20VC: 50% of Funds Will Go Out of Business | Why Growth Expectations Today are BS and Will Not Last | Why Oren Zeev Takes $0 Management Fees But 30% Carry | Why GPs Should Not Tell LPs Their Strategy

Oren Zeev is one of the most prominent solo capitalists in venture. He is one of the most no BS investors of our time. Oren manages over $1BN in AUM and is known for his "radical alignment" approach, often taking $0 in management fees. His track record includes massive successes like Navan, Audible, and Houzz. AGENDA: 03:11 – Why the Best Investments Always Look "Wrong" at the Start 05:58 – The AI Tsunami: How to Spot Beneficiaries vs. Victims 10:43 – The Death of Incumbents? Why Most AI Predictions Are Wrong 14:12 – Why Chasing Hyper-Growth is a "Disaster Waiting to Happen" 19:41 – The Biggest Mistakes From 2021 and Investing Lessons From It? 25:52 – Is the Future of Venture Boutique or Mega Fund: Does the Middle Die? 32:00 – The Great VC Shakeout: Why 50% of Funds Will Slowly Die 38:52 – Why Oren Zeev Takes $0 in Management Fees 50:48 – Why VCs Should Never Tell Their LPs What They Are Doing? 59:11 – How I Missed Investing in Facebook and Lessons Learned

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  I think this notion that only growth matters is still a very dangerous one. And I've seen this movie many, many times. We humans are not truth seekers. We are self-validation machines. In every one of my funds, I'm the biggest LP, every single one. By the way, I pay myself zero. So I tell LPs I only have one rule and that rule is that I have no rules. AI is the biggest change ever in the history of humanity.

• 0:23Harry Stebbings?

  This is 20 VC with me, Harry Stebbings. And today we have one of the most prominent solo capitalists in venture, Oren Z, who now manages over a billion dollars in AUM. My favorite thing about Oren, there's no show, there's no facade. He is so authentic. He has no rules when it comes to investing. He tells LPs exactly what he thinks. He has zero management fees. He takes 30% carry. He's just wonderfully authentic and he's done incredible deals like Navan, Audible, How's. And he's a brilliant player in this ecosystem. He's a dear friend and this show was so much fun to do. But before we dive into the show today, as an investor, I'm always on the lookout for tools

• 1:05Harry Stebbings?

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• 1:50Harry Stebbings?

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• 2:32Harry Stebbings?

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• 3:17Harry Stebbings?

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• 4:00Harry Stebbings?

  That's why top companies, from startups like Cursor to enterprises like Snowflake, choose Vanta. Do security and compliance right. My listeners can get $1,000 off Vanta by going to vanta.com/20vc. That's vanta.com/20vc for $1,000 off Vanta. You have now arrived at your destination. Orin, it is so good to have you back on the show, dude. It's been several years since we last did this. So, thank you so much for joining me, man.

• 4:30Speaker 00

  No, it's my pleasure. As you know, I was skeptical that I would be able to bring anything new to this conversation. You insisted, but...

• 4:38Harry Stebbings?

  I insisted because last time we actually did a show, I don't think I was a very good interviewer and call it a lack of humility, but I hope that I've improved as an interviewer. And I think now is quite a hard time to be investing. Again, I'm going to use the next hour as an advice session for me as an investor because I think I have a lot to learn from you. Now is a weird time because a lot is uncertain. And so when we look at picking investments, that is our job. That's what we're paid to do in a lot of ways. Why do so many of the best outcomes look wrong or weird at the time when we invest?

• 5:10Speaker 00

  Look, I think if they look weird and they look wrong, then probably there aren't going to be 15 or 20 or 100 other startups doing it. So, you're probably going to have two or three years without real competition and you have a chance of really building something, you know, a real moat. Now, if you're wrong, it's not going to help you. But if you happen to be right, then these are some of the greatest outcomes. And again, this is not, this is really some level of contrarian plus being right. That's the ingredients typically of great outcomes.

• 5:43Harry Stebbings?

  The challenge that we have today is the level of competition has changed so much. You know, when we first met 10 years ago, there was always one or two competitors. Now, for every company I meet, there's legitimately eight to 10 at a minimum. What do we do when the level of competition has increased to the extent that it is?

• 6:02Speaker 00

  I try to avoid it, to be honest. I'm in the Peter Thiel camp, I guess. I don't like to go where everyone else goes and have 10, 20 competitors from the get-go because I think the chances of building a market... I really want every investment to become a market leader. And the more competition there is early on, the smaller the chance. So, I try to avoid it. Every now and then, I find myself in such a situation, okay? But I don't like it. So, I try to avoid it and I try to do things. To me, if everyone is doing something, it's a reason not to do it, not a reason to do it.

• 6:36Harry Stebbings?

  Has what you look for changed in the last 24 months in the dawn and the wave of AI that we're looking at today?

• 6:43Speaker 00

  Not so much surprisingly, because I think the fundamentals are the same fundamentals. Yeah, we have, of course, a tsunami wave that changes everything, which I think creates a lot of opportunities, because basically every single industry business is going through change. And whenever there's change, there's opportunity. And there's a lot of value being created, and there's a lot of value being destroyed, and there's a lot of value being shifted. The one thing maybe you could argue that changed, I don't know if it's 24 months or 36 months, is that every investment, I have to ask myself, is this company a likely beneficiary of AI or not? The answer is that they're a victim of AI, obviously, it's the easy answer. But even if the answer is neutral, still the answer is probably no.

• 7:27Speaker 00

  So I just have to ask this question, which is a question I wouldn't ask four years ago, right? Four years ago, I would look at an opportunity, I wouldn't ask myself, is this a beneficiary of AI? But in the past three years, absolutely, I have to ask this question.

• 7:39Harry Stebbings?

  If we were to reflect that back on one of your best investments and one of your most concentrated positions, which obviously went public in Navan, would you say that Navan is a beneficiary of AI?

• 7:50Speaker 00

  Hundred percent. I am not sure that the market, the public market yet, sees it that way, based on the valuation. This is my theory. The market feels or believes that some or many of the softer companies, the incumbents, are gonna get disrupted by AI. And I think the market is right about that. I think that the market is not yet at the point where they discern between the ones who are gonna be negatively impacted and the one that are gonna be positively impacted. So I think that most softer companies are getting somewhat of a discount because of that justified fear. As you know, SaaS multiples, for example, are lower than they've been in the past 10, 12 years. But I think over

• 8:34Speaker 00

  time, what's gonna happen is that for some companies, the suspicion is gonna materialize. And in fact, even with a discount, they're gonna, in hindsight, look very expensive today. And for others, they're gonna be beneficiaries. Now, specifically with Navan, which a company I know well, I'm hundred percent convinced that there is zero chance. That we get disrupted by AI and there is 100% chance that we're huge beneficiaries of AI. I can go into details, but I feel, I just feel very, very, uh, very, very strongly about it.

• 9:06Harry Stebbings?

  Can you?

