20VC: Kleiner Perkins' Mamoon Hamid on Investing Lessons from Leading Rounds in Figma, Slack and Rippling | Lessons Building a Generational Defining Firm with Kleiner Perkins | AI: Where Value Accrues, Startups vs Incumbents & Scaling Laws

Mamoon Hamid is a General Partner @ Kleiner Perkins and one of the greatest venture investors of our time. In the past, Mamoon has led rounds in Figma, Slack, Rippling, Intercom, Glean and Box. Prior to joining Kleiner Perkins, Mamoon was a Co-Founder of Social Capital, and prior to that a Partner at U. S. Venture Partners (USVP). In Today’s Episode with Mamoon Hamid We Discuss: 1. The Greatest Venture Deal of All Time: Figma or Slack: What is Mamoon’s highest returning deal? What did Mamoon see in Dylan and Figma when they had no revenue and very little user data? What compelled Mamoon to write Stewart the check with Slack? What did he not see with Slack that he should have seen? 2. Taking Control of the Great Brand in Venture: Kleiner Perkins: Is it true that Kleiner approached Mamoon and gave him the keys to the Kleiner kingdom? How did it go down? Will Kleiner go back to having multiple products, large growth funds, international funds? What does Mamoon want Kleiner to be in 5 years? What was the hardest element of the transition into Kleiner? What did Mamoon not know that he wishes he had known? 3. Becoming a Generational Defining Investor: Market, founder, product, how does Mamoon rank them 1-3? How has Mamoon changed most significantly as an investor? What does he know now that he wishes he had known when he became a VC 19 years ago? What is his biggest loss? How did it shape his mindset and go forward investing approach? 4. AI Supercycle: The Greatest Time to Invest Where does Mamoon believe the value will accrue in this wave of AI? Where are many investors spending a lot of time but Mamoon believes is not worthy of that time? Will scaling laws continue? Have we ever seen an incumbent set spend like this incumbent class? How does that change the game for VCs?

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

• 0:00Speaker 00

  I love products that create markets. Slack created a market. Figma created a market. They get to create the playing field. They play on the playing field and they win the game. There is more capital in our industry than ever before. That capital at times thinks that everything will be a deck of corn. And you're overfunding some companies. There's a lot of time being spent on a lot of the middle layer between the foundation models and the applications. There's just a lot going on there. I feel like perhaps it's a little over invested. We've invested in a lot of application layer companies. We took actually the top 20 jobs in the US. 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?

• 0:43Harry Stebbings?

  This is 20 VC with me, Harry Stebbings. And today we are joined by one of the greatest venture investors of our time, Mamoon Hamid, general partner at Kleiner Perkins. I will tell you why he's the best. He is able to consistently see greatness at moments in a company's lifetime when it is not clear. He did Figma when it had almost no revenue at a $100 million valuation. Similarly, he did Slack when it had almost no revenue at a $250 million valuation. The company ultimately sold for $27 billion. He also did Rippling pre-inflation point. The man is a master picker. He's also been a dear friend. I met him at Sastre nine years ago and he's been a mentor to me ever since. This was such a special show to do.

• 1:28Harry Stebbings?

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• 2:10Harry Stebbings?

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• 2:54Harry Stebbings?

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• 3:36Harry Stebbings?

  in just 15 minutes, covering psychology, marketing, business and more. It's no surprise 8 Blinkist users see themselves as self-optimizers and 65% say it's essential for business and career growth. Speaking of business, Blinkist is a trusted L and D partner for industry leaders like Amazon, Hyundai and KPMG UK, empowering over 32 million users since 2012. As a 20 VC listener, you can enjoy an exclusive 25% discount on Blinkist. That's B L I N K I S T. Just visit blinkist.com/20vc to claim your discount and transform the way you learn. You have now arrived at your destination. Mamun, I am so excited for this, man. I can't believe it. You just reminded me of Sasta.

• 4:20Harry Stebbings?

  Nine years ago was our first show. Thank you so much for joining me today.

• 4:24Speaker 00

  Thank you so much, Harry, for having me. It's so great to be here.

• 4:27Harry Stebbings?

  Listen, I wanted to start. I started an LP update the other day that I did with it is the most exciting time to be in venture. It's also the hardest time to be in venture. Would you agree with that statement?

• 4:38Speaker 00

  It is the most exciting time to be alive. We're in the midst of a super cycle like none we've seen before. The AI super cycle, 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 going to be the same anymore.

• 5:08Harry Stebbings?

  The thing that's seismically different for me when I look at the two, and I don't mean to age you, I was four in that kind of period. We didn't have the incumbent spending $100 billion on frontier models. Larry Ellison said the other day, it's going to be $100 billion to enter the frontier model race. And you're looking at that going, Christ, that is a different level of incumbent spend than we've ever seen before. How do we think about that as it is a fundamentally different addition?

• 5:30Speaker 00

  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.

• 5:42Harry Stebbings?

  Does that make it harder for us as venture investors with the rise of corporate investors? Who maybe have different motives or different incentive structures? Does that make it harder for us?

• 5:52Speaker 00

  It 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.

• 6:05Harry Stebbings?

  I hate kind of broad and generous questions because they're generally for crap interviewers. But as I said, I've done 2,700, so hopefully I have some skills. But when you think about kind of the AI landscape today, how do you think about where the most value will accrue? And you want to concentrate most of your time and capital?

• 6:20Speaker 00

  Okay, so we just talked about how everyone's over investing right now into this 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're, we've invested in a lot of application layer companies and 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.

• 7:02Speaker 00

  So we backed companies that help doctors, lawyers and developers, co-pilots. So Harvey, Ambience, Codium.

• 7:10Harry Stebbings?

