The Ledger
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Motamedi: Current Series B VC vintage overall will not perform well
“Again, Harry, I come back to, unless you're betting that public market multiples are going to re-expand, or that the growth durability of these assets is a lot stronger than what we've seen in the past, the vintage writ large is not going to perform. It does n…”
Saam Motamedi: Most venture capitalists are not helpful
“And our view is most people in Metro Capital are not helpful.”
Saam Motamedi: AI investing is in a crazier bubble than peak ZIRP
“The short answer is yes, we are in a In an exuberant bubble. I think we may not even fully appreciate in how big of a bubble we're in, and what's happening, I could argue, is even crazier than what was happening in peak 2021, 2022 zero interest rate period.”
Motamedi: Right now is the best time in years to invest in SaaS
“I couldn't disagree more. I sincerely believe it is the best time in a long time to be building SaaS companies and investing in SaaS.”
Saam Motamedi: Seed rounds frequently hit $100M+ post-money valuations
“It's not unusual for us to see seed rounds for companies that are just getting started being priced in the many tens of millions of dollars, even a hundred million dollar plus post money ranges.”
Saam Motamedi: Series B market is frothier than peak 2021
“I think the series B market may be even frothier than it was in 21.”
Motamedi: 100x-200x AI multiples make no sense without unprecedented growth persistence
“Now you're investing at a hundred to 200 times revenue when public names are trading at the best public names are trading at 15 to 20 times. That dislocation does not make sense to me unless you believe that these companies fundamentally have much more persist…”
Greylock refuses to invest in fast-growing startups lacking retention
“And if we don't like the answers to those questions, it doesn't matter if the company's gone zero to twenty million in six months, we're not going to invest.”
Motamedi: AI application layer investing is no different from traditional software
“I don't think it is. And I think this is like one of the biggest misnomers in the venture zeitgeist where”
Motamedi: OpenAI will compete ruthlessly in pure code generation
“I think coding is a foundational capability. And I think if you just take kind of Pure code generation. I would bet very strongly that OpenAI is going to compete ruthlessly on that.”
Motamedi: Focused AI applications will yield many large public companies
“Like, I think there's going to be many, many large companies, public companies built that will be focused applications On top of these large model capabilities, but that's where we're focused.”
Motamedi: Foundation models with tightly coupled applications will generate strong venture returns
“On the other hand, we do think there are some applications where you need to own the model because the model needs to be tied to the application. Whether it's a personal agent, as an example, you referenced inflection. And for those, we actually do believe mon…”
Motamedi: Long-term value creation for standalone AI API services is doubtful
“I think if you're just building like, you know, An API service. I'm more skeptical. I think there's a lot of value this year, next year. I'm skeptical how it plays out.”
Motamedi: Sales reps won't use Salesforce's interface in 10 years
“And I would argue in 10 years, sales reps won't even know what the Salesforce UI looks like because the interface to the underlying system of record has changed.”
Motamedi: VCs shouldn't pass on elite founding teams over early-stage valuations
“So when you find one of those teams, I really don't believe you should be passing on price in those ranges. Because whether you do it at 20, 25, 30, 35, 40, if that company goes on to get to a hundred million plus of ARR with high growth, you're going to be ve…”
Motamedi: Greylock's Biggest Seed Misses Came From Disliking Iconic Founders' Ideas
“Our biggest mistakes where we have not, you know, pursued the investment has been where we've met someone truly iconic and we did not like the idea. And by the way, Harry, often we're right. Often two years later, the founder is working on something different,…”
Motamedi: Don't overthink market dynamics when backing iconic repeat founders
“And when you have the opportunity to work with someone like that, you don't overthink the dynamics around the market because he for sure understands it better than you do.”
Motamedi: Moving up the application stack protects focused AI models
“If you can start with a better focused model and then very quickly move up the stack into the application layer, it's actually a very good strategy.”
Motamedi: OpenAI model competition will not disrupt ElevenLabs due to workflow moats
“It might compete on the model layer, but I don't think it will matter for 11 labs because I think they built really fantastic workflow around it.”
Motamedi: Uncompetitive VCs Fail Slowly Due to Lagging Signals
“And if you're wired that way, I think it doesn't matter if you're 20 years old, 30 years old, 40 years old, 50 years old. But I think if you're not wired that way, you're dead. And it takes a while to notice, given the lagging nature of our business.”
Motamedi: Google Trends for AI prosumer apps show rapid drop-off
“Take your favorite, you know, AI prosumer application that's going really fast and just go run the Google trend graph on it. For many of them, you'll see an amazing peak. And then also it really quickly comes down.”
