Why Being a Generalist VC Is a Competitive Advantage (Aydin Senkut, Founder & Managing Partner at Felicis Ventures)

Two decades ago, Aydin Senkut was a first-time fund manager with a thin track record to show prospective backers. LPs didn’t believe a solo GP, especially one without experience at a legacy firm, could build a lasting franchise. They were wrong. Today, Felicis is a Silicon Valley mainstay on its 10th fund, a $900M vehicle. Across its history, Felicis has backed a slew of winners, including Shopify, Canva, Crusoe, and dozens of other billion-dollar outcomes. Rather than specialize over time, Aydin has remained a true generalist, investing across markets and cycles. In this conversation, we dig into the frameworks, stories, and philosophies that shaped Felicis into what it is — and where Aydin believes the next decade of technology is heading. We explore: How growing up in Turkey with entrepreneur parents shaped Aydin’s approach to risk and investingLessons from working alongside Larry Page and Sergey Brin during Google’s early daysWhy Felicis deliberately chose a generalist strategy when most VCs were specializingHow international experience became a competitive advantage in finding global winnersThe mathematical case for portfolio diversification (50-70 companies per fund)Why valuation concerns are often overblown when revenue growth is exponentialFelicis’s aggressive AI investment strategy and what other investors are missingThe future of robotics and physical AI through companies like Skild AIWhy learning and adapting rapidly is Felicis’s constitutional principle— Thank you to our sponsor, Guru https://www.getguru.com/: The AI source of truth for work. — Transcript: https://www.generalist.com/p/why-being-a-generalist-vc-is-a-competitive-advantage — Timestamps (00:00) Introduction (03:09) How Aydin made his way to Silicon Valley (06:15) What he learned from his entrepreneurial parents (08:55) Learnings from the early days at Google (15:05) The childhood roots of his investing philosophy (16:31) Why rejection became a catalyst for his venture career (19:28) Strategy behind Felicis's first $41M fund (25:44) How his international background became an investing edge (28:17) How Aydin approaches diversification at scale (32:08) How he sizes investments based on conviction (33:15) Generalist vs. specialist investing (38:23) Why founders are the foundation (42:48) Why success may look different than expected (43:46) The Felicis journey (48:18) Why Felicis is going all in on AI (54:54) Why entry point matters less than potential (57:33) How the AI bubble debate misses the point (59:47) What makes Skild AI a standout company (01:04:58) The AI bets Felicis missed (01:07:55) How missing Airbnb and Uber led to backing Adyen (01:11:20) Final meditations — Follow Aydin Senkut LinkedIn: https://www.linkedin.com/in/aydins X: https://x.com/asenkut — Resources and episode mentions —Books— Antifragile: Things That Gain from Disorder: https://www.amazon.com/Antifragile-Things-That-Disorder-Incerto-ebook/dp/B0083DJWGOClear Thinking: Turning Ordinary Moments into Extraordinary Results: https://www.amazon.com/Clear-Thinking-Turning-Ordinary-Extraordinary/dp/0593086112 —People— Larry Page: https://en.wikipedia.org/wiki/Larry_PageSergey Brin: https://en.wikipedia.org/wiki/Sergey_BrinEric Schmidt: https://en.wikipedia.org/wiki/Eric_SchmidtBrian Chesky on X: https://x.com/bcheskyShane Parrish’s blog: https://fs.blog https://fs.blog/ —Other resources— Felicis: https://www.felicis.com https://www.felicis.com/Mastering Portfolio Construction: https://www.generalist.com/p/mastering-portfolio-constructionSteve Jobs’s quote on focus: https://www.goodreads.com/quotes/629613-people-think-focus-means-saying-yes-to-the-thing-you-veAngry Birds: https://www.angrybirds.com https://www.angrybirds.com/Rovio: https://www.rovio.com https://www.rovio.com/Adyen: https://www.adyen.com https://www.adyen.com/Canva: https://www.canva.com https://www.canva.com/... Resources continued at: https://www.generalist.com/p/why-being-a-generalist-vc-is-a-competitive-advantage⁠ https://www.generalist.com/p/why-being-a-generalist-vc-is-a-competitive-advantage — Production and marketing by penname.co https://penname.co/. For inquiries about sponsoring the podcast, email [email protected].

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

• 0:00Mario Gabriele?

  The history of Felicis suggests that even in these hot markets, when other folks have leaned in and gotten burned, you've managed to be strong enough on the selection that those vintages still look good.

• 0:11Speaker 01

  There has been many instances where we picked the company just right, and we were off by a 10x on the entry valuation. So everybody looked at only that side and said, there is no way it's going to work. But what they missed is the revenue growth that materialized after was 30x, 50x, 100x. So while we were 10x wrong on the entry price, we were absolutely underestimating the revenue growth by even a much, much larger factor.

• 0:36Mario Gabriele?

  One of the investments that you've made is in skilled AI. How have you thought about the way AI begins to enter the physical world more?

• 0:43Speaker 01

  We're going to have a ton more robots in the next 10 to 20 years. I doubt it's going to take jobs away. It's just going to do jobs that people are not meant to do, but they're doing it because there is no other way of doing it. I do think it's going to be happy coexistence. We're going to have a lot of robots, and they're going to take more drudgery out of our lives.

• 1:04Mario Gabriele?

  When Aidan Senkut started as a solo GP in 2006, most LPs rejected him, giving him little chance of succeeding as an investor. Nearly two decades later, and Aidan has transformed Felicis into a Silicon Valley franchise, now on its 10th fund, a $900 million vehicle. While many VCs insist on the importance of specialization, Aidan has kept Felicis genuinely generalist. From Shopify to Adyen to Canva to Crusoe, the firm has found billion-dollar outcomes across nearly every imaginable category, including in companies that many others overlooked. In today's episode, Aidan and I discuss how he scaled Felicis

• 1:45Mario Gabriele?

  from a one-man operation into a well-oiled machine, his framework for evaluating opportunities across wildly different sectors, and why he's betting aggressively on AI despite the sky-high valuations. We also cover his approach to portfolio construction and what he learned from working with Google founders Larry Page and Sergey Brin. I'm Mario, and this is The Generalist. Every revolution in AI creates one question that never changes. Can you trust the output? AI for work is incredible, but without trust, it's just leading to faster mistakes. The challenge isn't building an AI that can answer questions. It's making sure those answers are right. That's where Guru comes in.

• 2:30Mario Gabriele?

  It's the AI source of truth that connects everything your company knows. So every insight, every answer, every recommendation is grounded in verified knowledge, not outdated information or hallucinations. When your teams and your AIs share one trusted foundation, everything moves faster with fewer redos, fewer blind spots, and more confidence in every decision. Because in the age of AI, truth isn't just power, it's protection. See what Guru is doing for thousands of companies like Spotify, DHL, and Stripe at GetGuru.com. That's GetGuru.com. Well, I'm super excited to have you here.

• 3:10Mario Gabriele?

  I've admired your career for a long time and I remember the last conversation we had very, very well and really enjoyed it. So lots to get into today.

• 3:21Speaker 01

  Looking forward to it.

• 3:22Mario Gabriele?

  I'd love to start a little bit with your origins because you started Felicis as a solo capitalist. The language of that term hadn't come to the fore yet, but you were a solo GP running a strategy that really was your own. And that has evolved into a real franchise over the past 16 years, such that you guys recently announced a 10th fund, 900 million. And so I'd love to sort of begin this conversation maybe by closing the gap between where you are today and how you started out. How did a boy from Istanbul wind up in Silicon Valley?

• 4:01Speaker 01

  I kind of feel like... I I lived in five, six different lives. You know, when I was a kid, I couldn't be farther from the truth of today here. But it was really interesting. My dream as a kid, when I was seven, eight years old, was always to travel around the world, meet people, do something. And whatever it is, is to learn languages, to learn other cultures, to discover other countries. I was very lucky that I was able to get into actually a German school in Turkey. And that allowed me to then use the language. Afterwards, I came to the US for college and then ended up working in countries like Morocco, Switzerland, Germany, Brazil.

• 4:46Speaker 01

  And then came back to the US for grad school. And all those things, I think, just gave me like a little different flavor, which then allowed me to make the jump to Silicon Valley. And that was a crazy story too, because I was not really an engineer. So I had to really push to get my first chance as an intern. And I ended up coming here about thirty years ago. And the languages and the experience of having lived abroad has always served me well. It's actually what differentiated me at Google. And it allowed me my first like product job there. And then I did international sales. And that allowed me to get this ability to, wherever I am, relate to people.