  I completely understand that rationale. My question to you, when I look at those is fantastic. Trouble is, there's 10 alternatives going after every category.

• 7:19Speaker 00

  Yeah.

• 7:19Harry Stebbings?

  How do you think about differentiation in this world when there are 10 transcribers note taking apps for doctors?

• 7:27Speaker 00

  Yeah, I think it's like any other space, any other traditional linear software space, I call them. It's about teams that 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 model does matter. You can't have a 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. It's not just like some tourist AI engineer.

• 8:08Speaker 00

  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.

• 8:19Harry Stebbings?

  It's really interesting. You said that it's very much like investing of old, really backing incredible teams in the right markets, building incredible products. So many people said, listen, Mamoon is one of the greatest investors of the last decade. When we look at some of the picks from Rippling to Figma, the list goes on. It's insane. Is AI investing different to traditional SaaS?

• 8:40Speaker 00

  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 was 25 years ago.

• 9:11Harry Stebbings?

  It's also challenging from a pricing perspective. I saw three companies my moon last week that raised at over 750 million pre-product. How do you think about navigating the pricing environment when there is such further pitch excitement for these companies?

• 9:25Speaker 00

  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 million for 15 to 20% for the math to work for our funds. And it can't be done if you're investing 25 million at 750 post out of an early-stage fund.

• 10:00Harry Stebbings?

  My question is then, how do you think about breaking the rules and letting the one that got away not become the norm?

• 10:07Speaker 00

  Yeah, I think I heard from someone many years ago, you know, 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.

• 10:24Harry Stebbings?

  Have we ever seen revenue scaling like this either? I'm brought up in the days of like 18 months, 10 million ARR was amazing. This was like the gold standard. And now we're in 11x, which is insane revenue scaling. And you're seeing this across the board. How do you think about determining sugar high revenues unsustainable but very fast versus sustainable value creating?

• 10:46Speaker 00

  So in the age of AI, we have to think about what What are we doing? We're not just providing software. We're providing labor. We're providing capabilities that enable people to 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 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, $400 a month, even $500 a month. So, simple math is that if you, you know, you go from start to 1,000 seats and you got paid $30, you know, you're getting $30,000 a month.

• 11:31Speaker 00

  If you're getting paid $300, you're getting $300,000 a month and you're going very quickly from zero to, you know, four or five million of revenue.

• 11:38Harry Stebbings?

  We've seen companies like, we said about kind of replacing labor there. We've seen companies like Klarna say, you know, we're going to replace Salesforce and Workday in that specific case. And we're going to build it our own with, you know, our own AI tooling. To what extent do you think we'll see the next generation of companies build their own custom tooling and replace existing SaaS solutions?

• 11:56Speaker 00

  Yeah, well, hats off to Klarna for undertaking this. I just remember the time when we built an internal CRM at Klarna 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 tool.

• 12:13Harry Stebbings?

  We could just get Affinity or something.

• 12:14Speaker 00

  Exactly. We use Affinity. It's great, okay?

• 12:17Harry Stebbings?

  For like 3,000.

• 12:18Speaker 00

  And you know, like, we had four engineers on it, like, working.

• 12:22Harry Stebbings?

  Why?

• 12:23Speaker 00

  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 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 going to do it really well for you and you will have to pay for outcomes. And you have to pay for the number of tickets resolved by that 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, you know, I should just pay Stripe two and a half percent, okay, rather than billing it all myself.

• 13:06Speaker 00

  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, you realize like, you know, it's hard actually to build this custom thing inside. And this reminds me of like 25 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 Razorfish and 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, you know, history repeats itself.

• 13:48Harry Stebbings?

  What today do we do or not do that in 10 years' time, we will look back and go, that's crazy? So some examples is you would never put your credit card on the internet. One, two, you would never find your partner on the internet.

• 14:01Speaker 00

  Yeah, 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 my flight and get upgraded or I need to change my seat or can you cancel it because I can't go? You know, or the bank, things that of that ilk that you still scratch your head, why don't, why am I still doing this? And it will happen, you know, hopefully just like you, like you provide a text message and it gets resolved on the backend and it's all being done by agents talking to agents and stuff like that happening. I hopefully think the world will not, will have a way better customer support experience.

• 14:35Harry Stebbings?

  Please hold.

• 14:38Harry Stebbings?

  It's when you're waiting on like insurance lines and it's like, please hold. And like 30 minutes later, it's like, they should put the phone down and you're like, what?

• 14:44Speaker 00

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

• 14:51Harry Stebbings?

  You got hold music?

• 14:52Speaker 00

  From one of my CEOs.

• 14:54Harry Stebbings?

  His reserve check is one.

• 14:57Speaker 00

  I was deeply offended.

• 14:58Harry Stebbings?

  I love the bullseye to have the professionalization of like hold music. Where do you think a lot of people are spending time today in the investing world? That you don't understand or don't think they should be?

• 15:09Speaker 00

  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 to 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 allowed, for example, to capture vector databases or waits 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,

• 15:51Speaker 00

  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 over invested.

• 15:58Harry Stebbings?

  I do have to ask, you know, when we look at a lot of potential use cases, a lot could be subsumed by the foundational model companies if they are big enough. An example could be talking translators, you know, talking avatars that you could talk to in a friendly enough way. How do you, do you worry about application layer companies being potentially subsumed by foundation model layer if they are such a core competency?

• 16:20Speaker 00

  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 for, by the, by the hour or the kilowatt hour. That's a pretty darn good business model for the hyperscalers that provide the models and 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 O1 and Strawberry. And realize that their positioning is we can't do everything. We're a 1600 person company. We can't build the, 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 and in providing the compute and the electricity. And there's a great business to be had by being very vertically focused. Focused around applications.

