The Exchanges

Q see you too, but I've heard so many things from George before this call, but I want to start with that first meeting. I love a good story. So tell me, how did you first come to meet George? And I hear it was a, a 15 minute meeting that he scheduled. Always a good power play. Tell me about that, and what was the story on the first meeting?

A Yeah, this is one of those ones that's gotten to be, I think it's embedded in the lore now. It, Probably wasn't 15 minutes. I flew down to Irvine with a couple of the other guys here. John Locke had gone with me and Nate Naparko, and so I'm sure we had a 30 minute meeting. You know, this was one of those companies that was very stealthy. No one knew what was going on. It was supposed to be a good team, but they weren't really talking much about it. It was very under wraps, and we kept calling George, and it's a really longer story, but we just knew that they were up to something interesting, and we had a thesis around endpoints. We wanted to meet all the companies. Finally, he kind of relented and agreed to a meeting. And I think part of it was that he looked and saw that we had a long history of investing in cyber and thought we could be, you know, helpful to him at some point. So it was the one meeting he said that he would agree to take. We flew down there. He was late because he had a, an eye doctor's appointment, the one where you get your eyes dilated. So he came in with these big shades on, you know, the sunglasses you have to wear. And I thought, well, there goes like 10 minutes of our 30 minute meeting and he can't see. Let's see how this goes. And I think, you know, one thing led to the other, and we just realized that we were really on the same page in terms of longe…

AI assessment note: “Probably wasn't 15 minutes. I flew down to Irvine with a couple of the other guys”

Q see you too, but I've heard so many things from George before this call, but I want to start with that first meeting. I love a good story. So tell me, how did you first come to meet George? And I hear it was a, a 15 minute meeting that he scheduled. Always a good power play. Tell me about that, and what was the story on the first meeting?

A Yeah, this is one of those ones that's gotten to be, I think it's embedded in the lore now. It, Probably wasn't 15 minutes. I flew down to Irvine with a couple of the other guys here. John Locke had gone with me and Nate Naparko, and so I'm sure we had a 30 minute meeting. You know, this was one of those companies that was very stealthy. No one knew what was going on. It was supposed to be a good team, but they weren't really talking much about it. It was very under wraps, and we kept calling George, and it's a really longer story, but we just knew that they were up to something interesting, and we had a thesis around endpoints. We wanted to meet all the companies. Finally, he kind of relented and agreed to a meeting. And I think part of it was that he looked and saw that we had a long history of investing in cyber and thought we could be, you know, helpful to him at some point. So it was the one meeting he said that he would agree to take. We flew down there. He was late because he had a, an eye doctor's appointment, the one where you get your eyes dilated. So he came in with these big shades on, you know, the sunglasses you have to wear. And I thought, well, there goes like 10 minutes of our 30 minute meeting and he can't see. Let's see how this goes. And I think, you know, one thing led to the other, and we just realized that we were really on the same page in terms of longe…

AI assessment note: “He came in with these big shades on... and the meeting just took two hours.”

Q appreciate it is, but you also have the relationship, the historical data, asymmetric information, and so I actually think it's more of an advantage than a disadvantage. How would you respond to that, given the fact that, as you said, you layered on additional vehicles with the insight that you have, how would you respond to LPs that would go, ah, it's a very different mindset to succeed in each?

A Yeah, look, I mean, this is not new for us, and we've been doing it for over a decade, and it is a different kind of investing. You have to think about the team differently. You have to think about your investment decision-making process differently. You know, we launched our growth fund, our first one in 2008. We're on our sixth one today. This later stage vehicle, you know, we, even though we expanded it just recently, it's our third one, and so, you know, we're just organizationally set up to think about it as What we want to do is be able to back these really extraordinary founders and companies right from the beginning. And so we're still writing, you know, a million dollar, half a million dollar seat check. But if you want to do the, you know, two or three hundred million dollar round pre IPO, we can do that also. And you just have to understand that it's not just one giant fund. There are different vehicles and teams that understand how to execute the different investment strategies. And we do that under one roof. But if you're George or someone like that, or Stuart at Slack or Ryan Smith at Qualtrics, you know, or Lots of examples of this. Then you say, like, hey, I've got this investor that can ride with me through this whole journey that's committed, have a deep relationship with them and their team, and they're committed to seeing it all the way through. And that, yo…

AI assessment note: “there are different vehicles and teams that understand how to execute the different investment strategies”

Q growth. Before we talk about financing, I do just want to touch on, you mentioned the element of, like, services versus software-based revenue there. Like, a lot of founders here, VCs say, services revenue is bad, and we've got to avoid it. How do you feel about services-based revenue, and how do you advise founders today where services is a component part of their business, but they're concerned about it?