• 5:29Speaker 01

  And I I think this is interesting because it's one of the most underrated aspects of venture capital. Everybody thinks about the numbers, but it's really about people. And what's really interesting is even today, one of the things that makes Felicis's different is a lot of our most successful companies tend to be global and international. So in some ways, I am living the dream, the crazy imagination I had as a little kid. And that's what I feel like. I'm I'm working and loving what I do. And, you know, I have that enthusiasm of an eight year old.

• 6:01Mario Gabriele?

  Hmm, amazing. Well, I think we're gonna go, you know, go into a lot of those different pieces of the story. But, you know, one of the things that struck me when I was researching you a little bit was that your parents were entrepreneurs. So you you must have grown up with, you know, seeing what it really took from a from a very early age.

• 6:22Speaker 01

  Yes, indeed. I'm an only child. Both my parents were entrepreneurs. Different paths and different learnings. My mom started as a VP of HR. And that was really interesting because whenever I went to visit her at work, I was fascinated by how she did what she did. You know, she had this elaborate system of like really getting to know people and what made them tick. And what was really great about what she did is it was very much skill-based. And then later on, she joined a recruiter. And then she just wanted to do it in her own way. And then she had her own recruiting firm. And what was really cool is she worked until she was 81. Wow. And foreign firms employed her all the way from Denmark to Israel to Bulgaria

• 7:07Speaker 01

  and like crazy countries where she had no background. And they're like, look, you're so good at what you do. We want you to go to these countries and still do what you do in Turkey for us. And she would take my dad with her. My dad, on the other hand, you know, I came in, they met in college. They were college sweethearts. I came pretty early, so he had to kind of pick something very quickly. And our family business was textiles, which was a big industry in Turkey. And the big difference there is that was good as it lasted. But it was a commodity business. And as long or as soon as kind of cheaper textiles came to Turkey from Asia, his business was pretty much done. And so it was a very important lesson that stayed with me that

• 7:51Speaker 01

  it wasn't just important to be an entrepreneur, but what you did really mattered. And I kind of realized that strategically, you know, like being in a line like I am now, it's very much like skill and capital-based. It's very asset-light. Also, it's kind of like very much adapting to the times. In fact, it's ahead of times. So the likelihood to get disrupted is a lot lower versus if you're in a traditional industry. You know, you have a factory, you have like a whole team of people. You know, like you have very like thin margin for error and you're at the mercy of what's happening in the markets in the world. So that's something that really stayed with me. On the other hand, I also have to say that For those that are brave enough and lucky enough to be an entrepreneur, I think this is the best thing in the world.

• 8:36Speaker 01

  You know, like, some people have the personality, they're not really made to be employees. They're made to be like, you know, like, do crazy things, like, take some chances and risk, do original things. And sometimes the best way to do that is as an entrepreneur, as a founder, which I'm sure you would appreciate.

• 8:53Mario Gabriele?

  Yes, definitely. You were employee, I think, sixty-three at Google. And I imagine that was a very special group of people at the time that you joined. I imagine the talent density must have been pretty remarkable. I wonder what you remember of those early people and that early company.

• 9:09Speaker 01

  I remember a lot of stuff. And here's a crazy story. The reason why I was sixty-three and not thirty, actually, my offer came in when there were thirty employees. But it took over three months for my H1B to transfer. And I still have these nightmares that I think if we were in today's climate, I don't even know if I would have made it. So I'm very grateful for those early days. Coming back to Google, look, the one thing that starkly stood out for me is how smart the people were. Everybody around me, I felt, were super smart. Not only were they super smart, they were super talented. And one thing that stood out for me is how unique and individual each one of them were and how a different take they had on everything.

• 9:51Speaker 01

  If you were to ask me one thing that stayed with me from my Google days, where I was for six years through its IPO, is that whenever we faced a big problem or whenever we had something big to do, we never took a standard way to do it. We never went the orthodox way. We were always very creative. We always did something very unique and unusual and something that I never thought would work. Or I'm like, oh, my God, this is crazy. Like, wow, this is a totally different way of tackling it. And lo and behold, not only did we do it, but it also turned out to be, wow, that's a great way or best way to do it. And I think that training was really important because, in essence, what we do, if you're like, hey, what is the venture capital business? It's a business about outliers.

• 10:36Speaker 01

  The only way you can be successful is to be an outlier yourself, to identify other outliers and appreciate them before it's obvious, hopefully have a chance to partner, to invest with them. And so the best way to train for that is to be in an outlier company, see how it operates, how it does things, just to kind of get that DNA. And I thought it was fantastic training in that way.

• 10:59Mario Gabriele?

  To what extent did, you know, seeing Larry and Sergey and Eric Schmidt sort of operate that business and, you know, the extreme level of growth that that company went through sort of impact what you started to look for in entrepreneurs? Like, did you find yourself almost trying to pattern match against, you know, these three very remarkable people? Was it perhaps, you know, more abstract than that?

• 11:26Speaker 01

  No, I mean, definitely. Whatever you learn and your experiences really stay with you. And it wasn't just the three of them. Like, we had a person who ran like data centers and infrastructure for Google. We used to joke that he was like Darth Vader. He would negotiate with data centers and like, I don't know, a couple of them went bankrupt after that. I'm like, I never ever want to negotiate against that guy. But like, everybody that did something, like the person who did like the web spider was like only 18 years old and he was really special and he's still like a dear friend. Everybody was unique and individual and super strong in some way and super smart. But some things really stuck with me at the end.

• 12:06Speaker 01

  For instance, like everything that I did with Larry, every single thing he asked, nothing less than 10x would be acceptable to him. So every time he asked us to do something, it had to be 10x better, 10x faster, or 10x cheaper. And his concept was very simple. If somebody just asks you to do something better, say 20% better, 30% better, on surface it looks like, yeah, it's great. But the thing is, you can do that with a marginal improvement. But if somebody asks you a 10x change, you have to completely change the way you think. You have to completely rethink the way you do things. So that really stayed with me.

• 12:45Speaker 01

  The other interesting thing was, for instance, like Larry basically said no all the time. I mean, I think like his vocabulary was no 99% of time and then maybe like yes every now and then, and then some other words. And I mean, I'm dramatizing a little bit, but the whole point of that is he was very razor sharp focused and very much of the mind that do very, very few things well, but make sure that those things are things that matter. The other thing that I observed, especially like Sergey, it was so fun to work with him. Even though both Larry and Sergey were only PhD students, they were never in a corporation or worked a day, a single day in their lives, they had an amazing business instinct as well.

• 13:27Speaker 01

  So they were special that there are a lot of people that are academically smart, but to combine that with a commercial instinct is pretty rare. And when Eric Schmidt joined, all he did was kind of button things up. It was really funny. We were 500 people and he's like, what? Like you guys are still running this on QuickBooks? You know, we made a NetSuite implementation and so on and so forth. So it was a really great combination and a really great kind of distillation of duties. And the other interesting thing was like they were really committed. This was not just a job. I mean, I used to see Larry at 9:00 PM, 10:00 PM at night. When his day job was over, he would go to his office and basically configure or create servers. And he's like, I'm like, Larry, why are you doing that? Can we not buy servers?

• 14:12Speaker 01

  He's like, why would we buy servers? Like, they're not really done for the way that we want them to work. And CPUs are so cheap, storage is so cheap. I would be pretty good at configuring it myself. And not only will it be cheaper, but it will be the exact machines as we need. Like, he could have easily taken an easy way out and say, why am I doing this at 10:00 PM? We can just buy servers. But even there, like every single thing he did was very much perfectionist, is very much down to the smallest details.

• 14:41Mario Gabriele?

  Gosh, I love stories like this so much to just to really see what obsessiveness and perfectionism looks like in action and also that extreme focus. I mean, it's funny, it rhymes so directly with one of those famous Steve Jobs quote about, you know, focus isn't saying no to things that aren't a good idea, it's saying no to something that you you know is a great idea, but but doing it anyway because there's something even more important. When did the idea of investing sort of come into your mind as something that you were interested in and that you you maybe thought you would be good at?