• 17:05Harry Stebbings?

  Is there really a great business to be had in the LLM layer? When you look at the price dumping that's occurring right now, it relatively and the commoditization that we're seeing occurring, you know, you get people like Sarah Tavell, who we love is like the fastest depreciating asset in history. Every week is Anthropic is better than OpenAI now. Yeah, OpenAI is better than Anthropic and bluntly, the price dumps are real. Is it actually a good business?

• 17:28Speaker 00

  The beautiful thing 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, there's GPUs, there's a people providing data centers. There's people who've now built LLMs on top of all this compute infrastructure that's there. So what's a clearly Nvidia is a great business. Hyper scalers are investing today for the future. And I think ultimately the margins, just like if you look at 20 years later of AWS, how great of a business that is, that standalone basis would be a top four enterprise software company. Same with Google Cloud. So that's a great business over time.

• 18:13Speaker 00

  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.

• 18:32Harry Stebbings?

  Do you think the scaling laws will continue?

• 18:34Speaker 00

  Yeah, so just the rough math is that in the last 18 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?

• 19:04Harry Stebbings?

  David Kahn at Sequoia wrote this article, the $600 billion AI question, pointing out the chasm, as you know, between bluntly the costs and the capex and then the revenues. Incredibly lagging from AI companies and essentially being the six hundred billion dollar question of AI.

• 19:19Speaker 00

  Yeah.

• 19:19Harry Stebbings?

  Do you share his concern with that or do you have a different view?

• 19:23Speaker 00

  I'd say if I look at the, do you know what the world's GDP is?

• 19:26Harry Stebbings?

  No.

• 19:27Speaker 00

  It's about a hundred trillion dollars. Of that, fifty to sixty percent is in labor. Technology is roughly like fifteen percent of it. And over the next decade, if we grow at the more traditional GDP growth rates, it'll be anywhere from hundred and twenty five to hundred and thirty. What if technology grows from fifteen percent to twenty percent? That's like twenty five trillion in technology companies, up from fifteen trillion today. So ten trillion of annual spend will get created for technology companies over the next decade. When you think about two hundred billion dollars spent on CapEx or six hundred billion dollars spent, I think the question is really, the two hundred billion should result in six hundred billion of revenue. I think the revenue will be there. Because again, we're not just tackling software, linear software as I call it.

• 20:11Speaker 00

  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 going to see the immediate more near term impact.

• 20:31Harry Stebbings?

  Listen, when we spoke before, you said to me that the nature of the landscape is changing so fast. And it's kind of all the same, but different in terms of the venture landscape. What's the same then?

• 20:43Speaker 00

  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.

• 21:04Harry Stebbings?

  So what's different?

• 21:05Speaker 00

  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.

• 21:24Harry Stebbings?

  When we look at the venture landscape, you have like, in my mind, boutiques, USV, benchmark boutique, and you have like capital accumulators, which is Tiger, Co2, Andreessen, General Catalyst Lights, Speed, Sequoia now. Where does Kleiner sit in that? Because you kind of sat in the middle in my mind. How do you think about that?

• 21:44Speaker 00

  We are primarily early-stage focused. We have an $800 million fund for that. And then we have a $1.2 billion 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.

• 22:22Harry Stebbings?

  What have been your biggest lessons? I suck at doing reserves. I think it's a very hard thing to get good at. So please, give me your wisdom. What have been your biggest lessons in how to do reserves management and concentration of capital well?

• 22:34Speaker 00

  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 million in that early-stage company, but you're starting out with a $15 million check. And then you're reserving another 10 for the Series B and beyond. And it's generally worked out pretty well.

• 23:03Harry Stebbings?

  So you're 60% initial, 40% for subsequent two rounds?

• 23:07Speaker 00

  That's a rough, rough math. And then we move dollars around. You know, 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.

• 23:16Harry Stebbings?

  When you don't do it, how do you communicate that to founders well?

• 23:19Speaker 00

  It is a tough. 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 like doing a small amount in a follow on round. And 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 parata. 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.

• 23:53Harry Stebbings?

  Have you ever had a pay to play turnaround? I said this the other day to an investor and they said, okay. I bet you if you never participate, you will do better off. You have. Wow. That's good to hear.

• 24:03Speaker 00

  I've had companies that are one week away from cash out, become public companies.

• 24:09Harry Stebbings?

  Wow. Can you say?

• 24:11Speaker 00

  Yeah, sure. Box.

• 24:12Harry Stebbings?

  Really?

• 24:13Speaker 00

  Yes.

• 24:14Harry Stebbings?

  Wow.

• 24:15Speaker 00

  There's a, there was a point in time where we had to do three bridges at Box back in two thousand eight, nine.

• 24:21Harry Stebbings?

  Why? What was not working?

• 24:23Speaker 00

  The market sucked. Nobody wanted to invest in a cloud storage business that would get eaten up alive by a Google or a Microsoft.

• 24:31Harry Stebbings?

  So I mean this respectfully.

• 24:32Speaker 00

  Yeah.

• 24:33Harry Stebbings?

  You know, Warren Buffett, Charlie Munger would say, you know, Mr. Market, don't try and be smart on the market.

• 24:38Speaker 00

  Yeah.

• 24:38Harry Stebbings?

  When the market is giving you signal like that, why do you do it? And how do you get comfortable doing that when the market's giving you such?

• 24:46Speaker 00

  Harry, you and I, we're in the risk business, my friend. You believe in the people. It's, it 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, well, 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 into 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, like some of the best investments come out of that cycle. And so we got to invest more dollars in the box at a twenty five million.

• 25:29Speaker 00

  Our valuation, every incremental dollar, two, three million dollars in bridge that was being done, done at that valuation.

• 25:35Harry Stebbings?

