20VC: General Catalyst CEO Hemant Taneja on The Future of Venture Capital: Chanel vs Walmart | Lessons Scaling GC to $40BN in AUM | Investing $5BN+ Into Stripe Over 14 Rounds | Investing Hundreds of Millions into Anthropic at $60BN Valuation

Hemant Taneja is the CEO and leader of General Catalyst, the firm he has scaled over the last decade into one of the largest with over $40BN in AUM. He has been one of the most influential investors of the past two decades, leading early bets in Stripe, Snap, Gusto, Samsara, Grammarly, and Canva. He also played a pivotal role in Livongo's $18.5B merger with Teladoc, one of the largest digital health deals in history. AGENDA: 00:00 Introduction 03:37 Is Hemant a CEO or an Investor? 05:42 With $40BN AUM Is General Catalyst Still a VC Firm? 12:11 Has Trump Done More to Hurt or Help the US? 13:25 No One is Talking About the True Impact of AI on Jobs 21:30 Is Hemant Concerned by the Concentration of Value in MAG 7? 27:30 Has Trump Done More to Hurt or Help the US? 30:27 GC's Anthropic Investment: Upside from a $60BN Price 37:06 Do Margins Matter in a World of AI 45:23 Does Revenue Growth Matter in a World of AI 49:39 Why it is BS to Turn Down a Company Based on Price 56:06 We Have Invested $5BN Into Stripe Over 14 Rounds 01:00:02 VC is About To Be Flooded with Retail Investment: What Does It Mean for VC 01:08:51 "What I Learned Losing the Series A of Snap, Stripe, Samsara" 01:11:25 Future of Venture Capital: Walmart vs Chanel

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

• 0:00Speaker 00

  Our aspirations in venture capital is to be the best seed firm in the world. Venture capital can't scale and performance at the same time. I deeply believe that just because we have more money doesn't mean there are more Patrick Collison's, Sam Altman's that are going to go build iconic companies. I lost the series A of Stripe, I lost the series A of Samsara, I lost the series A of Snap. Triple, triple, double, double is definitely dead. Going from one to three to nine to 27 is not interesting or one to five to nine to 27 is not, whatever the math is not interesting. You gotta go like one to 15 to 20 to 100.

• 0:35Harry Stebbings?

  You are listening to 20 VC with me, Harry Stebbings. Now I'm so excited for the show today. Today we welcome Haymont Tanezha, CEO and leader of General Catalyst. Now Haymont has scaled GC over the last decade into one of the largest platforms in venture with over 40 billion in assets under management. He's also been one of the most influential investors, leading early investments in Stripe, Snap, Gusto, Samsara, Grammarly and Canva, to name a few. He also played an incredible role in Livongo's 18 and a half billion dollar merger with Teladoc, one of the largest digital health deals in history. This show is incredibly wide ranging with everything from the future of labor to geopolitics, to the future of venture capital.

• 1:20Harry Stebbings?

  I loved doing this show. Haymont was so open and it was just fantastic. You can check it out on YouTube by searching for 20 VC and I cannot wait to hear your thoughts. But before we dive into the show today, I love seeing the team come together to make this show happen. What I don't love is trying to keep track of all the information, the data and the projects that we're working on across dozens of platforms, products and tools. That's why we use Coda, the all in one collaborative workspace that's helped 50,000 teams all over the world get on the same page, offering the flexibility of docs with the structure of spreadsheets. Coda facilitates deeper teamwork and quicker creativity and their turnkey AI solution, the intelligence of Coda Brain is a game changer.

• 2:03Harry Stebbings?

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• 2:47Harry Stebbings?

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• 3:30Harry Stebbings?

  you signal to your customers and investors that you're building tech with just your domain name. Isn't that cool? So if you've got a name in mind, search for it now with dot tech on a trusted platform like GoDaddy or visit get dot tech slash twenty V C to grab it. You've got the name locked down with Radix? Now it's time to get the fun structure just as solid. If you're listening to twenty V C, you know we have a really fricking high bar. Well, Angel List is the modern platform used by the best in class venture funds, where over forty percent of top endowments and banks are LPs. Their customers include a top five venture firm, twenty V C, and they now have, check this out, a hundred and seventy one billion dollars of assets on the platform.

• 4:12Harry Stebbings?

  They combine an all in one software platform with a dedicated service team that moves as fast as you do. One manager said this awesome quote. Angelist feels like an extension of my fund. Another said Angelist gives me total peace of mind, the attention to detail, lightning fast response time and just real sense of ownership from the team are exactly what I need to stop worrying about back office ops. So if you're starting a new fund, don't be a moron, just use Angelist. They're incredible. Head over to angelist.com/20vc to learn more. You have now arrived at your destination. Hamon, it is so good to have you here. Last time it was seven years ago. It was in person. I've been so looking forward to this, dude.

• 4:54Speaker 00

  It has been seven years. Last time I was younger and you were a little skinnier. You've gotten fit and you have no glasses and I have my glasses right here.

• 5:02Harry Stebbings?

  Dude, I was much skinnier. I think this was before I fell into a protein bucket.

• 5:06Speaker 00

  You've done well, it's good.

• 5:07Harry Stebbings?

  My question to you is, you have built now in the last 10 years, one of the most defining firms that we have in venture. Do you consider yourself a venture capitalist or do you consider yourself a CEO?

• 5:20Speaker 00

  Harry, that's a great question. I carry the title of CEO and managing director for a very intentional reason, which is general catalyst is a business, but it wouldn't be a business if it wasn't venture capital at its core. I am a managing director and a partner, just like everybody else in our partnership, but I'm also a CEO and that's the duality that it's going to take to build an iconic institution in our industry.

• 5:43Harry Stebbings?

  Do you think GC is still a VC firm?

• 5:45Speaker 00

  GC is very much at the core of VC firm. Not only that, I mean, our aspiration is that we want to be one of the best seed firms like you. That truly is our aspiration because the earliest relationship with founders and that trust is the key to actually doing the best work in building the companies that matter.

• 6:02Harry Stebbings?

  When you look at total AUM, can you realistically put the hours in and justify that commitment to seed when it's a $200 million vehicle in a $25 billion pool?

• 6:14Speaker 00

  Culturally, this gets hard for VC firms at this scale. At GC, the thing we talk about is focus on the ownership and the relationship with the company versus the size of check that you put in. And when you reorient yourself to think that way, we get that only at seed. If you think about the last two years, you know, bringing on Jeanette and La Familia, Yuri and Wayfinder and Niraj and Venture Highway.

• 6:40Speaker 00

  We've tried to really make sure at our core, we remain very committed to doing the seed work with the same intensity and rigor that you do at 20VC.

• 6:50Harry Stebbings?

  Oh, zero rigor here. Oh, no, we're just like blindfolded throwing dots.

• 6:54Speaker 00

  I didn't say a lot of rigor, I said the same rigor.

• 6:56Harry Stebbings?

  Okay, fantastic. I was feeling bad.

• 6:58Speaker 00

  No, but it really, it really, like, it's a genuine comment. Like, we internally talk about early-stage venture capital as a core. And obviously, we want to leverage our core to have greater impact in the world. But if we don't do early-stage investing well, we will lose the right to exist. And we're paranoid about that.

• 7:13Harry Stebbings?

  Do you worry about the transition of venture? Doug Leone said that we've moved from a high-margin boutique community to a low-margin commoditized industry. Do you agree with that?

• 7:24Speaker 00

  If you think about the innovation in venture as a role of technology has scaled, all the innovation, for the most part, ends up being on the three axes: stage, sector, and geography. Make the funds bigger, put them in different geos, put them in different sectors. Well, the reality is that role of the companies that we're building is becoming far, far more sophisticated in society. The innovation in industry was much more focused on how do we deploy more dollars and try to keep as much of the return as possible? Where the reality should be, how do we retool our proposition for founders so they can build the biggest companies possible? So when you think with that second lens, you have to innovate. And you have to think broader than just that sort of fund formation mindset.

• 8:06Speaker 00

  That is what allows you to break from, hey, going from high-margin boutique, so smaller funds, better returns, to low-margin scale, which is bigger funds, lower returns. That's only happening because we're thinking about innovation in a constrained way in this industry versus being first principled about how do we transform our proposition for founders?

• 8:23Harry Stebbings?

  You said that, kind of, bigger funds, lower returns. Do you disagree with that as a premise, then?

• 8:29Speaker 00

  No, I actually have a strong belief that venture capital can't scale and performance at the same time. I deeply believe that. And the reason is because, just because we have more money, doesn't mean there are more Patrick Collisons or... Pick your favorite founder, Sam Altman's, that are going to go build iconic companies. So we're actually, in some ways, fighting the zero sum game of founders that are naturally, you know, going and doing great things. So that's not necessarily going to scale because we have more money. But if we can create more tools to have more founders to scale, then we can actually manufacture more outliers than the ones that naturally exist on the power law. Our mindset is how do we actually expand the proposition to founders so that there can be more companies on the power law?

• 9:13Speaker 00

  That is a very different way to think about it than do we have enough capital to get everything that's on the power law?

• 9:17Harry Stebbings?

  If you accept lower performance with bigger funds, respectfully, Hemant, what do you tell LPs? When you go out and fundraise for early-stage venture funds and much larger funds, is it just a different LP class? Because I'm sure you hear the podcasts and the shows and it's like, oh, they're just pitching sovereigns who just are happy with 10% and so it's graduating.

• 9:37Speaker 00

  Going back to saying that we want to remain early-stage venture at our core, I actually reject being in a business that has lower performance. So what we have done is if you look at our overall assets under management, we've basically said we're not going to make our venture funds bigger. What we're going to do is actually keep the size of the venture fund where we think it can be to create elite performance, which to us is you got to at least deliver four to five X funds on the capital that you raise and sort of build bottom up. Can you do that, you know, in venture? And then we have creation and customer value fund, which are focused on other value propositions, other capital solutions for founders so they can do M and A more effectively, they can

• 10:19Speaker 00

  invest in sales and marketing more effectively, but don't scale the venture fund itself because that'll degrade performance. That is the way we have architected our capital that we provide to founders.

• 10:30Harry Stebbings?

  When you think about where you intersect with them in the journey, as much as I love the, hey, we absolutely want to be focused on seed and build that relationship as early as possible, when you have the capital supply that you have today, arguably, it's a much better proposition to just do a Kleiner and put 100 million into Anthropic at $183 billion and play the large check at late stage. Actually ride that wave.

• 10:56Speaker 00

  I don't think so.

• 10:57Harry Stebbings?

  You don't think so?

• 10:58Speaker 00

  I mean, look, our best returns have come from seeding companies like Stripe and Anduril, or creating companies like Kayak, Livongo and Camer and others.

• 11:10Harry Stebbings?

  Livongo is insane, huh?

• 11:12Speaker 00

  It was. It was a great outcome for us and, you know, that's something we built in our offices.

• 11:16Harry Stebbings?

  How much did G C make from Livongo?

• 11:18Speaker 00

  A few billion.

• 11:19Harry Stebbings?

  How big was the fund?