• 15:12Speaker 01

  Honestly, it also started when I was a kid, you know. I don't think about it as much, but again, when I was seven, eight years old, I joked like only Turks and Brazilians. We were two countries that had hundred percent inflation for twenty years. And what ended up happening is when I was seven, eight years old, you know, families have different dinner conversations. Our dinner conversation every night, are we gonna buy German marks, French francs, Swiss francs? Are we gonna buy real estate? Because you couldn't keep it in the local currency. I mean, hundred percent means every year, whatever you have, like is essentially lost most of its value or at least half of its value. So that meant that from the very early age, regardless of math, regardless of finance,

• 15:54Speaker 01

  everything I was doing was around, how can I think about like compounding returns? And where would money appreciate the most? So it kind of become a second nature. It was great training. Um, the other thing was I used to read all my parents like Fortune and Business Week magazines. And I used to see like these incredible companies and CEOs and the stocks. And I'm like, wow, like it would be amazing to be able to buy and sell this or maybe become a CEO one day. And you know, you have to start with a dream. And little did I know that there was this really interesting part of finance called venture capital. Um, and when I left Google and I wanted to tackle this, I went through a bunch of other ideas,

• 16:34Speaker 01

  but realized that those sounded great as hobbies, but as a business, again, I went back to my parents' beginnings. And I didn't wanna, you know, tackle anything where there was, you know, anything that could be disrupted by the markets or was not asset light and all of that. And when it came to the idea of venture capital, I'm like, this is great. Because honestly, like all you need is capital, a great strategy and execution. So from an entrepreneurship point of view, it felt like the best opportunity. But the other scary thing about it is I've never done it. I didn't have a network. Um, I didn't have a team. All I had was some capital and a crazy idea.

• 17:17Speaker 01

  But that's what the founders and entrepreneurs need sometimes and go all in. So I did, and I went all in.

• 17:24Mario Gabriele?

  Had you made a few angel investments during your time at Google that had sort of given you a flavor of it?

• 17:30Speaker 01

  I did not, I did not. It was complete cold turkey, cold start. And what was really interesting is the beginning was even crazier. I actually was a little bit afraid in the beginning. I'm like, wow, like, you know, maybe, you know, I should really be more conservative. It was also crazy in the sense that I was expecting my first child. My first one, son was on the way and, you know, when you're expecting a child, you know, the dads become very conservative as well. So my initial reaction is maybe this is really crazy. I'm gonna fail my wife, my family. Like, let me go get a job, maybe learn the ropes before I tackle this crazy thing. But the people that I interviewed basically said, I wasn't an engineer, I wasn't senior enough at Google.

• 18:12Speaker 01

  I mean, I told this story many times, but the reality is, look, everybody goes through setbacks and disappointments and what seemed like, you know, initial failure or, or, or something like that. And to me, everything that happened in my life, like every single good thing happened on the back of some disappointment or failure. And this was similar in the sense that those rejections became rocket fuel. And we always talk about like starting a company and why did you do that? But I think the motivation and, you know, the fire and the impetus to succeed is equally important, if not more important. So for me, that was really like the big catalyst is not that just I wanted to do it. But I also really now needed to do it and not only do it, but be so good at it to prove all the naysayers wrong.

• 18:57Speaker 01

  That said, like, I could not do this thing. I was not fit to be a VC. That's it. I mean, honestly, this is one of the reasons why I relate to our founders that we work with so much. Because a lot of them early on are told the idea is terrible, it won't work. You know, like what they are thinking about is crazy or they, they're thinking about it the wrong way. I've been in their shoes and there is nothing like being in someone's shoes to feel like you're one of them and they feel like they're one of you. It all worked out, it all worked out, but it was a crazy beginning.

• 19:28Mario Gabriele?

  When you fast or you rewind to the, to that first fund, which I, I think it ended up being a forty one million dollar fund, if I'm remembering correctly. What was the sort of strategy that you were going into it with? Like, you know, did you have really specific ideas about, you know, this is the number of positions I really care about? And these are the, you know, the, the parts of the ecosystem where I think I can be most effective. I think, you know, about a lot of the newer solo capitalists now and being able to sort of understand how someone who's really grown from that position so much, sort of seeing where it starts is so, is so valuable.

• 20:02Speaker 01

  I mean, look, there was a lot of strategy and design, surprisingly. Nothing was really left to chance. Honestly, one of the great things about getting the opportunity to do this for four years with my own capital as a solo GP is that I made hundred investments. It was one of the best times to invest. Even in four years, I already had 12 exits.

• 20:23Mario Gabriele?

  Wow.

• 20:23Speaker 01

  By the time we were doing our first fundraise. So I think it's a little bit different than today. There are a lot of great people on the scene, but not as many that can say, hey, not only did I have one, but I had a dozen exits. It's a really great validation that the strategy is working. The other interesting thing was, look, venture fundraising is much more difficult and different than people think. Limited partners have a very traditional way of thinking about things and they want you to do what traditionally worked. So if you have an idea that's really different, it's very, very difficult to get limited partners to buy it. On the other hand, it was also interesting that you're basically telling them this is an original.

• 21:06Speaker 01

  If you were to follow the other ideas, you're going to keep investing in the exact same funds. Then what's the impetus to invest in a new fund? And so for me, it was really simple. I did quite a bit of benchmarking and analysis and realized that there were two or three things that was very difficult for the incumbent VC firms in Silicon Valley to do. Number one, they had this sense that if you're going to do venture, it needs to be local because you need to keep a close eye on the companies. Also, They wanted to have control of the company in case something wrong, you know, you replace the founder. So they were very inflexible and wanted to have high ownership. And they also had this attitude that in order to do venture capital investing,

• 21:49Speaker 01

  you need to be expert in an area, which meant that as an investor, you would always be in a narrow field. Yes. And I know one of the topics we're gonna chat a little bit later on is to be a journalist. I had a completely different strategy. I thought, listen, if I try to be very good at those things that the other firms are already excellent at, that is not a very high probability way of making my way to the top. So I had to do something completely different. Not only would I be really good at that, but that also had to be something where the existing firms would be very hard pressed to do well. So I basically said, you do not need to have offices internationally and you do not need to be next to the companies you invest.

• 22:31Speaker 01

  Not coincidentally, a lot of our great successes have been international because I lived in these countries, I knew the cultures. That's where my inherent advantage was, right? So I did not feel like I need to go to that country, have an office. The other thing is, look, I felt that if you were intellectually curious, you did not need to be a subject expert. If you understand what's really important about an area, you can still make the investment. Like, I can make a biotech investment. I don't need to be a doctor or a VP at Genentech to be able to make good investments. In fact, in some crazy way, it's better that you're not an expert because if a crazy father comes and say, you know what? We're gonna do some things in a very different way. You're the expert, your first reaction is, I've been doing this for 20 years.

• 23:14Speaker 01

  The only way to do that is the standard way, and this probably has less chance of succeeding. In some ways, the only way you can be like more imaginative, a little bit bolder, is to be in this situation where like, wow, you know, like, just maybe this can work. And then the last thing is so much of traditional venture was concentrated capital, few number of companies, and that never really made sense to me. I mean, I had a different thinking on it. And this is where, again, my, you know, four years of solo invest- Hundred companies, I felt that at then like the traditional venture model is about twenty companies per fund. Yep. And I always felt like fifty to a hundred companies, roughly fifty to seventy companies per fund is the right size.

• 23:58Speaker 01

  And what I basically like found, and maybe one day I'll, I will be able to bring a mathematical model in front of you. The odds of improving the returns and reducing the risk drastically goes up until about you have fifty to seventy companies in a fund. How do I know this? Because we have ten funds and we had situations where we had about eighty companies per fund and my first fund had a hundred companies. So I could totally see how the N made a huge contribution in terms of how many more unexpected winners the portfolio had. And because the portfolio size was really small, small ownership did not matter as much, right? So like there's all these things that everybody is like, well, that's never gonna work, that's never gonna work.

• 24:38Speaker 01

  But in some ways, it's a little bit lazy because they're also not trying to understand your reasoning. Like they're not saying like, well, maybe it could work. Can you help explain to me? I'm like, yes, it actually works if it's five million of investment and you own one percent of the company. For that to be a fund driver is not a huge like pushing probability, right? Like even at forty one million dollars. And then we did crazy things with the first fund, like our first major investment was in Angry Birds. And the whole run was bigger than our fund. And what people didn't understand why we did that is because I realized that all my peers were going to continue investing in the exact same seed companies, continue to continue to go to demo day and all of that.

• 25:19Speaker 01

  And I'm like, I'm gonna do something that nobody probably is gonna do or nobody even expects. What was really great is like the international background and the comfort of having like lived in four continents and haven't been in fifty countries. I felt like I could be home anywhere and like come up to speed in an instant and convinced as founders that we would be a great partner for them.

• 25:39Mario Gabriele?

  Wow, so interesting. So many threads there that I'm excited to dig into. One that I hadn't fully appreciated and I really should have is is the way in which your international background does map to so many of these winners. I mean Angry Birds, the company's Rovio maybe?

• 25:55Speaker 01

  Yep, that's it.

• 25:56Mario Gabriele?

  The Scandinavian company.

• 25:58Speaker 01

  It is Finnish company.

• 25:59Mario Gabriele?

  Finnish company, right? Adyen, Netherlands. Canva, Australia. Shopify, I guess, Canada. But so many of these really do map in that way. I wonder which other ones maybe come to mind for you that you think? Only because I'm sort of a man of the world, was I able to catch this before, you know, the folks that were still on Sand Hill Road?

