Kleiner Perkins' Mamoon Hamid on Investing Lessons from Leading Rounds in Figma, Slack…

It is the most exciting time to be alive. We’re in the midst of a supercycle like none we’ve seen before. The AI supercycle, as you know. It reminds me of the time when I first came to Silicon Valley in 1997. I was 19 years old and it was all just roses all around me. It was the rise of the Internet. This time feels much like it multiplied by 10, and that obviously puts us in an interesting spot as venture investors who get to invest into this cycle.

Yeah. The world’s not gonna

Yeah. We have some very strong incumbents, Google, Microsoft, Amazon, Meta, Oracle, who can all spend hundreds of billions on these front end models. So you’re absolutely right and Larry’s absolutely right, of course.

doesn’t, because I think the opportunity is still in front of us. I think there are so many things to build on top of this infrastructure, all these frontier models that is going to create so many trillions of value over the next decade.

So we just talked about how everyone’s overinvesting right now into the cycle. None of us can miss, whether it’s the large incumbents or us as venture investors backing companies. And so your question is like, where do we invest as venture investors? And I can tell you we’ve invested in a lot of application layer companies that are solving very specific pain points. The way we’ve looked at it pretty simply is, we took actually the top 20 jobs in The US, who makes the most? And it’s doctors, it’s lawyers, and it’s developers.

How do we help supercharge these people who are highly scarce, highly skilled, and we’re not producing enough of them? So you try to build software, AI, that helps them do their job better. So we backed companies that help doctors, lawyers, and developers, copilots. So Harvey, Ambience, Codium.

Yeah.

like any other space, any other traditional linear software space, I call them. It’s about teams will out hustle and will outwork and have, in this case, actually, the technology really does matter. The quality of the output of their models really does matter. The tuning of what they’ve done to the frontier models does matter. You can’t have medical transcriber that’s 87% good. It has to be close to like 99% good. That actually requires real technical depth and adeptness. I would say all three of these examples I cited are started by founders who are extremely technical, and they’ve been at it.

This is not just like some tourist AI engineer. It is like sort of deep ML experts have been doing this before they started these companies and paired up with a very domain expert co founder who understood the market that they’re going after.

No different than anything else in venture capital. Our job is to invest in early stage companies that make history and are generational in nature, And our job is to recognize the trends and the tectonic shifts in technology, and then invest in the right people and the right markets at the right time. And right now, I would say the entropy in the system is really high. It’s crazy out there. It is like things are changing left and right. That makes, I think, the job really fun. I just would say that it’s the same as it

Great question, Harry. And I think we all sort of fall victim to those every once in a while, but that can’t be the core part of the business. That can be the one, like, that got away and you have to get into this pre product company because the founder is so exceptional. That can be, you know, one out of the 20 deals you do this year. It can’t be every single one of them. Because as you know, Harry, we have to get our ownership at the early stages where you’re investing 5 to $10,000,000 for 15 to 20% for the math to work for for our funds.

And it can’t be done if you’re investing 25,000,000 at 750 post out of an early stage fund.

Yeah. I think I heard from someone many years ago, 20% of the strategy should be to not be on strategy. In some ways we have what we call like a YOLO bucket in our funds and where you just have this extreme conviction around the founder and the company where you’re sort of willing to break the rules.

So in the the age of AI, we have to think about what are we doing? We’re not just providing software. We’re providing labor. We’re providing capabilities that enable people to do 10x the work or 5x the work, and it’s helping real labor costs either multiply your abilities as a developer or a doctor, or bring costs down. You’re not just getting paid for seat based pricing anymore, you’re getting paid for labor. So we’re seeing right now is that you have seat based pricing that was $30 a month, 40 a month, and now you’re getting $300 a month, dollars 400 a month, even $500 a month.

So simple math is that if you go from start to a thousand seats and you got paid $30 you’re getting $30,000 a month. If you’re getting paid $300 you’re getting $300,000 a month and you’re going very quickly from zero to $45,000,000 of revenue.