• 9:07Speaker 00

  Yeah, I can get into details in terms of numbers, obviously, but, but just, but from a cognitive perspective, I'll give two examples. One example is gross margins. You know, three years ago before AI, our gross margins were around 50%, it was all the cost of support. In the past three years, we've invested a lot and, you know, and we're doing more and more with AI. So, uh, and ultimately I believe that almost all the support is going to be done by AI. Already I think that it's dramatically better already. I mean, this is public information, I just don't have it in front of me and it continues to improve. So this is the easy part. The second part, which is even more exciting is think what you can do with AI in terms of the customer experience. And again, I

• 9:50Speaker 00

  don't, I'm not sure what I'm supposed to say and what I'm not supposed to say. So I want to leave it to the, the, the company because I don't want to trip on some SEC rule or something. But the even more exciting thing is how it dramatically improves the customer experience on multiple levels. And, and back to the first thing, why am I not worried about being disrupted? Because if you have a piece of software that's fairly simple, then yeah, someone can write it quickly and maybe price it lower and maybe even have better functionality and have much faster velocity. And those companies are at risk. But the more operationally complex a business is, now, now I'm not talking about Navan, I'm talking generally, but I think Navan falls in within this framework, the more

• 10:34Speaker 00

  operationally complex a business is, the more it's about distribution, the more it's about integration with source and with other pieces of software or content in the case of Navan or, or part of the ecosystem, the more it's in a regulated, this is not about Navan, but the more it's in a regulated environment where there's a lot of licenses and stuff, the harder it's going to be. Cause you know, the technology, okay, so someone can develop the technology, but technology is 5% of it, you know, you have. You have all so many other things, data, data is so important, especially in the age of AI. And who has the most data? The incumbents. So the bottom line is, I think this notion that all the incumbents are gonna die, you know,

• 11:18Speaker 00

  this notion that is being promoted by some people who, who I think was main motivation is to make provocative statements and get attention as thought leaders. I don't buy it. I think that, yes, of course, there's the change of technology and some companies that are not gonna be able to adapt for both objective reasons, like the one that I mentioned, and also execution reasons. I mean, some CEOs are just gonna be faster and more crisp in adapting the companies. Of course, if you continue to do nothing different, you're gonna die. But that's always been true. I have, specifically with Nirvana, I have zero concern, and I think that in general, many companies are not easy to disrupt, and as long as they don't fall asleep on the wheel,

• 12:01Speaker 00

  and as long as they, you know, they adapt, there are gonna be huge beneficiaries of AI.

• 12:06Harry Stebbings?

  So I have so many things to unpack there. The first I just wanna unpack is, you mentioned Nirvana invests obviously in support, blah, blah, blah. Support is a space where everyone is like, duh, AI is gonna replace a huge amount of labor. It's the most perfect solution for AI. That would be a consensus company slash market to invest in with huge amounts of competition. Does that mean you don't like it? Because that's the opposite of what you said you like.

• 12:35Speaker 00

  Yeah, and you company that they're solving the support problem, one, you know, one of them is gonna be successful, but there's, there's two, but there's a thousands that are not. So I'm not, they are very early stages. I don't trust my intuition enough to know which one of the thousand is gonna be successful.

• 12:51Harry Stebbings?

  You know, it's something I'm really struggling with, which is like growth rates. And what I mean by that is, I'm meeting companies today, and I'm looking at them, and they're going from one to five million in revenue. And before, Oren, when we met, that was great. That was impressive. Now, it's just not enough to get the great big funds interested at the B or the C. And I know that actually, I'm not gonna get a good next round on the back of that growth. How do you think about the changing expectations on company growth rates? And does that impact your investing?

• 13:21Speaker 00

  Yeah, so to be honest, I don't buy that either. Call me old school, but I don't buy that, because the math doesn't change. If you have a company that... Can double every year for the next five years. It's gonna be thirty two X what it is today. Because two to the power of five was thirty two before AI and after AI. That has not changed. So the real question is, is it sustainable growth? And is it healthy growth? So maybe a company grew from one to five. But you know, it's honestly healthy growth. You know, the economics are not very impressive. And you know, I think that next year they they're not gonna be growing much. So yeah, so in that case, it's not gonna be enough to grow from one to five. But if the company grew from one to five and they look like next year is gonna be twenty or fifteen

• 14:03Speaker 00

  and the economics are healthy, absolutely, it's a great company that I wanna be, you know, invested in. So and I think there is danger in dismissing companies. Actually have right now a company that's raising and really, and the company is is growing at a hundred percent. It's a twenty million today, growing to ARR, growing to forty million with very healthy economics. And I think they should also double the following year. And one investor said, oh, you know, we're gonna be have a challenge with a growth rate of a hundred percent. Right? And I, you know, and I have a lot of respect for this investor personally. I'm not gonna mention him. I have a lot of respect for him. I think he's dead wrong on this one. And I think-

• 14:38Harry Stebbings?

  Why do you think he's wrong? Because I think he's right.

• 14:40Speaker 00

  I think he's wrong because I think this company, again, it's not as if, look, if this company had competitors at the same level growing at three X and they're growing two X, yes, then he would be right. But they have the market to themselves, they're leading the market, they're growing two X, they're growing. I prefer a company that's growing two X with very healthy economics than a company that's growing three X with unhealthy economics. You know, as long as I believe that the market is large enough to continue to sustain this kind of growth for the next few years, I'd back this company all day long. So yeah, I don't think that AI changes mathematics, you know, and compounding. Compounding is the same compounding before AI and after AI.

• 15:17Harry Stebbings?

  When you look at the opportunity costs that large, great funds have today when they're investing large amounts of money into the follow on rounds of our companies, they can be in a Cursa that goes to a billion faster than ever. They can be in a Harvey that hits two hundred million within two years. And I I'm in businesses like you are, dude, so we're on the same side here. But I'm looking at going, I get it. Opportunity cost adjusted, they wanna be in Harvey and Cursa, not ours.

• 15:44Speaker 00

  I don't think so. I will tell you, even this day and age, there aren't many $20 million companies that are doubling with, you know, with very healthy economics, you know, just not so many of them. The other thing, I think this notion that only growth matters is a very dangerous one. And I've seen this movie many, many times, you know, because when you only look at growth, it drives companies to do things that are unsustainable and unhealthy. For example, these circular deals, you know, I'll buy your product for $1 million and you buy my product for $1 million. It's a win-win, right? Because we both now have another $1 million of revenues. Yes, we also have another $1 million of costs, but that doesn't matter

• 16:27Speaker 00

  because nobody looks at it. So you realize that no value was created in this theoretical transaction, but a perceived value was created. So we're starting seeing this, and this is not even before I get to fraud. This is really still like within gray area. And you see other manifestations of that. You see things that are clearly not, not sustainable. Now, in some cases, the companies will be able to somehow succeed, but in others, you know, it's going to implode at some point. So.

• 16:56Harry Stebbings?

  So are you telling companies that you're on the board of, don't listen to the hype? Don't believe the bullshit on podcasts about growth rates needing to be crazy. Build healthy businesses today.

• 17:06Speaker 00

  Look, I think growth is super important, but yes, in general, yes, grow healthy. Now, there are some rare situations where you have no choice because if you have competitors that are also growing very fast, you don't have the luxury of, no, no, I'm gonna grow healthy. You know, you just have to play the game and hope for the best. You know, I don't know, Uber versus Lyft would be a good example 10 years ago or 50, whatever, 15 years ago. You know, you didn't have the choice of, oh, let's build it slow and make it healthy. You have to go as crazy as possible, whatever the margins are, and ultimately, in the case of Uber, come out on top. But again, I look for businesses where this is not the dynamic.

• 17:45Speaker 00

  And when you have the choice between growing fast in a sustainable manner versus just going crazy and just optimize just for top line, ignore everything else. Yeah, I think that the latter is a disaster waiting to happen.

