General Catalyst

“I'm an investor in McCaw. I never thought this would be as big as it has got as quickly as hit, as it has done. It's crossing out two, two and a half billion ARR. They're doing a new round led by General Catalyst at twenty billion.”

“It's going to be quite a while before Cloud Cowork solves that problem.”

“Senra Systems officially closed our Series B fundraising for sixty-five million dollars. We had Lower Carbon, Interlagos leading the round with a lot of our existing investors coming into the mix, such as Sequoia, Founders Fund, General Catalyst Andreessen Hor…”

“I have never seen a committee, a consensus decision-making process, make a contrarian bet, unless the group is designed to make contrarian bets.”

“You have to have the courage, then, To lose the people who actually were the people who invest with you because you were contrarian. In other words, you have to have the courage to get past the innovator's dilemma. And so, if there's a set of folks, high net w…”

“But I think a lot of these firms, they have just become alternative asset managers. And like, that is what they are. And they have venture products, but they are not venture capital firms. And that's, that, that's not me being like, oh, they're not VC firms be…”

“They gave us a term sheet within 36 hours for 2.3 million dollars at a twenty three million dollar post-money valuation.”

“For them, like, a Forex return, they're like, why are you wasting our time? Like, they need that 102 hundred X return.”

“I now run a artificial intelligence company called Lila Sciences, which has fundraising as a component to it. But I was finishing a big fundraiser, my last from General Catalyst, and I was feeling the urge to try something different the last chapter of my life…”

“We've extensively used CBF, which is General Catalyst's non-dilutive customer value fund to fund our go-to-market expansion without needing to dilute shareholders.”

“Instead of risking against balance sheet, it's risk against forward-looking customer cohorts and performance. So if you're confident that your SaaS cohorts will perform and revenue will show up, and when you put in go-to-market dollars, net new logos will show…”

“And part of that means going to Akron, Ohio, buying a system that was on track to go bankrupt in, in the next couple of years and transforming it with AI.”

“So the XAI co-founder I go where Babushkin is planning to raise up to one billion at an up to five billion dollar valuation for a new AI research startup with general catalyst possibly leading.”

“Really began to develop an appreciation for how spectacular the business is, but frankly, undifferentiated firms are from one another. And it, I worked in a lot of parity categories, including laundry detergent and credit cards and everything in between. And I…”

“Began to realize there was a pretty significant opportunity gap for many of those early stage founders who have a need to tell their story and build some foundational assets, but have none of that capability or acts of that capability. In their company or in t…”

“If you think about LP engagement as being the head of sales, and if you think about being a CMO as the head of marketing, we were very aligned, you know, and I think worked very closely to sort of make sure the narrative that we were developing and telling in …”

“A hundred percent. I mean, with our, the cool thing about the space that we're occupying is because the VCs themselves, like if you think about Iconic, General Catalyst, Bessemer, they have huge legal networks themselves. They're big spenders on legal services…”

“We're going to have companies that are routinely trillion dollar companies.”

“The natural gravitational pull is that a lot of that scale is going to get concentrated in a handful of companies.”

“At our core, I think of ourselves as the largest seed venture capital fund. Our venture fund is essentially a seed fund.”

“We have customer value fund, which is the first investment grade rated product in our industry”

“Anthropic obviously has been a great coming that came from behind, but has a you know, a strong leadership in the market in the categories that it cares about from a, from model perspective.”

“We've sort of led the wave around these AI rollups where the thesis was everywhere we offshored for labor productivity, we're now onshoring back with AI.”

“We align economics, you know, across all these funds with the whole team. We don't have a U.S. Fund and a Euro fund and an India fund. We are global in everything we do, and we're one team, and everybody participates equally”

“The way we make investment decisions is, ah, you know, the seed team, any two partners can do a seed. People push each other's conviction, and we have a very lightweight process.”

“If you go to SUMA today in Akron, Ohio, we have seven of our companies and the perceptive team and our own investment team that's literally there all the time trying to figure out how to take this community hospital that in all odds will go Down the path of be…”

“The sophistication to actually learn how to exit companies. Most people in this investment business aren't very good at it.”

“So when COVID happened, We were the first firm to go to the LPs, and we wrote down our portfolio by 40% proactively for no other reason than saying this is not real.”

“Bubbles are actually great for us. No bubbles, then you also don't get, ah, you know, a company, companies that really make fast progress and generate outsized returns.”

“The wrong reason would be if you do that, ah, to take capital off yourself, because then you're misaligning with your investors. Ok? The investors gave you money. Carry has some value. You sell it to the third party, monetize, but your investors didn't. That w…”

“We did do this, by the way. We did it in 2018. With Peters Hill, and the reason we had done it was because, ah, we had decided right when, around that time, that we're gonna scale, ah, to have the kind of capital needed to build companies in this generation. A…”

“If you look at, you know, a lot of what Mark and Madhu and our team is doing in creation, we're buying some of these things from PE firms. We're buying them for not a lot, and we'll arb them into AI transformation, and maybe there's a way to create outfalls.”