Yeah. Well, hats off to Clarna for undertaking this. I just remember the time when we built an internal CRM at Kleiner Perkins, and it sort of cost us many millions of dollars and then ongoing millions of dollars a year to just upkeep. And at some point we realized like there’s a great We can just get affinity or something. Exactly, we use affinity. It’s great, okay? Right. It’s for like 3,000. And you know, like we had four engineers on it, like working. Why? Why? Exactly, why? And now I think it’s actually maybe slightly different.

That’s too broad of a brush to paint with is if you think of the people you’d hire for customer support as labor that you would spend money on, now how about you hire developers to do the labor work for you in the form of AI? So I get the rationale perhaps that Sebastian has around doing that internally, But I also get like, there will be a company that’s gonna do it really well for you and you will have to pay for outcomes. And you will have to pay for the number of tickets resolved by that software or that AI.

So the question is, are you not willing to pay that? And in most cases, at the end of the day, you’re like, I should just pay Stripe 2.5%, okay, rather than billing it all myself. So the question will be, well, how many companies will go down the path of Klarna? The other side of it is that right now, we’re in this area, you talked about Sugar Rush, we’re in this era of you’re doing a bunch of proof of concepts. You’re just trying out all this cool stuff that’s come into existence in the last two years and seeing what can I do with it?

And every CIO, every large company is spending real money doing POCs. In many cases, we realize like, you know what? It’s hard actually to build this custom thing inside. And this reminds me of like twenty five years ago during the internet, everyone’s spending a lot of money internally to do things on the internet. And then you hired all these consultants from Razor Efficient, Sapient and other companies that came in and tried to help you with the internet. And I think that same thing is happening right now and history repeats itself.

Yeah. Two, I think we will hopefully never talk to a customer support agent ever again. Like someone you call for the airlines, like, you know, help me with my flight. I need to upgrade it, or I need to change my seat, or Can you cancel it because I can’t go? Or the bank, things of that ilk that you still scratch your head, Why am I still doing this? And it will happen, hopefully, just like you provide a text message and it gets resolved on the back end, and it’s all being done by agents talking to agents and stuff like that happening.

I I hopefully think the world will not will have a way better customer support experience. Please hold.

know, I was on a call yesterday with one of my CEOs and he said, hey, can you hold on for a second? I said, sure. I gotta hold music from my CEO. You gotta hold music? From one of my CEOs.

There’s a lot of time being spent on a lot of the middle layer between the foundation models and the applications. And I think in the middle layers, middleware, things that allow you to use those models better, faster, cheaper, and build applications on top. So if you think the application at the top of the pyramid, the foundation model at the bottom of the pyramid, you know, pyramid, in the middle, you’ve got middle layer. There’s a lot of new technologies emerging that allow you, for example, to capture vector databases or weights for fine tuning of models inside of vector databases and things of that ilk.

There’s just a lot going on there. At the same time, some of the value seems fleeting in nature. I think in early innings when things are in such high degree of change, so the rate of change is so high, there is a lot of that investing that happens. I feel like perhaps it’s a little overinvested.

I don’t. It’s a bit like the hyperscalers thinking they can do everything and they’ve decided that that’s a great business model is to own the electricity and then just charge by the by the hour or the kilowatt hour. That’s a pretty darn good business model for the hyperscalers that provide the models in OpenAI. I was at OpenAI maybe a month ago, and, you know, we’re going through all these demos of cool products that are coming out, like one and Strawberry, and realize that their positioning is we can’t do everything.

We’re a 1,600 person company. We can’t build the application layer stuff that we want you guys to build or your companies to build, and so there’s a great business to be had in LLMs in providing the compute and the electricity, and there’s a great business to be had by being very vertically focused around applications.

about just the GPUs getting better and the infrastructure being more performant, models getting better, sure, the models are getting bigger too at the same time. So there’s, let’s maybe like draw the difference between, there’s all the folks who are providing their GPUs, there’s people providing data centers, there’s people who’ve now built LMs on top of all this compute infrastructure that’s there. So what’s a clearly, NVIDIA is a great business. Hyperscalers are investing today for the future, and I think ultimately the margins, just like if you look at twenty years later of AWS, how great of a business that is, that on a standalone basis would be a top four enterprise software company.