• 17:58Harry Stebbings?

  Do you worry ever that having a focus on margin and good economics too early hinders the upside opportunity for the companies that you're in? If you look at a DoorDash, shit margins for years. If you look at an OpenAI or an Anthropic, actually shit early margins. Do you worry that actually you focus too early on margin optimization?

• 18:19Speaker 00

  As I said, in some spaces and areas, yes. It's more important to win the market share. It's more important to win the market. And you don't have the luxury of focusing on margins too early. And you have to make the assumption that you'll take care of margins once you win. But most businesses are not like that necessarily. Certainly not all businesses are like that. And in the business, when you have the option, then again, don't focus on too early. I still think that the growth is more important. So I agree with you that focusing too early, absolutely. But at some point, you do wanna focus on it. Again, if you can afford it. And that point really depends on the business and the competitive environment. I don't think there's one solution for, or one answer for.

• 18:59Harry Stebbings?

  My biggest mistakes have always been when I think that I'm smarter than the market. I turned down a deal at the seed round because I was like, payroll? Really? Paychecks, ADP? Come on, this is ridiculous with this kid Alex, who's now a friend. He won't mind that. Do you give a shit about market, given the stage where we invest? How do you think about that?

• 19:19Speaker 00

  I also made mistakes, thinking I'm smarter than the market. But also my biggest ones were when I thought I was smarter than the market. And it's much more about the winners than about the losers. So no, I actually, this social proof and what other people think. I tried to actually suppress this last signal, if not ignore it altogether, and really invest based on my own conviction. And you know, sometimes I'm gonna be right and sometimes I'm gonna be wrong. It's more important to be right about these things because if 50% of the time I'm right and 50% I'm wrong, that's actually a great result because a winner is so much more important than a loser. Because you know, as you know, if we lose something, we only lose 1X our money. If we win, it could be 100X our money.

• 19:57Harry Stebbings?

  It's absolutely true. What you don't wanna do is continuously put money into a loser. And you wanna reduce that on cost. When you have done, what did you get wrong or what did you not see?

• 20:08Speaker 00

  So first of all, I don't often get these double downs that I do. I don't often get them wrong because I really, I believe, have enough intellectual honesty to look at things, not be biased because I'm already in and not, you know, not, and I true, maybe because I'm originally an engineer or whatever. Even when I was in my previous life as a VC with the, I saw compared to the other partners, you know, I had a partner who never saw following and he didn't like, you know, he always found the reason to justify his previous decisions. And I think one of the strengths of being a good decision maker is actually change your mind when there's new information and not get, you know, there's a quote I like from any Duke's book.

• 20:53Speaker 00

  It goes something like, I'm gonna butcher it, but it says, you know, we humans are not truth seekers, we are self-validation machines, meaning that, you know, people, most people, when they have an opinion, whatever information now arrives, in their mind, it's a proof that they were right, right? And I don't, I don't think this is a good mindset, you know, for a good venture investor. So I think that you wanna have enough intellectual honesty to change your mind based on the, based on the new information. But I will give you an example, because I, you know, I'm not foolproof and of course I make, just like I make mistakes in new investments, I also make mistakes in follow-ons. I'll give you an example, a company that was in the prop tech space and seemed to be

• 21:35Speaker 00

  on fire, you know, it went from 2 million run rate to 30 million a year after invested and the projection was to go from 30 to 100. Everything looked great, you know, I doubled down and I thought I probably got a discount to what the founder would have got from the market. But the timing was just before the big rise in interest rates in late 2021 or 22, I forget exactly what it was. So what did I get wrong? So first of all, I understood that the business is dependent on interest rates to some degree. And I even stress tested it and I actually did assume that interest rates will go up fast and I had the worst case scenario and I concluded, and I ran the model and I concluded that.

• 22:18Speaker 00

  That the business is going to be resilient enough and was going to survive it. In hindsight, I overestimated the resilience of the business and I underestimated the speed. What I called the worst case scenario, what I modeled as the worst case scenario, was actually not as bad as the real scenario that happened. You know, the rise in interest was was too fast and the company just could not, did not survive it. And I lost. And by the way, this is, yeah, so there's an example. So it happens. You know, you were still in the risk business.

• 22:48Harry Stebbings?

  What do you take away from that as a lesson?

• 22:51Speaker 00

  I actually don't, not much. I'll tell you why, because I think that, I think some of the bets are not going to work, you know, I think it's a mistake to judge a decision by the outcome. Because when you play poker, you can make the right decision and the odds are in favor. But you know, the cards that came out, you know, you lost the pot, doesn't mean that your decisions were wrong. And over time, you make the right decisions, the over time you're going to win. And but in any individual case, luck has a huge role to play. So you can also learn the wrong lesson. So yeah, I took a bet. In this case, it was wrong. In hindsight, I wasn't aggressive enough in my, you know, in my stress testing. But does that mean that I should be overly conservative next time? Not necessarily, because I could have been right. In other cases, I was right.

• 23:35Speaker 00

  So I just have to be comfortable with losing money, including big pots every now and then.

• 23:42Harry Stebbings?

  Can I be blunt, Owen? You have massive balls.

• 23:47Harry Stebbings?

  When you, when you look at your concentration into Navan, okay, which now a public company and it's been incredible to see all that they've built. But at times it looked hairy. Covid, for example, when travel stopped as a travel company. Do you feel the pressure in those moments?

• 24:05Speaker 00

  Actually, in the case of Navan, I never felt pressure. I, you know, I, Covid was a big one. By the way, even before Covid, 2018 or 19, we had an existential crisis when Delta Airlines decided that they hated us. And you cannot really succeed as a, as a travel company when one of the three major airlines in the US is not willing to work with you and is suing and all that. And it wasn't, it was not obvious that we'd be able to. Solve it and luckily we did. And then COVID happened. But you know, with COVID, I had complete trust in the leadership of Ariel. Some people were saying, oh, after COVID, people are gonna just stop traveling for business and just do everything over Zoom. Never believed it. So I had no doubt that at some point COVID will be behind us.

• 24:47Speaker 00

  And Ariel was such a CEO that as an investor, I could sleep well at night knowing that he's doing and the leadership is doing everything. And they did a lot, actually, not just on the cost, you know, everything. They reacted so fast and they adjusted the cost. They were the first company to let people go and they got so much shit for it because they fired people over Zoom. As if there was any other way they could have, and they still got a lot of shit from the press, but who cares, you know? And changing product priorities, for example, changing pricing models, pricing messaging, prioritizing features that are more relevant in an environment like COVID. So they did so many things, very quick, bold actions.

• 25:27Speaker 00

  But in the end of the day, I think relative to other people, it's easy for me to also let go, I find. So if I have a company where maybe the founders are not doing the right things and they're not reacting to a crisis in the way that I think they should, I don't get too worked up about it. And I, you know, at the end of the day, I just am letting go emotionally. I mean, I'm still gonna show up to board meetings and be, you know, try to be helpful and positive. But emotionally, I'm letting go. I'm not, you know, I'm gonna at least try not to manifest frustration and angst.

• 26:01Harry Stebbings?

  LPs often like capital concentration limits. For those, obviously, who don't know, that's like, you know, a set amount of capital percentage wise of a fund that can be in one company. What capital concentration limit do you find uncomfortable?