A Yeah, I think you've got to break that down a little bit. So, you know, if you're talking about a software business, even if it's a cloud or SaaS business, And there's services as it relates to making a customer successful. Implementation services. I think we look at that very carefully because to me, if that, if the percentage of that rises too much in the company, it really tells me that there are product issues at the root of what's happening there. And it's just too hard to onboard customers and it takes too long. And therefore it just, it's just a drag on growth overall. And there's risk in that in terms of overall customer success. So I think there's, It's an indicator, but then there's other types of services. So you look at the incident response services at CrowdStrike, which are, it's a self-contained business. It's very high end. It's high margin. It's a very critical service because it's delivered at the time when a company's had a breach and you're trying to address in that moment what they need to go do. We look at that and say like, that's a standalone business. It's not related to the product at all. In fact, it's an amazing business because once you make money on incident response services, it pulls through product afterwards. Right. Because that the next thing you're going to do is like, well, how do we avoid this in the future? So I think that's a really great…

AI assessment note: “the implementation services, that's the one that I'm very wary of”

Q appreciate it is, but you also have the relationship, the historical data, asymmetric information, and so I actually think it's more of an advantage than a disadvantage. How would you respond to that, given the fact that, as you said, you layered on additional vehicles with the insight that you have, how would you respond to LPs that would go, ah, it's a very different mindset to succeed in each?

A Yeah, look, I mean, this is not new for us, and we've been doing it for over a decade, and it is a different kind of investing. You have to think about the team differently. You have to think about your investment decision-making process differently. You know, we launched our growth fund, our first one in 2008. We're on our sixth one today. This later stage vehicle, you know, we, even though we expanded it just recently, it's our third one, and so, you know, we're just organizationally set up to think about it as What we want to do is be able to back these really extraordinary founders and companies right from the beginning. And so we're still writing, you know, a million dollar, half a million dollar seat check. But if you want to do the, you know, two or three hundred million dollar round pre IPO, we can do that also. And you just have to understand that it's not just one giant fund. There are different vehicles and teams that understand how to execute the different investment strategies. And we do that under one roof. But if you're George or someone like that, or Stuart at Slack or Ryan Smith at Qualtrics, you know, or Lots of examples of this. Then you say, like, hey, I've got this investor that can ride with me through this whole journey that's committed, have a deep relationship with them and their team, and they're committed to seeing it all the way through. And that, yo…

AI assessment note: “There are different vehicles and teams that understand how to execute the different investment strategies.”

Q have to ask in terms of the deal itself, you know, I think a lot now about kind of outcome scenario planning and upside maximization when writing growth checks. And it's like, what is attractive enough? I hear some people that's Three to five X others like you think too small. It's seven to 10 X. What for you is attractive enough in terms of seeing the upside scenario planning?

A Yeah, I think it's a little bit different. I mean, I get the three to five X, you know, that's nice in a base case, but when you're making an investment like this and for us, you know, we had made it as a early growth equity investment. So it was a pretty risky one from that standpoint, just given the maturity of the company, but you know, the way we would look at it or the way we did look at it then is if all this works and we're right about cloud native, Right about endpoint being reinvented. Then there's a chance for a number of companies to be successful. And we know that multi-billion dollar companies been built in the past on endpoint. So, you know, there's already the existence of, you know, companies in this category that have gotten big outcomes. So for us, it's like, if this all works, then we know that the outcome is measured with a beat, right? Some number of billions. Then the question is, from a growth standpoint, a growth equity standpoint, is there a downside scenario that still enables us to achieve a good outcome? And part of that in the case of CrowdStrike was back to the idea that threat intelligence as a content subscription and incident response are already big enough categories where you can create a company that can have a nice outcome. And so we felt like, you know, the downside was protected, but we were going after the bigger opportunity. So I never l…

AI assessment note: “Is there a legitimate chance it could be worth one, two or three billion?”

Q growth. Before we talk about financing, I do just want to touch on, you mentioned the element of, like, services versus software-based revenue there. Like, a lot of founders here, VCs say, services revenue is bad, and we've got to avoid it. How do you feel about services-based revenue, and how do you advise founders today where services is a component part of their business, but they're concerned about it?

A Yeah, I think you've got to break that down a little bit. So, you know, if you're talking about a software business, even if it's a cloud or SaaS business, And there's services as it relates to making a customer successful. Implementation services. I think we look at that very carefully because to me, if that, if the percentage of that rises too much in the company, it really tells me that there are product issues at the root of what's happening there. And it's just too hard to onboard customers and it takes too long. And therefore it just, it's just a drag on growth overall. And there's risk in that in terms of overall customer success. So I think there's, It's an indicator, but then there's other types of services. So you look at the incident response services at CrowdStrike, which are, it's a self-contained business. It's very high end. It's high margin. It's a very critical service because it's delivered at the time when a company's had a breach and you're trying to address in that moment what they need to go do. We look at that and say like, that's a standalone business. It's not related to the product at all. In fact, it's an amazing business because once you make money on incident response services, it pulls through product afterwards. Right. Because that the next thing you're going to do is like, well, how do we avoid this in the future? So I think that's a really great…

AI assessment note: “implementation services, that's the one that I'm very wary of”

Q Was there a moment in the meeting where it clicked? I often find sometimes there's just a click moment when I suddenly see the unlock in terms of ancillary products that we can build on the back of it, how we can build data moats, whatever that is. Was there an unlock for you?