  What are the biggest reasons breakout companies plateau in your mind? You've seen some absolute monsters and you mentioned that Box struggled in those times. What are the reasons why breakouts plateau?

• 25:47Speaker 00

  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 disrupt you and starts taking away revenue from you.

• 26:00Harry Stebbings?

  You mentioned Box there, Box obviously IPOs. A liquidity event is always, you know, welcomed by LPs and investors. How do you think about when's the right time to sell? It's the age old thing. You look at all of, you know, Bessemer's memos, you always underestimate the size of your winners. How do you think about when to sell?

• 26:17Speaker 00

  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, pretty slow. But to answer your question, Harry, there's a local maxima that I think about sometimes about 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. And 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, but it's also like where people believe that this company is the leader. But there's questions around whether there's a standalone company to be built and it's way better off being acquired by a strategic who can do even better things with the company. That is again, doesn't happen as much anymore.

• 26:58Harry Stebbings?

  Have you done well selling?

• 27:00Speaker 00

  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 1.2 billion dollar acquisition. At the time it felt like, man, we've got so much ahead of us. Yammer can become the, 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.

• 27:30Harry Stebbings?

  Also, you don't have the challenge when it's acquired of like, do I hold? Do I distribute? Do I not? And that awful choice is almost easier when the choice is removed. Do you know what I mean?

• 27:38Speaker 00

  Yeah, yeah. In this, in that case, you know, when you get just cash, you just distribute the cash and you move on. And, you know, generally speaking, I would say even when companies go public for us, we've been pretty good about distributing stock.

• 27:50Harry Stebbings?

  It's tough when you think Shopify went public at 700 million, though.

• 27:53Speaker 00

  Yeah.

• 27:55Harry Stebbings?

  It's one way, either way, you're going to get criticized.

• 27:57Speaker 00

  Yeah, and I would say just to Harry, like, again, you know, 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, generated 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 25 years. And that's a great choice you have.

• 28:29Harry Stebbings?

  What has been your best performing investment on a pure multiples basis?

• 28:33Speaker 00

  Probably Slack, I would say, you know, even at the 250 post, with all the dilution over time, and take the 27 billion or some other number, that's a great multiple. Figma, you know, the initial investment was done at about 100 post. Rippling was also 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, 10 post. It was a $3 million check for like 30% of the company. That company, about a year and a half ago, the founder CEO Steve Flag, they sold it to Siemens for $700 million. And that ended up being 70x. Crazy multiple, right? Some ridiculous multiple. But you know, when you hold on to something for 15 years, guess what the IRR on that investment was?

• 29:16Speaker 00

  If you still owned, let's say, 25% of that company at 700 million, so like 100 and something, 170 million, 3 million becomes 170 million or something like that, or... That's a great multiple, but the IRR over 15 years looked more like, I think, 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 to something for 15 years.

• 29:38Harry Stebbings?

  But liquidity is tough. And liquidity is tough because M&A is not what it used to be. Mamoon, are M&A markets dead?

• 29:46Speaker 00

  They're in 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...

• 29:56Harry Stebbings?

  Why would you bother if you're them?

• 29:58Speaker 00

  Exactly. You're like, why create headaches? We 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 you know, we thought obviously with Adobe, Figma, Adobe is that next tier. And even that, the story's been told.

• 30:21Harry Stebbings?

  Well, I think the thing that you are seeing is actually like incredibly high-priced companies.

• 30:25Speaker 00

  Yeah.

• 30:25Harry Stebbings?

  I'm not going to name names because

• 30:27Speaker 00

  Sure.

• 30:27Harry Stebbings?

  they are too high-priced, but they are actually acquiring much smaller companies in only stock deals. And you know, I've had quite a few deals that way, you know, I'm getting like shares at $10 billion and it's coming, I'm like, well, it's worth two. And that is the kind of acquisition currency that they're going for. And they're small enough that regulatory wise, they're not getting any done. That's the only thing I'm seeing.

• 30:45Speaker 00

  Yeah, you're right. Yeah, there are big private companies looking to buy small private company. That's happening. And I think small, that was never part of the playbook.

• 30:53Harry Stebbings?

  What would change the M and A market today?

• 30:55Speaker 00

  You know, it's easy to say like, you know, regulatory environment, like the people running these organizations.

• 31:01Harry Stebbings?

  Yeah. Is it, I mean, being blunt, is it like, hey, Lina Khan gets replaced and then we get right M and A back?

• 31:05Speaker 00

  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 was Lina or the FTC. There were other issues here in the UK. There's a CMA that was really involved there.

• 31:20Harry Stebbings?

  IPO markets are also like bluntly not easy. Cerebrus, I think in pronouncing it right, you go, but filed.

• 31:27Speaker 00

  I think cerebrus.

• 31:27Harry Stebbings?

  Cerebrus, there we go. Filed recently, but that's kind of been it recently. Are you concerned by IPO markets being closed?

• 31:34Speaker 00

  Yeah, I 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 go out and just not a lot of activity. I do think that we're going to have a good year next year.

• 31:49Harry Stebbings?

  You do.

• 31:49Speaker 00

  I do.

• 31:50Harry Stebbings?

  I think we need to see one of the big ones go out for it to open. It needs to be a database, a Stripe, a Starlink. You're not going to make it on Cerebras.

• 31:59Speaker 00

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

• 32:02Harry Stebbings?

  You mentioned the $100 million Figma round, for example. I spoke to quite a few of our mutual friends and they said, you've got to ask him about this. Respectfully to Dylan and team, this was pre any revenue scaling, really. This was pre any real inflection point in the company. Cash had been in before, you know, Greylock were in already, Index were in already. He saw something that no one else in the market saw. This was like a real pick. What did you see that no one else saw in this round and why did you?