• 26:14Speaker 00

  I'd say 20% is my limit of a fund in one company. You know, I think industry standard is probably 10%, I'm at 20%. By the way, from the LP perspective, diversification at the level of the GP makes no sense because they have multiple GPs. So the recession gives nothing to LPs. Maybe, maybe the GP feels better, maybe. But of course, I think it's a mistake. I'd rather be concentrated in the best deals I can find because then when you have a winner, it really makes a difference.

• 26:43Harry Stebbings?

  LPs have said to me before about you, forgive me for this dude. He deploys too fast. We love him. He's smart. He's great. Too fast, like 12 months, sometimes less.

• 26:53Speaker 00

  Yeah, I know, I know.

• 26:54Harry Stebbings?

  Capital diversification is important. You need to bake different vintages in. Are they wrong? Or do you just respectfully not give a shit because you don't need to?

• 27:04Speaker 00

  It's probably the latter. I'm gonna do my thing and if it works for them, fine. And if not, they can opt themselves out and some of them have and it's fine. Good people opted out and it's fine. I'm not gonna do things differently. And by the way, I'm not investing fast because I want to invest fast. I'm just seeing opportunities I want to do. And by the way, sometimes looking back, you know, if I look at 2021, I would say I did, I invested too fast. You know, I wish I didn't, okay? But to answer your question, yeah, it makes their life a little bit more difficult because it's hard for them. And the thing is, it's not just the speed, it's also the fact that I'm not consistent. So I make it harder for them to plan, you know, because they're not sure when they put the money, if it's gonna be good for one year or two years or nine months.

• 27:49Speaker 00

  So I, you know, so it makes their sizing decision more difficult. So I, you know, I get it, I get it. But this is something that, you know, if you ask me, of all the things that I do that LPs might like less, I would say this is it. But honestly, I don't wanna, I don't wanna not invest in the company when I, you know, when I think it's compelling just because I just made another, you know, so.

• 28:10Harry Stebbings?

  What makes you say that in 2021, you invested too fast? And what are your lessons from that?

• 28:16Speaker 00

  Well, I think in general, in 2021, pretty much every deal that I did, most actually I should have because these are quality companies. But every single deal, I probably paid three or four X what I should have because that was the market. And because of that, I'm now in fund 11, but there's one fund that's gonna be okay, by the way. It's not gonna lose money, but it's not gonna be great, you know? The one that really invested the peak of the market because honestly, there was no other way to invest. Now, luckily, I invested in good companies for the most part. And some of them, despite overpaying, they're still gonna be great winners. But if every single deal, you pay three or four times what you should, then even if you have great winners, even if the fund otherwise would have been, I don't know,

• 28:58Speaker 00

  a five X, it's gonna be one and a half X, right? Or whatever. So yeah, I too, like everyone else, by the way, I too got carried away because this is the market. And it really, the thing is, I don't believe in my ability or anyone else's, to be honest, to time the market. In any given market, you want to do the best deals that you can. And some vintages are going to be better than others. Now, I don't think that for LPs it should matter. Because again, the idea is not that they invest in one fund and that's it. The idea is that the LPs are for the long run. I'm not interested in LPs, we just want it to come into one fund. So they're going to get the vintage diversification, just not specifically within one fund, but across the funds.

• 29:38Harry Stebbings?

  You're saying because you do such quick successive funds, they're going to get vintage diversification by being in both?

• 29:43Speaker 00

  Yeah, yeah, so maybe one fund did not have vintage diversification and everything was invested from that fund at the peak of the market. Okay, so probably that fund's not going to be great. But my typical LP would have been in three or four funds before that and three and four funds after that. So they'll have a series of six, seven funds and one of them is going to be okay, you know, and not great. Okay, not the end of the world. The other thing is not just to invest as fast, you know, I think that, as you know, each fund was larger than the previous one. And I think at some point I overdid it. I think, and again, I reacted to the market. There were a lot of rounds, they were frequent, they were big. And I think that I have two bubble sized funds.

• 30:26Speaker 00

  One of them is going to be okay, the other one is actually going to be good despite that. But I have two funds that were over 500 million from 2021 and 2022. But my 2024 fund already cut it by about a half, which I think is a better size, more conducive to great returns, yeah.

• 30:43Harry Stebbings?

  So we're like 250, say?

• 30:45Speaker 00

  I have a fund that's 250 and I have a fund that's in the midst of. So I had the first close, so I don't know yet what's going to be. So Fund 10 is about 250 and Fund 11, I don't know, but I actually, I want it to be less than 250.

• 30:57Harry Stebbings?

  So when we look at that decision, I think managers are faced with the decision today. You either need to be really fricking big, à la Andreessen, General Catalyst, Lightspeed, a wall of money. Or you need to be a real craftsman and boutique. Do you agree that you have to be one or the other? And that is the future of venture and the messy middle will be painfully suffering?

• 31:18Speaker 00

  I do agree with it, 90% agree with it. I think you have to have something special. Being middle of the road, you know, you want to be differentiated. So I think that naturally there is a bifurcation. So either you are, you know, one of these platforms like Andreessen, like Sequoia, like maybe Lightspeed, who are bringing a lot to the table, can do things that smaller VCs cannot, including myself. Or you're going in the opposite direction of solo GPs, for example, that you have other advantages, or I have other advantages. I'm not trying to be better than Andreessen and Andreessen's game. If it's gonna be Andreessen's game, they're gonna win, you know, beat me every time. No, I offer something different.

• 32:02Speaker 00

  You know, I'm faster than anyone else, for example. You know, there are other things, there's a personal connection. There's a lot of other things that founders find extremely compelling with solo GP. And I go for companies or founders that this is what they want. And that's differentiation. Or you have something else that differentiates you. But generally speaking, if you are a traditional five, six-person partnership, without anything very, very, very unique and special differential that you bring to the table, then yes, I think you are in trouble. Because it's almost like, on one hand, you're not as agile, you're not, it's not the personal connection. It still feels as a corporate to the founder. And on the other hand, you're not Sequoia. You're not gonna get the very best deals.

• 32:47Speaker 00

  So yes, I think, yeah, you don't want to be caught in the middle. And I think, and again, unless you position yourself like an amazing brand or you're just like an amazing expert in some area.

• 32:57Harry Stebbings?

  Do you think a lot of funds will go out of business in the next few years, be unable to raise and slowly die?

• 33:02Speaker 00

  Yeah, we're seeing it already. I think it's much harder to raise in the last couple of years. I think, first of all, there's less money going to venture. But not only that, a larger percentage of it is going to the platform. So if you're not a platform, then it's much harder for you to raise. And I would say that at least 50% of the funds today, and maybe more, either cannot raise, or at least are not sure that they can raise, or they're trying to stall and, you know, not test the market. And I think many of them are not gonna be able to raise.

• 33:30Harry Stebbings?

  Do you think LPs have an uncomfortable awakening coming with 90% of unicorns that they have marked as unicorns in their book not being unicorns? That is quite a difference.

• 33:41Speaker 00

  First of all, it depends on how the GP reports things because there's huge latitude in how we can report things.

• 33:47Harry Stebbings?

  How do you report things?