• 26:19Speaker 01

  A hundred percent. I mean, even some of the more recent investments like N A N in Berlin, Germany, or Times in Dublin, Ireland, Dublin, Ireland. Again, the funny thing is, we did not invest in those companies because of the country they were located in.

• 26:36Mario Gabriele?

  Sure.

• 26:36Speaker 01

  We just were enamored with those founders and we were enamored with the markets they were in. And it just so happened that they were not in Silicon Valley. So I think the adage was Silicon Valley is so strong and has such incredible talent density. Don't get me wrong, we have a lot of amazing companies ourselves in Silicon Valley. That's where we're based. But I always had this sense that, hey, there is all this incredible talent around the world. And just because they're not in Silicon Valley doesn't mean that they can't build and scale a company, the likes of which that we've seen in Silicon Valley. It's a lot more common here, but that doesn't mean that it can't happen anywhere else. And low and behold, like, we kept doing that, company after company, country after country. And

• 27:20Speaker 01

  and again, it's just one of those really cool things because one of the things that people don't appreciate as much about venture is not only do you have to be right, but you have to be right before it's obvious to anybody else. So this is something that I think we truly owned in terms of, hey, talent is truly global, opportunity is truly global. And I'm really happy that we kind of were the vanguard. And now if you look at some of the traditional VCs, like Sequoia has many more offices and, you know, is much more international. And even many funds that said they would never invest internationally or would require a local office or would not invest like across sectors have now started doing that. And I'd like to think that we were there first and we were the original and kind of like essentially like

• 28:04Speaker 01

  shown people that that idea can work.

• 28:07Mario Gabriele?

  Hmm. The other piece that I really wanted to dig into was, you know, the extent of the diversification that that you practiced because I'm a much, much, much earlier investor in my career. Have, you know, a much less successful than you have, uh, than the track record you've pulled together. But I've always felt that it must be so hard to create the level of outlier returns with such a diffuse portfolio at scale. Like maybe you can do it on an earlier fund, but from what you were saying, it sounds like you're, you've managed to still with quite large portfolio size, you know, maintain that level of performance. Am I sort of understanding that right? That you're still having sort of 70 companies per, per vintage?

• 28:47Speaker 01

  Look, I, I think we have about 35 to 60 companies per vintage. Maybe, maybe for ease, let's just say that if the traditional size is 2025.

• 28:58Mario Gabriele?

  Yep.

• 28:59Speaker 01

  We have doubled it. Let's, let's call it 50, right? Because we have some funds where we had a little bit less, some funds we had a little bit more. The reality is the following, when you have too small of a fund size, what ends up happening is first of all, you don't have enough N, right? Like the chances that you're going to have great winners from 20 companies versus 50, there's a statistical difference that 30 more shots on goal definitely makes a big difference. The second thing is when you have a small portfolio and all of them are high ownership and something goes wrong, now like it essentially jeopardizes the rest of the portfolio. What was really great about having at least like about 50 companies is that we did not put the same size check and own the same in every company.

• 29:43Speaker 01

  It was always a little bit asymmetric in the sense that, I mean, this is the thing about venture capital. Sometimes like not only is everything so obvious and clear, you can back up the truck and sometimes it's like, wow, like I must be literally insane to be doing this. And you just do not want to like ride a big. Check. And so the way that we have managed risk is to never treat everything as binary, like yes or no, we kind of treat it as a spectrum. So all of these things helped us. And then the other thing that I was obsessed with, the concept is a little bit talk in this book called Anti-Fragile by Nicholas Nassim Taleb.

• 30:16Mario Gabriele?

  Yep.

• 30:17Speaker 01

  But, you know, I'm a very deep student of finance. I was obsessed with investing. And one of the things that I really wanted to show is this business is all about risk. And LPs and like, you know, venture capitalists like, well, like we have this one fund that's 10x, but then sometimes there are bad vintages. And to me, that was not acceptable. I wanted every fund, every one of our funds to be successful. And one of the ways I wanted to balance risk with the returns is I thought if you have a higher end, and let's say that you have a view of the world, that you kind of have a feeling that there are maybe five or 10 areas where there are going to be great companies. Instead of only choosing one, if you did all of them, and we can talk more about this in generalist versus specialist battle.

• 31:02Speaker 01

  But I thought, hey, wouldn't it be great if we had a portfolio size and a strategy that allowed us to be in all of the sectors that we believed in? So then, what's really great is a lot of these sectors are not correlated to each other. So depending on what happens in the world, maybe not all of them will succeed, but they will succeed in different ways. In which case, like some of the great ones, you know, can make up for the other ones that did not work out really well versus in a much more concentrated portfolio, in a much narrower focus, if something goes wrong or if the world changes, now you're stuck with a strategy that's completely out of fashion. It's useless. Similarly, like the portfolio has too much exposure to one area and there is nothing else to make up for it.

• 31:47Speaker 01

  So again, having grown up with a lot of risk and haven't seen a lot of like crises or companies that went out, I wanted to have a strategy that was just not great for returns, but also equally resilient. And I thought this strategy can really work. And luckily for us, it really did work in this way.

• 32:06Mario Gabriele?

  And so you have that diversification for the resilience, but it sounds Sounds like you're sizing the initial checks very differently based on how much conviction you have in the company to start with, and then probably concentrating very aggressively in the ones as they grow that you feel like have the most upside. Is that sort of the way the pieces come together?

• 32:25Speaker 01

  That's absolutely the concept. And I think I also need to be humble is that, look, we've done really well with company picking and concentration of capital is not easy. And that's one of the reasons why we went from $41 million fund to like $925 million fund today. Not to mention like the real inflation. Like I feel like we've gone at least four X. You look at the price of gold, you know, like 900 million of today is like 225 of 10, 15 years ago. But you know, the companies also like need a lot more money today. And so you kind of need a fund size to not just be able to make enough bets, but to have enough capital in reserve that you still have some capital left over to concentrate into the winners.

• 33:09Mario Gabriele?

  Yep, that totally makes sense. Thanks for walking me through that. We did talk a little bit about this, this sort of generalist approach. And, you know, for very obvious reasons, I love that this is the way that you see the world. And it makes instinctive sense to me. Why do you think it's, you know, still so common in Silicon Valley that so many people find it hard to imagine that someone could be effective across so many sectors?

• 33:31Speaker 01

  It is probably one of the hardest things to do in venture. Honestly, if you ask me, the one thing that I'm most proud of is that we have literally touched virtually every area of technology and we have succeeded, even though we have zero background. Like we've done, well, consumer, you can argue I was at Google. So I did have a little bit of a background, but the companies we invested were maybe not related to what Google was doing. So like whether it's consumer or e-commerce or fintech, later on, AI, security, infrastructure, developer tools. I mean, we tackled areas like hardware, literally like we had no background in. And so I think like, I want to come back to this generalist approach versus specialist approach.

• 34:16Speaker 01

  The way that I think about them is very first principles. So I I think most people misunderstand journalists. Journalist is not about, hey, we have this big area. We're gonna spray and pray and we get lucky. And after we get lucky, we can say, well, of course, we were right. That is not the point. I think the way that I see journalists is different. The way that I think about it is journalist, you start from a much larger universe. So imagine you and I are both investors. And there are two different ways we can go about the world, which is, hey, here is the universe of all great companies. The journalist approach says, we're gonna start with all of them. And then based on what we think like has the highest potential of growth and what's happening in the markets. We're gonna hone in on the ones that are best, you know, risk reward.

• 35:02Speaker 01

  I think what people misunderstand about journalists is because you're starting with the top of funnel that is so large does not mean you're trying to boil the ocean. It means that you have a much larger universe to pick from. And the conventional wisdom says, well, you are not qualified to pick the best ones from a large universe because you're not specialist. And I think that wisdom is not right. And we have practiced it now, like we're on our 10th fund. And I think we have great data to show that you do not have to be an expert to make good picks. The specialist instead says, hey, you know what? The special approach will save you because you know the sector so well that you're gonna pick the best companies. I think a nuance that it misses, it means that now you're starting with a very small group to begin with.

• 35:47Speaker 01

  Right? Like, let's say that, hey, it's only like enterprise, it's only this. Well, in a large universe of companies, that's a small percentage. So first of all, you're starting with a much smaller base. Right? And then on top of it, you're looking for outlier companies. Well, in the general universe, you're gonna have tons more outliers. In a specialist area, mostly what's gonna happen is, well, we kind of ran out of outliers, but we basically said we are gonna specialize. Now you're gonna find more and more niches that go into smaller and smaller parts of the market. And so like, instead of investing in all number ones, now you're investing, well, we need to invest in number seven because we told the world, you know, we're a fintech firm. Why would you like, I want to invest in Stripe or Adyen.