Mhmm. Same with Google Cloud. So that’s a great business over time. And then you look at the LLMs. So if you’re just providing tokens, is that a great business? Right now, given the public profile of OpenAI and financials that we’ve all seen, today, it’s not a great business, but they’re smart enough to figure out how they can get to a gross margin that will allow them to be a highly profitable business over time. Do you think the scaling laws will continue? Yeah, so just the rough math is that in the last eighteen months, the price of a token has gone down by 200X, but that’s just like the super early innings, right?

We’re talking about the first, two years ago, we didn’t have ChatGPT. Today, we have so many different applications that are utilizing this technology. So will it go down 200x over the next two years? I don’t know, but it will probably go down by 10x or 20x. Do we expect to see 10x better models or 20x better models? That’d be pretty insane, right? Don’t you think that the 20x better model is going to be pretty insane for all of us? David

if I look at the, do you know what the world’s GDP is? No. It’s about a $100,000,000,000,000. Of that, 50 to 60% is in labor. Technology is roughly like 15% of it. And over the next decade, if we grow at the more traditional GDP growth rates, it will be anywhere from 125 to 130. What if technology grows from 15% to 20%? That’s like 25,000,000,000,000 in technology companies, up from say 15,000,000,000,000 today. So 10,000,000,000,000 of annual spend will get created for technology companies over the next decade.

When you think about $200,000,000,000 spent on CapEx or $600,000,000,000 spent, I think the question is really the $200,000,000,000 should result in $600,000,000,000 of revenue. I think the revenue will be there because again, we’re not just tackling software, linear software, as I call it, we’re tackling labor, labor shortages and things that humans can do, but it’s the worst part of their job, or we don’t have enough people who can do the job. Again, I go back to the example of doctors. We’re not producing enough doctors. We’re not producing enough developers.

We’re not producing enough lawyers. Those types of jobs where we’re gonna see the immediate more near term impact.

The same is we’re in the business of backing incredible founders who are perseverating on a problem set that may be a hair on fire problem for lots of folks, and they’re building the right product at the right time, that’s the same. We’re in the business of finding those people who are doing that job and trying to build a business, and hopefully we can help them a little bit in building their business. So what’s different? What’s different is that there is more capital in our industry than ever before.

That capital at times thinks that everything will be a deck of corn. You’re overfunding some companies, maybe they deserve it because they’re the far and away leaders. But at the same time, there’s another half a dozen dozen competitors that get funded.

We are primarily early stage focused. We have a an $800,000,000 fund for that. And then we have a 1,200,000,000 growth fund. This team of seven folks invests out of both of those funds. I would characterize us as boutique because we’re kind of a small team that believes in the craft of venture capital. We think it’s a business that doesn’t scale actually. We’re not scaling through people, but we have the scale of capital. Our growth fund even, half of the dollars are invested in our best companies from our early stage funds.

So it doesn’t require us to have a large team, so to say, because we’re already involved with some of these companies like Rippling and Glean and Figma that we’re doubling down into out of our growth fund.

Yeah, so reserves is one, it’s like when you have an early stage fund and we typically invest in about 35 companies per fund. So how much do you reserve for each one of those investments? We try to invest, and we’ve looked at the math, more than half in that first check. So let’s say you’re doing over the life of the company, you’re investing $25,000,000 in that early stage company, but you’re starting out with a $15,000,000 check, and then you’re reserving another 10 for the Series B and beyond.

And it’s generally worked out pretty well. So you’re 60% initial, 40% for subsequent two rounds? That’s a rough math. And then we move dollars around. You know, some a company may get acquired early or a company might shut down and we’ll rejigger those dollars around. It’s an art and a science. When you don’t do it, how do you communicate that to founders as well? It it is a tough if if you’re not giving someone well, I think because we’re on the board and there’s so much signaling involved in us doing, let’s say, nothing, we generally do something, and I think that’s allowed us to get away with doing a small amount in a follow on round.

