The Exchanges

Q companies of the decade in the, like, starting 2015 till 24. And previously you had briefed inside Bain Capital, Bridgewater, uh, in investing, and then a scout at Sequoia. So, so tremendous amount of things to discuss with you, Sri, today. So excited, uh, you know, uh, before that, right, would love to know about your background. Uh, Sri, right? Where did your parents come from about your own background?

A Yeah, happy to chat about that. Uh, so my, um, I was born in South India in Hyderabad area, and so that's where I grew up until I was about 11 years old, when my family moved to the US as part of, if you recall, they were importing a lot of computer programmers because of the Y to K crisis in the late nineties. And so that's how my dad, who is a COBOL mainframe programmer working at the ECIL in India, ended up moving to Madison, Wisconsin, like, you know, it's pretty suburban Midwestern. Uh, town. Uh, and, uh, and that's where I grew up. Uh, I went to middle school and high school and, uh, ended up going to college on the east coast, uh, to, to Dartmouth. Um, that's interesting about kind of even the early careers, you know, how, how much influence your, your parents have, especially in an Indian family, uh, in what choices you make. Uh, and, uh, and I was actually at the time, you know, Going to do, um, uh, you know, my dad, of course, gave me two options, you know, be an engineer or a doctor, uh, and, uh, and I, I was gonna, uh, considering going into computer science, but, uh, he actually discouraged me, given that he was, uh, you know, uh, a programmer, a computer scientist, because his view at the time, which I think in retrospect, you know, was probably not the right one, you know, 20 years later, was like, He was like, look, uh, the technical people are not where the val…

AI assessment note: “I was born in South India in Hyderabad area... my family moved to the US”

Q And now coming onto right. People believe they can enter VC, but VC is such persistent asset class, which means that the best funds keep on winning the best deals and hence driving the best returns. So, so for another fund, uh, to, to replace the top five is super tough, right? It's so competitive at the top.

A Yeah. Um, yeah, and, and this is obviously I'm not a professional venture investor, so you have to take everything I say with a mountain of salt. These are just observations from an outsider. But, uh, yeah, I think what you've observed, I've also observed, right, that there, there is persistence of returns among a handful of firms over long periods of time, right? Uh, although there are examples of top-tier firms going through tough patches like Kleiner that have now come back, and there's also rare examples of You know, new firms that really find success, right? Uh, I think in the grand scheme of things, A-sixteen Z and Thrive are relatively new firms in the US that seem to be doing well, right? Uh, and, uh, and so there's an interesting dynamic as to, like, why this is happening. One, like, obvious example is early stage venture is hard to scale, right? So as we talked about, there's only so many deals that you can get High conviction on and also win, uh, in a given year, right? Uh, and, uh, and because the return profile typical target for a fund is 35 to 40 deals or what have you, right? And the larger the fund, the harder, uh, it becomes to return. So what some firms have done is taken this to heart and have kept their fund sizes relatively small, actually, um, which means that they have had the ability to Select and get into the best deals. Right. And rather than focus on…

AI assessment note: “there is persistence of returns among a handful of firms over long periods of time”

Q AI is not useful. And the other camp is that, hey, uh, uh, AI is game changing, but it's not that the, the stuff that we have been doing is irrelevant. So what's your take on, right? What's the current AI hype cycle about? What are the areas that you are seeing genuine value getting created in? And what are the areas you are most, you know, excited about personally?

A Yeah, this is a great question to dive into near the end here. Um, I, I think, um, my high view on AI may be increasingly kind of consensus, but I think, you know, as you know, the technology is very, in very early days. I think there's bound to be a lot of change, and I think there's still a lot of potential. As you know, the models are, are, are costly to develop and, and, uh, and continue to iterate on. So I think the number of winners in terms of the model layer will be a handful. By geo and, and, and by type, and they'll require a lot of investment. Um, and, uh, and I think there'll be, of course, an ecosystem of infrastructure and dev tools companies that are built specifically to support the model companies and support AI use cases. Um, I think those are obvious. Well, it's obvious that those will happen. Which specific companies will be the winners? I think it's still not obvious at that layer. Um, outside of that, I think The way we're seeing AI being incorporated into a lot of businesses is that it's more of a sustaining innovation and not a disruptive innovation, if you were to use kind of Clay Christensen's framework. In, for example, in BtoB, it hasn't become a big enough wedge yet to build an AI native app company that solves a customer problem. I think the incumbents have benefited Very quickly because of how easy it has been to incorporate the API, uh, AI techno…

AI assessment note: “more of a sustaining innovation and not a disruptive innovation”

Q Which rather than joining as an operator, they can put money in because they have made now monies from secondary or from their firm getting public. Or the other motivation is they think that, hey, my skill is so good that I helped create a ten billion dollar company. So why can't I create more company? So what's, what's your framework? Uh, how does one begin angel investing?