• 11:20Speaker 00

  So Livongo sat in two funds. It returned one of the funds approximately three or four X and it returned one of the other funds maybe close to one X.

• 11:29Harry Stebbings?

  Is that the best performing investment G C have made?

• 11:32Speaker 00

  I think you would have to give that to Stripe still. We've been invested in Stripe since 2010. That's a big position for us. My point more is for us, we obsess over either that the companies are getting incubated at G C or we're investing in the seed round. If we don't, we want to be in the iconic companies. We will invest in them at growth stage as well. And that to me is about believing in the companies that you think will compound for a long time. So like, take Stripe as an example. We invested in 2010 and I've invested in Stripe 14 times in the last 15 years, just to give you a sense, okay? That's one of our core philosophies, that when you think something's going to be compounding for a long time, be strong sort of supporters of the company along the way. We invested in a Helsing, you know, Jeanette has seeded that, if you remember before.

• 12:16Speaker 00

  And we've invested that in all the rounds that they've raised since then. If you look at Anduril, same thing. We seeded that and we invested in every round that they've raised since then. So I think being part of these iconic companies and supporting them along the way is the reason to have the capital base. If we miss them at seed, we want to catch them as early as possible and then continue to help them with everything we got, our entire proposition as a platform to, you know, support these founders and help them all over endurance.

• 12:40Harry Stebbings?

  Can I ask, when you're at your scale, do you map out the industries that matter, the companies in them, and go, we have to have a check in these regardless of entry? Is that how you kind of map markets and capital injection?

• 12:53Speaker 00

  The business for me is about sort of getting serendipity and intentionality right. So you definitely won't know the industries that will become important in the future. I'll never forget that one of my big misses when Paul Graham. Asked me to look at the seed round of Coinbase and I said to myself, a Bitcoin ATM? What is that? Had no idea what this industry was about to become. I mean, it still haunts me. At the seed being very much focused on just backing the great founders and not over in textualizing what the returns are. And this is really culturally what.

• 13:23Harry Stebbings?

  Did you meet with Brian?

• 13:25Speaker 00

  Yeah.

• 13:25Harry Stebbings?

  Did you think he was amazing?

• 13:27Speaker 00

  He is amazing.

• 13:28Harry Stebbings?

  So it was purely the idea that you could.

• 13:30Speaker 00

  It was my, my, my little brain got ahead of sort of thinking about the world. And so my point was you definitely want to at the seed not be industry focused to say, we're going to back founders regardless of our view of the world. Then I think the reality is if you think, if you take a step back in the world and you think about the tectonic shifts that are happening, the theme that we call global resilience, that every region is focusing on defense, energy, industrials, health, financial services, how to be resilient from a sovereign perspective. That does have impact on industries. That does have impact on how businesses are going to get built. So we do look at it saying, are we in the right companies in the context of how the world is reshifting in the context of industries? So as an example, I'll tell you, I think we're the only firm that's invested in a

• 14:14Speaker 00

  defense prime in US, Europe and India. We did Andro, we did, you know, invested in Helsinki and we invested in a chemical Rafi in India. Well, each of these regions needs to create its own AI deterrent solutions and they want to see indigenous industries emerge, you know, from a resilience perspective. So we should make sure we're backing that theme. So I think it ends up being be brave serendipity, be humble, that these founders are going to take us in the world in a way that we just don't understand. And then be intentional where we think there are large macro shifts happening so that we can play certain sectors with a bit more of a thematic lens.

• 14:49Harry Stebbings?

  What do you think is the most significant macro shift today that not enough people are talking about?

• 14:55Speaker 00

  The most significant macro shift today that not enough people are talking about is thinking about jobs. I have gone around the world, you know, we have a real focus on understanding how to help governments think about transformations. And the transformation of any country, we think is in four parts. One is, how do you apply AI to deterrence? Because without peace, you don't have capitalism. And if there's no capitalism, then business can't really be a change vector. So you need peace. You need to think about transforming healthcare, because we just came out of a pandemic and we saw what it can do, and we're still reeling from it. You need to accelerate diffusion of AI into business, because that's ultimately what's going to lead to your industries being competitive. And then, if you get all that right, you have to think about jobs, because there is immense

• 15:39Speaker 00

  reskilling that needs to happen. People are starting to give lip service to it, but it hasn't hit people yet. We were talking about this earlier, we have a lot of these AI transformations we're doing of these service businesses, these AI rollups, as they're called, and I'm seeing this. I'm seeing what's going to happen to jobs as AI gets adopted to bring efficiency and productivity to these white collar jobs all around the world.

• 16:00Harry Stebbings?

  What are you seeing there? Because the MIT study was discouraging. It's like 95% actually doesn't actually have much impact. And I read them, I'm like, God, this is a bit of a downer. So what are you seeing?

• 16:11Speaker 00

  Okay, I do think there is merit to the MIT study for the following reason. When you think about transforming an enterprise with AI, you actually have to do four things correctly. First is, you have to get your data infrastructure ready, so that your company can adopt AI. Your data readiness is huge, infrastructure readiness is huge. Second is, you need models that understand your business. You have to train these models in the context of your secret sauce, your business. Third is, you have to think about a workforce transformation, because now you're going to have humans and you're going to have AI working next to each other. Some humans are going to manage AI agents, some AI agents are going to manage humans. Imagine how the org chart has to change. And the fourth, for all this to work, you actually need courage at the top. The CEOs need to really get behind it to drive it.

• 16:52Speaker 00

  So the idea that all four of these things are happening in a company to make the adoption of AI go from beyond just prototyping an OpenAI or an anthropic model to really creating change in your business is very difficult. That's why these things are hitting a wall, but that's why this MIT study is giving you the signal that it's giving you. One place where businesses already outsourced and let go of core operations was wherever they wanted to get labor arbitrated over the last 40 years. So our whole thesis around AI rollups was everywhere you offshored for labor benefit, you're going to onshore for AI productivity. That's where we're seeing a lot of this. So we bought call centers. I'll give you an example.

• 17:32Speaker 00

  We bought a call center in Philippines, 3,000 employees in one of our companies called Crescendo. It's going to have a huge change in the set come. It's going to go on quite a bit as this fully gets AI enabled. My first question to the team was, well, what are those people going to do in Philippines? And how many are there? So every country that built their middle class off of offshore labor, how do we really help them think about reskilling those people to be more successful in the world of AI? This is what's not being talked about enough.

• 17:57Harry Stebbings?

  Do you think this is a 12 or 18 months problem? Or actually a five to 10 year problem? I always go back to the Bill Gates. We underestimate, you know, the overestimate a year, underestimate 10.

• 18:05Speaker 00

  Is this adoption of AI into businesses going to be fast over 12 to 18 months or five to 10 years? I would say this is a five year problem. And I say that because if you go back and think about the physics with which these companies are getting built, the companies we're building, you have to put these teams together and they have to go get some customers. They can demonstrate progress on them. They have to start accelerating growth. Only after a few years of that, do you start to make a dent in the industry enough that it becomes a problem. And so just the diffusion has of technology has its own physics. So it's not immediate, but I, but five years is also not a long time. And so what I'm seeing is that these companies, enough of them are going to start being successful in these different areas. And they're going to start impacting jobs in a material way. I'll give you a really interesting anecdote that the CEO of one of the large consulting companies told me.

• 18:50Speaker 00

  One of their big clients came to them and said, we have 50,000 employees today. Draw up a plan for us that in five years, we are 100,000 employees. But only 10,000 of them are humans. The rest are AI agents. This is to be provocative, but they're sort of saying, if that was going to be our plan, how do we get there? This is the kind of stuff people are thinking about. Now, it's not going to happen in the next five years. But are organizations going to potentially change that much over the next 10 to 15 years? It's a non trivial probability that can happen.

• 19:18Harry Stebbings?

  That's a very forward thinking CEO and business leader. To what extent are governments prepared, thinking and equipped for this labor change that could be there within a five year period?

• 19:29Speaker 00

  I think not enough. I think people are still grappling with what does AI really mean? How fast is it going to diffuse? They're not even thinking enough about reskilling. But I'll leave you with sort of one interesting thought on this. Particular topic, we're in London today, okay? Imagine if every nurse and every lawyer and every accountant that works in London becomes a AI agent of some company in the United States in the next 10 years. You're going to hollow out a lot of your labor productivity and give it to a US company or a Chinese company. What I would, my point is more about like, it could actually hollow out the service sector, just like we hollowed out manufacturing jobs for globalization before. Getting every region to think about this, this is actually a point that, you know, Jeanette makes with her European Champions Initiative a lot,

• 20:12Speaker 00

  which is how do you retain productivity onshore in these countries? So that while you do the AI transformation, you're maintaining vibrancy, not only because your businesses got more profitable, but also because you're capturing the productivity gains onshore as well. The governments need to think about this as they are architecting this sort of next phase of their transformation with AI.

• 20:32Harry Stebbings?

  Which government do you think is most impressive and which is most screwed?

• 20:36Speaker 00

  I find folks in Singapore to be very impressive. I recently went there and I spoke at their National Singapore Day, and I was just blown away by the depth of thought that the politicians there have done. I have to tell you, Prime Minister Grease is very impressive. He's thinking about how do we really be pragmatic in deploying this. So I've met with Prime Minister Starmer here. I know there is some announcements being happening that this week as well around AI. So I know they're making some moves, but I don't see enough of the hey, let's think comprehensively about this. The answer I usually get when I talk to heads of states about diffusion of AI and this jobs issue that we just talked about is they have belief that if it's going to be that disruptive, that society will just slow it down.

• 21:16Speaker 00

  You, you just can't have a world where, I know in Silicon Valley, we covered a billion dollar employee with a company with a single employee, but you just can't have a world where that's what business looks like and people have no work. And so at some point, the interplay of business and society will sort of force it to be a more stable scenario. That's what the governments are sort of taking faith in.

• 21:34Harry Stebbings?

  That's true. I think Adam Smith's invisible hand would tell you otherwise.

• 21:37Speaker 00

  I think market forces are way stronger than, I agree with you. But I'm thinking that's a little bit of what they take comfort in is that we have time to figure this out. And I don't think we have time unless we're a lot more intentional about it.

• 21:47Harry Stebbings?

  I vehemently dislike government intervention. I'm like as free market maximalist as possible. Is that the same for you?

• 21:55Speaker 00

  I think you can't make progress if capitalism is not working. But I do think capitalism is a privilege. If you think about what happened in the last 15, 20 years, a lot of the nationalism all around the world is because. Social media essentially struck a chord with the core issue that all the technology productivity didn't really get passed on properly to everybody in society. It created multiple multi-trillion dollar companies, but our own innovation ecosystem, how much did that capture and how much does society really capture? Actually, a small percentage. We look back and say, wow, venture capital, there's been a real boon in the last 15 years. But when you look at the overall value created in venture compared to the Mac seven, it's noise. And so are you really creating a world where there's opportunity and capitalism can kind of do its thing?

• 22:40Speaker 00

  You have to make sure you protect that. That part of it, I do think government has a pretty role in. Beyond that, you gotta be very free market oriented, let bottoms up innovation, stuff that you and I do, let it go create the future. I mean, that's what you want to see.