In many cases, if it’s a really attractive round where folks want as much as possible, and we’re doing a little bit less than pro rata, everyone’s happy. But if it’s the, we need the money and you’re not going to invest in this round, and while these days there’s pay to play, so if you don’t invest, you get wiped out. Okay, so don’t want that. So there are different scenarios here. Have you

companies that are one week away from cash out become public companies. Wow. Yeah. Can you say? Yeah. Sure. Box. Really? Yes. Wow. There was a point in time where we had to do three bridges at Box back in two thousand and eight, nine. Why? What was not working? The market sucked. Nobody wanted to invest in a cloud storage business that would get eaten up live by a Google or a Microsoft.

in the risk business, my friend. You believe in the people. Goes back to like, these are incredible people. Aaron Levy, Dylan Smith, incredible founders, like legendary to me. And it was just a dislocation in the market where the market did not understand how to, one, it was just afraid. It was a global financial crisis and nobody wanted to invest in anything because back to your point of reserves, everyone was trying to save money for their own companies. In the same vein, we had to take our reserves and put it in the box and we weren’t investing in new companies at the time.

And that happens in every sort of cycle, down cycle like this. I think we all know some of the best investments come out of that cycle. And so we got to invest more dollars in the box at a $25,000,000 valuation. Every incremental dollar, $23,000,000 in bridge that was being done, done at that valuation.

They don’t innovate anymore or fast enough. They are what big companies become, which is, you know, you’re trying to protect your turf and you’re not disrupting yourself, and someone else comes in to disrupts you and starts taking away revenue from you. You mentioned Box there.

Great question. Well, I wish there was a bit more selling happening right now or opportunities to sell. As you know, the M and A markets have been pretty slow. But to answer your question, Harry, there’s a local maxima that I think about sometimes with companies where this is sort of the local maximum in terms of perceived value by the market for a company, and that’s a great time to sell. So now you have to figure out when is the local maximum for a company.

And I would say it’s like the markets are riding high, it’s also where people believe that this company is the leader, but there’s questions around whether a standalone company we built and it’s way better off being acquired by strategic who can do even better things with the company. That is, again, doesn’t happen as much anymore. Have you done well selling? There’s one particular example that I think ended up working out pretty well. This is when Yammer got acquired by Microsoft. It was a $1,200,000,000 acquisition. At the time, it felt like, man, we’ve got so much ahead of us.

Yammer can become the next Slack, you know? And fortunately for us, Yammer got acquired, and a year later, we had a chance to invest in Slack. And so it almost like, you know, you had a great outcome and then you weren’t conflicted out of investing in the future Slack.

Yeah, yeah, in that case, when you get just cash, you just distribute the cash and you move on. And generally speaking, I would say even when companies go public for us, we’ve been pretty good about distributing stock. It’s tough when you think Shopify went public

Yeah, and I would say just to Harry, like, again, we have a lot of friends in the industry, in almost all scenarios, when you’re returning 10X the fund on a great outcome or 5X plus, let’s say of a fund through you know, a legendary company, your LPs are happy, you’re happy, you wish you would have held on and, you know, generate another few multiples on that fund. But you have an option of holding it, the LPs do, as do you as a GP, you can hold on to your Google stock forever as John Doerr has done over the last twenty five years, then that’s a great choice you have.

What has been your best performing investment

It’s probably Slack, I would say, even at the two fifty post with all the dilution over time and take the 27,000,000,000 or some other number, that’s a great multiple. Figma, you know, the initial investment was done at about a 100 post. Rippling was also in the sort of 250 post when we did it. There’s one investment I remember doing early days of USVP where we did it at, I think, Ten Post. It was a $3,000,000 check for, like, 30 percent of the company. That company, about a year and a half ago, the founder CEO, Steve Flagg, they sold it to Siemens for $700,000,000.

