The Tiger Global Memo: From Sequoia Capital to Benchmark and Thrive: The World's Best on the Rise of Tiger Global

Tiger Global are one of the most discussed venture firms on the planet. With a deal cadence and capital deployment speed that is unmatched, they have made their mark on the venture landscape like no other over the last 24 months. Today we are joined by leaders from Sequoia, Benchmark, Thrive Capital, General Atlantic, GGV and Aleph to discuss the rise of Tiger and how it impacts the venture ecosystem. In Today’s Episode on Tiger Global You Will Learn: 1.) Doug Leone: Sequoia Capital Why we need to change the words when use in venture? Why we need to get rid of "the game"? How does the rise of Tiger compare to the rise of prior entrants with the same approach? Why does Doug believe that the craft of venture will persist despite these new entrants? 2.) Bill Gurley: Benchmark Capital How does Bill analyse the change in late stage venture today? What are the main drivers of the increased competition in late stage venture? Why does Bill get concerned not by Tiger but how others respond to Tiger's model? How does Bill analyse the entry of hedge funds and PE funds into traditional venture models? 3.) Michael Eisenberg: Aleph How does Michael think about the "weaponisation of capital"? What are the significant benefits for a fund of having more capital than their competitors? How does this capital advantage change in boom and bust times? 4.) Anton Levy: General Atlantic Why does Anton believe that funds are leveraging their assets more efficiently than ever? How does Anton approach the mindset of AUM scaling without lowering returns? Why does Anton never want to compete on price? How does GA think about competing in a world of Tiger and hedge funds investing in tech? 5.) Hans Tung: GGV Why did Hans always believe the model to look at moving forward was Tiger? Why does Tiger's business model allow them structural and financial advantages over their competitors? What does Hans make of the data network effects of Tiger with their strategy? 6.) Kareem Zaki: Thrive Capital Why does Kareem think Tiger's approach makes absolute sense? Why does Kareem believe so many in venture like to try and discredit the Tiger model? How does Tiger's approach differ to Thrive's?

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

• 0:00Harry Stebbings?

  This is 20 VC the Memo with me, Harry Stebbings. Now, the Memo is the monthly show where we go deep on one company, hearing the thoughts of the investor that led their round. But today, I really wanted to mix it up. For the last year, everyone has spoken endlessly about Tiger, and so I thought I would bring together some of the best clips and opinions from 20 VC on Tiger. So in this episode, we'll hear from leaders at Sequoia, Benchmark, GGV, Thrive, General Atlantic and more, hearing their thoughts and opinions on the rise of Tiger. But before we dive into our first segment with Sequoia's Doug Leone. There is no set recipe for creating an industry-defining company, but one issue that occupies every successful startup is managing equity properly. Well, that's where Ledgy comes in. Ledgy is the next-generation equity management product built for scaling

• 0:42Harry Stebbings?

  teams. When you really understand your cap table and share ownership, you motivate and engage your team and have more transparent conversations with investors. With Ledgy, your employees have rich dashboards that actually tell them what their share options mean, and powerful scenario modeling means real collaboration with investors during fundraising. As a 20 VC listener, when you sign up to Ledgy's growth or scale plans, you get your first month absolutely free. Go to ledgy.com/20vc, that's L-E-D-G-Y.com/20vc to find out more. And speaking of your employees feeling empowered there with Ledgy, you have to check out BetterUp, the leading human transformation company, helping teams reach peak performance and individuals find their greatness.

• 1:24Harry Stebbings?

  BetterUp creates personal and professional growth journeys that build mental fitness, develop leadership skills and deepen social connections. And now with over a million coaching sessions completed and counting, they have the largest dataset on how individual growth connects to organizational impact. Through personalized coaching, content and community, individuals can unlock their potential, prevent burnout and find more meaning and purpose in their work. And guess what? This means to retaining and attracting the best talent so that your company is ready for the next challenge. Better you, better all, BetterUp. Learn more at betterup.com. And finally, what about outside your team? Relationships are everything. And I've been using Affinity's Relationship Intelligence Platform as my CRM for many years to both manage my network and to find managing closed investment deals. The relationship insights in

• 2:10Harry Stebbings?

  Platform have enabled over seventeen hundred venture capital firms around the world to use their networks to engage founders and CEOs and drive deals. One thing I particularly appreciate is that every contact and startup record in our CRM is enriched with affinity data, making my work to filter in and filter out potential investments even easier. Affinity's new unicorn report uses that data to benchmark a successful unicorn investment as it grows. And you can get access to that report today. Visit affinity.co forward slash unicorn to get it and sign up for a demo of affinity. It really is a must. But that is enough from me. So now I'm so excited to start with the one and only Doug Leoni from Sequoia Capital.

• 2:53Speaker 01

  You have now arrived at your destination.

• 2:56Speaker 02

  Over the years, we have had numerous entrants trying to change the game. First of all, it's not the game. Remember I said we got to get the words right. It is a business where people lives are at stake, their careers are at stake, I should say, and capital for investors, in our case, nonprofits are at stake. So we don't view it as a game at all. Second, once upon a time, before your time, there was ICG, CMGI, firms that institutionalize things. Now we see Tiger, well, we had SoftBank a few years ago, Tiger now. There's all these attempts to short circuit what we do. What we do is company building. We'd like to get there early. We'd like to be the first investor when there's one employee,

• 3:40Speaker 02

  such as New Bank, since you said that you talked to David, and help set the DNA. And then stay with these companies for the next fifteen years, maybe twenty years. Like, which is why we now have a hedge fund, because we'd like to say we want to go from seed to IPO and beyond. And doing that takes headcount, takes time, it takes a lot of things above and beyond trying to be an index fund for every series B out there. And we believe that what we do will form a competitive advantage if we do it right. So what we tell founders, you've got to get product market fit. If you can't get product market fit, I doubt Sequoia Capital or any one of us can help. That is the black magic. That is really the art. Once you get product market fit, we can help you with everything else.