A I don't think there was one unlock, Harry, but I think it was more like we could finish each other's sentences. And so we talk about the opportunity, why he was building his products that way. He was cloud native at a time when that was really revolutionary step to take. And he was so committed to that concept. And then we said, yeah, we're big believers in that. I would say something and then he would jump in and finish it. And then he would say something and I'd finish it. And we just realized that we were talking the same language about the opportunity. And it didn't make sense to stop the meeting because now we got into the creative riffing of what The company could be. That was ours.

AI assessment note: “I don't think there was one unlock, Harry, but I think it was more”

Q as fast as they do achieve them. We see companies like Hopin achieved Incredible, incredible valuations and revenue numbers in very, very short time frames, unlike ever before. Do you think it's still possible to go slow, to go fast, do the hard yards first, and get the VC love and funding that others would get if they just hit the revenue ground running and go for the easy wins?

A Yeah, I think so. I mean, I think it all comes in if you articulate what your longer term plan is. So something that George is really good at is he's able to talk about where the market's going and why he's doing things in the company that are going to be relevant Two, three, four years down the road, but he does that at the same time where he's got this current focus on what has to happen in the quarter or the month. The combination of those two things is pretty rare. So I think if you have an entrepreneur like that or a founder like that, and you understand, and you're also a patient investor, you may be perfectly happy to take an investment in the company that maybe isn't the first one out of the gates, but is really looking at owning that opportunity over the longer haul. You know, the ones that get the quick markups And are focused on the, uh, the vanity metrics and the vanity valuations. Maybe that's great in terms of a quick hit on funding or valuation or even a quick hit on exit. But if you care about building companies for the, you know, that are going to really persist, there's an element of you got to go quick. It's not like you're going slow, but you have to do it right. And are you willing to be patient to really make those correct trade-offs when the decisions come up? But look, I think your hopping example is great. It's a phenomenal company and we're investors t…

AI assessment note: “Yeah, I think so. I mean, I think it all comes in if you articulate”

Q totally agree with you. I do want to touch on the financing element. I spoke to George, obviously before the show, I spoke to David George before the show also. And so I wanted to talk on, cause you led multiple rounds In CrowdStrike, which is pretty rare, actually. So what do you think enabled you to build the trust with George that he wanted you to lead multiple rounds?

A Yeah, I think, you know, as we were getting into this, our relationship and our roles had changed. In the beginning, there was a lot of company building, and we were assembling the team to go to market, and I really worked closely with George on that. I think, you know, he always appreciated that we were very patient about what the long-term vision and outcome of the company would be. We're on the same path as him. It's like that early meeting where we could finish each other's thoughts. As we went along in this company, our clarity of what would happen in a year or two or three, it became more obvious and clear. And frankly, the opportunity became bigger. And I think he saw that we understood it as well. And we were willing to be patient and go after that and build a company to pursue that and weren't looking for any sort of quick outcomes or anything. And that patience and sort of then helping him along the way and being consistent and also agreeing with that vision Just sort of strengthen the relationship over time. And then, you know, I think having an investor like us that offers a stamp of approval every round along the way in terms of, you know, really wanting to be aggressive about investing in the company, it just sends a great signal to the market. He understood that and it helped catalyze. There was always interest in this company, but I think it helped catalyze inte…

AI assessment note: “we were very patient about what the long-term vision and outcome of the company would be.”

Q have to ask in terms of the deal itself, you know, I think a lot now about kind of outcome scenario planning and upside maximization when writing growth checks. And it's like, what is attractive enough? I hear some people that's Three to five X others like you think too small. It's seven to 10 X. What for you is attractive enough in terms of seeing the upside scenario planning?

A Yeah, I think it's a little bit different. I mean, I get the three to five X, you know, that's nice in a base case, but when you're making an investment like this and for us, you know, we had made it as a early growth equity investment. So it was a pretty risky one from that standpoint, just given the maturity of the company, but you know, the way we would look at it or the way we did look at it then is if all this works and we're right about cloud native, Right about endpoint being reinvented. Then there's a chance for a number of companies to be successful. And we know that multi-billion dollar companies been built in the past on endpoint. So, you know, there's already the existence of, you know, companies in this category that have gotten big outcomes. So for us, it's like, if this all works, then we know that the outcome is measured with a beat, right? Some number of billions. Then the question is, from a growth standpoint, a growth equity standpoint, is there a downside scenario that still enables us to achieve a good outcome? And part of that in the case of CrowdStrike was back to the idea that threat intelligence as a content subscription and incident response are already big enough categories where you can create a company that can have a nice outcome. And so we felt like, you know, the downside was protected, but we were going after the bigger opportunity. So I never l…

AI assessment note: “Is there a legitimate chance it could be worth one, two or three billion?”