• 22:53Harry Stebbings?

  Do you worry about the ever increasing inequality of wealth? It plays in our favor in a lot of ways, but I look at so much of the next 10 years and I just see the concentration of wealth to very small networks and I get very worried.

• 23:07Speaker 00

  I am worried about that. The whole idea of can we build these companies that can focus on being the most profitable, the biggest, but also in a way that they're inclusive? That's something that I think a lot about. There's this moment, if you think about the last five years, we've had wars, we had a pandemic, we had a situation where because of wars, we actually, US kicked Russia out of Swift. So financial infrastructure got questioned, every part of our energy crisis happened, every part of our corporate society where capitalism maybe is starting to break, all sort of manifested over the last few years. And then AI comes along as an answer to all this. So now the choice we have to make is are we going to build these businesses in a way that the value accrues to very, very few? Or can we actually do it with a mindset of abundance where everybody benefits?

• 23:52Speaker 00

  And that's a choice that we have in the way we set up the companies of the future. And I do worry that if it's not a mindset of abundance, then that's not sustainable in the very long term. We won't feel that in the next 10 years and you and I will make a lot of money. Our funds will do great and our partners will generate great returns, but what do we create on the other side? And I think that's the thing that we have to think hard about.

• 24:13Harry Stebbings?

  Is it actually a choice? If we think about, say, your OpenAI, your Anthropic, you know, I know you're an investor in Anthropic. You know, when we think about the value that they generate, those returns will go to a very small handful of people. Is it a choice that we're concentrating the returns and wealth?

• 24:28Speaker 00

  I think about innovation in AI in two parts. One is every region's starting to figure out how to become leaders in core infrastructure and we're racing to it. And there's not going to be many, but there weren't that many clouds. There's not going to be that many AI model companies that actually become at scale and potentially be even bigger than what these cloud companies became. I think that's current course and speed. That's probably what's going to happen. What happens on top? What's the ecosystem we're building and how it interplays with consumers across the board? What happens to healthcare? What happens to education? How are we thinking about those things? Is there a level playing field so there can be a vibrant, diverse ecosystem that gets built on top? That's what I think a lot about. So, for example, is the Amazon of healthcare going to be an ecosystem, lots of companies, and sort of a more resilient system? Or it's going to be like some company that comes along

• 25:13Speaker 00

  and that just controls healthcare? The latter is not good for us. And so how do we create a level playing field for startups, for founders, so that opportunity can manifest into new, successful businesses everywhere versus this going to be a few concentrated ones? I think that, to me, is the place where policy has to create conditions where it allows for opportunity for many as opposed to opportunity for a few. That's the role governments can play, you know, when it comes to technology.

• 25:38Harry Stebbings?

  I've been very public on my concerns around the Labour Government in the UK and what it's done for the UK so far. The fastest access of millionaires out of any country. It's terrifying. Are you more bullish on the future of the States with the Trump administration or not?

• 25:53Speaker 00

  My belief is that US is very well positioned. We have energy, we have AI, we have the largest market, we have the largest entrepreneurial ecosystem. In a lot of ways, we're very well positioned. And I think in the short term, in some ways, we're actually increasing our moats. If we really focus on everyone investing in the US and creating, you know, more capital and whatnot. When we fund companies, whether it's in Europe or in US, I always think about it as, hey, you need to go win your market and then you need to become a global leader. And the thing I worry about in the US today is mostly what is the sentiment and the appetite of the world to embrace companies coming out of the US and let them be global leaders? And I think that's where there's going to be work to do because we're doing this

• 26:34Speaker 00

  one-time reshift with tariffs and everything on, hey, we need to realign commerce and trade. But we were also the keeper of the world order in a lot of ways. And as we are disrupting that, what is the relationship going to be with European countries? And how well positioned would the American companies be to be global leaders? That's the place where I think rubber meets the road. In our ecosystem, we're talking about sort of companies funded in our world founders. How will they become global leaders, given that there'll be more friction? That, to me, is the place where, you know, there'll be some challenges.

• 27:03Harry Stebbings?

  When you walk around London now, as I do with my mother every weekend, all we see is Anduril posters on the sides of buses and on the sides of bus stops. I always send it to Matt Graham, like, thank you for decorating London with American posters, which actually look incredibly British and wonderful.

• 27:20Speaker 00

  By the way, I love your post with your mom. I think that's a great thing that you do every weekend. And I enjoyed your last post about breaking the idea of 90% of your time you spend with your parents is before 18. That was an amazing, insightful comment.

• 27:32Harry Stebbings?

  I find it incredible that people just accept that. And it's like, you could change that. I really appreciate that. But when we go to that, you know, when people become global leaders, the element that's inserted is competition. Because when you back multiple geographic leaders, suddenly Anduril comes into Helsing's path. Is the age of not having competitive investments over? And when you're at your scale, do you just have to embrace that you're going to be in multiple players in the same space?

• 27:57Speaker 00

  Look, I think when we invest in these companies, we always want to see that they will be the leaders in their own market. We have a lot of confidence, Helsing, with this mission, its execution, its access to capital, talent, should be the company that gets disproportionate share of defence in Europe. Anduril is doing that in US. We think this company, Rafi, is going to do that in India that we invested in. And then they should go and be competitive in the global ecosystem. Also, I actually think maybe there's a New innovation and partnerships. We have not innovated partnerships ever. It's sort of the same boring old metaphors. And the question is, could these companies all think about engaging? It's not what's happening yet, but are there these resilient ecosystems that get created? Where they have special advantages because of where they sit in which ecosystems?

• 28:42Speaker 00

  And they can leverage each other to gain more global share as well. So I'm sort of very keen to see, while on one side, we've created some structured inflation because of the need for global resilience. On the other side, I am curious, is the playbook going to change in how you become market leaders in this next phase?

• 29:01Harry Stebbings?

  You mentioned kind of on the geo side, it's like it's race for infrastructure. And I find there's this often rhetoric that's like, hey, it's China versus the US and it's the war for AI. Do you agree with that race for AI? Is there a destination? Is there a winner? What does that mean?

• 29:17Speaker 00

  The way we see it, we are in a bipolar world for sure. Despite all the recent turbulences around tariffs and relationship between the different regions. US, Europe, India, very aligned in terms of core values. And I do think it's going to settle down to be a place where, you know, AI gets developed to be the common set of values. I think the Chinese system is different. And the race to me is only in the context of which AI is better? Because capitalism will force the adoption of that. Think about DeepSeek and the open source models that have come about. Out of China, people are using them in the US because they're better. Now, the question is, which AI ends up? And there's not much difference between the, I think China and US are very comparable in what they are in AI today. There's a few months lead here and there. I'd even argue there's always a second mover advantage to people building on top.

• 30:02Speaker 00

  So I think they're pretty comparable. It is important that you see AI infrastructure in the West, gain market share in businesses and be more pervasive. It's equally important to make sure it's done in a way that the compute productivity is captured on shore and each of the geos. So it doesn't leak from a lot of the places to sort of a single company or a single country. Because that creates imbalance. You want to be inclusive and abundant in your mindset with AI creation. But is the competitive dynamic something we need to worry about in terms of companies coming out of US versus China? Yeah, that's driving a lot of where the value is going to be, what our ability to compete globally.

• 30:38Harry Stebbings?

  In terms of second mover advantage, really interesting element. Do you primarily believe that just because of distillation? And the benefits that we saw DeepSeek have as a result of being second?

• 30:47Speaker 00

  You're seeing this in different use cases. Take customer support, for example. When new models come out, if you start building your company when you were in the chat G P T three era versus four versus five, you just have more tools at your disposal. So the go to market advantage you may have created in a year having started on G P T four versus five might be anemic compared to the technology advantage that you have if you start in the G P T five era, the choices you make and how fast you can move because the models are stronger because it's like you're getting this potent force, unfair advantage. And, you know, are you really going to sort of rearchitect everything you didn't take a step back or not because you actually have good momentum? So what's happening is that the good and greater companies getting created with each new model and the model companies that start later end up, you know, having some advantages

• 31:32Speaker 00

  because of technology. And the question is, can you not be bogged down by technical debt, even though technical debt used to be on the order of a decade of coding, not a year of coding? Can you actually overcome that and make sure you remain well positioned on the new sort of technology stacks or not? That's the advantage that I think second mover companies could theoretically have in these different verticals.

• 31:54Harry Stebbings?

  You mentioned kind of the evolution of models there from phase to phase. Anthropic is a big position for you. Can you talk to me about your first entry point into the company and the thesis that you had on first entry?

• 32:05Speaker 00

  Look, we invested in Anthropic only, you know, less than a year ago at the $60 billion round where we saw that the use case around coding was becoming an interesting application that was going to distinguish them. These models started to become distinguished. Obviously, everybody wants to do everything, but OpenAI is, to me, is more of a consumer company with chat G P T. I know they have enterprise ambitions, Codex, etc. I get it. And Anthropic kind of became an apps company in the cloud world with, you know, with coding as a use case, and we're showing really good traction. That was a time for the first time we felt, are we really betting on these companies with tremendous valuations, tremendous burns, tremendous dilution towards some abstract A G I goal, or they're actually going to be businesses? So I actually think risk adjusted, that was the round that was interesting to do as

• 32:50Speaker 00

  a, somebody who studies investment decisions in companies, say, where did people get lucky? And where they actually make a great call?

• 32:56Harry Stebbings?

  Why do you think? That was the round that was the best.

• 32:59Speaker 00

  Because that's when the use case that was going to draw them in and build a relationship with the enterprises became very clear and could scale. And it has, when we invested.

• 33:08Harry Stebbings?

  What was their revenues?

• 33:09Speaker 00

  It was at the end of last year. So it was, I think it was under a billion, if I recall. And they're going to, they publicly said that they're going to grow nine times that. That's not the forecast we modeled. I mean, they've done way better than we thought, which is amazing. It's an incredible team, very values oriented, very execution focused.

• 33:24Harry Stebbings?

  How much do you put in at sixty?

• 33:26Speaker 00

  Uh, we put in a few hundred million.

• 33:28Harry Stebbings?

  Few hundred million. And then you do another few hundred million at one eighty?

• 33:32Speaker 00

  I think you would. By the way.

• 33:33Harry Stebbings?

  I do too.

• 33:34Speaker 00

  I would actually argue.

• 33:34Harry Stebbings?

  It was five X oversubscribed.

• 33:36Speaker 00

  Anthropic, this round probably was the cheapest round I got done this year on a multiple basis. Which company was raising capital at twenty times A R? They're all raising capital at fifty to a hundred times A R. At a scale that's like ten times bigger than any of those companies that are raising capital. So like risk adjusted, if you think about it. And I should say it risk adjusted carefully because durability of everything in the model is highly unclear. So in that cohort. I would say that was the best price round you could have done. I'm not surprised it was five X oversubscribed.

• 34:06Harry Stebbings?

  Dude, risk adjusted. Fuck it. That went out of the window years ago. Welcome to venture.

• 34:12Speaker 00

  I eat risk for breakfast. So I'm with you.