• 32:31Speaker 00

  Credit goes first and foremost 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 a design tool. And that just wasn't the case in 15, 16. It just didn't wasn't, didn't have the latency for people 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.

• 33:06Speaker 00

  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 a DAO or look at an L28. You just saw that designers were using the product 15, 16, 17, 18 days out of a month. So effectively every workday, a designer was going in and collaborating inside of thing 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 hundred K revenue. It was working. Yeah, lucky for us that we, we got to catch it before it.

• 33:42Harry Stebbings?

  Can I ask, what did you get wrong in your assumptions on Figma?

• 33:45Speaker 00

  I have to share my memo with you because.

• 33:47Harry Stebbings?

  I would love that.

• 33:48Speaker 00

  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.

• 34:25Harry Stebbings?

  Do you like competitive markets? You mentioned Envision, you mentioned Sketch. Envision was bigger than Sketch for quite a while, actually.

• 34:32Speaker 00

  Both Sketch and Envision were way bigger than Figma for a while.

• 34:35Harry Stebbings?

  And a lot of investors were like, this market's competitive. Do you like competitive markets and say, yes, it's competitive because that's where there's enterprise value? Or do you actually prefer my mindset, which is I don't want to be one of 10 going after this?

• 34:49Speaker 00

  Yeah, 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.

• 35:08Harry Stebbings?

  I spoke to Owen, another one of your founders before, who I love. Intercom's a great story, but he said that you definitely have a type. You have.

• 35:19Harry Stebbings?

  It's young and it's not where you're going, it's product oriented. Okay. And he said, it's very much deeper than that. Unpack that with him. So when you think about your founder type, I know we say we don't have one and we, you know, everything, probably not true.

• 35:35Speaker 00

  Yeah.

• 35:36Harry Stebbings?

  What is your founder type?

• 35:37Speaker 00

  One 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'd 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 like actually the, the repeat founder who had an okay outcome or even a pretty good outcome and is doing it again. And I would put. 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.

• 36:21Speaker 00

  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.

• 36:32Harry Stebbings?

  What founder profile don't you like?

• 36:34Speaker 00

  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 company.

• 36:54Harry Stebbings?

  Are you okay paying a premium for the experience? I'm doing a seed now at Mamoon and I so appreciate you being our PM, my funds. Price is slightly, it's like a 40 million for a pre-seed, pre-product, pre anything.

• 37:06Speaker 00

  Yeah.

• 37:07Harry Stebbings?

  The founders are unbelievable from one of the best companies in the world and exceptional and paying a premium for experience. You always happy to do that?

• 37:16Speaker 00

  Yeah. So, I mean, I'll just give hard numbers. When we backed Arvind and Gleene.

• 37:20Harry Stebbings?

  Yeah.

• 37:21Speaker 00

  We did it, co-led it with Lightspeed at 35 post. And Arvind is a G. You know, he started Rubrik. He's like.

• 37:28Harry Stebbings?

  How much did he raise?

• 37:29Speaker 00

  He raised a lot. He was like 15 million at 35 post. So gave up a lot of the company in that round.

• 37:34Harry Stebbings?

  A 35 post?

• 37:35Speaker 00

  Yeah. And because.

• 37:36Harry Stebbings?

  That's not crazy for someone of Arvind's profile, actually.

• 37:39Speaker 00

  It's not. I don't think it's high.

• 37:40Harry Stebbings?

  Yeah.

• 37:41Speaker 00

  I think, but in today's environment, that would be like, oh, it needs to be 200 post. So.

• 37:46Harry Stebbings?

  Would you do that at 200 posts?

• 37:48Speaker 00

  Probably not. Yeah.

• 37:49Harry Stebbings?

  That's a hard thing.

• 37:50Speaker 00

  So, 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 Said Ali at Alef. We did that also at like 35 post. And Said had come off of a company just sold for $6 billion. And do you think he could have raised at a higher price? Probably, but he's just that, this is, feels fair. It feels right. And so I'm sure a lot of people listening are here thinking, oh, 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.

• 38:31Harry Stebbings?

  A lot of times founders are told, listen, your job is to raise as much money as possible at the highest price.

• 38:36Speaker 00

  Yeah.

• 38:36Harry Stebbings?

  Agree or disagree?

• 38:37Speaker 00

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

• 38:43Harry Stebbings?

  I also think bluntly, it can damage you incredibly for the next round. When you don't actually scale into it and suddenly you have to do a bridge or whatever it is, it makes it so much harder when you've got a hugely high watermark that you have to fill. Do you think you should always be raising?

• 38:56Speaker 00

  For the CEO, founder CEO or CEO, your job is to make sure your company never runs out of money. If you have $300 million 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.

• 39:09Harry Stebbings?

  When you've got a founder pick wrong, what do you get wrong?

• 39:13Speaker 00

  Generally, I would say you get the markets wrong. I would say that.

• 39:16Harry Stebbings?

  Can a great founder overcome a bad market?

• 39:18Speaker 00

  Hard. Yeah, hard. Bad markets, the structure of industries where margins are compressed and customers are bad. Life's just too hard that way.

• 39:27Harry Stebbings?

  So will you back a really great founder if they're in a shit market?

• 39:31Speaker 00

  Probably not. Yeah.

• 39:32Harry Stebbings?

  That's interesting.

• 39:33Speaker 00

  Yeah.

• 39:33Harry Stebbings?

  Cause like for me, it's like I'm pre seed and seed generally speaking. We use Series A as well, but like generally pre seed and seed. I'm like, you know what? Great founders find their way to great markets. And if they're truly great, honestly, they'll pivot, they'll change, they'll make their way.