• 33:49Speaker 00

  You know, I try to report things and in the conservative, what they're actually worth and not to me. What I always tell LPs, whether or not you can believe numbers from a VC is less dependent on the methodology that they use. Because with any methodology, you can inflate or whatever. It's more a function of the personality or, you know, the character. But even more so, the motivation, by that, what I mean, if you're a fund that's, let's, let's say Sequoia, for example. They know that they can raise anytime, right? So they have zero motivation to inflate numbers. They have all the motivation in the world. To show things as conservatively as possible, right? Because they get no benefit from inflating numbers.

• 34:29Speaker 00

  However, if you, you are fund that is more middle of the road and you're not sure how easy it's going to be raised or not. You're going to find any excuse to keep the prices up, to look good on paper. So I think just ask yourself as an LP, the more secure the GP that you speak with is. The less likely they are to inflate, to inflate numbers and, and it's easy to inflate numbers. And the, the accountants are not good rail guards from that perspective. Because even if they challenge valuations, they always challenge the wrong things and they always, it's, it's complete lack of understanding what, you know. Because how, why would they know what, you know, what companies will be, it's not, it's not in the numbers necessarily, what companies that work.

• 35:12Speaker 00

  So I think there's a huge latitude, which means that there's a huge challenge for LPs to tell whether the paper values are real or not. And there are only two ways. One is impractical, which is to really study every single underlying position. It's impractical. And the other one is just rely on who do they believe and who they don't. And here it's based on their experience, it's based on the personality and it's also based on the motivation of the, how motivated. They should ask themselves, how motivated is the GP to inflate numbers versus be conservative?

• 35:46Harry Stebbings?

  You mentioned the first close in fundraising. Is the attitude mindset, what LPs want, different today than what it was in prior years?

• 35:55Speaker 00

  Yes. First of all, in general, they've had little liquidity. By the way, that might change in 2026 in a big way because there are a host of huge unprecedented size IPOs in the works now, you know, companies like SpaceX and Stripe and Databricks and, you know, and others. So there could be, there could be a tsunami of liquidity in 2026, 2027, and that would reshuffle the cards again. And who knows how it will affect. But right now, there's been a drought of liquidity for most LPs for a long time, four, five years. Add to that the fact that what I just said, that the TVPI, you cannot accept it at face value. You have to ask yourself, because so it's challenging to judge based

• 36:40Speaker 00

  on that. And because of that, I think there is too much focus even, but understandably, on DPI, where, you know, people hardly talked about it three years ago. And now some LPs, oh, it's just DPI, it's just DPI. We don't believe anything. So that's again, that's also an approach. When you see something that's difficult to understand, one approach can be, okay, I just discount it. I don't know. And I treat everyone the same. I just don't believe anyone. And that's an approach. I don't think it's the right approach, but it could be an approach. So yes. So from that perspective, I do see a change of, number one, they have less liquidity and they're very focused on DPI, more than, more than two, three years ago. But by the way, Harry, I do think it's a cycle. So I do think it will change again. But right now, there is, there is, there's this focus.

• 37:21Harry Stebbings?

  The lack of liquidity in large part is down to the extension of private markets, the platforms that are able to have the supply side of cash to fund them for longer. That means that we either have to hold them for longer or we can sell secondaries.

• 37:33Speaker 00

  Yeah.

• 37:34Harry Stebbings?

  How do you think about proactively selling secondaries and managing the book pre-going public?

• 37:40Speaker 00

  I understand why others do it. I don't. Again, the reason is motivation. So first of all, in any given moment, anything that I want to sell, I won't be able to. And everything that I can sell, I don't want to sell. Okay. The things that I can sell are the best positions and I want to keep. If it works, if it makes sense, you know, the assumption that I'm going to sell something, you cannot assume that the buyers are stupid. So they're only going to buy things that. They think they can double or triple within the next two or three years. Now, you know, if it can double or triple in the next two or three years, I'd rather keep it, right? So almost by definition, to sell anything, it's possible to sell it, but you have to give a significant discount to the buyer. Otherwise, they're not going to do it. They're not stupid either.

• 38:22Speaker 00

  So why do people do it? I think people do it, again, if they need it for the fundraising.

• 38:27Harry Stebbings?

  A bit sorry for interrupting you. We sold, we sold something earlier this year. And it's like, we knew it would be double or triple in a couple of years, for sure.

• 38:35Speaker 00

  Yeah.

• 38:35Harry Stebbings?

  But dude, there was inherent risk bait into that. There was a lot of execution risk that was dependent on that. Then there'd be a lockup on the IPO. If I'm thinking about IRR for our investor, fuck it. They'd rather have a three X back now than a four and a half X back in two to three years' time, dependent on a successful IPO and then a good whole.

• 38:57Speaker 00

  But let me go with the numbers because I do still remember my second grade math. You said three X versus four and a half X. That means that you only believed one and a half X over the next three years with a lot of risk. Yeah. So, you know, if this is what you believe, you should have sold. Absolutely. But in general, of course, there are some positions that I can justify. Yeah, that I can justify sale. But in general, if I know that I need to raise, and if I know that in order to raise, I need to show more DPI, then I can understand why a manager would be willing to give up upside in order to show DPI today and help them raise the money. You know, I never felt that I needed to do it. And I, first of all, I'm the biggest LP in every,

• 39:40Speaker 00

  in every one of my funds, I'm the biggest LP, every single one.

• 39:43Harry Stebbings?

  Can I be blunt? How much of a fund generally are you? Like 10%?

• 39:46Speaker 00

  About 13, about 13, 13, 14%. And I don't have any LP who's more than 10% in any given fund. So I'm always, every single fund, I'm the biggest LP. And on top of it, I have 30% carry. So, so really, I'm 40 something percent of the economics. So of course I think as LP and I'm trying to maximize the, the, the long-term value. And I don't want to show change myself as an LP. So I, I believe, by the way, in radical alignment with LPs. And this is why I set up, by the way, I pay myself zero. I don't see anything, which is very unusual. I don't know any VC in the world, as far as I know, that has zero income from the management fees. Zero.

• 40:23Harry Stebbings?

  See, you don't take a management fee at all.

• 40:25Speaker 00

  First of all, I take a low management fees, but I reinvest 100% of it in the fund. So I don't have any expenses because, you know, I don't have enough, I don't have people, I don't have any expenses and I don't pay myself anything. So I have, I see zero, before the investors see their money back, I don't see anything from LPs before they got 100% of the money back. By the way, even the way the management fee reinvestment works is that, the way it works technically is that I don't actually, despite being an LP, I don't actually get paid until the LPs got 100% of the money back. That's how it's set up. So this is radical alignment. I don't see a shekel, a dollar before they see their money back. And because of that, I'm really, really, clearly incentivized to optimize for the LPs.

• 41:11Speaker 00

  But, you know, remember what I said at the beginning of the call, substance versus appearance? So I'm 100% substance, 0% appearance.

• 41:18Harry Stebbings?

  What do you think are the biggest misalignments between GP and LP today in venture?

• 41:23Speaker 00

  Look, especially in the larger funds, the compensation that the GP gets from the management fee, especially if you account for time value of money, is typically greater than the upside. So let's say you have 10 billion and you charge 2%. The minute you close the fund, you already made $2 billion. Because it's, you know, 2% over 10 years, that's 20%. You already made $2 billion that are, by the way, are, you're gonna see them over the next 10 years, but starting today. Now, the carry, you'll start seeing maybe in seven, eight years, maybe, you know, because it takes time to return these funds. So if you double the fund, you get another, let's say it's 20%, you get another $2 billion, okay? But you're only seeing this $2 billion in eight years.

