The Ledger, every show

“These days I'm primarily focused on AI. Cybersecurity, data, and then I have a small practice in an area that I'm calling the depth of the x-ray six. So because the x-ray six architecture is now effectively dead that's going to create some opportunities, and I…”

“Obviously your risk is much higher in a partnership. In a partnership, by definition, there is someone who is a good investor and someone who's a little bit less good investor. So you're getting an average. So as it is, you're getting slightly lower. And then …”

“And by definition, you maximize carry or you maximize multiple by making your largest investment first. And so that is very much the strategy of engineering capital. The first check is always the largest.”

“The second thing that has happened with AI is that for the first time, we have the entire technical stack being innovated on at the same time. This has never happened before. So, you know, in the PC era, all the innovation was the PC. In the mini era, all the …”

“We had Kubernetes in the cloud, but Kubernetes is not how you deploy your AI imprints and your AI training workloads.”

“One of the very common failure modes of founders, especially technical founders, is what I call playing house. What I mean by playing house is that in any company, and this is related to that prioritization point, in any company, there's a large amount of work…”

“In a good business, in a well-run business, you should definitely get carry checks in less than 10 years.”

“I like to say data is also the new asbestos. In other words, data is toxic, and data will kill your company if you're not careful how you manage the data in your organization.”

“General belief is that the average venture capital firm has either zero or perhaps even negative returns net of fees. So as an asset class, venture capital on average Is not a profitable business.”

“I believe in venture capital, you shouldn't make rules. In fact, our job is to break the rules.”

“And then one day, someone published a blog post in the UK about Cambridge Analytica, and in 1:02, the product market fit of Facebook changed to the point that even today, it has never achieved that same level of product market fit.”

“The Bay Area has become expensive because of Essentially political dysfunction. I mean, it is basically the failure of the California state and the city governments that it has become so expensive.”

“It will have as much impact as Visual Basic had on the nature of software development.”

“You know, relative to the value that you can create, and the amount of money that is available to a software company, it's still cheap. Bay Area is still cheap. That's why Bay Area still exists, is because relative to that, I mean, if you can actually get to a…”

“The technical inflection point was AlexNet, because AlexNet is what demonstrated that by scaling a neural net, you get disproportionate outcome.”

“I started engineering capital in 2015 because I noticed that even here in Silicon Valley, most of venture capital is actually focused on market insights or consumer insights. We had drifted away from our original roots, which of course was Silicon Valley.”

“Investing is a very local business. You really have to be local. You have to spend time in the market. You have to spend time with the entrepreneurs if you want to be a good investor.”

“And now with the success of Postman in India, I predict that as Postman succeeds, it goes public, people will learn that playbook, more people will leave. And if those other factors can exist around it, then you will see a blossoming of true technology insight…”

“I think a top-down market size is an incredibly dangerous way to think about a market from a venture perspective.”

“The risk factor for you is not starvation. It is gluttony. You are aiming for too many features, aim for less, and you are more likely to be successful.”

“Steve Jobs often said that the customer does not know what he wants, he or she wants. I don't believe that. I believe that if you spend time with customers and you really understand and really listen to what they are saying, you can identify the problem and yo…”

“My portfolio construction is identical. Nothing has changed since then I started engineering capital. In fact, as we were chatting earlier, you know, I closed fund five late last year, and I use the exact same slides that I used in fund one, just in terms of d…”

“I actually believe it will exist. I think, you know, it is one of those long lasting, independent, successful businesses.”

“Engineering capital, the name comes from the fact that I invest in engineers who are going to solve interesting technical engineering problems, not science problems. So I don't do deep tech in the sense of science, but it can be technically very challenging.”

“I typically leave the boards of my companies at the Series A. There's a couple of exceptions. I stayed on the board of Evinced. It's a Fund II company because, you know, it's a large board, and the company's doing very well, and the CEO wanted me to stay, but …”

“I don't keep an admin. I schedule my own calendar. my entrepreneurs hear from me directly, immediately when they reach out to me.”

“Evinst is one of my companies. The CEO, Naveen, I was the first investor. Naveen came to me one day and said, I want to talk to Microsoft, and he was still at the seed stage... Within four weeks, we had a one-on-one with Naveen and Satya Nadella. Microsoft bec…”

“Again, I don't know the numbers. I don't track things like this. I would say 50%.”

“It is not necessary, and it is not sufficient, but it is one of the most valuable skills that a founder can have, because founders ultimately have to tell the story of their company. It is possible to build companies without being a great storyteller. If you h…”

“I don't do opportunity funds, I don't do SPVs, I don't do side funds, none of those things.”

“I have already been lucky that I've already, one fund is fully returned. One fund is more than half returned. And another fund is also, you know, some portion returned. So yeah, I've already received carry checks.”

“Because of social reasons, It's not a stable long-term system, and so we will always see more partnerships than solo GPs.”

“But AI was a stroke of luck, because again, it happened over here and now it is again the heart of that, and for the next generation, it will be there, but it is not preordained that the generation after that has to be here, and so that is a risk”

“A technical insight means if I tell a good engineer what I'm doing, they will not know how I'm doing it. It will not be obvious to them how to build it, and that means you have an interesting technical insight.”

“Most technical insights are actually not good venture-backed opportunities. So it's really important to understand that a technical insight is a necessary, but not a sufficient condition to build an amazing technology company.”

“Many, many, many companies fail, not because the entrepreneurs don't work hard, or they don't have a good insight, or that they don't get financed, but because they have not estimated the market correctly.”

“The analogy that I would make if you think about venture capital is like winning a gold medal at the Olympics. Let's say you want to run a hundred meters, and you're really good, and you come first in your school, and then you come first in your city, and then…”

“A better approach is to identify a very small problem, a very narrow problem that has a broad application, and then you can build a very big company. That is the ideal way for an entrepreneur to do a startup, and so what I recommend to people is even at the ri…”

“He understood that the hardest thing for a product manager to do is to delete features, not add features. It is easy to add features. The hard thing is to remove the features and solve only a very narrow problem.”

“Menlo Security publicly, they cross a hundred million AR.”

“SignalFX was acquired for one billion by Splunk. He then started Trastero. He gave me the honor of being the first investor in Trastero after I was the first investor in SignalFX.”

“Cisco became an investor in the company and then eventually Cisco acquired the company. And today, all of what is called Cisco intelligence is run by your own.”

“Companies like Microsoft, Amazon, they went public at hundreds of millions of dollars of market cap. People forget that. Not billion, not even one billion, less than one billion market cap, they became public companies.”

“And that is the problem that SignalFX solved, and then of course, Phil Liu and Karthik, who were the founders of SignalFX, built a wonderful business on the back of that, that that Splunk was happy to acquire for over a billion dollars.”