• 36:32Speaker 01

  I don't want to invest in Stripe or Adyen of Indonesia or Malaysia. That is not what gets me up in the morning. Like, I want to find like companies that completely dominate the sectors around the world. So that's the concept behind generalist versus specialist. The other like interesting thing that most people never talk about or think about is that it's also very risky to be specialist. Right? Like, imagine if you were a consumer person, there was a quite a long time where consumer produced a few good companies, but the rest of the companies did not do well. Or enterprise was really, really hot. I mean, 10 years ago, SaaS, it was all about SaaS. Today, I mean, it's kind of like a death sentence to be in SaaS.

• 37:13Speaker 01

  AI is disrupting every area of SaaS. And if you basically stuck to that and you were a SaaS fund, you're gonna have a very hard time. So this is the curse of being a very narrow specialist that not only does it limit your options, but it is also always at the mercy of the markets. And if something happens, it does not give you a lot of options. So now you have to go back to your LPs like, actually, I was wrong to be a specialist in this. Now I'm gonna go to this new area. And they're like, how are you gonna do, go do this new area?

• 37:42Mario Gabriele?

  Yes.

• 37:42Speaker 01

  Do you see how it works versus we always said, we're a generalist, so we were always true to our world.

• 37:48Mario Gabriele?

  Yes.

• 37:48Speaker 01

  We always said we're gonna pick from a large universe. But if you look at all of our 10 funds, the mix of each, every single one of them is different. And we perfectly picked all the interesting markets that we thought were poised for great growth, basically five to 10 years before that growth actually happened.

• 38:07Mario Gabriele?

  Yes, the specialist is able to do what is locally the best deal versus the generalist can do what is absolutely the best deal. Perhaps there's a trade off in some level of precision between the two, you could argue, but. But I'm not even convinced that's always the case. I wonder what this approach sort of says about your investing lens as you might define it. Do you find yourself, you know, much more founder driven than your peers? For example, because I think that's one of the ways that generalist strategies can work is if you're able to almost, you know, pierce through the really thorny and complex details of a certain sector, which, you know, it's impossible for you to gain the amount of industry knowledge

• 38:49Mario Gabriele?

  as someone who spent 20 years in, you know, two hours with a founder. But if you're able to analyze this person in a certain way, uh, maybe it doesn't matter as much. And so I'm, I, yeah, I wonder how you sort of find those, those shortcuts or, you know, those efficiencies.

• 39:03Speaker 01

  Look, my personal take on that is people are lazy. So they just want to look at success and say, oh, all this success, it was because of this one factor. It's so much easier to say, it was all only the founders. Now, having said that, let me tell you that the most important ingredient in all of that is the founders. In fact, going back to what you asked me about Larry and Sergey is that the other cool thing about Larry and Sergey were not just that they spent tens of thousands of hours and they were really good at what they did, but they could explain to you the most complex things in less than a minute and make you feel smart. What I want to say is, look, let's just put something to rest. I think without exceptional founders, it's very, very difficult to succeed.

• 39:48Speaker 01

  So founders definitely is the foundation that we look for. But I'm gonna say, yes, but and add that even some of the very best founders, sometimes when they faced a very difficult market or at a really bad time, things have not worked out really well, right? I mean, we can always find a few things where like, oh yeah, but like the best founders pivot and find a way. Yes, but statistically speaking, you're looking at one or 5% or 10% of the cases. Nobody ever talks about the 90% of the cases where the pivot didn't work. Now, we're always here to make it happen and to support the founders. All I'm gonna say is that. It's kind of like you look at a championship team and yeah, it was all the quarterback

• 40:32Speaker 01

  or it was only the coach. The reality is, yes, it was the quarterback, it was the coach. It's the hundred thousand hours that they trained. It's the fact that they picked different strategies. It's the fact that they took the right risk at like fifteen different games. We really wanna simplify things and say, okay, that's it. Like, we found the secret. The reality is there is like twenty secrets. There is so much more nuance that goes into it. And again, like, not to take it away from the founders. I mean, I have so many great examples of founders where like when there is nothing, they will something to existence. And it's just incredible how they're able to do that. A good example of that is Scott Morton at Revel. I mean, he was the top engineer at SpaceX, wrote all the software for Falcon Records.

• 41:17Speaker 01

  And then one day he's like, you know what? There is no definitive infrastructure company for critical hardware, including space and other industries like utilities, dams, all of that. And literally, there is nothing that exists. He just says, I'm gonna do it. And all of a sudden, like, he's able to attract incredible talent. And next thing we know, in like twelve to eighteen months, he has his first prototypes already working. I mean, I've never seen a founder like be able to do that. It's a little bit of the equivalent of like Moses went to Egypt and parted the sea. We literally are working with founders like that today. And I will never take that away from them. But what market they tackle and at what time they tackle is also equally important.

• 41:59Speaker 01

  For instance, I think we are essentially in the beginning years of a huge space age. We're gonna have tons more satellites, we're gonna have a lot more things happening in space. So this is actually very timely because SpaceX had to do everything they did from scratch. And interestingly, like at Google, we did a lot of things custom for which there is like now platforms today. We, for instance, build our own thing, which Amazon with AWS turned into a huge cloud business. We literally had our internal AWS cloud twenty-five years ago. We build it. We build everything from scratch. Now, you don't have to do everything from scratch. So it's just to say that, yes, everything starts with amazing founders. But there is also a lot more nuance to it.

• 42:42Mario Gabriele?

  Yes, absolutely. To push on that question maybe a little more. Have you ever seen a situation in which you felt it was a truly top basis point founder who didn't find a way to succeed, maybe not even that company, but the next one? My feeling is that if you find someone that good, ultimately, they almost always figure it out somewhere along the line.

• 43:06Speaker 01

  I think one of the things is, yes, they do figure it out and I will not take it away from them. And I think some of the things that happens is like, look, I mean, everybody's dream is like, we're gonna be great and take the company public. But the reality is sometimes, you know, you're part of an acquisition and your product is still serving, you know, hundreds of millions, if not billions of people. So you have succeeded, maybe the company didn't go public, but it still succeeded in the way you originally dreamed of. So I guess the thing is, look, the very best founders do figure it out and do make it work. But it might not be in the way that people have expected.

• 43:43Mario Gabriele?

  Yes, yes. I imagine you've had to reinvent Felicis a lot over the years, you know, as the founder of it. As you look back on, you know, the decade and a half plus now, what have been the different sort of form factors and maybe what have been the hardest transition points along that journey? I frankly imagine that one of the first transition points of going from, you know, a solo GP to entrusting other people to make investments and to, you know, share this sort of mental space with you must have been, you know, a really significant one.

• 44:17Speaker 01

  Definitely. It was a very steep and also very gratifying learning experience. But I think that that needs to take us back to our origins. And what was really interesting is you and I just talked a little while ago about strategy and how we try to be different than standard VCs. So now I'm gonna go to the heart of it and it is. I looked at all the other VCs and I really tried to think like, what is one thing that all of these incredible VCs that came before my time not good at? And what is one single thing that could be my true north and define our franchise for decades to come? And what I basically ended up at is traditional VC, at the moment they succeed,

• 45:01Speaker 01

  they become very rigid and stagnant. All of them had some kind of a turning point. All of them started with a dream and then they have some really great bets, like incredible returns. And right at that point, they're like, don't change anything. You know what? I was walking my dog and, you know, whatever, like it was the morning and we were based in like, and then, okay, great, this works, so absolutely keep it, don't change anything. LPs really like it because clearly something worked. And what people don't understand and what I observe at Google with super high growth is that that's actually when you're most vulnerable. Actually, that's the point at which you should be willing to question everything

• 45:41Speaker 01

  and figure out like anything that can be improved and changed because if you don't do that, somebody else will and you will get disrupted. So that's both the blessing and the curse of Silicon Valley and technology. Is that it's always like crazy, it's always a battlefield. You think you won the battle and then somebody braver and somebody crazier comes along. And if you haven't adapted, like all of a sudden you're a dinosaur and then you get crushed or killed in the battlefield. So I basically said, I can fail at everything, but one thing that will define this franchise that we will never ever fail or cannot fail is learning and adapting rapidly. I literally said, that's our constitution. If our firm is a constitution, that is our constitution.

• 46:25Speaker 01

  But by the way, this means that learning and adapting rapidly doesn't mean that your strategy changes all the time. It doesn't mean that you're flailing and spraying and praying. It just means that it's the same strategy, but you can, you know, apply it in different ways. And do you see like how it's perfect with the generalist approach? Because that essentially gave us the flexibility of when we saw opportunities in the market. And I'll give you an interesting example where there was like a really interesting turning point in the history of Felicis, where we did an analysis of all the successes and realized we had nothing in AI or very few things in AI and security and infrastructure. So we made a hard pivot into those areas. I feel like the defining aspect of what we do is our strategies always remain the same.