• 42:06Speaker 00

  So if you, you know, you take into account with, you know, you apply discount rate, you're seeing more from the management fees. So I think that for many funds, they really wanna do well enough to be able to raise the next fund. And their whole thinking is, what do we need to do to raise the next fund? And if it means selling something early to show DPI, then yeah, of course they'll do it, you know? And again, in some cases, it can lead to other things. So this is one set of maybe misalignment. The other Set of misalignment is actually not between the the GPs as an entity and the LPs, but within the individual GPs. Because the larger the partnership is, the investors, not even the GPs, but also the the younger partners,

• 42:50Speaker 00

  they're first and foremost managing their career. So, you know, if there's a conflict between what is good for the individual manager and the long term maybe value of the fund, guess what? I'll give you an example. You know, if if a partner in a in a partnership, especially large partnership with some with politics and all that, they're much more interested in their investments succeeding than anything else because that's their career. If their fund is great, but they didn't get the credit. You know, remember the partner that I mentioned that never saw a full on deal he didn't like? That's part of it because they have zero incentive to admit failure. You know, they have all the incentive in the world to convince their partners to put more money into this company, roll the dice again, and who knows? Maybe maybe it's gonna succeed.

• 43:34Speaker 00

  And even if not, they bought some time personally, you know? So I think the larger the partnership is, the more there is not hundred percent alignment with between the individual partners. And just like in a company, the guy in sales can have different motivation than the guy in product or the guy in marketing and, you know, and in my case, it's just me. So there's hundred percent, there's no difference. And I'm the biggest LP, so the LPs and you know, just there's zero conflict in my mind.

• 44:00Harry Stebbings?

  One area that's very challenging as we look at the market today is also about pricing. I look at series A today, dude, and I think it's the worst place to be investing. And so I'd love your thoughts on this. We have 200 X ARs, 150 X ARs. There's very little company progression from the seed round, but there's a very steep price increase. It's a very competitive stage. How do you advise me, others to navigate this seemingly very bad insertion point today?

• 44:29Speaker 00

  Okay, so first of all, I agree, but with a few comments. First of all, scratch the wood today, it's always been the case. Even 30 years ago, that, you know, you have a seed round, basically founders in an idea. It's priced low and then a year and a half later, basically, they have now 20 people, they have an office, maybe they have a few tiny, you know, small customers that really haven't proven anything. But the perception is, oh, now it's a company and we made so much progress. Now we have a product, now we have this. You really didn't prove anything. And all of a sudden they jump in valuation. This is, there's nothing new under the sun. This has been the case always. Okay, so this is something to be worried about always as an investor. That's the first comment, obviously. The second comment is, I agree with you.

• 45:12Speaker 00

  Just watch it not to be confused by the name of the round. Because calling it A, that's just a name. You can call it anything. You can call it seed one, you can call it A, you know, it's just a name. And I think people, when they talk, it's kind of a shortcut. You say A and it's, oh, I know what you mean. You know, actually, no, you know, because we can, we can both call something round A. It would be very, very, very different things. So I wouldn't be caught up. I don't care if it's called A or B or seed or whatever. Generally speaking, when I look at the second round after the first round, I want to make sure that the progress that I'm seeing is really substantial in terms of, in terms of risk reduction as opposed to the looks of it, the optics of it. So if the progress is, oh, yeah, now we have a product.

• 45:55Speaker 00

  And as I said before, and we have a few, few logos, but really they didn't really make a commitment. Really, they haven't renewed yet. The tough question is for an investor, whether it's me or you, are the indications that I'm seeing, is it a real signal of product market fit? Or is it just noise? Because if it's not real signals of product market fit yet, then nothing has really changed since the seed. If anything, maybe the opposite. The very fact that after a year or two, they don't have signs of product market fit, maybe it means that it should be worth less than what it was worth at the seed. Because at the seed, you had the option value of maybe within a year or two, you will have it. So, so I think that's the thing. It's not about whether you call it A or not.

• 46:36Speaker 00

  It's about really exercising judgment if this really represents product market fit or not.

• 46:41Harry Stebbings?

  What do you think of the rise of very proactive preemptive rounds? Where you have a company raise and then a month later, Iconic or any of the big platforms come in and shove another 50 million bucks in. And very little has changed again. It's still on 3 million of ARR. Do preemptive rounds work more often or less often in your experience?

• 47:02Speaker 00

  I think my advice to founders, and it's advice that's harder, hard to follow, actually. Because I cannot fault a founder for taking fifty million to higher valuation if they're being offered that. But I often tell them, and they, you know, it's, it's hard. But some of them, the more mature ones are able, I believe. My advice is take the money, but continue to behave as if you didn't. Don't spend money just because you have it. You know, companies can be overfunded and it can lead to loss of focus. So if the founder is mature enough and strong enough to take the money, put it in the bank, but spend it based on the signals that they get from the market as opposed to the pressure that they're getting in the boardroom.

• 47:45Speaker 00

  I think they should take the money because it would be stupid not to.

• 47:48Harry Stebbings?

  But Jason Lampkin is a dear friend of mine, very famous SaaS investor on Twitter a lot. And he says founders today, they don't want to hear your thoughts. They don't want to hear your opinions. They, they at best will say thank you and ignore you. And at worst will say, God, what a dick and say bad things about you for giving me advice.

• 48:06Speaker 00

  Yeah.

• 48:06Harry Stebbings?

  Do you agree with that perspective that founder sentiment has changed towards investor advice?

• 48:11Speaker 00

  I'm not feeling it personally. I feel that founders that I back, the only reason they speak to me and ask my advice is because they want to hear my advice because, and I'll tell you why. Because I never force my advice. So they, for them, I'm a safe environment. You know, it's like going to a sec-, you know, to a psychotherapist because they don't. And the other thing is they don't need to convince me because I'm going to support them even if I think they're wrong. So when you feel that as a founder, that you need to convince someone that then you're not so much in a receptive mode. You're, you know, trying to think, okay, what, how do I overcome this objection and that objection? When, when I have a conversation with a founder about something and the founders know before we even start the conversations that no matter what I think, I'm going to support what they want to do.

• 48:56Speaker 00

  It disarms them and then they're much more receptive mode then. Because otherwise, why even talk to me unless they really want to hear what I say now? So I'm not personally feeling it. I think it also depends on the way you deliver the advice. And there is a famous book about raising children. And I think the title is How to Talk to Children So That They Listen and How to Listen So That They Talk. And I think it's very, I love the name of the title because if when you listen, you keep telling, whether it's your children or founders, you're being judgmental, you're accusing, you're not patient, you know, you think you know better,

• 49:40Speaker 00

  then of course they're going to be less receptive to listening to your advice. So I think it also, by the way, I don't know Lemkin at all, so it's not, you know, I don't want to sound like I'm bad mouthing him and I've only heard good things. So it's not personal, right? But in general, I do think that you want to be, as an investor, you want to be mindful of how you give the advice. And if you come from a point of know it all, then I think that most founders would not react well to it. I wouldn't react well to an LP who would start telling me, even if they're right, by the way. I remember, by the way, an LP of mine who, two years ago, was very critical of the size of my fund and really pushed me to do a much smaller fund.