And that ended up being 70 x. Crazy multiple. Right? Some ridiculous multiple. But you know, when you hold on to something for fifteen years, guess what the IRR on that investment was? If you still owned, let’s say 25% of that company at 700,000,000, so like a 100 and something, a 170,000,000. 3,000,000 becomes a 170,000,000 or something like that, or that’s a great multiple. But the IRR over fifteen years looked more like, I think it was like 15%. We’re in the multiple business still at the end of the day, but IRRs do take a hit when you hold on some to to something for fifteen years.

slow, man. Yeah. Slow. A lot of the big companies are just gun shy. I hear this all the time, just like not ready, too much going on in the regulatory Why would you

Exactly, you’re like, why create headaches? Already have like multiple legal things that we’re pursuing and we don’t need yet another thing we’re questioned about or used as an example in this other thing. So yeah, why bother? The question is, are there a next tier of companies that will buy? And we thought obviously with Adobe, Figma, Adobe is that next tier, and even that, story has been told.

Yeah. You’re right. There are big private companies looking to buy small private companies. That’s happening, and I think small That was never part of the playbook. What would change the M and A market today? You know, it’s easy to say like, you know, regulatory environment, like the people running these organizations.

I don’t think so. I don’t think a lot of the blame on Lina Khan, poor Lina Khan. In our own experience, that’s not that was not the issue for Adobe Figma. It wasn’t Lina or the FTC. There were other issues here in The UK. There’s a CMA that was really involved there.

think everyone’s just waiting until after the election. You know, I think we all thought there’s a window of, like, eight weeks before the election or this year to to go out and just not a lot of activity. I do think that we’re gonna have a good year next year.

I I’m really hopeful. I think next year will be a good year for

and why did you? Credit goes, first and foremost, to to Dylan and Evan who’d built an incredible product. It was just it took a while to build. We’ve heard sort of famously the story around, like, WebGL advancing. And finally, by 2017, Figma had a product that could work multiplayer inside the browser as as, you know, a design tool, and that just wasn’t the case in 1516. It just didn’t wasn’t didn’t have the latency for people who, like designers are very high end in terms of, like, their needs for product naturally, right?

And so lucky for us that we got to see the company when the product started to work, and in the metrics for the product, even though the numbers number of users was small, the amount of use, the you look at something like DAOMAO or look at an L28, you just saw that designers were using the product fifteen, sixteen, seventeen, eighteen days out of a month. So effectively every workday, a designer was going in and collaborating inside of Figma or using it to design inside of Figma.

And so you saw early indications that the product that was just, had just launched and it was just in a few 100 K revenue, it was working. Yeah, lucky for us that we got to catch it before it Can I ask, what did you get wrong in your assumptions on Figma? I have to share my memo with you because I I would love that. Yeah, I know, I’ll share it with you. Sometimes it’s eerie how right you can get it in terms of talking about the adjacencies to product people, so designers, to then marketers, and to engineers.

Not just the growth in designers driving the number of seats that you could sell at Figma, but also adjacent seats and doing sort of the math behind what was potentially possible in terms of Figma’s TAM, which one would have said, well, it’s just like the Envision TAM or the Sketch TAM, which is, like, not that exciting. Sometimes you can play this out in diligence or play this out in your head around building a real prepared mind around an investment. And in the case of Figma, you know, sometimes you get it right.

Do you

I don’t mind competitive markets, but at the same time, I love products that create markets. Slack created a market. In some ways, Figma created a market. There wasn’t a notion of collaborative design software. I love companies that create markets. They get to create the playing field, they play on the playing field and they win the game. That’s a beautiful thing. I

of the founder types that I love is the first time founder hyper obsessed about building a product in a sort of newish market where it’s not obvious and the market doesn’t necessarily exist. And that would I put Owen from Intercom in that bucket. I’d put Dylan from Figma in the bucket. Owen’s alluding to young product centric founder. And the other bucket for me is actually the repeat founder who had an okay outcome or even a pretty good outcome and is doing it again. And I would put Stewart Butterfield from Slack in that bucket.

I would put Parker from Rippling in that bucket. You know, he was a repeat founder, as you know. So there’s the first time founder going into a market that they’re hyper obsessed about. They’re building a beautiful product, taste is on, the level of grind and grit is there, and then there’s a second time founder who wants to surpass anything they’ve done before. What founder profile don’t you like? I don’t like the, we looked at the landscape and we discovered this is a great place to build a business.