• 39:48Speaker 00

  I mean, I think one could have said that about like you would have, maybe you would have missed the seed at Uber. Because what probably not so great economics early on, right? Customer acquisition and like trying to pay the drivers, et cetera. So.

• 39:59Harry Stebbings?

  Was Slack an obvious home run when you did it?

• 40:02Speaker 00

  None of these are obvious home runs when you do them, right? No, it wasn't. It was 500K of ARR at the time and.

• 40:08Harry Stebbings?

  What price did you do that?

• 40:10Speaker 00

  Uh, 250 million post.

• 40:12Harry Stebbings?

  You did it at 500X ARR?

• 40:14Speaker 00

  Yeah. And I think we weren't thinking in those terms.

• 40:16Harry Stebbings?

  Why? Was it usage patterns again?

• 40:18Speaker 00

  Yeah, I think there were enough, at that time, there were 10,000 or so users, like a third of them were using the product every day for multiple hours a day. And like, okay, well, we all need something like Slack and you can scale this by a thousand X. Because there are lots of companies that look like this, that use it like this today.

• 40:35Harry Stebbings?

  Do you think that's the wrong mindset to approach it with? A lot of investors do approach it on a revenue multiple basis. Is that wrong?

• 40:41Speaker 00

  For early stage companies, yeah, it's, it's, yeah, you can't take a 500K ARR or a million.

• 40:46Harry Stebbings?

  But when you're paying 250, it's kind of like a, some of the.

• 40:49Speaker 00

  But, but if you've seen the engagement data on a product that you think can apply to 10,000, 100,000 of companies, then.

• 40:58Harry Stebbings?

  The entire workforce.

• 40:59Speaker 00

  Yeah, then why not? I think it's really a mistake to look at revenue multiples at like half a million, a million.

• 41:06Harry Stebbings?

  What do you think is nuts that VCs do today that they shouldn't do?

• 41:09Speaker 00

  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.

• 41:20Harry Stebbings?

  Do you think everyone does have the same knowledge? A lot of big firms say, we built out these amazing data platforms and that's why we're operating off this proprietary information.

• 41:30Speaker 00

  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.

• 41:40Harry Stebbings?

  And the founders wanting to work with you.

• 41:42Speaker 00

  Exactly. Yeah, no, I think.

• 41:44Harry Stebbings?

  It's what I tell a lot of LPs though, which is like, you know, I remember speaking to an LP actually about you. And I was like, the thing that you've got to understand with Mamoon is like everyone in a valley respectfully probably sees the same deals. But you have to be aspirational capital to the best founders in the world where they say, yeah, I've got 12 term sheets, but I want that one. And that's the only thing that matters. It doesn't matter that you saw it. It means shit.

• 42:04Speaker 00

  A hundred percent. 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?

• 42:24Harry Stebbings?

  How do you think about decision making? One of the things I think is crazy is voting structures in venture firms. I get asked this by a lot of LPs, which is like, what is your voting structure? And they kind of seem quite upset when I say, well, there's only four of us and so anyone can write a check. And I believe that the best deals are often non-consensus and right. So we don't have like four out of 10 or six out of 10. They look quite upset with me when I say this. I think that's nuts. How do you feel about voting structures in decision making?

• 42:49Speaker 00

  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 years, 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 a few days later when we see each other again. It's like, you know what, like, we talked about that and, you know, 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.

• 43:35Speaker 00

  You get to really test each other's conviction.

• 43:37Harry Stebbings?

  So you don't have a vote?

• 43:38Speaker 00

  We have a discussion, but there's no vote.

• 43:40Harry Stebbings?

  If I disagree with you and I say, Mamoon, I don't think we should do this deal.

• 43:44Speaker 00

  Yeah.

• 43:45Harry Stebbings?

  I do not see the market. I don't see the upside. The entry price is too high.

• 43:49Speaker 00

  If you wanted to veto me, you could veto me, but that hasn't happened.

• 43:53Harry Stebbings?

  No one's ever vetoed. Why do deals get crushed mostly?

• 43:56Speaker 00

  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.

• 44:15Harry Stebbings?

  Do you do outcome scenario planning?

• 44:18Speaker 00

  We used to and haven't done it more recently. I used to do like, what is the probability of this company being a zero? A $500 million exit, a $250 million exit, a billion dollar exit and a $10 billion exit? You do the percentages. It's such false precision.

• 44:33Harry Stebbings?

  I always do 25, 25, 25. Thank you so much.

• 44:36Speaker 00

  It's such false precision that I think it's, it's, it's, it feels like busy work, actually.

• 44:41Harry Stebbings?

  Who's the best picker in the team?

• 44:43Speaker 00

  Josh is a very precise picker. I would say that Ilya and I, we're almost always on the same page. We're like too similar, actually.

• 44:50Harry Stebbings?

  Is that too dangerous, actually? Because you can almost encourage each other.

• 44:53Speaker 00

  It's actually great because if I meet someone and then I say, you know, Ilya, come over. You know, like I'll see him in the hallway. Can you meet this person for like five or 10 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 like at least like quickly get to, am I seeing the same thing that you're seeing?

• 45:18Harry Stebbings?

  What was the most contentious deal? You did.

• 45:21Speaker 00

  You know, actually, Figma was quite contentious because to your point around like half a million of AR at a hundred and ten, fifteen 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 that, there's a lot of questions around the investment.

• 45:38Harry Stebbings?

  You had a fund that, I can't remember the exact vintage, and it was a fast deployment. It was like twelve or eighteen months.

• 45:44Speaker 00

  Yeah.

• 45:44Harry Stebbings?

  It was a time when everyone was deploying fast, but it was fast. How do you think about deployment pace? Is it a play the game on the field or do you take a much more structured, disciplined view towards it?