• 50:23Speaker 00

  And I didn't like the way they delivered it and basically, and I wasn't, you know, willing to listen to them, even though in hindsight I think they were right. But at the time, I wasn't willing to listen to it. In fact, I told him, listen, there's a very easy way you can help me making it a smaller fund by just not being the next fund. And to my surprise, I was sure that I lost that LP. To my surprise, they stayed with me. They have a great relationship. But, you know, even I was not listening to advice, which in hindsight was the correct advice. So I think it's also, the delivery is also important.

• 50:52Harry Stebbings?

  How have your thoughts on ownership changed over time? The reason I ask this is because like, we could have invested in 11 labs at the seed round. We would have got 1%. We could have invested in granola at the seed round, we would have got 1%. But we do what we tell LPs, Oren, which is we lead rounds and we take double digits ownership and we are your concentrated investor. How have your thoughts around ownership changed and where do they sit today?

• 51:16Speaker 00

  So the truth is that they haven't changed. And that's exactly why I don't tell LPs anything in terms of what I'm going to do. Because I feel that if I tell an LP something, I would feel too committed to that specific strategy, which I may have thought was the right strategy. But then there's a situation that requires being flexible. So I tell LPs I only have one rule and that rule is that I have no rules. I think it all depends on the circumstance and in some circumstances I would. In some cases, I would do things that maybe an hour before the meeting I didn't think I would do. I'll give an example, and by the way, which is still an ongoing company. I don't know how it's gonna end, but you know, there's this AI company called Descartes. Have you heard of it?

• 51:57Harry Stebbings?

  Yeah.

• 51:58Speaker 00

  So I met them a little bit over two years ago. I met them over Zoom and when we met, they said they're gonna start. It was just the two founders. They didn't really have an idea, but they were exceptional. And they told me, yeah, we already have $3 million committed. We're gonna close on it in the, you know, the next 24 hours from a bunch of really good angels. I asked them if I wanted to invest, what can you do? And they said, what we can do is we can cut them back 50% and give you 1.5 million of the 3 million. By the way, it was gonna be an uncapped safe. I normally don't do safes at all, but in this case, I said, you know what? I'll do it, but I need it to be capped and we capped it luckily because otherwise, at least for the investors, it was lucky

• 52:41Speaker 00

  because the next round was at much, at a very high valuation already. So I end up with, you know, 5%, which is way less my normal ownership of 1.5 million. I assumed that I'd be able to increase it later. It never happened. The reason it never happened is because they became profitable very, very, very quickly. So they didn't need more money. They only took Sequoia money because they wanted Sequoia and they later took Benchmark money again because they wanted Benchmark. And so I was able to maintain my ownership, but I was never able to increase it. So I deviated from my rules. Again, I don't have rules, you know, I don't have minimum ownership. I don't have rules. At that point, it made sense to wanna do it and I'm glad I did.

• 53:23Speaker 00

  And it helps not telling LPs, I'm gonna do this, I'm gonna do that, because then you don't have to later explain why you didn't do what you told them.

• 53:28Harry Stebbings?

  Does having Sequoia on your cap table move the needle for a company, do you find?

• 53:32Speaker 00

  I think it depends on the situation, the partner, but they're a great firm and they have, you know, I've partnered with Alfred in one deal and in the case of Descartes, it's Sean McGuire. And I think they're great and I think there is a chance that it will make a difference.

• 53:48Harry Stebbings?

  Can I ask a weird one? Like Hunter and Satchel at Homebrew have been incredibly successful, as have you, and decided not to raise more money from LPs, manage their own money. And they can be way more collaborative because they don't manage other people's money and they just invest their own.

• 54:02Speaker 00

  Yeah.

• 54:03Harry Stebbings?

  You could do the same.

• 54:05Speaker 00

  I have done the same before. You know, between Apex and doing what I do now, I've done what they are doing now for eight years with my own money. Yeah, I have done the same.

• 54:14Harry Stebbings?

  Why do you not go back to it? You could be more collaborative. You don't have to have LP management. You don't have to fundraise. Why do what you do now?

• 54:23Speaker 00

  Why would I want to be more collaborative?

• 54:24Harry Stebbings?

  Because you can get into more deals.

• 54:26Speaker 00

  I don't want to get, you know, I want to be the main player. I don't want to get into more deals necessarily. I want to, the ones that I do, I want to make it, I want them to matter. And I want, you know, to be as meaningful as possible, to be the player, the main back or one of at least that so.

• 54:39Harry Stebbings?

  How many companies do you own in a fund?

• 54:41Speaker 00

  In the early funds, it was less, but now it's more like 15, but there is a lot of crossover between the funds. So I'm now on fund 11 and I only have 40 companies. So if it was exclusive, it would be four companies per fund, but it's not because, you know, you see the same names in different funds.

• 54:58Harry Stebbings?

  Can we do a quick fire run? I'm going to give you a series of short statements.

• 55:01Speaker 00

  That's scary. Okay.

• 55:03Harry Stebbings?

  No, no, it's not scary at all. What do people not know or see about having money that they should know and see?

• 55:11Speaker 00

  I find that there is an increasing level of hating the successful, hating the rich. I see it on Twitter. I think in Europe it's even worse, but it's come to America, unfortunately. I think many people, unfortunately, generally believe that rich people are evil or that you cannot become rich without taking advantage of other people, et cetera. And the reality is that rich people are as evil and as good as anyone else. And most rich people that I know actually are looking for ways how they can use, leverage their success to make the world a better place. But you have politicians who are trying to, you know, come up with all sorts of.

• 55:54Speaker 00

  Suggestion how to, you know, basically hurt successful people for being successful. Of course, they're not going to get cooperation from and because they feel that they it will make them more popular among people who, you know, assume that if someone is rich, it's because they did something bad. So I think this is, I don't know, this is, I'm this is more about politics than about business. But I think one of the strengths of the of America, they always, always believed in merit and success. And let's say that I'm not a fan of the movement or the woke movement that is dragging or trying to drag America in the in the other direction. I didn't mean to be political, actually. I

• 56:33Harry Stebbings?

  Are you concerned by the labor displacement theories of AI? I'm excited because I'm going to make a lot of money, but I'm also nervous because I don't know what's going to happen. Are you?

• 56:43Speaker 00

  I feel exactly the same as you. Look, I think it's the most powerful transition or force maybe in history. And just like any powerful force, there are very good reasons to be excited and there are very good reasons to be worried. And I'm pretty sure that we're going to be proven right on both sides. We're gonna, our words are gonna be proven right and our excitement is gonna be proven right also.

• 57:04Harry Stebbings?

  Do you think a lot of people respectfully, and I mean this so respectfully, with your wisdom and years of experience, say, oh, Harry, it always looks like this. It always takes longer than you think. It always takes. And part of me goes, I get that and I respect your experience and wisdom. And part of me goes, this feels a bit different.

• 57:22Speaker 00

  Yeah.

• 57:23Harry Stebbings?

  Which side are you on?

• 57:25Speaker 00

  Yours.

• 57:25Harry Stebbings?

  Good.

• 57:26Speaker 00

  But but but wait, yours, but but I hope I'm right. I I very much hope to be proven wrong on the concern side.

• 57:32Harry Stebbings?

  Which is the most memorable first founder meeting that you've had?