We did a whole market mapping exercise, and the TAM is going to be X billion dollars. It is that sort of like the top down approach to building a company versus the bottoms up approach to building a

Yeah. So, I mean, I’ll just give hard numbers when we back to Arvind Glean. Yeah. We did it, co led it with Lightspeed at 35 post. And Arvind is a G, you know, he started Rubrik, he’s like How much did he raise? He raised a lot. He was like 15,000,000 at thirty five post. So gave up a lot of the company in that round. At 35? Yeah, and because That’s not crazy for someone of Arvind’s profile actually. I don’t think it’s high. Yeah. I think, but in today’s environment that would be like, oh, it needs to be 200 posts.

Would you do that at 200 posts? Probably not. That’s the whole thing. So I think it’s not that I’m trying to get a deal. I’m trying to work with people who see the world the way I see it, and they’re willing to be partners together and creating a bigger pie for all of us. They’re not so short term oriented around like, well, I need to have this crazy pricing, or another example is Syed Ali at Aleph. We did that also at like 35 posts and Syed had come off of a company just sold for $6,000,000,000 And do you think he could have raised at a higher price?

Probably, but he’s just is, feels fair, it feels right. And so I’m sure a lot of people listening here are thinking, wow, like we really jammed them or no, these are adults making decisions together around what the right pricing of a company should be at that stage.

At that Series A seed, it’s about the people you’re surrounding yourself with.

For the CEO, founder CEO or CEO, your job is to make sure your company never runs out of money. If you have $300,000,000 sitting on your balance sheet, I’m not sure you should be raising at all. So if you’re well capitalized, heads down, go build. When you’ve got a founder pick wrong, what do you get wrong? Generally, I would say you get the markets wrong. I would

Hard, yeah, hard. Bad markets, the structure of industries where margins are compressed and customers are bad, life’s just too hard that way.

I mean, I think one could have said that about like, would have maybe would have missed the seat at Uber because probably not so great economics early on, right? Customer acquisition and like trying to pay the drivers, etcetera. I think Was Slack an obvious home run when you did it? None of these are obvious home runs when you do them, right? No, it wasn’t. It was 500 ks of ARR at the time and What price

that? $250,000,000 post. You did it at 500X ARR? Yeah, and I think we weren’t thinking in those terms. Why? Was it usage patterns again? Yeah, I think there were enough, at that time there were 10,000 or so users, like a third of them were using the project every day for multiple hours a day. And like, okay, well, we all need something like Slack and you can scale this by a 1000x because there are lots of companies that look like this, that use it like this today.

Is that wrong? For early stage companies, yeah, you can’t take a 500 ks ARR But a

But if you’ve seen the engagement data on a product that you think can apply to 10,000, a 100,000 of companies, then The entire workforce. Yeah, then why not? I think it’s really a mistake to look at revenue multiples at like half a million, a million. What do you think is nuts that VCs

There’s just a big echo chamber, and a lot of people live in the echo chamber. Folks think that’s information, and information is knowledge, and knowledge is arbitrage. But when everyone has the same knowledge, then it’s no longer arbitrage.

I think it’s mostly BS. Many have tried and failed at using the very data oriented approach to investing in startups when at the end of the day, it’s about the founders. And the founders wanting to work with you. Exactly. Yeah. No. I I think

A 100%. It’s about how do you position yourself so that the founders are choosing us. It’s based on reputation of our body of work, our firm’s body of work, what the firm represents, what we can offer them once we get involved or even before we’re involved, what are people saying about you? What’s the folks who you worked with before?

Yeah. I don’t believe in voting structures for early stage venture capital. I think you have to allow every partner to put themselves on the line with their conviction that they’ve built up over a year sometimes, weeks sometimes, but you have to give into the conviction of the person wanting to lead. And so the way we work is that because we sit around the table, we literally get to see each other’s body language, how someone goes from excitement to less excitement when one of our partners, like, you know, Ilya asked me a question about why I’m so excited about a company, and then he asked another question and I just go, Well, that’s a good question that I don’t have a good answer for.