“The geopolitics is going to force supply chains to shift. Does Europe really want to buy American defense products? Maybe some countries will, but the biggest ones won't. They want to create resilience. Does India really want to rely on Russia or America for t…”

“The commitment that Neeraj and I made was to invest Five billion over the next five years in India's resilience opportunity”

“The irony of how we behave is, ah, we'll say in the same breath, I want to build a legacy defining company, and legacy companies are stupid. So somebody else is like you from the past is stupid, and your future legacy is important. That's just a disrespectful …”

“We took a stance that we're not going to engage in politics. And, but we want to work with the administration, whichever one is there, with genuine partnership to help them think about how can innovation truly be impact at scale in our societal systems. So we …”

“So Nikesh has just joined as a lead independent director, and he's been first of all, Nikesh is incredibly brilliant.”

“We're not going public.”

“He's certainly building a firm that could go public.”

“He's got GC buying up and rolling up accounting firms, et cetera, healthcare firms, hospitals, et cetera.”

“You look at Anthropic, Which we're also investors in. That goes from sixty billion dollars last year to, you know, a couple hundred billion dollars. So like, and by the way, with good economic progress, these are not pine to sky valuation. They're based on act…”

“So that business, when we invested, was doing about eight hundred and eighty million dollars, which was a 10 X growth from the year before.”

“We ended up investing at, you know a eight, nine, ten billion dollar kind of run rate business at sixty billion. That's the cheapest deal that got done last year in venture capital. On a financial basis.”

“Why did we go you know acquire a health system in Ohio? It was a nonprofit. We worked with the attorney general, converted it.”

“This is not about trying to be PE. This is about acquiring businesses in PE that actually have declining value, but have important customers that need to be served and help them get to that AI transformation that Bob's talking about faster by getting our found…”

“And I believe that at least General Atlantic, General Catalyst, Andreessen, maybe Insight, maybe Lightspeed, go public.”

“We have a wealth management business that we've set up to help founders manage their money. That's another company we've built in house that we plan to hold for a very long time. And then finally, we have now an AI consulting business called Percepta that real…”

“We on the creation side are incubating companies But ones that we would want to take public in seven to 10 years. So they're not necessarily companies we majority own or we would hold forever, but they're businesses we think really should exist that we're crea…”

“In our last fund cycle, we put up to work about a billion and a half on the creation strategy.”

“Or in about half the cases after incubating an applied AI company, we actually give them capital to go by their distribution, by their client list and the data that comes there.”

“Someone from GC went and joined full time, and we built out this software that automates 50 to 70% now of what a call center does. So after proving that out in a year and having 10 or so pilot clients, we gave them the money to actually go buy a call center. A…”

“Then went out, got six pilot clients, showed us they could automate 38% of what MSP does, which is an outsource IT services firm. And now they've bought RFA, which is a well-known MSP in New York.”

“So then we map those forms of automation against these 70 industries. And we came up with 10 where we thought we have really high conviction that at least 20 to 30% of tasks, again, not people, but tasks can be automated.”

“So we're already seeing in many of the case studies that if you look at the first couple of companies they acquired, even if they've only grown revenue, 20%, if they've kept the cost basis flat using AI, but then bringing up people to kind of do 20% more tasks…”

“We've made about nine offers in this AI enabled software rollup idea or AI enabled software that turns into rollups. We've kind of made nine offers and we've won eight out of the nine.”

“So at GC, we've been investing between a hundred and a hundred fifty million in each of these projects, but over, you know, three or four rounds of funding. We like to lead at least the first two, and then we start bringing in other investors in the third or t…”

“Some of this AI technology, you add costs, right? So you can't go in, add debt, cut costs. We're actually going in and we're adding costs. We're saying hire engineers. We're subscribing to LLM based software. It's like we're going in and investing in adding co…”

“We haven't seen a lot of people implement AI effectively to date, and we're generally in the view, along with that MIT study, that maybe 95% of these Fortune one hunters have tried, and they said it's kind of a waste, and it didn't really work, and it was jank…”

“In a 16 trillion dollar services industry, we could have companies growing faster than software companies and at higher margin than software companies. And so this pool of one trillion that VC has been fishing in has actually expanded now, maybe not to the ful…”

“But at GC, we created a company called Percepta, one of our transformation companies that we want to hold for the long term. And they, you know, the thesis there is that maybe traditional consulting isn't really designed for a lot of the AI implementation piec…”