• 57:36Speaker 00

  Okay, you don't. Okay, I'll give you one. A relatively recent investment from a year and a half ago called Sensi, which I think is on fire, is going to be great. I love the founder. She's a she's a force of nature. And so I'm cheating a little bit because it's not first meeting, it's second meeting. So I met her a year earlier. And it was the same company, it was already had revenues even then. I found it interesting, I found it interesting but not interesting enough. I had a lot of concerns. And a year later, I almost didn't take the meeting, but I, she told me she's in town and then can we have coffee? And I meet there and within five minutes, I realized that number one, all my concerns from a year ago were addressed in flank callers. And number two, she's a different person.

• 58:18Speaker 00

  Like she felt so confident, it felt, she felt so confident because I met her a year earlier and she didn't convey this confidence. I knew it was real. It wasn't like bullshit confidence. It was real because I also saw her less confident. So within five minutes, the whole conversation changed and, you know, within 24 hours. By the way, she already had a couple of term sheets from big brand names and I took the deal.

• 58:41Harry Stebbings?

  What's your biggest miss and how do you reflect on that? I mentioned deal for me.

• 58:46Speaker 00

  Yeah, you know, I don't have too many, which means that I'm not seeing a lot of the great. To be honest, it's not a good thing. I'm not proud of it because I didn't see, by the way, I love Alex. This time Alex from Deal. Now, I do have misses from the Apex days where I saw something that I wanted to do, but I knew that there was no way I could get it approved. Including Facebook, by the way, in the very early days, you know, I saw it, I could have done it. Brought it to the partnership, it was dead on arrival. The one that I know I could have done is I tried to convince the partnership to buy. I made the investment in Audible, it was my first big home run. And then it went public and it was a great, we sold not all the shares, but enough to make it a home run. And then the stock price dipped and it was obvious to me that it's temporary.

• 59:30Speaker 00

  And I wanted to basically take it private and I couldn't, you know, and I could have because the founder was totally on board because he didn't like being public and I couldn't get it approved. But this is less of a mess of mind because I tried and then because the founder already decided they don't want to be public anymore, we ended up selling it to Amazon. And now it's a huge humongous company and it would have been an amazing deal if we took it private. But that's less of a. In terms of, I'm sure, by the way, I'm sure I did. I do have things that I missed, but not one of, not one of the really great names. Not in OpenAI or Anthropic or anyone's. This is an interesting story because when I heard that, I didn't know Asaf,

• 1:00:12Speaker 00

  but when I heard that he was leaving Microsoft, I didn't even know he was starting a company. I asked someone to make an introduction. I guess he checked with him and he connected us, but he used the wrong, but he used the Microsoft email address, which Asaf was not checking. So I tried two or three times, didn't get an answer and I moved on. Now, two years later, when I met him for the first time, I asked him, why didn't you respond to me? And then we worked it out back and it turned out that he was, on one hand, he still had this email. Otherwise it would have bounced and on the other hand, he wasn't checking it. But to be honest with myself, I don't think I would have got the deal anyway because I think he was, you know, he had an amazing cyber investor from his previous company who also led, you know, I think you know him, Gilly, and you know, it was his deal.

• 1:00:57Speaker 00

  I wouldn't, I wouldn't, you know, and he's not a much of a, just like me, he's not much of a collaborator either. So I don't think he would have done me any, you know, I, I don't think I would have got into the deal anyways. Just because, and by the way, this is one thing that is consistent fallacy within VCs, that they think that just because they saw a deal, they necessarily would have been able to do it. No, you know, with all due respect to anti-portfolio, it doesn't make sense that the same deal appears in 20 different anti-portfolio because it's not as if the 20 could have done it, you know? So.

• 1:01:28Harry Stebbings?

  No, mine I could have done, actually. I've got three $10 billion companies now.

• 1:01:32Speaker 00

  Yeah.

• 1:01:32Harry Stebbings?

  Where I legitimately could have.

• 1:01:34Speaker 00

  No, I'm, I'm, by the way, by the way, it's easier when you write a small check because and you have the value that you have, then why would people not let you in, right? It's harder when you have to be the winner and exclude everyone else. So yes, I agree, you could have done. By the way, Riverside 2, Riverside 2, which is the, it's not $10 billion yet, but it will be, I believe. And.

• 1:01:53Harry Stebbings?

  Dude, you sent it to me. Do you remember this?

• 1:01:55Speaker 00

  I know, that's one thing, yeah.

• 1:01:56Harry Stebbings?

  And I was like, dude, you're an idiot. Zoom is gonna continue, like, really? What are we on now? Oh, Riverside.

• 1:02:04Speaker 00

  Exactly.

• 1:02:04Harry Stebbings?

  That's, just keep sending things or next time I won't ask, okay?

• 1:02:11Harry Stebbings?

  You mentioned Mickey earlier, and we mentioned Mickey earlier. Which investor do you most respect and admire, and why them?

• 1:02:18Speaker 00

  Mickey is definitely very, you know, I don't want to say the only one, but he's one that I super respect, not just as an investor, but also as a human as a person.

• 1:02:27Harry Stebbings?

  What do you take from your relationship with him? Like, for me, he taught me, you've never won or lost, you're only ever ahead or behind. I always remember that.

• 1:02:36Speaker 00

  Okay, I have to think about it. No, look, I I've been in this business longer than he has, and actually, when he started, he came, you know, also consult with me. And so it's not, it's less of some mentorship, but what I so respect about him is that he just, he's so authentic. And he speaks his mind, is, and he has his, you know, his own way of doing things. I have mine, different, but actually, I think it's harder the way he does it, because, you know, it's one thing to do things your your own way when you're one person. It's another to be a leader of of of a group, which he is. So it's a much better leader than I ever will be or aspire even to be. And I know, I think it's just a great, just a great person.

• 1:03:17Harry Stebbings?

  Tell me, final one, what are you most optimistic about? I always like to end on a theme of positivity. We mentioned like being concerned about labour displacement. What are you most excited for, happy about?

• 1:03:27Speaker 00

  So, listen, AI is the biggest change ever in the history of humanity, I believe. So, certainly the history of technology, and it changes everything. And whenever there's change, there's opportunity to make things better and to build huge amount of value. And we're, you know, and we happen to be placed at the very, very, very, you know, it's the best time in history to be an investor. It's the best, I'm in the Bay Area, you know, with the best ability to make these investments and be part of these things. So I'm super bullish, but I've never, never had so many companies that are crushing it and building market leaders, you know, in my portfolio that I'm super excited about. Almost every vertical, right? There's an opportunity to reinvent with with AI. So I'm super bullish now.

• 1:04:10Speaker 00

  The fact that I'm bullish about personally about my investments or about the potential investments, or even about the VC industry in general, doesn't mean that I'm not worried about the political side of things with the political unrest because of people get disenfranchised and things like that. I think it's very, very, very risky to humanity, so. And as I said, it goes together. If something is powerful, then it's gonna be very exciting and scary at the same time. And if something is weak and not powerful, it's not gonna be scary and it's not gonna be exciting. So it goes hand in hand.

• 1:04:43Harry Stebbings?

  Oren, you've been a friend to me for many years. I so appreciate. I said it at the beginning, it's so funny, and I don't know why. Ten years ago, I was nineteen and I really had nothing. And you were so kind to me then. You've been so kind to me since. I really appreciate the friendship. So thank you for being so amazing, dude.

• 1:05:00Speaker 00

  Thank you.

• 1:05:03Harry Stebbings?

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• 1:06:31Harry Stebbings?

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• 1:07:13Harry Stebbings?

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• 1:07:58Harry Stebbings?

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