• 34:15Harry Stebbings?

  That is the caption for it. When you look then out, do you put another few hundred million dollars into the next round?

• 34:21Speaker 00

  Depends on how the business does and depends on how they're expanding. But when you get into growth, you have to be very fundamental focused on actual economics, revenues, margins, profitability, scale. This market size for these things is endless. Five hundred billion dollars. A payroll is developers in the world. Probably, I think it's about ten trillion of like white collar jobs, if I have that generally correct. It's an insanely large market and you're naturally well positioned to be one or two or three players that's going to go capture it. So if you believe that, this company could be ten to twenty times bigger from here and it's well priced even at this valuation. If it keeps on that trajectory, of course you would want to invest. Who would not want to invest?

• 34:58Harry Stebbings?

  Yes, but you also then look at the information did this incredible chart. I don't know if you saw this pie chart yesterday with OpenAI's distributions or kind of with the value. And one percent, I think it's like five billion.

• 35:09Speaker 00

  Yeah.

• 35:10Harry Stebbings?

  Is to early investors.

• 35:11Speaker 00

  Yeah.

• 35:11Harry Stebbings?

  And you look at that and I thought, my word, well done founders and team. This is the greatest transfer of wealth from venture capitalists to founders and team members. When you look at the employee stock-based comp that's going out now, this is the greatest transfer of wealth ever. Is it actually a great investment when you look at the dilutive nature and cash burn of these businesses?

• 35:29Speaker 00

  Well, I think OpenAI, I saw that early round, you know, Sam's a force of nature and I've said this publicly. I mean, the guy can bend reality and he has, it's changed the world. I just couldn't get my arms around the structure. If those numbers are correct, I don't know if they're entirely correct. You would say at five billion, the $200 million at the billion dollar round only generated 25X. Our best companies like Livongo and Circle and others, you know, Stripe and others, our first rounds were not 25X. They were hundreds of X in terms of returns. So, so I agree with you, dilution took a huge toll here, but for two reasons. One is because that structure led to, hey, nonprofit needs to be given a share. And the second is the compute that was needed to make this happen. The first one to provide that compute was Microsoft and they had a lot of leverage. That was a good deal for Microsoft.

• 36:12Speaker 00

  They made a huge amount of return because without that, this was also, there was never going to be a company. So I think it's just the sequencing of who really took the risk, sort of risk-adjusted with capital. Microsoft maybe took more risk in a lot of ways and they did benefit. And then there was, so the dilution comes from a lot of that dynamic as well.

• 36:28Harry Stebbings?

  How do you analyze that relationship with Microsoft? Cause speaking of Anthropic, you know, Microsoft have now openly said for the majority of suite, actually they're using Anthropic.

• 36:36Speaker 00

  Yeah.

• 36:37Harry Stebbings?

  How do you analyze that relationship?

• 36:39Speaker 00

  Well, I think that relationship was, if you remember when that was done, everybody's society was brilliant. Like that was an incredible way to essentially buy innovation. It's like what biotechs do, right? Like in pharma companies do, bought innovation in AI because the internal efforts maybe weren't as, as productive. And gave them the halo effect to be the leading AI company, gave them an entry with Azure. Azure's had a huge draft because of OpenAI as well. And, you know, they have really gained market share in the cloud industry as a result. So that was an amazing investment for Microsoft. Is that an enduring investment? No, obviously now they've gone at odds with each other because there's an ambition that collides between the two companies. And so they want to have more choice. They want to have Anthropic at the table as well. That's just normal, good business thinking. I get it. Taking that bet was hugely valuable for Microsoft.

• 37:22Speaker 00

  And if you look at the return, by the way, if they put in 20 billion, they're the ones who have the highest multiple return as well. So it was a great investment on a financial basis and way more on a strategic basis.

• 37:33Harry Stebbings?

  As an anthropic holder, do you worry when you see Sam talk about, we're going to need to spend hundreds of billions? And then you see his deal with Oracle, where both of them are going to need to be levered up to the hills to be able to finance it on both of their sides.

• 37:47Speaker 00

  Look, never bet against Sam, but I feel like he's doing a lot of things and he's doing it in every single dimension, right? The phone, the data center, the infrastructure and all that. I think Anthropic is a much more focused, kind of a product oriented company. They have not taken as much money to get here and to this size as well. I think their enterprise business, I'd argue, will be bigger than OpenAI if it already isn't already. Capital is a lever, but it's not the only lever. I think execution matters. And one of the things I've learned and Arthur at Mistral really taught us about this, which is you can waste a lot of compute too. So I think a more focused team with a focused agenda, you can probably get there much more effectively. And I think Anthropic seems to be doing that, being very targeted in the bets they're picking and doing them really, really well.

• 38:29Speaker 00

  I'm a big believer that that leadership is really maturing to be excellent company builders. I mean, Dario, just think about that person a few years ago, it's running research and the kinds of choices he's made and the kinds of choices, both in business and for society. And how they've scaled and the bets they've made and how well they've paid off every step of the way, the thing, the products they've launched, it's like really impressive. And, and that's why the investors there will probably end up doing on a multiple basis better than, again, you know, in a world of like what's durable, what's not, like they're trending to be, maybe they'll do better. In their MOI than the early investors would in OpenAI, if that math is correct, the one that you were referring to.

• 39:07Harry Stebbings?

  The hard thing is that growth is great until it's not great. And at some point it does reduce and reduce and one billion goes to nine billion, which is insane. I mean, nuts, nuts numbers that we've never seen before. And what is it next year? Twenty seven? Which would be three X, which would be great still. But at some point, growth does reduce and then. And there's the core business that sits beneath it. The thing that I worry about is our ecosystem today is so.

• 39:33Speaker 00

  But hey, can just interrupt for a second. Let's say it's twenty seven. I don't know what the numbers they have shared and they've always done better than they've said, by the way, too. But let's say it's twenty seven.

• 39:40Harry Stebbings?

  You're not also anthropic CFO, not, not, not a spoiler alert.

• 39:45Speaker 00

  I got a caution. But if you think about it, that business, which will still grow two hundred percent to go from, let's say, nine, let's say nine's number this year and twenty seven. That's tremendous growth and you put any multiple on that, that is a very valuable company. Think about tech technology multiples on that kind of good. That's a really valuable company. Significant headroom because the market size is so large even from there that they can maintain good growth. Doesn't have to be this crazy growth. But they only price it at twenty times this year's error. So twenty twenty times twenty seven.

• 40:15Harry Stebbings?

  What is twenty times twenty seven?

• 40:16Speaker 00

  Take the same multiple, you know, which you could get in public markets with.

• 40:19Harry Stebbings?

  Five fifty?

• 40:20Speaker 00

  Something like that. My point is that, so that's half a trillion dollar company, like by the end of next year. I'm not saying that's what it's going to be, but if they hit their numbers, I don't see why. That won't happen. Just I'm just saying public market comps, like that's what those things are going to be valued at.

• 40:32Harry Stebbings?

  I completely agree. Does margin not matter anymore today?

• 40:36Speaker 00

  Margin matters absolutely. And I actually think that's another place where they've done a good job. The reality is that. When you think about the ROI in the coding space, you're doing the work. Coding agent is essentially a replacement of engineering, right? You start with low end sort of engine junior engineers to more senior engineers. Even a junior engineer makes eighty to a hundred grand a year. So your pricing power there is actually pretty significant. And if you're truly doing that kind of work. Margins are not going to be an issue and margins already are not an issue for anthropic. They have a good command. They've been very disciplined about how they've they built their business.

• 41:09Harry Stebbings?

  Do you worry about the competitive nature of the landscape when you look across at codex, but then you've also got your cognitions? And then you've also got your curses and you've got your kind of on the low more consumer, your, your lovable, your rat plids.

• 41:21Speaker 00

  Great. I'll take you back to the clouds. You could use the same logic on the clouds to be like, hey, they're going to get commoditized. You'll have three, probably three big telcos in every geo, probably three big clouds, probably three big AI models and just, you know, I'm just sort of empirically saying that. Think about the margins of the cloud companies. Like seventies. I do think these companies will all figure out the margin structure really well. And at scale, because there's so many different ways they can add value to hold on to that margin. And they're all kind of getting specialized into like different areas where they are going to be doing that.

• 41:50Harry Stebbings?

  There are, but there's only three cloud providers, really.

• 41:52Speaker 00

  Yeah.

• 41:53Harry Stebbings?

  And when we look at the plethora now that we have in terms of.

• 41:55Speaker 00

  Today, today, but I think that's going to shrink. I don't think everybody's going to make it and then.

• 41:59Harry Stebbings?

  So you think it's going to be a real shrinkage in those.

• 42:01Speaker 00

  I think you'll have a couple of global ones and a couple of sovereign ones in every geo. That probably is what'll end up sort of happening in in AI, in my view. Not everybody's going to make it. You have a lot of other models that have been funded. Different approaches as well. We'll see what happens to those. Is there like a new architecture that emerges? But it's not going to be that many. But think about the size of the market. You're talking about the labor market is the AI market.

• 42:24Harry Stebbings?

  So you buy that massive sun. Hey, there's a ten trillion dollar labor that GDP up for grabs. And if we capture two trillion of that, game on.

• 42:33Speaker 00

  I don't see why not. I don't see why technology is not going to do most of that work we do in companies better than humans do. Which going back to your earlier point, market forces will take us there then. It'll be cheaper, it'll be faster, it'll be better, and it'll give the businesses more leverage. So I think that's a real trend we're going to head down the path of.

• 42:49Harry Stebbings?

  The economy is so on the AI hype wave, or not hype wave, but like AI momentum wave. Because a lot of it's not hype. And when you look at the concentration of like shareholder value accumulation. It's just solely predicated on Mac seven pretty much at this point. Do you worry that we hit a speed bump? And when we hit a speed bump in the AI train, I mean, literally the world kind of crashes. Given how much is predicated on that, or do you think that just won't happen because we are on such an exponential upswing?

• 43:17Speaker 00

  I don't think it's going to be that it's a speed bump that spirals us down. So for the simple reason that with every new model with its capabilities, there's a certain amount of that content of white collar jobs. The ten trillion that you mentioned, that is now doable. And what the speed bump is not going to reverse that. So I think I have this sort of visual in my mind where. We're kind of cumulatively taking more and more of the labor content and AI is better than us in more and more of it. And over time is going to be most of it. And when robotics comes, it'll be all of it. And so in that context, you know, a lot can be already be done. We have the energy, we have the compute to be able to support that. The question is. The really frontier stuff, what are we going to do with that? And I think you could see speed bumps there. The speed bump could be that the architecture doesn't scale and you need.

• 44:01Speaker 00

  These world models to take on or some of the new architectures people are developing that are non-language oriented that could maybe would be needed. So I think the frontier could slow, but I don't think this transition of labor or melting of labor into productivity is necessarily gonna slow because the economics are way too compelling for that to not happen, in my view.

• 44:18Harry Stebbings?