• 47:09Speaker 01

  Our, you know, differentiator of being the trusted brand by founders and doing right by founders always stayed the same and we scaled it. But all other aspects, we learned and adapted, right? Like we started as a solo firm, then we were three people. Now we have research. We're doing 20 different things that I would have never even imagined that we would be doing today.

• 47:30Mario Gabriele?

  Yes.

• 47:30Speaker 01

  Same strategy, same generalist approach, but the practice and application and what sector we choose today versus 10 years ago. It's so different. The team is very different. What I love about that is the thing that kills civilizations and cultures is the inability to adapt. Like, why did the Roman Empire die? Like, why did all of these great civilizations like go become extinct? It's because they could not keep up with the time. And so that to me was the thing that if we are the fastest adapting, fastest learning, you know, team, culture and venture, we will always have a place in the upper echelon of venture as long as we are able to make it there.

• 48:09Mario Gabriele?

  Amazing. I love that theory, this willingness to rethink things and sort of prevent against that stagnation that, as you say, success often breeds. On the, on the subject of, you know, avoiding stagnation, you guys have been, I think, very aggressive in investing in AI and doing it, you know, at, you know, almost every altitude, it feels like, you know, you have Crusoe at the energy layer. You have, you know, sort of some orchestration plays with N8N and, you know, infrastructure, Superbase and some of these sort of bespoke model companies. How have you thought about the right way for Felicis to be involved in this? And why have you been willing to sort of lean in so aggressively such that, you know, it seems like a lot

• 48:52Mario Gabriele?

  that is, I would imagine, the majority of the firm's activity at this point?

• 48:57Speaker 01

  A hundred percent. This is a really great thread because I think about it a lot. And I was just talking to a VC club at a really well-known university. And I told the students the following. Venture business is very simple. There is only one thing you need to do, which is you need to find companies that have hockey stick revenue inflection curves. And be in these companies before the steep part of the inflection happens. That's it. That's venture. I did it in less than a minute. You do that right and consistently, no matter what you do, you're going to succeed. Notice, I did not talk anything about sectors. I did not say anything about stages. I did not say anything about the economy or markets, nothing else. I did not say anything about valuations. All of these things are excuses.

• 49:43Speaker 01

  Like, sometimes like it's a great analogy in F1, like, you know what? Like, they complain, you know what? Oh, it's like terrible, like it's rain. And like the best drivers, like when, whether it's dry, whether it's rain, whether it's a challenging circuit, whether it's night, whether it's day, whether it's street, whether it's like whatever. This is the thing that, um, that comes to my mind is that, you know, people complain about the markets. Oh, AI is a bubble. No, valuations were really high. And we can find companies not only across all the sectors and all the geos, but also when the markets are up, when the markets are down, when it's really expensive, when people think there is a bubble. Because what they're not doing is they're basically looking at things that they can't control, but that has no impact in how they choose companies.

• 50:25Speaker 01

  The only thing that matters for the companies is whether you can find that hockey stick curve. So now, how does this translate into AI? In my 20 years of doing this, AI age is the first one where I have seen these growth curves, the hockey stick growth curves, happen at the most insane velocity. And the most, the sharpest steepness. Right? Like, to give you an example, even like the Google age, Google went public in six years. Shopify went public in six years. I, I need to look up the exact time, but like these companies got to 100 million of revenues, let's say, between four and eight years. Ten, twenty years ago, getting to a hundred million of revenues in four to eight years was considered exceptional.

• 51:06Speaker 01

  Today, you have not one, but multiple companies, maybe soon to be dozens, that are rocketing from zero to a hundred million on revenue in twelve months or less. Not only are they doing that, they are doing that with probably about ten percent or less of the people that traditional companies did. Because one of the great things about AI, like, you would have hired in so many different roles and like, I don't need to hire in that many different roles. Like, there are some like edge things that I can like rely on AI and instead of like a team of hundred, I can do this with a team of ten. Now you can move a lot faster, you don't have to hire a lot of middle management. So it's not just a steep revenue growth, but also you can probably do that more profitably.

• 51:48Speaker 01

  And this is what I want to get to is that people again are very lazy and they're only looking at one aspect and drawing conclusions, "Oh, AI, it certainly must be a bubble." You know, that's not gonna work. And yes, it's true, there are companies that do not have a durable technical advantage. But there are very few companies that not only do they have the durable technical advantage, not only do they have growth, but they're also gonna be able to get to profitability and if they do, they're gonna become invincible and it's not gonna be bubble. And this is the reason why, for instance, you know, like 2021, people can't stop talking about it. You know, we made some of our best investments in 2021 when the market was at its peak. And everybody thought we were crazy, that's gonna be a horrible vintage.

• 52:30Speaker 01

  Those companies are gonna be like, I cannot tell you how many LP meetings I had to take to explain to them, but no, like, we can pick companies even in that environment. And we did, like, I actually had to look back just to make sure, whether it's NADN or Superbase, those were some of the most expensive investments we've ever made. Highest valuation and conventional wisdom is that certainly is not gonna work out. And it worked out, not only did it work out, it worked out exceptionally well. Despite the fact that we paid maybe ten X what people thought we would pay, the companies grew their revenues by a hundred to five hundred X. And so that means that What on surface looked like a terrible move ended up being a genius move because

• 53:14Speaker 01

  everybody else were like cold on their tracks. We were aggressively pursuing those companies and those founders are like, you know what? Nobody had the courage or the insight or the imagination to see what we see, but you did. And that's basically our brand today, right? Like when founders look at our brand, at our firm, what I want them to see is that these people have been brave enough, even when things were tough, even when valuations were crazy, even when markets were really crazy. They still go to their founders and have this incredible conviction and partner with them, even in those most difficult situations.

• 53:48Mario Gabriele?

  Okay, so interesting. I wanna make sure I'm sort of following the way this hangs together because it strikes me as, on the one hand, it's, you know, there are parts of it that are on trend, but I think there's also a depth behind it that is maybe built on some contrarian principles. So I think one of the things you're saying is that, yes, maybe there are these companies that are getting done at two, three hundred X revenue, but as long as you can pick the ones that are actually likely to have a durable technical moat, you're happy to pay even a few years, let's say, in advance of where their, you know, let's say reasonable valuation or durable multiple might settle at, because you think they might really be sort of game changing, world changing companies.

• 54:32Mario Gabriele?

  And the history of Felicis suggests that even in these hot markets, when other folks have leaned in and gotten burned, you've managed to be strong enough on the selection that those vintages still look good. Is that right?

• 54:47Speaker 01

  A hundred percent. And the best way to summarize it is follows, just so that the math makes sense. Um, I'm gonna simplify it a little bit. Let's just call it VC one on one. And here's the interesting thing. There has been many instances where we picked the company just right, and we were off by a 10x on the entry valuation. So everybody looked at only that side and said, there is no way it's gonna work. But what they missed is the revenue growth that materialized after was 30x, 50x, 100x. So while we were 10x wrong on the entry price, we were absolutely like underestimating the revenue growth by even a much, much larger factor.

• 55:31Speaker 01

  And so that's the thing, like to be successful is not only that, like you need to be right on the valuation side. In fact, it's the opposite because if you're basically a cheapo and say, wow, like I'm basically gonna think that's too expensive, I'm gonna go for the cheaper companies. You're forgetting the most important part, which is the revenue growth never materializes. So you will only be successful if the revenue growth materializes. It does not matter that you were like paying a much higher price, but you have to be in those companies where the revenue growth is like 50x, 100x, 1000x. Because without that, we're never gonna get to the point that we wanna get to anyway. So that's the part that people don't talk about, to be able to like understand what are the dynamics,

• 56:13Speaker 01

  what are the ingredients, to be able to like look at a company when none of this is done, when all of this is like in air and uncertain and say, you know what? We have the imagination, we have spent so much time trying to understand the space and these founders. We think that this company and these founders are the most likely to be able to produce that growth. And that's the thing, like that's what we're really good at. And it happened literally over and over again across all the different markets, all the different GOs, all the different sta-, you know, stages of investment. And that's why I tell our LPs, like if I showed you the time we invested and the growth that ensued, 20 investments, every single one of them looks like seed, only 10% were seed. Some of them were Series B, some of them were Series C, some of them were Series A.

• 56:58Speaker 01

  This is why like I'm like throwing twitches when people talk about markets or stages. It's just like go back to the essence. That's the essence of venture capital, to be able to find companies that are these extreme growth companies.

• 57:11Mario Gabriele?