• 45:53Speaker 00

  I, I think the view is, hey, we'd love to deploy over a two and a half to three year period of time. When we got to KP, it came in two thousand and seventeen, a bunch of the team joined in two thousand and eighteen, so Bucky, Ilya, Annie joined that year. Josh joined the same week I did, so, so there was a period of time in two thousand and nineteen, so we just raised our first fund as a team together, where we deployed that fund within like fifteen months. I think it was just.

• 46:16Harry Stebbings?

  Was that more the Rippling fund?

• 46:18Speaker 00

  It was Rippling, Gleam, a bunch of other stuff in there. We just were a new team, didn't have board seats, we, 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 As, the core of the business. And so if I look at that fund, I think it'll be an amazing fund, actually.

• 46:37Harry Stebbings?

  Unbelievable.

• 46:38Speaker 00

  Right, and so you could have said like, well, wait a second, you guys didn't do time diversify. It was shit if you would have deployed over a two and a 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, it can actually work.

• 46:55Harry Stebbings?

  Very dear mutual friend of both of ours is Kush. Kush and Thrive think that bluntly everyone has the plasticity to move between stages or in their firm. I don't think everyone, but like their investors do. I think that is just really hard to do. But which side do you take?

• 47:10Speaker 00

  I think generally speaking, it's hard to have the newer plasticity 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.

• 47:44Harry Stebbings?

  You said about putting your name on the line and really believing. When have you put your name on the line most and been wrong?

• 47:52Speaker 00

  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 Tally and the founder, Jason Brown, who I've known for 15 years.

• 48:02Harry Stebbings?

  I had him on the show.

• 48:03Speaker 00

  Yeah.

• 48:04Harry Stebbings?

  And. How much did you do?

• 48:06Speaker 00

  Thirty million 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 than to not put more money in to lose more. Because our job is to invest five, 10, 15 upfront. And if you lose five on a seed check, all good, that's your job.

• 48:30Harry Stebbings?

  Is there anything you learned from Tally?

• 48:32Speaker 00

  That lending businesses are really hard. Consumer lending is very hard.

• 48:36Harry Stebbings?

  Did you do reserves there?

• 48:37Speaker 00

  Yes.

• 48:38Harry Stebbings?

  And that was where it went wrong?

• 48:39Speaker 00

  Uh, well, the first check was back to the 6040, it was like 6040. But there's more along the way that went in because, you know, they raised subsequent up rounds from great investors. The round after us, Angela and Andreessen Horowitz did it. It was a great round, great time for the company. And then it did in one in 2022 with one of our seed investors, Sway, led this, the growth round because things were growing really well. And then consumer lending just turned. This is when interest rates went up from, you know, zero to 5%. And, and that really made that business really difficult.

• 49:11Harry Stebbings?

  How have you changed most significantly as an investor over time?

• 49:14Speaker 00

  I mean, obviously there's more experience, but actually try not to let that weigh me down. Because I think a 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.

• 49:33Harry Stebbings?

  Where do you most need to improve as an investor?

• 49:35Speaker 00

  I think I'm a dreamer and I want to just believe in the people that I back.

• 49:40Harry Stebbings?

  This I heard that you are such a dreamer that sometimes you believe for too long.

• 49:44Speaker 00

  Yeah.

• 49:45Harry Stebbings?

  And you should cut things before.

• 49:46Speaker 00

  Yeah.

• 49:47Harry Stebbings?

  How do you think about knowing when is the right time to cut the belief and actually we've had enough time?

• 49:52Speaker 00

  I agree. I agree that that 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 want to be on that journey with them.

• 50:02Harry Stebbings?

  Do you believe in VC value add, Mamoon? Vinol Coase has famously said, you know, 90% of VCs actually destroy and found you.

• 50:08Speaker 00

  Yeah, I don't disagree with no 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 companies.

• 50:17Harry Stebbings?

  What makes the, I'm not asking for the name, but what makes the worst board, the worst board?

• 50:21Speaker 00

  The worst board, it starts with how a CEO runs a board.

• 50:25Harry Stebbings?

  How do the best CEOs run a board?

• 50:27Speaker 00

  They start off with a high level of view of how the company is doing. And then they give a chance for their leaders, they're 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.

• 51:05Harry Stebbings?

  Two more questions and then I'll do a quick five. Do you mind super dilutive businesses? Like your DoorDash, the world, like Uber, I know Uber's and DoorDash, different cash profiles intensely, but still, do you mind them?

• 51:15Speaker 00

  Personally?

• 51:16Harry Stebbings?

  Yeah.

• 51:16Speaker 00

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

• 51:21Harry Stebbings?

  What would you like climate to look like in 10 years? When I hear you there, it feels like actually there is scope for you to go into the capital accumulator bucket.

• 51:29Speaker 00

  Yeah.

• 51:29Harry Stebbings?

  Do you want that?

• 51:30Speaker 00

  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 BSing you, your longtime friend. And I, 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. Your select fund and then call it a day.

• 51:52Harry Stebbings?

  I totally agree. We share the love of venture. We share the kind of love of the boutiquey nature of venture. I want to move into a quick fire. What do you believe that most around you disbelieve?

• 52:00Speaker 00

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

• 52:06Harry Stebbings?

  My favorite is the amount of friends I have who are operators who are like, this isn't what it said on the tin. This is so fucking hard.

• 52:13Speaker 00

  Totally.

• 52:14Harry Stebbings?

  And you're like, yeah, I totally agree with you there. What's the most memorable first founder meeting you've had?

• 52:20Speaker 00

  It has to be Aaron Levy, when I first met him.

• 52:22Harry Stebbings?

  Why?