  You mentioned geo winners in some respects. You mentioned Mistrala. I love Arthur. I think the world of him. I'm obviously a proud European. A lot of people are going, huh, it feels like they've been left behind, calling a spade a spade. Do you think sovereignty is enough of a reason for Mistral to be a winner?

• 44:35Speaker 00

  It's a great question. So Jeanette's on the board there and we talk a lot about it. We've had many conversations and meals with Arthur about this as well. I look at that company and I see Arthur's growth from a scientist to a CEO. And remember, it's a two-year-old company.

• 44:50Harry Stebbings?

  Do you want to hear a funny story?

• 44:52Speaker 00

  Yeah.

• 44:52Harry Stebbings?

  I got introduced to him by Jean Charles at Alain.

• 44:55Speaker 00

  Yeah, sure.

• 44:55Harry Stebbings?

  And I was the first VC he ever met. And he took a video call with me on a pub bench in Paris. And I said, dude, I'm gonna give it to you straight. I've never had such a bad pitch. And you are competing against Sam Altman, the mother of all fundraisers. This is not gonna end well. And now I see him pitching and I'm like, well, fuck, he changed.

• 45:15Speaker 00

  He changed. But I think this is the point. Not only in his ability to aggregate capital, he stayed focused on doing really disciplined work in the way to build models. And I think they were a compute constraint and capital constraints, so they fell behind. But I think they've caught up. Like, everything I hear now is that their models are now against sort of their investing. He's figured out how to aggregate capital. I mean, you saw that. He's also figured out that his relationship with customers needs to be a lot more commercial than if you build it, they will come. And so I am bullish on what they will do, even though I was anxious about it, because he and his team are growing up. I think they're learning how to be in this competitive world. And by the way, there were no, if there were two companies not existing in this world, OpenAI and Anthropic, you said this is the hottest startup in the world in terms of how fast they're scaling and what they've

• 45:59Speaker 00

  accomplished and their valuation and progress. It's just you have the overhang of these two monsters that the flywheel going with capital and products and so on. And that's why we say this is interesting. I actually think they'll build a pretty compelling business. I see a lot of interest from companies in Europe but all over the world that want an open source player. Like, who else is truly dedicated to open source that is doing it in a way that enterprises care? It's not meta. They're not an enterprise company. In the West, it's really Mistral today.

• 46:27Harry Stebbings?

  Can you name to me success stories where sovereignty was the number one driver of their success?

• 46:33Speaker 00

  All the US defense primes were built off of sovereignty. We were the biggest allocator of spend in defense and that's what Lockheed Martin and Raytheon and Boeing, that's a lot of what it was. And then sovereignty also dictated who and which countries they sold to and what now the State Department gets involved, but like it was all dictated by that. I think AI is that strategic a technology.

• 46:53Harry Stebbings?

  Does revenue growth matter anymore? You know, we just had the founders of Merkur on the show.

• 46:58Speaker 00

  Yes, we led the seed there.

• 47:00Harry Stebbings?

  I know, that's Max, no? Yeah, one to 500 million in 17 months.

• 47:05Speaker 00

  Unbelievable.

• 47:06Harry Stebbings?

  Well done, thrilled for you. Does it matter anymore though? Because every week there's a new one to 100, one to 500.

• 47:14Speaker 00

  The internal conversation I had about this was, of course it matters, but the normal has changed. When we did some Sara and Gusto and some of these group companies, they were like, yeah, yeah, triple, triple, there you go, triple, triple, double, double, right? You look at these companies and say, wait a minute, going from one to three to nine to 27 is not interesting, or one to five to nine to 27 is not, whatever the math is, not interesting. You gotta go like one to 15 to 20 to 100 and they're all on a revenue basis more interesting than the stuff we thought was the most interesting five years ago. That speaks to the way value concentrates in the hands of a few companies. That speaks to the fact that these technologies underneath are so high leverage that they're potent in making these companies grow fast when you actually get a product right. That's what's going on.

• 47:59Speaker 00

  Durability is a question, like the thing that's unknown is, you know, we never had so much scale without kind of just taking durability for granted. And what's the question that we all grapple with today? Lowable is an amazing company, Anton's on a great job. Is that going to be around? Merkur is an amazing company. The people that are naysayers, that's what they say. The people that believe in it, like, you know, we have a huge conviction in Merkur. We think this, you know, we have our own thesis. So it's sort of, everybody's kind of grappling with this and we all have our theories and some people will get lucky and I do think some of these companies that grow really fast in this will also not be around.

• 48:32Harry Stebbings?

  So funny, I'm very good friends with Rory O'Driscoll from Scale, who I think is one of the most brilliantly strategic. But

• 48:38Speaker 00

  To SaaS OG.

• 48:39Harry Stebbings?

  Yeah, exactly. And I learned from a lot. And he said, like, the go to market is fundamentally changed in a world of AI, where bluntly, it's a case of you just go into a market, scream the loudest in the room, gain mind share and deliver from there. Your Harvey's, your A bridges are great examples of that. Do you agree with that?

• 48:56Speaker 00

  So if you look at Harvey or who invested in Lagora and Yudia, take the legal space. It's not just that they screamed the loudest and they wanted. I think the interesting thing that has happened with AI, I want to go back to sort of one important observation, which is for the first time, every CEO in every industry in every country is thinking about what do I do with this technology? Never happened before. Cloud wasn't like that. Certainly PCs weren't like that. Internet wasn't like that. Everybody's like, what do I do with this? Right? So all of a sudden, in every department, people popped up early and they got to go around and there was resonance with the customers. There wasn't as much evangelism for the earliest companies. Everybody just wanted to engage. So that's why these companies got initial momentum so fast.

• 49:37Speaker 00

  But then I want to go back to my second mover advantage. But some of the ones that have started after had a chance to take a step back and be like, oh, wait, there's a better technology now. And I think we've learned the proposition needs to be better. The initial diffusion in the zeitgeist was really fast. But the actual deployment, to my earlier points, was like, you know, people are like, well, how do we really use this? And that's where now this next generation of companies are coming out just more sophisticated at that. Is the early mover advantage in some of those companies really going to take hold or not? I think it remains TBD.

• 50:04Harry Stebbings?

  So when you look today, it's triple, triple, double, double dead.

• 50:07Speaker 00

  Triple, triple, double, double is definitely dead. I tell our investors, don't bring that to me.

• 50:12Harry Stebbings?

  What do you do with the generation of SaaS companies you have? I hope you have it because I have it. They're good companies.

• 50:18Speaker 00

  Good companies. By the way, they're good companies. They're durable companies. They're going to be around. And this is actually an observation. I give Purnav and our team a lot of credit. He sort of said, hey, these companies, venture capital doesn't like them anymore because they grow 20% and they're not the hyper growth. Nobody wants to fund them. But there are some founders, life's work. And if you give them alternate ways to endure and scale, they will and they will create value. It'll just take longer. And that's where we actually have also made sure our customer value fund supports those types of founders as well. We obviously want To support the fastest growing companies in venture, but also the ones that are fundamentally good businesses that are profitable if they were not investing in sales and marketing and give them capital to scale their sales and marketing. That's what customer value strategy

• 50:58Speaker 00

  does. And it's entirely focused on those founders deserve to endure and compound because their companies are good, their customers like them, they're growing, they're just not in the zeitgeist.

• 51:10Harry Stebbings?

  I've never felt so much uncertainty in what I do. I am trying to understand, it almost feels like COVID, where we had these highly transient categories that were created and it's like, do they remain? And we actually just do exercises at home all day and pelotons? Or do we go back to gyms? And you didn't know what would be enduring strong markets and not. And I feel that is the case here. Have you ever felt such uncertainty in investing? And what would you advise me?

• 51:33Speaker 00

  I'll give you the same advice that we follow here at G C. This is peak ambiguity. And so everything we do to support founders, everything you do, you know, you were showing me a lot of your cool ways of supporting founders, get them excited, all the products and the solutions we have created to support the founders. The question is to what end? And I think having a true sense of long-term set of principles that you believe in, in a world of ambiguity, that's all you can lean on. The way you navigate ambiguity is by having a true north. In the U S, we have this enormous movement towards transforming healthcare post pandemic. And so everything we do in healthcare, we go back to saying, is this decision going to make it proactive, affordable, accessible or not?

• 52:14Speaker 00

  In Europe, the work that Jeanette is doing is very much about Europe's resilience with AI. So everything we do, we sort of look at it and say, is this going to make the economy here more resilient and through this investment decision or this relationship decision or this partnership decision or not? And sort of having that kind of a sense of where you're going, so you're directionally aligned with your values is the only thing you can lean on. And there's so much uncertainty, it's so difficult. And I feel bad for investors that are learning in this era, because the signals to determine if your decisions were right or wrong, you in some ways have none. You have this, again, you have this great revenue growth to lean on, but no durability. And then you have

• 52:53Harry Stebbings?

  And then you have great margin structures.

• 52:55Speaker 00

  With your revenue. So it's like, you have to be values. You have to have a sense for what am I really trying to do. At G C we say we build deep relationships with people. We build enduring companies and we're doing that to transform industries across the world. And what does that do? It gives our founders access to talent, access to policy sophistication, access to distribution and access to differentiated capital. If we give founders all of that and we have a set of values with which we want to march down these industries, I think we'll be okay. We're trying to take faith in that and I would sort of have everybody think about that because I do think we are building the future. It's an amazing time. We will shape what this society is going to look like for probably a hundred years. I mean, this shift is as big as what electricity was, you know, a hundred, hundred fifty years ago.

• 53:41Speaker 00

  We get to shape it, but I think we have to make those decisions. What do you want this to look like? And I think that intentionality should always be in the back of our minds as we make the short term decisions, as we deal with FOMO, as we deal with how are we scaling our business, how are we supporting our founders, what are the kinds of things we choose to do and not to do? Because there's way more opportunity than any one of us can do. You're near the true north.

• 54:00Harry Stebbings?

  You continuously mentioned the exponential market size or the insane market size that we have. It makes me think of a, it's either a Buffett or a Munger quote, that it's better to buy a great business at a good price than a good business at a great price. Is there any point in being price sensitive if markets are a trillion dollars?

• 54:17Speaker 00

  You know, one of my partners, Joel Cutler, used to say, price only hurts once. It's like buying a Gucci bag. Price only hurts once, but then you'll never regret it.

• 54:25Harry Stebbings?

  Stop it whenever I see my mother with a Chanel bag. I'm reminded of the dent it caused.

• 54:29Speaker 00

  Well, I think there's actually wisdom in that comment, even though it's a cheeky comment, which is, first of all, when did we ever get price right? I have been doing this for twenty five years. We've seen all these models. I am yet to see some investor, at least in our firm, ever nailed price in the way they thought it was going to be. It's usually worse than that. And we make all the money when it's better than what we thought. So if money's all made in what's better than we thought, like using price to pass, investors use price as a reason to pass because they couldn't gain conviction elsewhere and this makes them sound pragmatic. I get very ticked off when somebody says, I love this company, but I don't like the price. I'm just like, well, then you don't know if you love this company. You're just taking solace in trying to be like, I'm a price disciplined investor because you didn't really understand the potential of this company to see what it's actually going to be.