First-gen AI writing apps have seen growth metrics crash
“And by the way, Harry, like again, it's early, but we're seeing some of the first generation AI apps that two years ago, everybody was talking about writing assistance and the rest that had unbelievable growth metrics. You know, now come down quite a bit and r…”
Motamedi: Dismissing AI startups as 'wrappers' will age like early SaaS critiques
“I think we're going to look back on this discourse a few years from now, and it's going to feel very similar.”
Motamedi: Customer service AI startups should not build their own models
“Whereas you mentioned customer service AI, that's an area where I don't think you need tie-in, where the startup should be really focused on everything except for the model.”
Motamedi: AI pricing power requires replacing human workflows
“The bet I would take is if you take a slightly longer term view I do think you will be able to price to increase price pricing power, but the way you're going to do that is by really replacing elements of work.”
Motamedi: 80% of Greylock investments start before company inception
“In this case, we got to know these people when they were still full-time employees elsewhere, and we're helping them before the company even existed, and that actually, I think something like 80% of our investments, they're of that flavor, where we met the per…”
Motamedi: ARR Should Be a Secondary Consideration in Series A Investing
“It's an important proxy for product market fit, but I always start with who's the founder and what's the market. And then I go to ARR as a secondary consideration.”
Saam Motamedi: Founders cannot overcome poor market dynamics late in growth
“Markets have gravity. And I don't think even the best founder can overcome a market that has the wrong dynamics when it's too late.”
Motamedi: Young VCs focus too much on personal metrics over firm success
“I think most young investors make a big mistake, which is they think too about too much about themselves and not enough about the firm.”
Motamedi: Most VC firm incubations fail due to cap table greed
“Broadly, I think incubations don't work for a number of reasons. I think most firms take too much of the cap table. There's negative selection bias where they don't get the best founders to want to work with them. They can't actually help. And so I broadly thi…”
Motamedi: VC reference checks do not correlate with founder quality
“I would say in my experience, it's not correlated. Like I have backed great founders who did 12 references on me and I've backed great founders who did zero references on me. And so for what it's worth in my data set, it hasn't been correlated”
Motamedi predicts SaaS will shift to hybrid seat and work-based pricing
“I think we're going to see hybrid pricing models. Where you're going to layer on to seats the type of work that you're doing for the end user, and you're going to monetize that separately, and that will allow these companies to continue growing inside accounts…”
Motamedi: No new horizontal system of record SaaS company launched in 5-6 years
“Now, why has there not been a new deep horizontal system of record SaaS company built over the last five or six years? I can't think of one.”
Motamedi: Series A valuations range from $80M to $200M post-money
“For series A, based on what we're saying, again, for that kind of cohort of companies, If you have a little bit of product market fit, again, we're seeing pricing between 80 and maybe a 152 hundred post on the high end.”
Motamedi: Greylock led a $26M seed round in cybersecurity startup Upwind
“We backed a team coming out of NetApp, where they had previously built and scaled a business and they sold it to NetApp for half a billion dollars, and they're building a new cybersecurity company called Upwind that's off to the races, and we led a really larg…”
Motamedi: Greylock regularly leads defensive inside rounds when startups hit air pockets
“Reserves aren't just for when things are going great. It's also for when like companies hit an air pocket. And many of the great companies we've been a part of have been Have hit those air pockets and we've had to step up and we have gladly done that and let i…”
Motamedi: Wiz Raised Series A at $500M Valuation with Zero ARR
“Wiz, when they raised their Series A at a five hundred million dollar valuation, had zero in ARR.”
Abnormal Security reached $100M ARR growing over 100% year-over-year
“We were fortunate at Greylock to initiate a company called Abnormal Security, which recently announced they've crossed a hundred million of ARR growing north of a hundred percent.”
Motamedi: Greylock Backs Flawed Ideas if General Market 'Zip Code' Is Right
“I think we are more likely to do it if we think the general zip code is good, right? So, like, if you're in a good zip code, but the street you've picked to build your house on is a bad street, like that we're more willing to get behind because we're like, hey…”
Motamedi: Sourcing is the hardest and most important pillar of VC
“But I think the hardest and most important is sourcing. I believe like you are only as good as what you source.”
Motamedi: Greylock's 17th fund is $1B and targets 20-25%+ ownership
“For us, you know, we invest, you know, we're investing in our 17th fund. It's a billion dollar pool of capital. We are more ownership sensitive than price sensitive within a range, and so the lens we take on our kind of core early stage positions is how many o…”