Q Was there a moment in the meeting where it clicked? I often find sometimes there's just a click moment when I suddenly see the unlock in terms of ancillary products that we can build on the back of it, how we can build data moats, whatever that is. Was there an unlock for you?

A I don't think there was one unlock, Harry, but I think it was more like we could finish each other's sentences. And so we talk about the opportunity, why he was building his products that way. He was cloud native at a time when that was really revolutionary step to take. And he was so committed to that concept. And then we said, yeah, we're big believers in that. I would say something and then he would jump in and finish it. And then he would say something and I'd finish it. And we just realized that we were talking the same language about the opportunity. And it didn't make sense to stop the meeting because now we got into the creative riffing of what The company could be. That was ours.

AI assessment note: “I don't think there was one unlock, Harry, but I think it was more”

Q I do want to start, and it kind of top down, you mentioned that kind of being cloud native at a time when it really wasn't common at all, and actually quite a contrarian thought. So when you think back to that first check, how did you analyze and break down the market, given it's a very different market than it is today?

A Yeah, look, so I think, you know, when we look at this, there's a couple things that were really important to us. And if you go back and evaluate what was happening in cyber at the time, you know, endpoint hadn't really been touched and people were really innovating on other parts, you know, network security. And I'd been in this company source fire that had done some really innovative stuff around intrusion detection and then just general network security. But endpoint was still like this legacy, very brittle antivirus, you know, kind of stuff that you remember your Mac takes forever to boot up or your PC, you know, bogs down that sort of thing. And we just looked at it and said like, that's gotta get reinvented because The threat landscape is so much more sophisticated than it was when these things started. Everything else that we were seeing in that time was all about how do we move legacy on prem to cloud in a pure cloud native way from the beginning, the business and the product architected for that. And security was one of the ones that people felt like that's never going to happen. No one's going to want their security go outside the four walls. They're not going to trust it to be in the cloud. And George had this Vision of like, this is the only way to solve the problem at scale, and he was so committed to it, just like relentlessly determined on this, and we also felt …

AI assessment note: “endpoint hadn't really been touched and people were really innovating on other parts”

Q team there, because you mentioned it quite a few times, obviously, and we touched on George before the call. You know, when I looked at the memo, it was just the speed of execution that was unparalleled, scaling the team to a hundred with 60 engineers and ten million in bookings in one year. How much weight did you place on the speed of their execution when making this investment?

A Yeah, I like that you call it speed of execution. So I would rephrase it a little bit. And speed is a component of it. I think we look at execution overall in terms of the quality of it. And some element of that is speed, but it may not be that you're the fastest. You just have to be the best at different aspects of executing your plan on your business. And some of it might actually be that you're taking longer to do something, but it's the right way to do it. And you didn't take the shortcut. You took the harder path, but it's the one that sets you up for longer term success. And one of the things I'll point back to is I wrote this blog post when the company went public. It really talked about in the early days how George was very focused on doing things right. What we called it was do the hard things first. And part of that related to he had this longer term vision of what the company could be, but it meant that you had to lay the foundation right in the beginning. You couldn't take the shortcut because you'd never be able to go back and fix it later on. It's really difficult to do. And a lot of that was in product decisions. It was a team and org decisions. And we didn't necessarily go the fastest, right? So when you say speed, we weren't the first, you know, to do next gen AV as an example, but we did it better, even though it took longer. And that set the company up to rea…

AI assessment note: “I think we look at execution overall in terms of the quality of it.”

Q as fast as they do achieve them. We see companies like Hopin achieved Incredible, incredible valuations and revenue numbers in very, very short time frames, unlike ever before. Do you think it's still possible to go slow, to go fast, do the hard yards first, and get the VC love and funding that others would get if they just hit the revenue ground running and go for the easy wins?