• 55:14Speaker 00

  Because if it's going to be destined for greatness, then jump in.

• 55:17Harry Stebbings?

  What about if it's a capped upside company? Okay, let me just walk you through this. There's a data, I'm just making this up. Super interesting data providing company and you're like, okay, this is a good business and I can easily see a two to four billion dollar outcome here. Either to a strategic or as a public company and I'm getting in at eighty million pre. That's a great way to make a lot of money. It's a potential twenty five X on an early stage check and in a ten million dollar check that can return my fund almost. Great. But if it's one forty, it's very different to eighty, the multiples.

• 55:46Speaker 00

  A hundred percent right, but we say these things as a capped upside company. What does that mean? When my next investor in Stripe, all the guys that I called that new payments were like, this is a niche thing. Like, why are you doing it? I could you not? And I was like, you know, I just don't want to listen to the experts about what they think their industry is or is going to be. Markets expand also. So the humility in this business also is just understanding, we don't know what's going to happen in the future. If it's truly a capital side, then you shouldn't be doing it anyways. It's not a price question. Like we're in the business of trying to build and back companies that can become, you know, enduring very, very large businesses. That's like a precondition. I feel like people get stuck either because the companies are just completely mediocre and they're not even going to be worth two to four billion.

• 56:27Speaker 00

  Or they're actually great and you're not willing to stretch because you're not willing to believe what the world's going to look like.

• 56:33Harry Stebbings?

  I always think of Peter Thiel's biggest investing mistake, which was not doing the next round in Facebook.

• 56:39Speaker 00

  Yeah.

• 56:39Harry Stebbings?

  When did you not do the next round in a company that with the benefit of hindsight, you're like, oh, I should have done.

• 56:46Speaker 00

  I don't think we have time for all my mistakes, but I'll tell, I'll give you a very recent example. We have a company that's, you know, a Deco Corn now. And I actually called the investor who led it at GC saying, congratulations, you're going to make over a billion dollars on this investment. And you're an idiot because you do, you gave up not making the second billion. You gave up making the second billion. Why? Because you didn't double down. That is where you can get a lot of it wrong. I mentioned earlier in Stripe, I've invested fourteen times. That's what it takes. If you're in the best companies, you really should be buying into them constantly. In fact, that's the reason to scale capital. The reason to scale capital isn't to be a low margin business. It's because you want to have capital for the very best ones and really lean into them.

• 57:28Speaker 00

  That's ultimately where you drive, you return your best businesses and that requires courage, conviction, belief. And how markets are going to change.

• 57:37Harry Stebbings?

  Do you worry about capital concentration limits?

• 57:39Speaker 00

  I have invested in, I don't know the exact number, probably over 200 companies and 60, 70% is like 10 companies over 25 years. Capital concentration is the way you drive return.

• 57:51Harry Stebbings?

  Which single?

• 57:51Speaker 00

  You've just got to be right.

• 57:52Harry Stebbings?

  Which single company are you most capital concentration?

• 57:55Speaker 00

  Stripe. It's about a billion dollars.

• 57:57Harry Stebbings?

  Is cross fund investing concerns bullshit? LPs often worry about it, don't like it.

• 58:01Speaker 00

  Well, cross fund is an important consideration. We do think a lot about before we cross funds, but we do cross funds. You want to make sure you have done enough capital to work in the fund that it's in, where you feel uncomfortable about the risk you're taking before you cross it. If you really believe in something, you want to make sure that becomes one of your largest positions in that fund before you go to the next fund. I try not to have more than 10 to 15% in a single company in a fund. So at some point it does, if it's truly a great company, you will be forced to cross because you should have multiple funds benefit from that.

• 58:31Harry Stebbings?

  Always remember Brian Seaman saying capital concentration limits are the enemy of great venture returns, which is why we'll often have 30% in a single company. And I thought, wow, I need to get more courage.

• 58:41Speaker 00

  I mean, concentration is key to being a great investor. I genuinely believe that.

• 58:45Harry Stebbings?

  When companies go public, you have the choice to distribute or not. How do you think about whether you are better placed than your LPs to manage those positions once going public?

• 58:57Speaker 00

  I always look at it as it's a variety of things. One is will our time matter? If our time continues to be spent on this company, will it matter in terms of compounding from here or not? So some of the ones we started, for example, that would make sense. You want to stay on and do that. The other thing I look at is how long should we hold it to make sure we drive the best returns for that fund? Is this the company that should be compounding most to keep generating returns and driving performance, given our commitments to the LPs? Because a lot of the LPs will have their public sleeve and their private sleeve. You give them stock, they'll sell it. And it's like programmatic for them. But we want to make sure we give it to them at a point where we've really captured enough value. So that's another factor we think about in that context.

• 59:35Harry Stebbings?

  Which suggests you do think you're better at managing it than them.

• 59:38Speaker 00

  Well, they may not be managing it is what I'm saying there.

• 59:41Harry Stebbings?

  But by selling it, they're managing it.

• 59:43Speaker 00

  Because that's programmatic that in their private. They're just not going to hold it and the private team is basically told that once you get stuck yourself. And also the other thing is you want to in our lead companies where we lead where we go public, we have a lot of stock. You also have to be measured in how you distribute stock because by doing too much at one time, you could also hurt the prices of stock, which hurts the rest of it. So I think there's also a pacing question of how do you liquidate.

• 1:00:05Harry Stebbings?

  How do you think about navigating secondary markets? You know, when we look at, there's a very strong chance that we have a trillion dollar private company in an open AI of the world. How do you think about navigating secondary markets when public market is sometimes not there?

• 1:00:20Speaker 00

  Well, look, I think for the very best companies, private markets behave like public markets. There's a secondary market that you can liquidate, so your shareholders can take liquidity, your employees can take liquidity, you have access to credit, you can do M and A, your stocks, you know, your valuations believed. I'm talking about very, but the stripes, the SpaceX is, I think, I think OpenAI is going to get there, Entropic and so on, right? So the very, the Databricks is getting there slowly. So the very best, that's what happened. Then there's the very good companies, but not the, let's say, the top 10 or 15 private ones, not the magnificent private 10, if you will. For them, going public and getting validated actually could be more helpful. It may be that the secondary market isn't behaving as well, or they can't do M and A as effectively, or they need to access a lot more capital than they can just being in the private markets.

• 1:01:05Speaker 00

  And I think those decisions are what ultimately then push you to go public. And then there is the, as I said, this bloated set of companies that are good companies that'll compound at 20, 25% maybe forever, that have no access to public market because they're too small. They're not a billion dollar company growing 30% a year that the public markets, you know, would be excited about. And they're too slow for venture to fund. And that's the purgatory where we need innovation and that's where the customer value fund resides, like help these companies get to that scale so they can go public someday.

• 1:01:32Harry Stebbings?

  Is the extension of private markets not an increasingly harmful thing to the distribution of wealth in society? When we look at the before, it would be your fidelities, your T-rows and the pensioners of the world. My grandparents would pay them 20 bips, 30 bips, 40 bips. And now with the extension of private markets, you get money and get 220.

• 1:01:54Speaker 00

  When I published my first book. Unscaled in 2018, I had the leadership of Vanguard come by and they talked about, look, Main Street doesn't have access to this asset class. So I spent a lot of time in 2018 saying, how do we do that? How do we actually give retail access to our funds? Now with 401k changes and some of the 40 act evolution, you actually can do that. So I fully expect that you will start seeing products that give retail access to the best companies in technology and we will definitely engage in that because it's the right thing to do.

• 1:02:24Harry Stebbings?

  Do you agree with that? When I saw the LaFons talk about this, I was like, oh, wow, guys. Well done. And then part of me is like, well, isn't that what we want? The democratization of access.

• 1:02:34Speaker 00

  Look, I think everybody wins in this. You open up large pools of capital for investing in technology, but you also open up large pools of opportunity for people that don't have it otherwise. So like, we don't need to look at it as, oh, we're doing it because it's sneaky. I think it's good for the world and we should do it. And if you're oversubscribed, make room for it. That's where this matters, which is when you have more capital than you want to take on in a fund, would you let it in or not? And what I'm saying is that we should be making room for this.

• 1:02:59Harry Stebbings?

  Do you think fee structures need to change?

• 1:03:01Speaker 00

  I am very much focused on performance as the number one thing. That's why I said in the beginning that I measure us as how good a seed firm as we are in the context of everything we do is like, is our core right? Are we doing the highest risk, highest reward work? Are we helping founders in the earliest stages? So you want to stay high performance. And if you want to stay high performance, then your incentive should be much more focused on generating carry and making it a prosperous place for your team than generating fees, which to me can be a distraction. By the way, we not just to say like in our business, we don't distribute any fees. We invest everything back in the business. And that's a deep belief that we don't want to be in the game where the partners of the funds at General Catalysts want bigger and bigger funds because they can take, you know, bigger and bigger distributions. Whatever fees we get, we invest

• 1:03:46Speaker 00

  back in the business.

• 1:03:47Harry Stebbings?

  I'm so sorry to be so blunt, but don't partners make like three or five million bucks?

• 1:03:51Speaker 00

  Less than that.

• 1:03:52Harry Stebbings?

  Do you worry that you're not going to get the best partners? Because they are getting that at alternate funds.

• 1:03:56Speaker 00

  Uh. Depends on if they're focused on performance and salary. I think that that to me is a filter. And my commitment is that you go deliver, you know, your dream and you'll make more money than anywhere else. And but it's got to be aligned. We got to be focused on performance and value creation versus being rich and fat and happy salaries. That is just not the culture we want.

• 1:04:12Harry Stebbings?

  Do you think that is the same or reflective of the rest of the venture ecosystem?

• 1:04:16Speaker 00

  I have no idea. I pay no attention to it.

• 1:04:18Harry Stebbings?

  You don't?

• 1:04:19Speaker 00

  No.

• 1:04:19Harry Stebbings?

  Do you not pay attention to your competitors?

• 1:04:21Speaker 00

  I don't know what people get paid there. I don't.

• 1:04:23Harry Stebbings?

  Which competitors do you most respect?

• 1:04:25Speaker 00

  All of them. They all make us better.

• 1:04:27Harry Stebbings?

  If you were to choose one, so I could say like point nine, I think point nine in Europe have done an incredible job. Really carving out their industry and knowing what is their type of deal.

• 1:04:35Speaker 00

  Andy Golden, who ran the Princeton Endowment and he's doing some stuff with us now. He had a huge impact on me as I was helping build G C. He always said, run your own race. It's actually a chapter in my upcoming book is about that, like play your own game.

• 1:04:49Harry Stebbings?

  Do you not think you can learn from others?

• 1:04:51Speaker 00

  No, I want to learn from others, but I don't want to be in the game of we're competing in the zero sum game of venture capital.

• 1:04:56Harry Stebbings?

  When you look at that product that you give to founders, you have a lot of products now from, you know, the G O's of your Europe and your Indias and your U S's to the seed, to the growth, to the customer value, to the rollups. What product do you not have that you would like to have? Do you have like a square heritage or a wealth management business?

• 1:05:14Speaker 00

  We do.

