right person to put in that seat? Again, getting back to what I said, so much of this business is just making sure the right people, starting at the CEO, are in the right seats, and letting them execute.

AI assessment note: “I think it's just picking and choosing your spots.”

Q That is very, very kind. I promise to pay you later, but I do want to start with a little on you. So venture is your third hurrah in the professional world. So how did you make your initial entry first? And then how did you come to found Nuvi most recently?

A For sure. My journey to venture was a pretty circuitous one. So a little bit of background. So I was born in India, grew up on the East coast. And at college, I went in the East Coast to Penn, and I studied bioengineering. And at the end of my time there, I really was fascinated by science and technology and really the research. And there was this burgeoning field of material science that I wanted to explore more. So I went to grad school, went to grad school at UC Santa Barbara, and got a PhD in material science and chemical engineering. And I really loved it. And back then, that was the early innings of a field that's now known as nanotechnology. Back then, it was called molecular engineering. So I thought it was really interesting. So I finished that in the mid nineties, 1994, came up actually to the Bay Area and got a job at a company called Raycam, which people probably don't know the company. It's been bought a couple of times, I think, bought and sold. It's for material scientists. It's a wonderful sandbox, a ton of innovation, ton of science. So I joined Raycam. This is in the mid nineties and I like to play soccer. So I play soccer with friends at a Robley field in Stanford on the weekends. And I got to meet new friends that were working at these crazy companies called Netscape and whatnot. And that really was a trigger for me. I said, wow, science is great and innovat…

AI assessment note: “My journey to venture was a pretty circuitous one. So a little bit of background.”

Q and then you get given a large sum of money. I often find the mental transition to actually going for growth being a challenge for the founders. How do you think about and advise founders on the transition from extremely lean, iterative, fast approaches to really pouring fuel on the fire when they have a model that works? What advice would you give them in terms of that mental transition?

A You see it really in smaller markets where there isn't as much venture. You know, we've done deals in Toronto and Atlanta and Chicago where they're used to actually operating with a very lean mindset because there just wasn't so much venture out there. Now, when these firms get a lot more capital, I think for us, really, it is they're coming from a good place. That's the first thing. If you're coming from an efficient mindset, that's always a good place to come from. It's really thinking about, all right, where is the stickiness of this? Again, I keep saying product market fit and how do you scale that efficiently? There's two ways to think about it. You get this capital and you just flush it in marketing, right? Whereas the other way to think about it is really have metrics say, okay, this is where the efficiency metrics are such that you can spend more and still grow profitably. And that's what we spend a lot of time with our management teams thinking through. And then the overlay on that is, How big a market they're going after and where they are positioned. So if you're going up to a big market and you are a leader, then you actually want to lean in more with capital. Whereas if you get a lot more capital, but it's still very murky in terms of the competitive intensity, what you don't want to do is just flood the market with capital because your competitors will probably do…

AI assessment note: “have metrics say, okay, this is where the efficiency metrics are such that you can spend more”

Q Can I ask also, my business partner, Fred, says it's the duty of the board member to build this kind of relationship of intimacy with the founder, where they can really tell you anything about their business or their life, and just having that True, honest, and direct relationship. How do you think about creating such close-knit relationships with those founders at the board level?

A That's kind of a great lesson. It's kind of a younger me, 1520 years ago serving on boards, and the older me now, is what I tell people is build really close personal relationships with the CEOs and the founders. The reason you do that is they're going to share more, you're going to develop this trust, you're going to cross that chasm where you actually become a trusted partner. And so when you go through tough times, and most every company does, If not all, and you need to make tough decisions, they view you as a partner, not just as an investor. And the tough calls, and you'll actually, what you should endeavor to be is the first call. Something happens, they call you, whether it's a funding issue or a strategic issue or a team issue, and you're able to add a lot more value. So I think that would be something that I totally agree. And every time I get on board, first, I try to build a strong relationship even before we invest, just to make sure that we're all simpatico in terms of how we think. Our value systems are aligned. And next, after getting on the board, make sure that you're able to build a great relationship with the CEO and the exec team.

AI assessment note: “I try to build a strong relationship even before we invest, just to make sure”

Q know, I had Samuel Shaw on the show, and he said the best early stage managers will be able to navigate secondary markets efficiently. And obviously, going in much later with your position, But I'm just intrigued how you think about it. How do you think about when to sell, how much of the position to sell, and just navigating secondary markets, which are much more fluid and liquid today?

A I think that a lot of times, you know, it really begins and ends with the CEO and the founding team, let's say selling the whole company, and it's really, do they have it in them and having a really dispassionate, intellectually honest conversation that, you know, we can get X now, but can you really translate that to Y by not selling? And I think a lot of times the answer is, you know what, we can. We're not getting the value that we think. We're just hitting at the knee of the curve in terms of the inflection point and creating value for ourselves in the market. The flip side of that is we're getting an amazing multiple, whatever that multiple is. In order for us to take the return we would have gotten now and multiply it by three, four, five X by holding it for X number of years, the risk return equation really doesn't make sense. And that's when you think, okay, maybe it's better. This is a wonderful outcome for everyone. We should think about selling. But a lot of it really is in close consultation with the founding team, because you may want to hold, but if the founding team and the management team really are closest to the field, obviously, if they see a market transition or if they are getting tired and they think, you know what, this is a great outcome, then obviously we let them drive it.

AI assessment note: “let's say selling the whole company, and it's really, do they have it in them”

Q know, I had Samuel Shaw on the show, and he said the best early stage managers will be able to navigate secondary markets efficiently. And obviously, going in much later with your position, But I'm just intrigued how you think about it. How do you think about when to sell, how much of the position to sell, and just navigating secondary markets, which are much more fluid and liquid today?

A I think that a lot of times, you know, it really begins and ends with the CEO and the founding team, let's say selling the whole company, and it's really, do they have it in them and having a really dispassionate, intellectually honest conversation that, you know, we can get X now, but can you really translate that to Y by not selling? And I think a lot of times the answer is, you know what, we can. We're not getting the value that we think. We're just hitting at the knee of the curve in terms of the inflection point and creating value for ourselves in the market. The flip side of that is we're getting an amazing multiple, whatever that multiple is. In order for us to take the return we would have gotten now and multiply it by three, four, five X by holding it for X number of years, the risk return equation really doesn't make sense. And that's when you think, okay, maybe it's better. This is a wonderful outcome for everyone. We should think about selling. But a lot of it really is in close consultation with the founding team, because you may want to hold, but if the founding team and the management team really are closest to the field, obviously, if they see a market transition or if they are getting tired and they think, you know what, this is a great outcome, then obviously we let them drive it.

AI assessment note: “really begins and ends with the CEO and the founding team, let's say selling the whole company”