A Yeah, I think so. I mean, I think it all comes in if you articulate what your longer term plan is. So something that George is really good at is he's able to talk about where the market's going and why he's doing things in the company that are going to be relevant Two, three, four years down the road, but he does that at the same time where he's got this current focus on what has to happen in the quarter or the month. The combination of those two things is pretty rare. So I think if you have an entrepreneur like that or a founder like that, and you understand, and you're also a patient investor, you may be perfectly happy to take an investment in the company that maybe isn't the first one out of the gates, but is really looking at owning that opportunity over the longer haul. You know, the ones that get the quick markups And are focused on the, uh, the vanity metrics and the vanity valuations. Maybe that's great in terms of a quick hit on funding or valuation or even a quick hit on exit. But if you care about building companies for the, you know, that are going to really persist, there's an element of you got to go quick. It's not like you're going slow, but you have to do it right. And are you willing to be patient to really make those correct trade-offs when the decisions come up? But look, I think your hopping example is great. It's a phenomenal company and we're investors t…

AI assessment note: “Yeah, I think so. I mean, I think it all comes in if you articulate”

Q totally agree with you. I do want to touch on the financing element. I spoke to George, obviously before the show, I spoke to David George before the show also. And so I wanted to talk on, cause you led multiple rounds In CrowdStrike, which is pretty rare, actually. So what do you think enabled you to build the trust with George that he wanted you to lead multiple rounds?

A Yeah, I think, you know, as we were getting into this, our relationship and our roles had changed. In the beginning, there was a lot of company building, and we were assembling the team to go to market, and I really worked closely with George on that. I think, you know, he always appreciated that we were very patient about what the long-term vision and outcome of the company would be. We're on the same path as him. It's like that early meeting where we could finish each other's thoughts. As we went along in this company, our clarity of what would happen in a year or two or three, it became more obvious and clear. And frankly, the opportunity became bigger. And I think he saw that we understood it as well. And we were willing to be patient and go after that and build a company to pursue that and weren't looking for any sort of quick outcomes or anything. And that patience and sort of then helping him along the way and being consistent and also agreeing with that vision Just sort of strengthen the relationship over time. And then, you know, I think having an investor like us that offers a stamp of approval every round along the way in terms of, you know, really wanting to be aggressive about investing in the company, it just sends a great signal to the market. He understood that and it helped catalyze. There was always interest in this company, but I think it helped catalyze inte…

AI assessment note: “he always appreciated that we were very patient about what the long-term vision”

Q I mean, it is a bold assertion, and it is a bold bet, and bluntly, it could have been five years delayed, quite frankly, in terms of enterprise adoption of, I mean, Cloud Native in this way, but market timing risk is something I'm always inherently quite scared of. How do you feel about taking market timing risk today?

A Well, I think just more generally speaking, like market timing, if you get it right, it covers up a lot of other deficits in a business, right? If your team is incomplete, your product isn't quite there. If your execution is not stellar, you can cover all that stuff up. If you just hit the market at the right time for a while, eventually it will catch up with you or somebody will do it better. And so we're always, we're very much It's oriented at evaluating opportunities to see, you know, and really assess where we are from a timing perspective, but all the other aspects of the market too. What are the dynamics as it relates to the existing players? How are other competitors thinking about it? Is there something that says that the timing today makes more sense than it would tomorrow or yesterday? You know, all those things factor in. We really start there before we think about technology and products and things like that, because I think if you get timing wrong, it's It's hard to overcome that with any other part of the business. And then, you know, with CrowdStrike, it was a sense of not if, but when. And so we were pretty pragmatic going in saying it could take a while. And you're right. It could have been five years longer. I would not have been surprised if it was five years longer. It happened faster than I expected, but we went in thinking it was like, this is the long-te…

AI assessment note: “we're very much It's oriented at evaluating opportunities to see... timing perspective”

Q Which I totally get, but then I spoke to George, and George tells me, That you, uh, I couldn't believe it. He said, you wrote a term sheet, and you'd say, go shop it. Now, that is very unlike any other VC, as we both know. I mean this with respect, Samir. Like, what were you thinking, and how did that play out?

A Yeah, I had a lot of people that said, what were you thinking at the time? So here's what I felt. I felt like he valued our relationship, and the fact that we're investors. But I also thought, like, hey, look, he's a sophisticated entrepreneur. It wasn't his first company. He's smart. He wants to understand what's out there, and it's not just What capital and valuation and that sort of thing, which he obviously wanted to make sure that he was doing the right thing for the company, but maybe there were other investors that should be part of the syndicate. Likewise, you know, when I talked to George about it, I said, look, you know, like you should do your homework and make the best decision you could possibly make for the company. But I tell you what, I'm committed to it. I'm excited about where we're going. I'm willing to do it. Why don't you take my offer, my term sheet, you have it in your back pocket. So when you have these other conversations, Go in knowing that your deal done already, and if someone comes along and offers you something much better, or you think they're additive to the mix and you want to bring them in, it's just better for all of us. So I just think it was the right call for the company to end up at the right spot at the end, and he felt like, I felt like he would come out of that realizing that he had done, you know, run a thorough process, done his analy…

AI assessment note: “I had a lot of people that said, what were you thinking at the time?”

Q I mean, it is a bold assertion, and it is a bold bet, and bluntly, it could have been five years delayed, quite frankly, in terms of enterprise adoption of, I mean, Cloud Native in this way, but market timing risk is something I'm always inherently quite scared of. How do you feel about taking market timing risk today?