• 1:05:15Harry Stebbings?

  Of course you do.

• 1:05:15Speaker 00

  We do, and that's actually growing rapidly. It's a fairly large business at this point. We have a roadmap, to be honest, and I always look at it as what do the founders need? And we have a roadmap of things that we think about, you know, that we will over time experiment with and see we should bring in. I mean, we have really three products, right? We have venture capital, starting with seed. We have customer value fund and we have creation, which is where we do the rollups and hatches, building companies from scratch, sort of being really builders. We have three products today.

• 1:05:40Harry Stebbings?

  But which one would you most like to have?

• 1:05:42Speaker 00

  I think we need to figure out infrastructure. The race in A I, the thing that I'm very focused on learning about and we're early in our thinking is, in order to get A I right, you have to get energy right. Everybody knows this. And if you think about energy, it's a really interesting opportunity with all the new demand to actually move towards sustainability profitably as well. But in the short term, you don't have sustainable solutions, really have natural. Gas in the US, for example. So what is that arc with which we're going to think about energy to really get AI right? That's an infrastructure problem. That's an example of something of like, well, if we care about using AI to change the world, you know, all of our transformation work is about transforming industries, businesses with AI all over the world, then we need to figure out what to do with energy.

• 1:06:25Harry Stebbings?

  How do you think about how you need to change the capital supply base with the different products? I very much operate in the endowment fund foundation world, which is lovely and nice. But does it change drastically when you move across products?

• 1:06:38Speaker 00

  It's a great question because I think as we went through the succession at GC, from David, Joel and me running the business sort of most of last decade together, the two of them before that, to me taking on as CEO, I think at the same time, we also, we had a succession from a leadership standpoint. You know, and Ken Chanel came and became our chairman, mentored me, but also had a interesting evolution of our LP base. Because the LP, the endowment foundations, which many of them are huge backers of ours, and I consider them sort of really part of our team. The mindset there was we want managers to be dedicated in single strategies and we will create the portfolio. The break in strategy we did was to say, well, no, we need to have all the strategies that make the founders successful.

• 1:07:23Speaker 00

  And you back us to make the founders successful because then we'll create alpha. And that's what we were on a campaign to convince enough of them to stay on with us and do that, and they did. Then we went and got a lot of the states in the US, states and pensions, because that part of it was going back to your point. I want to make sure we create wealth for everybody in the US. So there was like a motivator there as well. And now we're actually very deeply partnering with sovereigns as well, because as I said earlier, the AI, the transformation of the countries. But there, the relationship needs to be more of a partnership. We're helping them think about, hey, what you can be doing in your regions and let us be a strategic partner to you and you be a capital provider to us, like we're doing the sort of interesting partnerships in that regard.

• 1:08:00Harry Stebbings?

  And you have to go to sovereigns because they're the only ones who can write a billion dollar check, no?

• 1:08:04Speaker 00

  Some states can as well, but there is scaled capital in each of these areas. The key is how does your work fit the context of their strategy? And GC is sort of a flexible platform where people can engage in that context. And we were talking about jokingly before. Retail is another one that's about to open up, right? There's like sixteen trillion dollars of retail capital that's.

• 1:08:22Harry Stebbings?

  What will cause retail to open?

• 1:08:24Speaker 00

  Retail is opening up in terms of the forty act regulations, in terms of the changes in the can four oh one K invest in alts? It is going to open up and it should open up. And we need to be responsible about exposing retail to the right part of the risk curve in privates. I think it's very important that we do that to being very thoughtful about if and when we do make G C. We don't, we don't do that today available, like what would be the right way to do it? I think the whole industry is going to think about that. So, so in my view, all these pools are there. And I think if we are to service the founders the right way and have the capital and the flexible capital solutions all available for them to build their companies, that we need to engage with all these capital sources that are willing to support different parts of that stack.

• 1:09:05Harry Stebbings?

  When retail opens, is it a trickle or is it a flood?

• 1:09:08Speaker 00

  Hopefully it's a trickle. It sort of starts slowly and then scales. I do think it'll scale in a big way, but I think we should be, we'll be careful.

• 1:09:16Harry Stebbings?

  Cause why, when we go back to your very early statement, there's not many Patrick and Johns or Sams or Darius. The problem is there's not enough truly generational defining entrepreneurs for the supply side of cash. That will only get worse. I'm not looking at retail opening up going, woohoo, I'm going, wow, this is about to get harder.

• 1:09:34Speaker 00

  That's right. So I think retail can open up to be in the very best companies at scale, in my view. I think Robin Hood is working on some work there, for example.

• 1:09:42Harry Stebbings?

  The tokenization.

• 1:09:43Speaker 00

  And they just announced they're going to create like a way to give retail access to some of the top companies as well. I think it's a recent announcement. So that's one, which is, I think there you could be, hey, giving people access to SpaceX and Stripe, you're not going to regret it. It'll do right by them. You'll feel proud of it. What you don't want to do is take retail and put it into the bottom quartile of the venture capital funds that lose money because they got access to it. I think that's where it needs to be trickling in to make sure it, it goes where it returned. We should not put retail into very high risk situations where they lose money. I like, I feel very, very strong about that. We have to be careful. So I think it needs to be trickling down the risk curve in terms of how retail accesses our asset class.

• 1:10:21Harry Stebbings?

  What did you do that you wish you hadn't done in the last 10 years? And it doesn't need to be, I'm more thinking about like product. Strategy firm build.

• 1:10:31Speaker 00

  You know, the good thing about our culture and I give the founders of GC a lot of credit is anytime I had a crazy idea, they supported it. So I've usually gone and have been able to do most of what I wanted to. There's one place I look back and say, did I make a mistake? When the financial services market took off, I was like, I want to be in the best company. And I was like, let's invest in Stripe, but let's not do Square and whatever else. And when the AI stuff happened, I was like, I want to be where I think I can register to just make the most money. I think in hindsight, we should just go on and index those. You know, some of the other investors like Jurey Milner and others that did a great job with it and did very well. I was focused on, I want to be the best. And I was like, aha, see how good I am that I did the best one.

• 1:11:12Speaker 00

  And if I could go back, I would understand that in certain parts of the stack indexing, if you can afford to, if you have the capital base to, is a better strategy than trying to pick in a world of peak ambiguity. And that's something that I'm a slow learner. I feel like I've been at it for 25 years and I'm starting to understand that better.

• 1:11:29Harry Stebbings?

  And you've moved to that now?

• 1:11:30Speaker 00

  I have not moved to that, but I'm going to wait to see the next time I missed it in AI. Our friends at Light Speed did a great job in AI, for example. I think it's going to work out really well for them.

• 1:11:38Harry Stebbings?

  Why do you think that?

• 1:11:39Speaker 00

  Because when you know the trend's going to win, but you don't know which one's going to win, you're better off backing all of them than trying to pick and meaningfully play and get it wrong. That's a very hard decision to make and get it right.

• 1:11:50Harry Stebbings?

  Do you regret not being in OpenAI when you had the chance to, but didn't because of the structure?

• 1:11:55Speaker 00

  This is a daily conversation I have with myself and with my partners. I mean, I do regret it because the amount of learning we would have had if I was sort of in a front row seat, really understanding what's going on. Like, I wish I had that.

• 1:12:07Harry Stebbings?

  Would it have prevented you from doing Anthropic?

• 1:12:09Speaker 00

  I don't think so. I think there are plenty of investors that are in both companies. We looked at structure, many people overthought it and I overthought it as well. And there's a lot going on that platform that's changing the world and I don't have a front row seat. So yeah, I do regret that a little bit.

• 1:12:21Harry Stebbings?

  We mentioned focus on performance. Circle's IPO was nuts. And it did wonders for the fund in terms of returns. How did that fund return? Look, we were chatting about it outside.

• 1:12:33Speaker 00

  Yeah, that fund is one of our two or three best funds. And just to tell you what was in it, it was Levanga was in that, Snap was in that, Circle was in that, Gusto. It's probably going to end up being a 13 to 15 X fund. Story's not over yet, so.

• 1:12:47Harry Stebbings?

  How big is the fund?

• 1:12:49Speaker 00

  It's 500 million.

• 1:12:50Harry Stebbings?

  Wow. Well done.

• 1:12:51Speaker 00

  We need to keep doing it. That was a long time ago.

• 1:12:55Harry Stebbings?

  What is GC in 10 years?

• 1:12:57Speaker 00

  I think GC is gonna look like the most diversified solutions for founders to build enduring companies. That's the lens which we justify everything that's on it. And if you looked at it, GC as a business is gonna feel like a strategic conglomerate where every part of GC is in service of founders, whether it's giving them access to distribution or access to policy or access to capital or access to wealth management. It's all about founders. So it's the platform for founders.

• 1:13:23Harry Stebbings?

  How many team members do you have?

• 1:13:25Speaker 00

  We are over 300 people.

• 1:13:26Harry Stebbings?

  300 people?

• 1:13:27Speaker 00

  Yeah.

• 1:13:28Harry Stebbings?

  I am positively small compared to Andreessen. Absolutely fine.

• 1:13:31Speaker 00

  We're tiny.

• 1:13:31Harry Stebbings?

  Final one, then we'll do a quick fire. On the future of venture, everyone does this binary. You're either, you know, the massive AUM gatherer or you're the boutique provider. And that's it. Everything else à la Pabell. Do you agree with that binary view of venture? Or do you think it's an alternate view?

• 1:13:48Speaker 00

  I don't like that view. I don't like that framing because

• 1:13:51Harry Stebbings?

  My framing is actually Walmart and Chanel.

• 1:13:54Speaker 00

  Totally, totally. But I would say we wanna have the biggest AUM in venture because that means we're doing the best job. But not because we have a lot of companies, we've raised a lot of money, but because we're in like 20 stripes.

• 1:14:05Harry Stebbings?

  Well, the biggest AUM doesn't mean you're doing the best job.

• 1:14:07Speaker 00

  No, no, I'm saying, I'm saying the kind of AUM I want is the biggest because we have, but with the fewest number of companies, meaning our companies have created a lot of value. It's not the amount of money we raised. AUM can be one of two things. How much money did you raise? Or what is the value of the capital you raised? I want the value of the capital raised to be the biggest. Or the amount of money you raised to be smallest. That's when you've created the most alpha. So that's why I think this biggest AUM is not like a very informative way to look at it. And if you're boutique, you could still have really big AUM. If your portfolio was only the top 10 companies that got funded, if that was your portfolio, you actually would have the biggest AUM, even if it was a $500 million fund or $300 million fund, whatever you call boutique. The focus needs to be on being the support of the best founders to build the biggest companies, which will

• 1:14:52Speaker 00

  give you the biggest AUM, will give you the biggest performance, and not focus on can I go raise the most amount of money for venture. That's why I said in the beginning, our aspirations in venture capital is to be the best seed firm in the world, or second best after you.

• 1:15:07Harry Stebbings?

  I have two more. What was the most memorable first founder meeting and then I'll tell you why I laughed?