Maybe my excitement wanes, and then I come back few a days later when we see each other again. It’s like, you know what? Like, we talked about that and, you know, I’ve I’m sort of leaning out on the opportunity. And so I think that’s also the magic of being around the same table in the same room. You get to really test each other’s conviction. So you don’t have a vote? We have a discussion, but there’s no vote.

Yeah.

I’d say it’s when questions get asked around, or is this a fleeting cycle of adoption for this sort of product, or this is going to be gnarly dogfight because there are too many competitors, or this is the wrong time. The risk reward isn’t great for this round. That’s when your excitement tends to wane. Do you do outcome scenario planning? We used to and haven’t done it more recently. Used to do like, what is the probability of this company being a zero, a $500,000,000 exit, a $250,000,000 exit, a billion dollar exit and a $10,000,000,000 exit.

You do the percentages. It’s such false precision. I always do 25, 25, 25.

It’s such false precision that I think it feels like busy work actually. Who’s the best picker in the team? Josh is a very precise picker. I would say that Ilya and I, we’re almost always on the same page. We’re like two similar actually. Is that too dangerous actually? Because you can almost encourage Well, each it’s actually great because if I meet someone and then I say, You know what, Ilya, come over. You know, like, I’ll see him in the hallway. Can you meet this person for like five or ten minutes?

And he did that to me recently actually, and he’ll come in and he’s like, Oh yeah, I see the same thing you do. So we are in some ways quite similar, which is awesome. I think we may miss some of the same things then too, because of it. But I think it’s a good lock to get, like, especially when we’re trying to build conviction or at least like quickly get to, am I seeing the same thing that you’re seeing? What was the most contentious deal that you did?

You know, actually, Figma was quite contentious. Because to your point, around 500,000 of AR at a 110, 15 posts or whatever it was at the time, the same thing, there’s Envision, there’s Sketch. This company’s been around for five years. It’s not obvious to us. It was contentious that there’s a lot of questions around

I I think the view is, hey, we we’d love to deploy over a two and a half to three year period of time. When we got to KP, I came in 2017, a bunch bunch of the team joined in 2018. So Bucky, Ilya, Annie joined that year. Josh joined the same week I did. So there was a period of time in 2019, so we just raised our first fund as a team together where we deployed that fund within like fifteen months. Think it was just Is that all the Rippling fund?

It was Rippling, Glean, a bunch of other stuff in there. We just were a new team, didn’t have board seats. We had drive like, we had a fund ready to deploy, and so we deployed it fairly quickly. And I would say mostly Series A, like real ownership Series A’s, the core of the business. And so if I look at that fund, I think it’ll be an amazing fund, actually. Unbelievable. Right? And so you could have said like, Well, wait a second, you guys didn’t do time diversify, it was, if you would have deployed over a two and half year period, you would have missed a high valuation environment until lower and yada yada.

And so I would say that that would be the counterpoint to fast deployment, like, no, you can actually

side do you take? I think generally speaking, it’s hard to have the neuroplasticity to one day think about ten years ahead and a new infrastructure company that’s building on a new open source framework, and the next day think about like pre IPO stage consumer company. While we all have one meeting, one pipeline meeting, one investment team meeting for both early stage and venture, all of us do venture investing, and a few of us will do more of that select investing, because we don’t want to burden everyone to bring neuroplasticity to the job every day.

You know, I’ve just gone through my first sort of bigger loss in terms of capital loss for a while, company just shut down a company called Metalli and the founder Jason Brown, who I’ve known for fifteen years. I had him on the show. Yeah. And How much did you lose? 30,000,000 or so, multiples of the largest loss prior to that. So I don’t wear this badge of honor of like losing a lot. I mean, there’s a whole thing in venture, like you need to lose like so many million dollars before you made it kind of thing.

And I think there’s a lot more precision one can apply even at the early stage to not put more money in, to lose more, because our job is to invest five, ten, 15 upfront. And if you lose five on a C check, all good, that’s your job. Is there anything you learned from Tally? That lending businesses are really hard. Consumer lending is very hard. Did you do reserves there? Yes. And that was where it went wrong? Well, the first check was back to the sixtyforty.