A Well, I think just more generally speaking, like market timing, if you get it right, it covers up a lot of other deficits in a business, right? If your team is incomplete, your product isn't quite there. If your execution is not stellar, you can cover all that stuff up. If you just hit the market at the right time for a while, eventually it will catch up with you or somebody will do it better. And so we're always, we're very much It's oriented at evaluating opportunities to see, you know, and really assess where we are from a timing perspective, but all the other aspects of the market too. What are the dynamics as it relates to the existing players? How are other competitors thinking about it? Is there something that says that the timing today makes more sense than it would tomorrow or yesterday? You know, all those things factor in. We really start there before we think about technology and products and things like that, because I think if you get timing wrong, it's It's hard to overcome that with any other part of the business. And then, you know, with CrowdStrike, it was a sense of not if, but when. And so we were pretty pragmatic going in saying it could take a while. And you're right. It could have been five years longer. I would not have been surprised if it was five years longer. It happened faster than I expected, but we went in thinking it was like, this is the long-te…

AI assessment note: “we were pretty pragmatic going in saying it could take a while”

Q Tell me, what was your pre-mortem on this one?

A Yeah, I looked at it, so I, I think the number one thing on this was like, man, we just whiffed on the cloud native concept, and nobody's willing to do it, you know, like, that was one where, if you got that wrong, you know, and I think you see in my memo, it's like, well, if we totally botched this, and we're totally wrong about this, We're going to build a nice IR company, and we'll have a, like, a pretty nice outcome, but I didn't think that was going to be the case, but that was really, like, that's a way to sort of justify it to yourself if you're writing a big check in a really, really early company.

AI assessment note: “the number one thing on this was like, man, we just whiffed on the cloud native concept”

Q on timing, and it could be five years. Do you mentally write a check for five years with that in mind, and continuously, I mean, where do you draw the line? Because there is a time when the rubber hits the road, and the market isn't there, or isn't evolving. How do you think about that, and when you have to pull the cord, and market timing just isn't timing?

A Yeah, I look, I think, and if I was going to give you numbers, if we really felt like, hey, this is, Five years plus out. It's probably too far out for what we were trying to do with a CrowdStrike type of investment, which is really, you know, it's a go into market investment. It's not an early development stage company. It was like ready to launch a product. And so if you're waiting five years, it's a lot of time to be sitting around. I think there's other types of investing where you're willing to go that far. Look, I think we really look at it and say like, it's gotta be, you know, within plus or minus a year or two. That's the right way to look at it. If you're later than that, you're too late. And I think if you're earlier than that, it's just a different kind of investment. And with this one, here's why you can feel like you might get cloud adoption happening sooner. It was so much pressure around the kinds of attacks that companies were facing. Like think about the difference, you know, in 2013, now you're talking about organized crime or state sponsored, you know, threats and the sophistication and the backing and the capital behind it and the risks and the benefits of pulling off something like a hack or a, or intrusion. Like there was so much bigger. So companies had to do something different. They just weren't going to be able to sustain the way they were doing in th…

AI assessment note: “Five years plus out. It's probably too far out for what we were trying to do”

Q My question to you is in terms of like marketing evolution that you didn't expect, did the market evolve in a way that surprised you or was unexpected?

A No, look, I think it's back to what we talked about on the timing. I think we had a scale that was, that was longer than it was, you know, I don't think it was not five years, but we felt like, Hey, we could be pushing cloud and having a slower adoption cycle around the Falcon platform, which is really the endpoint product platform. And the way that was mitigated for us is that the company was doing really high-end incident response services, and so there was a bridge to get there, as opposed to, you know, you're trying to sell a product that the market's not ready for. It felt like we had a transition period, and we could absorb some of the slack on the market timing by offering the IR services, which in and of itself was a really good category, right? There were companies that, Mandiant is an example, highly successful in that particular category. So we had some downside protection, even though the long-term vision was really just Falcons. Product and, you know, doing the, the cloud-based employee protection. But yeah, I think, look, I mean, if you look at that and say, again, if versus when, what's the question? And we felt like it was when it really came down to, you know, having a couple of years here or there of just, you know, being able to manage the timing aspect of it.

AI assessment note: “No, look, I think it's back to what we talked about on the timing.”

Q team there, because you mentioned it quite a few times, obviously, and we touched on George before the call. You know, when I looked at the memo, it was just the speed of execution that was unparalleled, scaling the team to a hundred with 60 engineers and ten million in bookings in one year. How much weight did you place on the speed of their execution when making this investment?