• 1:15:12Speaker 00

  I mean, I have to say it was with Patrick Carlson. It's just one of those, you know, like the movie Sixth Sense, when the ring falls and the guy's like, oh shit, I'm the one who's dead. And you just feel like you didn't know something about the world and how to think about it. That's how I felt with him because I asked him, who are your ideal customers? And he said, they haven't been born yet. And he was talking about the developer movement. Remember this 2010, right? Developer movement and what's about to come. And I'm just like, oh crap, I don't even have a complete view of the world and what's happening around me is how I felt in that meeting. And I was like, I have to back this person. I don't even know payments. I mean, everybody, all the payments people are telling me what's wrong with the payments. I was like, I kind of don't care. Like, I don't know what's in this thing, but like, he sees something and we have to be part of it.

• 1:15:50Speaker 00

  And that moment taught me a lot about humility in terms of what this business is all about. It really is about backing the best people. And honestly, it had a huge impact because I saw him and John build Stripe. I was like, well, why does our business run so shitty? When we are in service of trying to help build businesses that can be run really well. I want to run well. GC should be running with the same rigor these companies run. And I think we still run pretty good. We're still a very messy company. But the aspiration is we want to run with the same rigor as, as, you know, companies like Stripe do.

• 1:16:21Harry Stebbings?

  Which loss hurts the most? So the reason I laughed when you just said about the, I've only lost one deal in three years. It's not me being arrogant. It's just the truth.

• 1:16:32Speaker 00

  Yeah.

• 1:16:32Harry Stebbings?

  I lost to you, which is great. And you know what I hate, by the way, when you lose? Because we people do. And they phone up and like, oh, it's Seavash and Kai. Do you know them?

• 1:16:43Speaker 00

  Yeah.

• 1:16:44Harry Stebbings?

  Yeah, out of Shopify. Amazing guys. Love them. Fantastic.

• 1:16:47Speaker 00

  Well, that was Jeanette.

• 1:16:49Harry Stebbings?

  Yeah, and like awesome.

• 1:16:50Speaker 00

  Great founders.

• 1:16:51Harry Stebbings?

  You know what I freaking hate though, is when other investors call up and they're like, Hank, can we like share it and have some of yours? And you're like, are you kidding me? No.

• 1:16:59Speaker 00

  Yeah.

• 1:16:59Harry Stebbings?

  So I never do that.

• 1:17:01Speaker 00

  Yeah.

• 1:17:01Harry Stebbings?

  But that one like sticks in my mind. It's one I'm annoyed.

• 1:17:05Speaker 00

  First of all, Harry, you should be losing more. I'll tell you a little story. When we moved to the Bay Area, I lost this company at a series A of a company called Class Studio. We were rated to be.

• 1:17:14Harry Stebbings?

  Yeah, Sam.

• 1:17:15Speaker 00

  And I remember. My partners from Boston came and they were, they just felt bad for me. They're like, you can't be losing because that's just gonna like emotionally devastate you and then you're not gonna be able to compete here. And I was like, are you kidding me? If I'm not losing, I'm not winning because the very best founders go meet all the five to seven great firms and they pick one. So theoretically, your win rate, as long as it's over thirty percent, you're actually maybe in the right fights. It's very important to be in the right fights. You, you actually wanna feel like you're losing more. Everybody that in the team and they come and tell me I've been lost in my category, I'm like, well, then you're just in the wrong pond, buddy. So even that's, I think that's like an important thing, which is there are so many smart people. I just lost one the other day. There you go. That fucking hurts too, but I was worried about saying that one.

• 1:17:57Speaker 00

  I think we're, we should enjoy the pain. I actually think if we're winning, if we're losing, we're winning. That's like something I genuinely believe about. When she was like, you need to be in the right fights and then you gotta win your fair share and not dwell on it beyond that. The things I lost, I mean, I have so many of these moments, like Drew Houston, when he was starting Dropbox, I asked him to come work at G C with me. Cause I had him intern for Chris Dixon, I'd backed Chris's company. And I said, come work with me. He's like, no, I'm gonna go start this file storage company. And I was like, file storage? There's Moji. That was the first million dollars, would have been a two billion dollar return. Because I'm like, what is this thing? Even though I was willing to work with this guy, but I didn't give money on that. But you didn't lose it. That's a miss. Well, to my own brain. That's a miss, the one where you lost it.

• 1:18:39Speaker 00

  I lost the series A of Stripe. I lost the series A of Samsara. I lost the series A of Snap. And the first one I won was a series of gusto. If I look at my most competitive fights, when I first got to the Valley, I'm like, oh my God, this just sucks. No one's ever gonna pick me. Fuck this, I'm going back to Boston. You know, and I did, I lost a lot, but the key was I stayed on and then I was able to, you know, do the next round and. But those moments make you better. It just sort of, you just gotta realize there are a lot of smart people in the industry. They're just very smart. I called up my mentor, who's this kind of one of the best investors in the world, billionaire genius, and I called him up after losing this deal to Andreessen. And I said, fucking hell, like, what the?

• 1:19:18Harry Stebbings?

  And he's like, Harry, all of my biggest returns I've never made when I won the deal. I always lost the deal and then I just had to scrabble and buy secondaries from angels, from operators, from founders, and that, all of those ones were my best returns.

• 1:19:35Speaker 00

  The thing is, in the very best companies, you don't get the amount of ownership you want anyways, because founders command a premium. And so you're constantly building ownership after that. Like, you know, as I mentioned, my biggest overall investment is in Stripe.

• 1:19:47Harry Stebbings?

  How much do you have in Stripe across everything?

• 1:19:50Speaker 00

  It's still sub 10% and so.

• 1:19:52Harry Stebbings?

  Like a two billion, a billion?

• 1:19:53Speaker 00

  No, no, more.

• 1:19:55Harry Stebbings?

  Five billion?

• 1:19:56Speaker 00

  More, but, but I think that doesn't matter.

• 1:19:57Harry Stebbings?

  More than five billion?

• 1:19:58Speaker 00

  I think the key point is, it's a lot, but the point is Stripe's going to be a trillion dollar company. He's got to give it 10 years, you know, so I'm, we're, it's a compounding business that Patrick and John always say, infrastructure is hard, but it also compounds and they're sort of steadily just doing that and making some really smart choices in this AI world. And so you've got to have a long-term view. You know, we'll have a 25-year-old probably on Stripe in some form or the other. So when these companies are good, you want to keep buying in. And then at some point you say, okay, I have done enough. And now, you know, the next 5X where it just seems extraordinary, think about a way more beyond that. Maybe I'm gonna, I'm gonna stop. So at some point you, you have to sort of say, okay, I gotta move on to the next thing. There's some firms that are trying to make all their money on SpaceX and keep buying SpaceX. I'm like, that's great. And I actually think Elon's got a lot to run away with spacing.

• 1:20:43Speaker 00

  That's a good investment, but I want to go back to the next generation of entrepreneurs as well and figure out if we can generate alpha there too.

• 1:20:50Harry Stebbings?

  Listen dude, I could talk to you all day. I need to do a quick fire because I'm sure you actually have some other place to be in life. Tell me, what have you changed your mind on most in the last 12 months?

• 1:20:58Speaker 00

  This idea of indexing.

• 1:20:59Harry Stebbings?

  Being in every company and.

• 1:21:01Speaker 00

  When you have macro trends, should you index or not? I'm being open-minded to thinking that way about major technological trends or market shifts.

• 1:21:09Harry Stebbings?

  What has been the biggest challenge in changing your leadership? So like for me, I'm very emotional and as I lead, I need to dampen my emotions.

• 1:21:18Speaker 00

  I think it becomes really hard going from becoming a master at something to being a teacher at something. The reality is when you can teach something is when you've truly mastered it. And I don't think I'm very good at that, you know, some of my partners will say. Gibberish comes out of your mouth when you try to teach. It's much better to just watch what you're doing and like make sense out of it. I'm still trying to figure out how to crack that.

• 1:21:37Harry Stebbings?

  What would be your single biggest piece of advice to an LP navigating venture today?

• 1:21:42Speaker 00

  The proposition for founders has to change. You want to embrace entrepreneurial VCs that are innovating around that.

• 1:21:50Harry Stebbings?

  What worries you most in the world today?

• 1:21:52Speaker 00

  The short term alignment of value creation in business with long term prosperity of everybody being inclusive and abundant in that.

• 1:22:03Harry Stebbings?

  What would you do if you weren't scared?

• 1:22:05Speaker 00

  I'm not scared. I don't operate with fear. I'm doing what I would do. I think we take a lot of risk. I think we're innovating in every dimension that we possibly can. We're pushing ourselves as much as we can. So I'd like to think I would do what I'm doing.

• 1:22:18Harry Stebbings?

  Does money make you happy?

• 1:22:19Speaker 00

  No, money is a byproduct of the impact I want to create.

• 1:22:22Harry Stebbings?

  Biggest advice on parenting?

• 1:22:24Speaker 00

  Teach them to be unique. And in the world of AI, teach them to ask questions, not solve problems.

• 1:22:30Harry Stebbings?

  Is college less valuable than ever?

• 1:22:33Speaker 00

  I have a 16 year old and he's definitely going to college. I have an 11 year old and I talked to him the other day and I said, hey, AJ, you may not need to go to college. The world may change in how we think about developing skills. He was happy about that.

• 1:22:46Harry Stebbings?

  Final one for you. What are you most excited about? I like to leave on like a tone of positivity. What are you most excited for when you look forward?

• 1:22:53Speaker 00

  Look, technology is neutral. What I'm most excited about is that, you know, over the next 20 years, if I look at GC, we'll probably invest, what? 300 billion, 500 billion dollars into the world for helping shape what AI does for society. I and my partners and my, you know, broader team have the opportunity to leave a mark. And I want to get it right. I want to get it right where, you know, when I'm some days living at a senior living facility, then I'm like, hey, I did it right by the world. It's actually turned out to be okay to the shift.

• 1:23:24Harry Stebbings?

  Listen, Hamon, shows like this remind me why I love what I do so much. You've got to remember, I love investing. This is my true passion.

• 1:23:31Speaker 00

  Yeah.

• 1:23:32Harry Stebbings?

  And being able to speak with you and discuss the craft of what I love so much is such a joy. So thank you for being so brilliant.

• 1:23:39Speaker 00

  Thanks for having me. This was fun. Really enjoyed it.

• 1:23:43Harry Stebbings?

  I think you could tell just how much I enjoyed that show. If you want to watch that episode on video, you can check it out on YouTube by searching for 20VC. I always want to make the show the best it can be. Let me know how I can make it better for you. Email me [email protected]. But before we leave you today, I love seeing the team come together to make this show happen. What I don't love is trying to keep track of all the information, the data and the projects that we're working on across dozens of platforms, products and tools. That's why we use Coda, the all-in-one collaborative workspace that's helped 50,000 teams all over the world get on the same page. Offering the flexibility of docs with the structure of spreadsheets, Coda facilitates deeper teamwork and quicker creativity. And their

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• 1:26:30Harry Stebbings?

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• 1:27:12Harry Stebbings?

  Stay tuned for an incredible episode coming on Thursday with the one and only Jason Lemkin and Rory O'Driscoll.