CapitalG

“And at some point, we raised money from Google. Capital G is one of their investment arms. And the partner from that firm sat me down and she said, nobody else will invest in this company if you don't figure out how to make money. You know, you're not going to…”

“So it was five hundred millions of euros at a five billion valuation. It was Summit Partners, one of our earlier investors who sold to Sequoia Capital, BlackRock, Mubadala, and Capital G.”

“Fabian Pinkhares is announcing a five hundred million, ooh, million? I was gonna say dollars, but then I caught the symbol here, five hundred million euro investment in UDU at a five billion euro valuation. Which has been led by Capital G and Sequoia Capital a…”

“One of the early lessons I got in pattern recognition in investing was believing more in the second and third act than I think really would transpire for most companies.”

“So I would like to invest in a non-founder led company. You point out Satya, I know dozens of incredible CEOs that were not founders and have same, but different mix of special sauce that makes them The right person to lead that company, and often to lead the …”

“Now when I look at an investment, almost always my base case is I'm only going to underwrite what exists today. I can get excited about the possibility of the future, and that's built into the upside case, but if there's not evidence of the launch of that prod…”

“I would say in the growth stage, more often they wait too long, particularly as they're ramping up in, in the couple of years prior to IPO, because it's almost always Needed for a strong public company to have some sort of diversification.”

“I think there's a bit of a myth that once you go public, you can't make the investments that you want. I don't believe that's true. I think you can make the investments you want, but you are accountable to delivering those results.”

“But I don't actually think it's necessarily a scale thing. I've seen a hundred million dollar revenue companies that are operating with that level of precision have their story tight, have their execution plan really tight, and would be a good candidate to go …”

“We would never underwrite something dependent on M&A.”

“That's one of my core investment theses is always look for outlier metrics and look for outlier personality traits in a founder. I believe that outlier data is really important to pay attention to, and that will end up having outsized impact and returns.”

“So most of the time, if you're growing 15, 20%, you'll, you'll see that decay to single digits. And I do think that those companies, it's going to be hard to remain independent.”

“So in the context of working with a private equity partner, if they were to do a roll up or invest in more traditional profitable assets that either trade from the public markets to the private or have been private the entire time, then we're very open to part…”

“2017 when we invested in them, nobody, or I would say lots of people didn't believe that they could compound and continue to grow at such a strong rate that actually the valuation multiple that we were paying into was more than fair because they would compound…”

“If you add in AI deals, the number, the volume and dollar amount actually looks quite high.”

“If you feel nervous and, like, you're advocating for something so hard and others are telling you no and, you know, to the point that it almost makes you doubt it yourself, you're exactly where you should be.”

“When I did that deal, I remember talking to lots of other investors and the pushback would be it's in a commodity market. It's valued too high. There's not real differentiation.”

“UiPath when, you know, made that investment in the series B, the numbers were extraordinary, but the pushback was this company's been around for 10 years based in Romania. Like, why is it all of a sudden exploding now?”

“So we underwrite three to five X returns, money on money returns. And you know, depending on the stage. So if it's really early, it will be 10 X, but the core of what we do in growth is three to five X money on money returns.”

“And that's a huge advantage for us because it means that we can invest and hold over the long term and why we're so obsessed with finding generational companies that will compound over the long term because that creates incredible Money on money and incredible…”

“So again, we're growth stage investors. We're investing 50 to two hundred million dollars in these companies.”

“So we believe that over the last 18 months, the best opportunities have been going earlier in these AI companies, and that is what we've done.”

“Six to eight. And then a lot of small ones along the way, but probably six to eight.”

“So I said basically no to Sequoia to our Series B, and we, Series B was led by Excel US, and Capital G, Kleiner Perkins, and some other people participated in, but I said no to Sequoia.”

“And at some point we raised money from Google capital G is one of their investment arms. We raised money from them. It was, I believe it was forty-five million bucks that we raised from them.”

“We look at the entry multiples we're paying on average, and they're, you know, more than double what we did five, six years ago.”

“So I, you know, co-led Stripe Series D investment in 2016. And at the time that, you know, that was a nine billion dollar valuation back in 2016.”

“We're an independent growth fund backed by Google and Alphabet. So the GPs, we have investment decisions. We operate entirely separate from Google and Alphabet, but Alphabet is our single LP.”

“We think the right portfolio size is for each of the GPs to invest in about two companies a year. And so what that means is that we tend to invest in about seven or eight companies a year.”

“I first invested in UiPath in the Series B. We co-led the Series C and invested in several other rounds. So in total, we invested a hundred and sixty million in UiPath over the course of several rounds”

“In general, we look For growth stage investing to have a sort of three to five X return as a minimum threshold for, you know, money on money return on investments with an eye toward investments that have a 10 X opportunity.”