A Yeah, I like that you call it speed of execution. So I would rephrase it a little bit. And speed is a component of it. I think we look at execution overall in terms of the quality of it. And some element of that is speed, but it may not be that you're the fastest. You just have to be the best at different aspects of executing your plan on your business. And some of it might actually be that you're taking longer to do something, but it's the right way to do it. And you didn't take the shortcut. You took the harder path, but it's the one that sets you up for longer term success. And one of the things I'll point back to is I wrote this blog post when the company went public. It really talked about in the early days how George was very focused on doing things right. What we called it was do the hard things first. And part of that related to he had this longer term vision of what the company could be, but it meant that you had to lay the foundation right in the beginning. You couldn't take the shortcut because you'd never be able to go back and fix it later on. It's really difficult to do. And a lot of that was in product decisions. It was a team and org decisions. And we didn't necessarily go the fastest, right? So when you say speed, we weren't the first, you know, to do next gen AV as an example, but we did it better, even though it took longer. And that set the company up to rea…

AI assessment note: “I would rephrase it a little bit. And speed is a component of it.”

Q on timing, and it could be five years. Do you mentally write a check for five years with that in mind, and continuously, I mean, where do you draw the line? Because there is a time when the rubber hits the road, and the market isn't there, or isn't evolving. How do you think about that, and when you have to pull the cord, and market timing just isn't timing?

A Yeah, I look, I think, and if I was going to give you numbers, if we really felt like, hey, this is, Five years plus out. It's probably too far out for what we were trying to do with a CrowdStrike type of investment, which is really, you know, it's a go into market investment. It's not an early development stage company. It was like ready to launch a product. And so if you're waiting five years, it's a lot of time to be sitting around. I think there's other types of investing where you're willing to go that far. Look, I think we really look at it and say like, it's gotta be, you know, within plus or minus a year or two. That's the right way to look at it. If you're later than that, you're too late. And I think if you're earlier than that, it's just a different kind of investment. And with this one, here's why you can feel like you might get cloud adoption happening sooner. It was so much pressure around the kinds of attacks that companies were facing. Like think about the difference, you know, in 2013, now you're talking about organized crime or state sponsored, you know, threats and the sophistication and the backing and the capital behind it and the risks and the benefits of pulling off something like a hack or a, or intrusion. Like there was so much bigger. So companies had to do something different. They just weren't going to be able to sustain the way they were doing in th…

AI assessment note: “Five years plus out. It's probably too far out for what we were trying to do”

Q and a lot of founders are asking me is, when we have preemptive operas, how do we determine whether to take them at very high prices, or whether to stay disciplined, stay the course, we don't need the money. You have this, I'm sure, with all of your portfolio companies. Like, how do you advise them on whether to take the preemptive term sheet, or whether to stay the course?

A Well, every situation is different in terms of capital needs of the company's And, you know, their ability to go raise money. But I think, you know, non-dilutive simple capital is something you have to look at pretty seriously, right? It's like, it has a benefit. There's a cost to it, perhaps, but more of a risk that, you know, an overcapitalized business doesn't always have the same rigor in terms of how you run it as a company that's been capitalized thoughtfully. It's also getting ahead of yourself creates all these issues downstream potentially. But I do think that when we look at things and say, like, if there's relatively non-dilutive capital with terms that make sense, You know, we want to have the flexibility later on to do other things, and it's not a bad decision to go, to go take that money. Part of it is also, when we look at this, and I'll tell you, this is one of the things that came out of this whole CrowdStrike experience, is you get all these coming from the outside, but the reality is that we also have a great inside view on these companies, have a sense for what their real opportunity is and what the outcomes could be. I mean, at this point, you should really intimately understand it, and if you don't, that's a problem, but If you're inside, you should understand it, and so we can present a simple alternative, which is what happened in the CrowdStrike case. L…

AI assessment note: “an overcapitalized business doesn't always have the same rigor in terms of how you run it”

Q Tell me, what was your pre-mortem on this one?

A Yeah, I looked at it, so I, I think the number one thing on this was like, man, we just whiffed on the cloud native concept, and nobody's willing to do it, you know, like, that was one where, if you got that wrong, you know, and I think you see in my memo, it's like, well, if we totally botched this, and we're totally wrong about this, We're going to build a nice IR company, and we'll have a, like, a pretty nice outcome, but I didn't think that was going to be the case, but that was really, like, that's a way to sort of justify it to yourself if you're writing a big check in a really, really early company.

AI assessment note: “number one thing on this was like, man, we just whiffed on the cloud native concept”

Q What's your favorite memory from working with the company? Final one.