  And it's because these companies are the ones that matter so much that, you know, if you have to pay up for the access to the number one versus, you know, getting a steal of a deal for the number 10 in a market, you know. There's no real value in that scenario where you're getting a better valuation because you know, the number one business is going to run away with it over a period of time. And so then that makes me wonder if you even need to care in a way about whether this is an AI bubble or not, because in some respect, it doesn't matter, right? If you're always just going to believe that you pick the biggest winner, you know, it all should work out in that, in the bull case, right?

• 57:52Speaker 01

  Not only that, but let me go back to the point that I made. People are looking at it again very simplistically. Oh, it's an AI bubble. What they're not paying attention is that there are seven different markets or 10 different markets that are coupled to that. So it's not just AI. What is the raw material of AI is data. Who manipulates data? Companies like NADN, which is data translation. Companies like Superbase, which actually store the data and make it actionable. We are talking about AI wave while everybody's looking at the chip while the processing actually happens in data centers. You know, 100 years ago, when the greatest wealth was created, it was all about oil and the people that made the most money were the refineries. That's the data centers of today.

• 58:35Speaker 01

  Then you look at what is the most important resource for data centers is energy. We actually do not have a scarcity of chips. We do have a huge scarcity of energy, right? So like the energy is going to benefit from that. Basically where I'm going with this is people are looking at it too simplistically because some of these things are such high numbers and it is not what people expected. They're thinking that, oh, like some of it must be wrong. And don't get me wrong, some of it is wrong, right? Like just like everything, like internet wave, like people basically like thought a lot of these like websites on the web that sold things didn't amount to anything. But Google that was built then became a trillion dollar company, right? Like every one of these eras where people thought, oh, this is really bad.

• 59:19Speaker 01

  Some companies really, really got it right. And not only did they get it right, but they got it right 10, 100,000 times more than what people expected.

• 59:28Mario Gabriele?

  Yes.

• 59:28Speaker 01

  How can I say that? Because I was one of those early people that said, oh God, please let Google be a billion Dollar company, it became a four trillion dollar company.

• 59:36Mario Gabriele?

  Wow, yeah.

• 59:36Speaker 01

  I was off by not one, not two, three zeros, three orders of magnitude. Right? Like it not only became a multi-billion dollar company, it became a multi-trillion dollar company.

• 59:47Mario Gabriele?

  Yes. One of the investments that you've made is in skilled AI, which is in the sort of robotics space. Obviously, an important part of the AI ecosystem, but in many ways, it still feels a little bit like the the younger sibling that, you know, gets attention every once in a while, but maybe not as much as some of the flashier applications. How have you thought about the way AI begins to enter the physical world more? And and why was skilled one of the companies that you were sort of most interested in?

• 1:00:15Speaker 01

  One of our most favorite companies, I mean, so many like interesting things. Let me start by like some really cool anecdotes. Before we made the skilled investment, we made six robotics investments and virtually all of them failed. And not just failed, but failed miserably, like absolute abject failure. So any other traditional VC would have said, you know what? Six failures are enough. Do not make this mistake again. But this is the reason why our culture is learning and adapting rapidly. So your initial reaction would have been, oh, like it's AI boom, why robotics? Here is like a couple of secrets. The reason why it's different now, why skilled was really interesting is that all the other robotics companies were trying to make the robots do one simple thing.

• 1:01:00Speaker 01

  And the programming was all about making the robot do one thing over and over again. It literally took them years. Like, people don't learn to walk like that. I mean, babies just like go fumble and do stupid things sometimes like fall out. And like, I'm like, sometimes like, God, you know, my two sons. Only if you knew like the moments where they came really close to doing something

• 1:01:20Mario Gabriele?

  Yes.

• 1:01:20Speaker 01

  really crazy when they were like toddlers. But that's how we learn. And then after that, you never think about like, oh, like you're walking, like, oh, I'm just stepping here, whatever. So you're inherently understanding movement, right? And so the reason why I got excited about skilled is unlike all other areas of AI, this concept of how will robots generally learn skills? And that's why the company is skilled. Data for that did not exist, so the company had to master synthetic data. They were one of the first to master reinforcement learning. So they got many, many different things, right? It's because the founders, the two founders have been doing this for well over a decade. They were the best experts in this field, like whether it's Meta, Google,

• 1:02:02Speaker 01

  like a lot of the things they did were based on the papers that these founders wrote. You know, this is really interesting because it looks like essentially it reminds me of Microsoft. When the PC wave happened, Microsoft said, we're not going to build the PCs. We're just going to be the operating system for all the PCs. Yes. So I think that's the second thing that I learned from robotics is that if you're trying to do both software and hardware, it is very, very difficult and also building hardware is really costly. I'm not saying that skilled will never build hardware. I just love the fact that they really focused on software first. Yes. And they said, our software not only has to be very good, so good in fact that you can take the cheapest robots that are literally a hundred times less precise

• 1:02:45Speaker 01

  and make them more precise than the robots that cost hundred times as much just because the software is so good in managing them. This is literally what Microsoft did with PCs. They were competing with these elegant workstations and software made the PCs shine. And then the last thing is, look, a lot of times when these investments are made, this is like a really good insight. So I thought about, hey, you know what? Let me think about it. Let's say that we're using our imagination of robotics works. What could be the kind of positive impact? And then I did the simple calculation. If you take US, Western Europe and Japan, there are 190 million low skilled jobs. And if you basically say like $25,000 a year,

• 1:03:27Speaker 01

  which skill can easily offer and can charge like multiples of that. But I'm like, wow, like you don't even have to replace all of them. Point 001 would be a 10 to 50 billion dollar company. Yeah. Not value, revenue. Yeah. 10 to 50 billion dollars at a 10x multiple, that, that, that is almost on its way to become a trillion dollar company. And it's point 001% of the market. The reason why I'm telling you this, the margin of error is so great. Like even if they captured a tiny piece of the market, not even one, but one, one thousand of a percent, it's gonna be a huge company, right? And so that's the thing, like, people are like, oh, like robotics is crazy, it never work, like, it's not gonna scale, whatever. No, it actually will work.

• 1:04:10Speaker 01

  We're gonna have a ton more robots in the next ten to twenty years. And they're gonna do a lot of things. And I doubt it's gonna take, like, jobs away. It's just gonna do jobs that people are not meant to do or not, should not be doing, but they're doing it because there is no other way of doing it. And like, there are so many jobs that are unsafe, it's risky. People are getting killed, getting injured. People are doing the job at night because, you know what? They need to do something. And I just feel like we're gonna use people for different things, where hopefully it'll be like better value add jobs. So I don't think it's like one or the other, like, oh, robots will come, none of us will have jobs. I do think it's gonna be like this kind of happy coexistence. We're gonna have a lot of robots and they're gonna take more drudgery out of our lives.

• 1:04:53Speaker 01

  And then hopefully we can do more, um, a higher value, a higher order of things as humans.

• 1:04:59Mario Gabriele?

  I think I'm right in saying that Felicis hasn't invested in one of the sort of large, general purpose labs like, you know, an OpenAI, Anthropic, even, you know, the European sort of offerings like Mistral. Has that been a concerted strategy or more just a consequence of sort of when your own AI strategy came to the fore and, and, you know, the, the opportunities that came uh, in front of you? I'm, I'm curious maybe that what that says about how you see this sector.

• 1:05:27Speaker 01

  Yeah, I mean, look, first I need to start by being very humble. Um, I have to say that I think I drastically underestimated Anthropic and OpenAI. And this is the thing, I think human beings, you look at large numbers, I look at the valuations, I mean, I, I look at what these companies were doing and I think I underestimated the value they can capture. So I think the right thing to do here is to say, We've done really well in many areas of AI. I think we should have taken Entropic and OpenAI a lot more seriously. The growth that they've been able to capture, the value they've been able to capture. If you basically say, hey, like, what's your biggest regret?

• 1:06:07Speaker 01

  I'm gonna go back to 2008 and talk about Airbnb, but what is your biggest regret in the age of AI? I feel that we should have taken this much more seriously and taken a bet in one of the large model companies. Whether it's Entropic, OpenAI, you can make pros and cons for each one of them differently. I'm not really sure I would put Mistrel in this bucket. But I will certainly say Entropic and OpenAI are special companies, each in their different way. And I will be the first to admit and own, and this is part of the learning and adapting fast culture, is that you have to be very honest with yourself. You know what? That was a miss.

• 1:06:41Mario Gabriele?

  Yep.