“We have definitely gone earlier over the last couple of years, just as we talked about as the market has gotten more competitive and funding rounds have happened and preempted rounds have happened with even greater frequency.”

“One of the things that I've seen in terms of commonalities of the truly generational transformative companies is that they are able to get world-class leaders to join their companies way earlier than they should.”

“The very best founders hiring is probably 30% of their time. If not more, they're relentless about it.”

“I would say one of the big, cause I looked at new bank early. That's a good example. And I think I was, while I was loved the founder and so impressed with the business traction, the risk around a new market and a model I didn't totally understand just made me…”

“I think there's been an oversupply Supply of capital for, you know, the better part of 10 years now, at least 10 years, really since the Fed took interest rates down to zero coming out of the GFC in 2008, 2009.”

“And I think what that means in reality is that for investors to make informed judgments On underwriting risks and making investments, you really need to have been doing your research and your work and developing your thesis on a category well in advance of a c…”

“What I worry most about, and I think what's most challenging is if in markets like this where prices are incredibly high, going for breadth and trying to chase everything, I think is a losing strategy because then you're going to, you know, not have enough, en…”

“So for Clibra as an example, that initial idea around data intelligence and data management came from spending time with a number of Google engineers who had regular conversations with folks throughout Google and outside Google who are combating these challeng…”

“And I think there's a case to be made that you're likely to see a bit more consolidation down the road as CIOs and CDOs look to rationalize all the vendors are using to solve, you know, common pain points throughout the enterprise.”

“Frankly, a lot of these hedge funds manage such enormous pools of capital relative to the size of the traditional VC fund. That for them, you know, writing a 25 or fifty million dollar check into an A or a B round is a rounding error, right? So for them, they …”

“One learning that I've come away with from those conversations and experiences is if you take the money and it's at a very high price and it's easy money, there is a risk to that because you, if you take it at too high of a price, you get over your skis and th…”

“As IoT devices continue to proliferate, you know, every enterprise will need a CrowdStrike for their agentable devices and an Armus for all unagentable devices.”

“At that point, I was in the mindset of leaving Google, and I talked to Larry Page, and the idea was, for me, in that conversation, was to see if he wanted to invest his own capital in my firm, and he said, why don't you do this within Alphabet? And I thought a…”

“I do feel that there's a little bit of a disadvantage in protracted bull markets of having lived through these cycles, because your experience has taught you to be more risk-averse, and as you're kind of living through a bull market, that's kind of a negative.”

“Ultimately, being a little more conservative is going to prove out, but it's not after kind of years of money-making.”

“At the core of it is kind of the decision process, and for us, which is extremely unusual for a growth equity fund, we make the investments individually. The group can and does hopefully help inform that, but it's more of an investment club than kind of an inv…”

“The rounds in growth are extremely competitive, just like any segment. And the way to compete is by being in the ready position, like already having your thesis, already kind of knowing what price you would invest, already kind of being able to activate dilige…”

“We'll make three X with a reasonable expectation of market growth. If things go as we hope, then this could be a 10 X. And that's independent of multiple. We're just talking about market expansion.”

“I think our funds are still going to perform in the same IRR neighborhood as venture funds, but the distribution, so we're a three X IRR could be 30% depending on how long it takes you to get the three X. So the IRR for the fund is going to be the same, but th…”

“I think people overvalue perceived diversification. I think you get a diminishing return in our business once you get past five or six investments.”

“People were asking me, who's my successor from the beginning? So I didn't feel that it's something I kind of need to think of all of a sudden. I've always been thinking about that.”

“To date, UiPath has raised over nine hundred and seventy seven million dollars in funding from some of the very best in the world, including Sequoia, Excel, Meritech, IVP, Capital G, Kleiner, CoTo, and more.”

“To go public, I would say, you know, it seems like companies need to be a bit larger and a bit more developed than would have been the case 20 years ago. But I think a great deal of the consideration whether they go public Is driven by management teams who may…”

“We have in our LP here at Google, Alphabet, the ultimate and very patient capital. And so, if we can find companies to invest in that we can be in for a very long period of time, That are growing and doing the things that they want to be doing and building val…”

“I think our most recent public investment, most recent investment in a private company that, that, that's been publicly disclosed is Stripe, which is a revolutionary company in the payment space with an extraordinary team and traction that's quite unlike what …”

“So our only metric for Google capital is financial return. So we're by no means a strategic investor for Google.”

“One of the big challenges a lot of companies face is they'll get Some sort of product market fit. They'll get one or two customer acquisition channels going, but when you really dive into the details, it's quite hard to scale those customer acquisition channel…”

“We've never defined, it has to be, you know, XYZ billion or trillion in market size. What we typically look at when we make a decision is we want to understand what our multiple of money will be in our IRR from an investment perspective.”

“For much longer than five years, but as we model investment returns, we typically do it over a five-year horizon.”