A I have so many, but I'll tell you, I'll give you an anecdote. It's not quite a memory, but it's one of the things that has brought us together, George and myself. We both have this passion for racing and George, as you know, is a pretty incredible race car driver. One of my memories, like every board meeting we start, we talk about what race we've done and what happened. We watch each other's videos and it's just a, it's a common thing that we share. But it translated to the business, and I thought about this a lot. I was like, what is it about the racing that's also like the business? And part of that is, if you got to be a really good driver, you have to be able to look up and out. You're not looking at what's next to you. Like, you got your peripheral vision and everything, but, you know, like, the really good ones are already, like, way ahead of where you are in, on the racetrack, and so for George, like, he does that driving, but he does that in the business, too, and when you think about when you're listening to him talk, And he's like, this is where the market's going. This is what customers are going to need. This is how we're going to solve the problem. And he's talking two or three years out. But while he's doing that, everything in the company today is being built to address that two or three years later. He does not lose his sight or attention to detail on the prese…

AI assessment note: “every board meeting we start, we talk about what race we've done”

Q and a lot of founders are asking me is, when we have preemptive operas, how do we determine whether to take them at very high prices, or whether to stay disciplined, stay the course, we don't need the money. You have this, I'm sure, with all of your portfolio companies. Like, how do you advise them on whether to take the preemptive term sheet, or whether to stay the course?

A Well, every situation is different in terms of capital needs of the company's And, you know, their ability to go raise money. But I think, you know, non-dilutive simple capital is something you have to look at pretty seriously, right? It's like, it has a benefit. There's a cost to it, perhaps, but more of a risk that, you know, an overcapitalized business doesn't always have the same rigor in terms of how you run it as a company that's been capitalized thoughtfully. It's also getting ahead of yourself creates all these issues downstream potentially. But I do think that when we look at things and say, like, if there's relatively non-dilutive capital with terms that make sense, You know, we want to have the flexibility later on to do other things, and it's not a bad decision to go, to go take that money. Part of it is also, when we look at this, and I'll tell you, this is one of the things that came out of this whole CrowdStrike experience, is you get all these coming from the outside, but the reality is that we also have a great inside view on these companies, have a sense for what their real opportunity is and what the outcomes could be. I mean, at this point, you should really intimately understand it, and if you don't, that's a problem, but If you're inside, you should understand it, and so we can present a simple alternative, which is what happened in the CrowdStrike case. L…

AI assessment note: “if there's relatively non-dilutive capital with terms that make sense... it's not a bad decision”

Q with founders is like the speed of company growth and trajectories accelerated so much. Hoppin being a great example, Miro being another great example in your portfolio, you name it. But people fundamentally, like, haven't, like, increased brain size necessarily. Like, people have not increased their acceleration ability at the same scale of company. How do you advise founders in terms of scaling with the increased acceleration of company growth?

A Yeah, I think it's a tough challenge, and I think if there's not a, you know, in a company like that, if there isn't some sort of conceptual north star that everybody understands, you know, like, there's a vision and then some sort of mission for the company, and people are really bought in And it's easy to articulate. It's hard because you're adding people at an incredible rate. Everybody's moving so fast. You're not all sitting around together. We're in a virtual world too. You know, if you don't have that commonality of purpose, I think it's really hard to go do. And when it's simplifying and people really understand what you're all about, and I think even in the CrowdStrike case, it took us a couple of years to really articulate it. I remember in the beginning, it was fuzzy and we used to work on that and say, like, how do we really crisply articulate what we're all about? I think these companies that are growing really fast and are managing to do it are able to get everybody on board with that same clarity of vision because it applies to employees in the company, people you're recruiting, but it's also like your partners, your customers, it's everybody in the ecosystem. And if it's confusing, it's hard to do. And then it gets back to our execution conversation, right? Which team is really exceptional on that basis. And now the difference between the winner and the loser is…

AI assessment note: “if there isn't some sort of conceptual north star that everybody understands”

Q with founders is like the speed of company growth and trajectories accelerated so much. Hoppin being a great example, Miro being another great example in your portfolio, you name it. But people fundamentally, like, haven't, like, increased brain size necessarily. Like, people have not increased their acceleration ability at the same scale of company. How do you advise founders in terms of scaling with the increased acceleration of company growth?

A Yeah, I think it's a tough challenge, and I think if there's not a, you know, in a company like that, if there isn't some sort of conceptual north star that everybody understands, you know, like, there's a vision and then some sort of mission for the company, and people are really bought in And it's easy to articulate. It's hard because you're adding people at an incredible rate. Everybody's moving so fast. You're not all sitting around together. We're in a virtual world too. You know, if you don't have that commonality of purpose, I think it's really hard to go do. And when it's simplifying and people really understand what you're all about, and I think even in the CrowdStrike case, it took us a couple of years to really articulate it. I remember in the beginning, it was fuzzy and we used to work on that and say, like, how do we really crisply articulate what we're all about? I think these companies that are growing really fast and are managing to do it are able to get everybody on board with that same clarity of vision because it applies to employees in the company, people you're recruiting, but it's also like your partners, your customers, it's everybody in the ecosystem. And if it's confusing, it's hard to do. And then it gets back to our execution conversation, right? Which team is really exceptional on that basis. And now the difference between the winner and the loser is…

AI assessment note: “if there isn't some sort of conceptual north star that everybody understands”