A Yeah. Uh, first of all, I, I feel like I have to always say this before I start talking about angel investing. It's really important to know that it's a consistently underperforming asset class. Like you will make less money doing angel investing than putting your money in an index fund or almost any other kind of equity, uh, investment, uh, by and large. Of course there are corner cases of people who got lucky, uh, or, you know, were maybe successful in, in finding truly a handful of Amazing, um, investments. But, uh, it's, that's rare. Uh, you should just assume that you're probably going to lose most of your angel investment value and, and wouldn't put in, you know, more than 10 to 15% of your liquid, uh, net worth, right? And I think, uh, once you've kind of, one, with that disclaimer out of the way, I think, uh, Something that you previewed is, you know, why are you trying to invest? I think that's a question that people need to be very clear on before they start their journey. I think a lot of folks, uh, are, are muddled, uh, on that. And I think part of it, again, similar to what we talked about earlier about wanting to be a VC, part of it is a little bit of a status game. People are like, oh, like I also want to be an angel investor, uh, because that seems like, you know, a high status thing to do. Uh, and, uh, and I think, you know, what are some goals? There's not nec…

AI assessment note: “why are you trying to invest? I think that's a question that people need”

Q And, and now coming to a very specific question, you know, for our audience who want to, you know, do career pivots and land onto the, The most enticing opportunities which can help them grow. So how did you think about your own career pivots? The thought process behind picking when you entered and when you exited?

A Yeah. Uh, you know, the, the handful of jobs that I had pre-tech were really more kind of quote unquote natural progressions of me learning a skill set, right? So going from management consulting to getting deeper business knowledge into an investing role. And, uh, so I think what would be really helpful maybe especially for your audience is How to navigate it through kind of the tech lens. Uh, and so once I, you know, kind of made the, the pivot over to tech in, in 2015, uh, with open door, you know, I've made a couple, few changes as well, and, uh, would love to talk through some of those. I think, you know, a lot of this stuff is simple in retrospect when you, you know, uh, the, the lesson that I've learned is honestly to be, At the right place at the right time. Uh, that's easier said than done. And, and, you know, what does that mean? Right. Uh, and I think for me, you know, the right company is a company that you think is going to be successful, right? Be a unicorn, decacorn, uh, reach, uh, liquidity, uh, and, and the right time is like a bit more nebulous, right? Which is like, you want to join before a key inflection of, uh, of growth at the company. I think if you do both really well, you'll learn a lot, and you'll also build great relationships and reputation that will serve you well, uh, along your career. And, and there's a reason why there's these quote-unquote maf…

AI assessment note: “the lesson that I've learned is honestly to be, At the right place at the right time.”

Q And, uh, if you have to remember, right, some of the best investors that you know in your network, uh, what's been their intrinsic motivation if you can draw patterns from it?

A The investor that I've probably interacted with most is, uh, is Keith Raboi, right? Uh, he was co-founder at Opendoor, was obviously on the board there, and was also, uh, on the board, uh, at, uh, at RAMP, um, and we've worked together in other contexts as well, and, um, I think, you know, each person, it's, it's, it's very different, but, uh, Keith really enjoys, um, Finding the next kind of paradigm changing company and product. Like he has a, he's an eye for finding those companies and founders in the consumer space. And, uh, and he's really competitive. I think he really enjoys doing that. I think he enjoys working with really smart founders and, uh, and, and working on solving problems that will have the ability to change Human behavior, right? And, uh, and then so he's a super interesting person. If you interact with him socially, he's not, He's not in true, uh, small talk at all. Like, you know, you go into a meeting with Keith, he's like already read your deck and has a bunch of questions and is just ready to, to, to jam. Right. And then you can tell that immediately based on kind of the, the passion that, uh, that somebody has and then just the level of engagement that they have, uh, in, in their job that just comes, um, uh, naturally. It's, uh, it's funny. One thing that Keith used to joke about, uh, open door folks is that, you know, you guys are too socially well ad…

AI assessment note: “Keith really enjoys, um, Finding the next kind of paradigm changing company and product.”