• 1:06:42Speaker 01

  That was a big miss. We way underestimated that. Because the cool thing about that is we are talking about growth, but there is yet another angle to it. We have not talked about growth at scale. These companies have been able to grow at scale. Like, I don't know, like, we talk about zero to 100 million, but I don't know how many companies could go from 30 million to 3 billion in as record of a time, right? Like, when cars, it's always like 0 to 60. But the harder thing to nail is like, I don't know, like 60 to 200. Like, it becomes exponentially more difficult to go from 60 mile per hour to 200 mile per hour. So I am just acknowledging that I think those two companies have really done something special.

• 1:07:26Speaker 01

  And I just look at the valuation numbers and I choke. But we are very aware of it. We got some other things. I mean, we still made foundational model bets, whereas runway or poolside or skilled.

• 1:07:38Mario Gabriele?

  Yes.

• 1:07:39Speaker 01

  They're just not building generalist models. They're building specialist models, but. Again, nothing takes away from the fact that I think Entropic and OpenAI are gonna be huge company.

• 1:07:49Mario Gabriele?

  Well, I'm sorry to bring it up in that case, but nature of the game, as you know very well.

• 1:07:53Speaker 01

  Nature of the game. All good, all good.

• 1:07:55Mario Gabriele?

  You, you mentioned Airbnb and that's one that I feel like a lot of folks look back on as, you know, maybe their big miss. What, what was it that, that didn't work for you at the time or that you missed?

• 1:08:06Speaker 01

  Well, let me be very specific. Uh, I have an email still from 2008 directly from Brian Chesky. This is even before YC invested, by the way. He's like, Aiden, we really enjoyed our meeting with you. We really feel you should invest in our company and you still have a chance to do that at $2.5 million valuation for a 60 billion or 100 billion dollar company. One of the biggest lessons I learned, and this is why, again, I'm gonna keep going back over and over to this, is that this is why I want learning and adapting rapidly to be our core values, that while the decision was academically correct, it was practically very wrong. Essentially what happened is I thought it's what a wonderful idea, but

• 1:08:50Speaker 01

  the reputational risk of something going wrong can kill the company early on, right? Like if you're Airbnb and something bad happens in one of the houses, like, I don't know, something like really bad or illegal.

• 1:09:01Mario Gabriele?

  Yeah.

• 1:09:01Speaker 01

  That would kill the brand.

• 1:09:03Mario Gabriele?

  Yeah.

• 1:09:03Speaker 01

  But what happened, what ended up happening is the community was so strong that the community basically self-policed itself and something bad did not happen. Where am I going with this? Not only was it a miss, and it is a very visceral miss, but basically what happened is, this is the thing about venture that is so like tough, is that your biggest misses are not the companies, you know, you're, like, you're saying yes, it's just the ones that you're saying no that end up being great companies. Because if you're not in those best companies, your returns will not be as good as the very best ones. But just to kind of like put an example of how you can take lemons and turn them into lemonade, one of the reasons I ended up finding that and investing in it, I also missed an underestimated Uber.

• 1:09:48Speaker 01

  I'm a very avid driver and I'm like, why would people want their own drivers? Eat my words on that one as well. But what ended up happening is after missing out on Airbnb and Uber. It basically like dawn on me that it was like an era where even Google and Facebook were having difficulty with international payments. I'm like, look, there might be yet one more chance to play this. Yes, maybe we cannot invest in Airbnb and Uber anymore. But if the international growth is going to be staggering for them. There will be an international payments company that's going to capture this. And that ended up being Adyen. So the only thing that I'd like to get a tiny little bit of credit is. It was a big failure and setback.

• 1:10:31Speaker 01

  And instead of saying, okay, like, it doesn't matter. I have big ego, like, we will find great ones. I said, no, I'm not gonna let this rest. I'm gonna go find yet another company and turn that lemon into lemonade. And Adyen became like one of our biggest exits ever. And it was very interesting because when Adyen first got announced in the US. It was the only company I literally remember calling Wall Street Journal and they're like. Actually, we don't even know what this company is. We don't even have it in our database. That's how under the radar it was. And this is where every VC in the US was investing in Stripe. Right? So like, again, like going back to that, like, not only do you have to be right, but you have to be right and in minority. Like, you can't be right with hundred, five hundred other people. You have to be right.

• 1:11:15Speaker 01

  And kind of being like this small minority where like, it's not obvious to everybody else.

• 1:11:19Mario Gabriele?

  That's a great story. To finish, I always like to ask a more sort of abstract philosophical question or two. One of them is if you had unlimited resources and no operational constraints, what is an experiment you would like to run?

• 1:11:32Speaker 01

  It would require a little bit of design, but I think one of the things we're obsessed with is like. Truly understanding what makes outlier founders. And I don't know if like a huge longitudinal study. Has ever been done. In fact, I did a little bit of a Google search. I think one of the largest studies ever done was only a thousand people. And I think the only large scale human study was COVID. Because everybody was going through it. But if we had unlimited resources, again, privacy safe, opt in or however is statistically designed to be relevant. But again, respecting people's privacy. I would love to do some kind of very detailed study of founders and what are the elements and,

• 1:12:17Speaker 01

  you know, personality aspects or like whatever, like what in their backgrounds really spiked? Because I feel like all these founders are very talented. But this is the thing, like, it's not just as simple, like, so many of them are brilliant, so many of them are brave, all of them are very brave. But then what determines the ones that spiked the highest? And the ones that ended up doing okay, just not great. So that would be an awesome thing to do.

• 1:12:42Mario Gabriele?

  What's a tradition or a practice from another culture or time period that you think we should adopt today?

• 1:12:47Speaker 01

  I'm gonna mention something from my heritage as, you know, a Turkish born American. We have this concept in Turkey called misafir per verlik. It's just about hospitality and it's not just hospitality as in, hey, like, you're nice to strangers, but you literally, if you have a guest, the guest is basically treated as if it's the most important member of your family. But you literally truly make them feel at home and you care for them. And the reason why I'm mentioning that is honestly, like, the essence of everything we do for the founders at Felicis is putting them first. That literally is that culture, like, I always like, like to think of my grandmothers. I didn't get a chance to meet my grandfathers, but my grandmothers were the epitome of that.

• 1:13:32Speaker 01

  And in some ways, like, we have these cute little traditions, like, everybody that comes to our office, we always give them a chocolate or something sweet as they leave. It's just this, you know, sense that everybody should feel special when they're interacting with us, especially founders. So it's a little bit of a cultural touch and in a world that's so polarized and stressed and, you know, grumpy, we want to add a little bit more happiness and a little bit of kind, a little bit. More kindness. Hopefully, we're doing our part and we can scale it.

• 1:14:01Mario Gabriele?

  I love that. Final question. If you had the power to assign a book to everyone on earth to read and understand, what would you like to assign?

• 1:14:09Speaker 01

  I'm going to pick one of the latest books that I've read that, you know, was really impactful for me. It's a book called Clear Thinking by Shane Parrish. He was a Canadian intelligence operative. And the reason why the book is really interesting is every time like I read a book, oh, this is a great story. Or it's like talked about this one thing. The the interesting aspect of this book is all about decision making. And how we normally make decisions where we're kind of defaulting to things that are not obvious to us and it really impacts our decision making. And when you think about it, if you could get one thing right, that could scale throughout your whole life. I think that would be making better decisions. You would have a better family, you would have a better career, you would have a better personal life.

• 1:14:54Speaker 01

  And so what I liked about this book is it broke down and said, this is four different ways, whether we realize it or not, we default to these different things and we think that we're making conscious decisions. But they're really like reactions and we kind of program. So it essentially says like the way to like unwind that or break that like kind of futile process is like take a little bit longer. Or whenever you're about to make like a reactionary decision, like put things so that you can't move as fast or is more difficult. So you don't basically like make a decision in a rush that you later regret. So I love the book. It's not a very long book. It's an easy read. So I would highly recommend it. Clear Thinking by Shane Parrish.

• 1:15:37Mario Gabriele?

  Amazing. He's also the author and founder, I think, of a great website called Farnham Street that I would also recommend folks check out. I'm sure you're familiar with it.

• 1:15:47Speaker 01

  Very familiar. I is one of the few like daily newsletters that I love. It's very inspiring, very positive. Highly recommended. Farnham Street.

• 1:15:55Mario Gabriele?

  Amazing. Well, Aiden, it has been so lovely to chat with you and I really appreciate you opening up about your craft and the way you see the world right now.

• 1:16:05Speaker 01

  Thanks, Mario. I really appreciate the opportunity. Great talking to you.

• 1:16:08Mario Gabriele?

  That's it. Thank you for listening to this episode of The Generalist Podcast. Please subscribe on Apple Podcasts, Spotify, or your preferred podcast app. Ratings and reviews help others discover these discussions, so if you enjoyed the conversation, I'd be grateful if you could take a moment to leave one. For all past episodes and more, visit us at degeneralist.substack.com. See you next time as we continue to explore the future.