It was like sixtyforty, but there’s more along the way that went in because they raised subsequent up rounds from great investors, round after us, Angela at Andreessen Horowitz did it, and it was a great round, great time for the company. And then it did one in 2022 with one of our seed investors, Sway, led the growth round because things were going really well. And then consumer lending just turned. This is when interest rates went up from zero to 5%, and that really made that business really difficult.

How have you changed most

I mean, obviously there’s more experience, but I actually try not to let that weigh me down because I think job is to stay open minded and have naivete and dream the dream and too many scars aren’t necessarily a good thing for like being open minded and thinking about what the next Figma or Rippling will be. Where do you most need to improve as an investor? I think I’m a dreamer and I want to just believe in the people that I back.

I agree.

is fair criticism. But I think that’s just part of the package. That is who I am. I believe in the people, and I wanna be on that journey with them.

Yeah. I don’t disagree with node that there’s destruction of value that happens with the wrong advice. But I think if with the right advice and the right help, we can help supercharge your company. What makes

for the

board, it starts with how a CEO runs a board. How do the best CEOs run a board? They start off with a high level view of how the company’s doing, and then they give a chance for their leaders, their very capable leaders to go dive in deep and share and ask questions, and there’s a fair bit of cheerleading, but a fair bit of like asking the hard questions. And I like board meetings where there’s one or two things that are talked about in detail.

You go deep dive into one or two things, because at any given point in time in a company’s juncture, that moment in time, one or two things that really matter, we can help change the trajectory on, and so if we’re talking about seven different things that matter, we’re probably missing the point, And so I love board meetings where that’s sort of the structure. Two

Personally? Yeah. Those are not my kind of businesses. I like more capital efficiency, but I can get behind them.

Yeah.

No, I don’t. I don’t think we want that at all. We love where we are today, we really do. And I don’t try to not BS ing you, your longtime friend, I believe in venture, early stage venture being a beautiful asset class, especially if you can follow the power law and be in the few companies that matter, And then you can invest in the very few companies that really matter out of your select fund and then call it a day. I

Venture is an easy job. It’s glamorous. It’s all of that except glamorous. My

It has to be Aaron Levy when I first met him. Why? He brought along with him a wonderful person, Karen Page, because he thought he had to bring on an executive or bring an executive to the first meeting. He was hyper nervous, I felt, coming to a VC firm office, in a coat and shirt. But I could tell from that meeting that he had thought about the problem of cloud storage more than, and this is 2007, so like cloud storage was not a thing more than anyone else.

And so for me, it was like an instant, need to invest in this founder, like right away, but it was also just memorable from the other things that were going around. Do public

1,000,000,000 in revenue. Billion in revenue, I’m gonna say. 4,500,000,000 market cap.

Yeah, I think growth and profitability. So to my point, do we need to see the reflation for Venture to be sustainable or not? I think just getting back to sort of normal historical levels would be good enough.

You know, one of my favorite investors is Matt Kohler from Benchmark who I got to see him yesterday. I wish he and I were on more boards together. You can be

Which company are you CEO of? Easy.

Really? I just wanna see what’s going on. I just wanna see where how far AGI really is. Geopolitics, polarization even in our own countries. Here, we talked about The UK. We talked about The US a little bit before we got going. There’s too much of an Us versus them, whether it’s in our own countries or competing with other countries. Yeah.

Seed firm U, Series A firm U, and growth firm firm U.

Just that venture is a grind. And Do you still love it as much as you did? Absolutely. I mean, how could you not love living in this like supercycle of AI, man? Like, we will not see this at the ground floor level value creation in our lifetimes ever again. Final one, what question are you never asked that you think you should be asked more? Religion and politics are like the taboos, obviously. And so the question is, how does faith impact the way you work? How does faith impact the way you work?

It’s everything, it starts, it’s the beginning of a day, it’s the end of your day and everything in between is how do you, how does your faith inform how you treat people? How do you treat this Earth? How do you show up in a meeting with someone? It’s around how much humility do you bring, empathy, care, love for each other, for the planet? Just like it’s sort of like deeply embedded in you and it’s at a board meeting, everything.