• 52:23Speaker 00

  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. It was just, he was like, hyper nervous, I felt, coming to a VC firm office, like, 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, I need to invest in this founder, like, right away. But it was also just memorable from the other things that were going around.

• 52:54Harry Stebbings?

  Do public market revenue multiples need to reflate for venture to be a sustainable business? You mentioned Box there. I post like, whatever it is.

• 53:01Speaker 00

  A billion in revenue.

• 53:02Harry Stebbings?

  Billion in revenue, and it's like.

• 53:04Speaker 00

  Four and a half billion market cap.

• 53:05Harry Stebbings?

  Yeah.

• 53:06Speaker 00

  Yeah, I think growth and profitability.

• 53:09Harry Stebbings?

  So to my point, do we need to see the reflation for venture to be sustainable or not?

• 53:14Speaker 00

  I think just getting back to true, normal historical levels would be good enough.

• 53:18Harry Stebbings?

  Which venture investor do you most respect and learn from outside of Kleiner?

• 53:22Speaker 00

  You know, one of my favorite investors is Matt Kohler from Benchmark, who I.

• 53:26Harry Stebbings?

  In London.

• 53:27Speaker 00

  Got to see him yesterday. I wish he and I were on more boards together.

• 53:30Harry Stebbings?

  You can be CEO for a day, Mamoon, of any company. Which company are you CEO of?

• 53:34Speaker 00

  Easy, OpenAI. I just want to see what's going on. I just want to see where, how far AGI really is.

• 53:39Harry Stebbings?

  What concerns you most in the world? You can be CEO for a day, Mamoon, of any company. Which company are you CEO of?

• 53:45Speaker 00

  Easy, OpenAI.

• 53:47Harry Stebbings?

  Really?

• 53:48Speaker 00

  I just want to see what's going on. I just want to 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.

• 54:05Harry Stebbings?

  This is so unfair of me, but fuck it, I've got you, I can.

• 54:09Harry Stebbings?

  You can invest in a seed firm, a series A firm, and a growth firm purely on multiples basis. Who do you invest in?

• 54:15Speaker 00

  Seed firm, you. Series A firm, us. And growth firm, us.

• 54:22Harry Stebbings?

  I was like, he's gonna give me a new one here. Come on, hit me. I can tell you mine.

• 54:26Speaker 00

  You tell me yours first.

• 54:28Harry Stebbings?

  Well, I mean, like, one on the seed, I'd do Gilly Ronan at Cyberstarts in Israel.

• 54:32Speaker 00

  Okay.

• 54:32Harry Stebbings?

  If you want a pure seed play.

• 54:34Speaker 00

  Okay.

• 54:34Harry Stebbings?

  Unbelievable. It would, it would either be client or it would either be benchmark because of the smaller fund size. And then growth, it would have to be either Pat or Kush.

• 54:43Speaker 00

  I totally agree.

• 54:44Harry Stebbings?

  Penultimate one. What do you know now that you wish you'd known when you joined USVP 19 years ago?

• 54:49Speaker 00

  Just that venture is a grind and uh.

• 54:53Harry Stebbings?

  Do you still love it as much as you did?

• 54:55Speaker 00

  Absolutely. I mean, how could you not love living in this like super cycle of AI, man? Like, we will not see this at the ground floor level value creation in our lifetimes ever again.

• 55:05Harry Stebbings?

  Final one. What question you never asked that you think you should be asked more?

• 55:09Speaker 00

  Religion and politics are like the taboos, obviously. And so the question is, how does faith impact the way you work?

• 55:18Harry Stebbings?

  How does faith impact the way you work?

• 55:20Speaker 00

  It's everything. It starts, it's the beginning of your day, it's the end of your day and everything in between is, 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? You know, just like it's, it's sort of like deeply embedded in you and it's at a board meeting, you know, everything.

• 55:45Harry Stebbings?

  My deep faith lies in liquidity.

• 55:50Harry Stebbings?

  That's the most like capitalist way to finish a conversation. Mamoon, I've loved doing this. Thank you so much for joining me and this has been so special.

• 55:57Speaker 00

  Amazing. Thank you so much, Harry.

• 56:00Harry Stebbings?

  My word, that was so much fun to do. As I said, I met Mamoon at a SASTA conference in 2016. He's been a dear friend and a mentor ever since and that was so special to do in person. You can watch the full interview on YouTube by searching for 20VC, that's 2-0-V-C. But before we leave you today, this episode is presented by Brex, the financial stack founders can bank on. Brex knows that nearly 40% of startups fail because they run out of cash. So they built a banking experience that takes every dollar further.

• 56:30Harry Stebbings?

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• 57:15Harry Stebbings?

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• 57:56Harry Stebbings?

  And when you're ready to launch, go to squarespace.com/20vc to save 10% off your first purchase of a website or domain. And finally, before we dive into the show, I want to recommend a book, The Road to Reinvention, a New York Times bestseller on mastering change. No time to read? Listen to 20VC now, then download the Blinkist app to fit key reads into your schedule. With Blinkist, you can grasp the core ideas of over 7,500 nonfiction books and podcasts in just 15 minutes, covering psychology, marketing, business and more. It's no surprise eight Blinkist users see themselves as self-optimizers and 65% say it's essential for business and career growth. Speaking of business, Blinkist is a trusted L and D

• 58:40Harry Stebbings?

  For industry leaders like Amazon, Hyundai and KPMG UK, empowering over 32 million users since 2012. As a 20 VC listener, you can enjoy an exclusive 25% discount on Blinkist. That's B L I N K I S T. Just visit blinkist.com/20vc to claim your discount and transform the way you learn.

• 59:01Harry Stebbings?

  As always, I so appreciate all your support and stay tuned for a very special episode on Wednesday with a brand new firm. Three partners introducing what will be an incredible new series A firm.