The Exchanges

Q invested into Sun Microsystems, AOL, Intuit, Amazon, Google, Zynga, Looker, Slack, X, Spotify, Square, Brex, Plaid, Robinhood, Rippling, Glean, Figma, and many, many more. Wow. I'm like winded from saying all of that, but you guys have certainly made a big splash, um, over the course of the 50 years that you've been around. So I'd love to understand how big is the fund now, and what is the thesis?

A Absolutely. So we're currently deploying out of, this is our, our 21st venture fund, KP 21, uh, it's eight hundred million dollars on the venture side, and then on the growth side, we have a 1.2 billion dollar growth fund that we call Select, Select Three. What's maybe a bit unique is, They're relatively similar fund sizes to our last set of funds. I think what's very important to understand about KP's approach is that we believe that venture doesn't just scale with money. Uh, and there's elements of the business, especially at the earliest stages that are just so unscalable, that are so relationship focused, that that's why we've kind of kept the funds a relatively similar, similar size.

AI assessment note: “eight hundred million dollars on the venture side, and then on the growth side”

Q So I'd love to go into windsurf specifically. I know you can't comment on Any rumored acquisitions, maybe something happens, maybe something doesn't, I'm not sure, but I'd love to know from the start, how did you find them and what was your thesis into the company?

A For sure. So this goes back a long, long time ago. Um, so I, uh, I actually grew up doing competitive math. That's kind of the thing that got me outside of Alabama in the first place. Um, and you know, I think growing up doing competitive math, there's this tight network of people. Um, and so that's kind of where I, you know, I don't think I, Brune and I, we ever met. Brune's the CEO of, of, of Windsurf. Um, but it's certainly where we kind of like first we heard each other, Probably talked on the forum somewhere in our art of problem solving, which is like this competitive math website. Um, but ultimately we met when we all went to MIT. So Douglas, uh, who's Varun's co-founder, Varun, me, we met, um, at MIT and definitely had a lot of, a lot of mutual friends and certainly had a lot of respect for them because they were known as, as being really, really sharp guys. Um, but then, you know, fast forward over a decade later, um, I'm starting at Founders Fund, um, as an investor. And I think it's literally like some of my first months of investing. I hear this rumor that Varun and Devlas are starting this company. It's called ExaFunction. Um, and Green Oaks is leading their seat. Um, and it's already done. Like it was a very fast process and now it's done. And so I get on, this shows you how long I've known Varun. I get on Facebook Messenger. Wow. And I, and I, and I, and I'm, I'm…

AI assessment note: “ultimately we met when we all went to MIT. So Douglas... Varun, me”

Q subject to potential fraud and Um, scams and all of that kind of thing. I was really curious to bring this up because when we are in an increased competition environment that increases pressure on companies, and so some of this happens. From your perspective, um, how are you detecting this within the companies? You mentioned you're asking more questions, but like what in particular are you looking out for?

A Yeah, it's, it's a, it's a great question. And it is like such an important part of the VC job to figure this out. You know, you've got a few different ways that, you know, like I probably tend to, to try to make sure I dot my I's and cross my T's when it comes to diligence. But I mean, one, there's obviously just asking questions, spending a lot of time with founders. I think in general, you know, it is underrated to spend a lot of time with people because ultimately you learn like from meeting to meeting. Like, how does their talk track change? Do they accomplish what they say they're going to accomplish? Like, are they, you know, and many of my, you know, best investments and relationships have been over many years. And so you can kind of get a sense for like, do they actually know where the puck is going or not? Because you've been able to, to talk, to chat with them so long. And then also just kind of generally to the, are they trustworthy? Are they intellectually honest? And I think that's, you can kind of judge intellectually honest from talking to somebody, just the way that they, Yeah, are they, like, are they, you know, proactively explaining discrepancies, or are they just trying to, like, kind of smoke in mirrors, hope you don't ask the follow-up question? I think the best founders absolutely love to answer follow-up questions. They're like, yeah, if this competitor…

AI assessment note: “are they, you know, proactively explaining discrepancies, or are they just trying to”

Q How is it split between early and growth?

A So, and this is, this is an approach that I really like. I mean, I think ultimately, you know, our job is to find the very best founders. And, and I think that's regardless of what stage they're at, regardless of what type of company they're building is to find the best founders and, and really build, be their partner. Um, and so therefore we don't like, I'm a partner in the early funds. I'm part of the growth funds. I bring in growth investments, even though I'm mostly, mostly an early stage investor. Um, we are all in both. And there's definitely people have preferences depending on your background, depending on, um, just, yeah, what you tend to focus on, but we're all, we're all in both. Um, we're all, yeah, and they're together.

AI assessment note: “I'm a partner in the early funds. I'm part of the growth funds.”

Q all these cool things that are going on, how does this inform the legacy portfolio of growth companies? I know you don't do much on the growth side, but I'm, I'm really interested to know, like, you have companies like Brex, Plaid, Robin Hood, Rippling, Square, these are all large companies. How, how are you or the team helping inform them, restructure if they are, to meet this new environment?

A I mean, a lot of these companies are just being, like, I mean, very proactive about all this. I mean, I think they all, like, are, yeah, the vast majority of them realize that, like, hey, like, we need to make sure that, like, we're using the most cutting-edge AI tools when it comes to, like, cutting costs or making the user experience better or things like that, and you, you, you've been seeing a lot of companies, like, reinvigorate it, like, because they're able to, to really, like, create a, create a great product with AI, um, they have, like, today. Um, and so, like, Yeah, I mean, in general, I think a lot of these growth stage companies are, like, you know, doing, doing a good job, and, you know, whether it's, like, we do a lot of dinners with, like, executives at these companies, and we'll, like, talk through, like, okay, best practices, sharing best practices of, like, what tools they're using, what they're doing, um, whether it's, like, things like that, um, or just, like, I mean, I mean, a lot of these companies are just incredible, incredible companies that, that, that figure stuff out.

AI assessment note: “we do a lot of dinners with, like, executives at these companies, and we'll, like, talk through”

Q I want to go into the exit environment. Figma just filed to go public, and OpenAI just announced a potential three billion dollar acquisition of Windsurf, one of your portfolio companies, which I believe you led the investment into. That would be OpenAI's largest acquisition to date. Is Kleiner untouched by the macro turbulence? Where are we at with this and how does the team view the current exit environment?

A So I cannot comment on either of those things in particular. Um, I mean, I, I, I'm happy to talk about Windsurf generally. I am on their board. Um, that is an investment that I'm very involved with. Um, so happy to, to chat more about that in terms of the, the exit environment. I mean, what's interesting is primarily, you know, we're looking at quite early stage companies, especially me who, you know, I, I mostly am looking at C to series B. Um, and so it's definitely like a, a bit You know, far away from the eventual exit, and we tend to take a very long-term view, and so I wouldn't say I have, like, you know, any, any particular super hot takes on the exit environments, but it's certainly something that, like, we, we keep our eyes on, um, as we're, you know, working with companies and, and pricing companies and things like, things like that.

AI assessment note: “So I cannot comment on either of those things in particular.”