• 4:23Speaker 02

  We've done that a thousand times. We iterate on how we do things. Whether it's hiring people, the type of people, when, how, customer introductions, board building, a whole bunch of other knowledge. Product market fit is yours. We do everything else. You cannot do what we do if you're investing in five deals a week. There's no way to do that.

• 4:43Harry Stebbings?

  I just love that from Doug on the right words to use and really removing the game and playing the game on the field. Such a special interview there if you haven't listened to the original. But now I want to move to the one and only Bill Gurley at Benchmark.

• 4:55Speaker 03

  There's one thing, idiosyncratic thing that's been happening with late stage that could get specifically to your question, Harry, about these Decacorn rounds and what. There appears to be a rather competitive environment going on between the different top players in the late stage private round. Provoked, you know, mostly by Tiger, which everyone's talked about, who's taking a very bold. Some people have called it SoftBank 2.0. You know, having talked to Scott and understand what they're doing. It's very meticulous, top down, tons of research. They have a plan they're executing on. But that's provoking other people to late chase. And there's a lot of money. Most of that money is in traditional venture firm formats, which is interesting because a lot of these hedge funds

• 5:38Speaker 03

  used to run a two and 20 book that marked every year. And they've all switched to this venture model where they raise capital, invest it and then return it. It's a very different model because you're not as worried about those marks, the daily marks, and your management fees aren't tied to the marks. You're pushing money through the system and there's ample money available and they're raising rounds faster and faster. It's easy to become valuation agnostic to a certain extent because you've seen if you hit a winner, if you hit a snowflake, if you hit a Uber or whatever, it ends up being 100x more than where you are today. So you become indifferent. So you have ample supply of money. You're not as worried about the daily mark.

• 6:21Speaker 03

  And every one of these things is a lottery ticket from your standpoint and the way your economics work. And so I think that shift where the late stage money move from a traditional kind of evergreen two and 20 model to our one and 20 or whatever it was, to a venture structure, I think has implications for what's happening.

• 6:44Harry Stebbings?

  And now I want to move to the one and only Michael Eisenberg. Michael is one of my favourite thinkers in venture, co-founder and general partner at Aleph in Israel.

• 6:51Speaker 04

  Talked often about the weaponisation of capital. What we often don't pay attention to is if you've got the largest war chest at the table, you've got a shot to overwhelm the cap table in a down market. Meaning if I'm Tiger and, you know, taking a large round from Tiger at a company, then the company needs capital at some point. They are, you know, kind of the winner in the capital sweepstakes in that case because they just have less price sensitivity and ability to overwhelm the cap table. And I think that's pretty meaningful. And at the same time, I think interestingly, one of the things that's different between now and 20 plus years ago in particular is there's a lot more secondary going on, which means that founders are taking capital off the table in a lot of these rounds. And it's hard to know how they react, you know, if the going gets tough, if the cap table starts to get compressed from the top, just really hard to know.

• 7:34Speaker 04

  People made a lot of money in secondary transactions in a way that wasn't true 10 or 12 years ago, and certainly not 20.

• 7:41Harry Stebbings?

  And now it's time for Anton LaVie, general partner at General Atlantic.

• 7:44Speaker 05

  I think people are leveraging their assets better. And they're saying, if I'm a Sequoia, if I'm a Tiger Global, if I'm a General Atlantic, I can raise a lot of capital, my returns are fabulous. So we've got access to capital. And we've also got access to entrepreneurs and great companies. So if we can combine those two, I think what people have realised, the ability to invest more without lowering returns is something that's a smart thing for everyone to do.

• 8:05Harry Stebbings?

  Can I ask you, in terms of the active versus passive first, and again, this is just a bit of a divisive one, but I'm just interested. Tiger have proven that it's popular and it works and founders actually love it. Does that worry you? And I had a GP the other day be like, if we're not doing that Tiger in our partnership meeting, we're lying to ourselves. Does that worry you that actually it's just becoming really, really popular to have passive, not active?

• 8:27Speaker 05

  You know, the honest answer is I don't think so. It doesn't worry. We talk about it. So you're right. We definitely talk about it. Does it worry me? I think not so much. I mean, look, we've gone the other ways. So we've reacted to it maybe a little bit. We've moved to being much more active. But the reason that I don't, and this can be naive here, we'll be talking here hopefully in friends in a decade from now and you say like, remember you said you weren't so worried about it? That was the wrong call. But the reason I'm not is that in my experience, when I talk to an entrepreneur, just like this, unfortunately, recently on Zoom calls, and I say, If you want passive capital and you know what you're doing and you've got all the right people you want around the table and you're like, give me the highest price possible, but kind of leave me alone. I want passive capital. Or do you want group that can help you scale around the world? Most of the entrepreneurs want help. They want access to our global

• 9:09Speaker 05

  network. They want access to our pricing experts. They want access to our capital markets experts. They want access to introductions to the biggest companies. So I'm obviously selling a little bit in this conversation, but I think that the passive capital commoditizes really fast. If you're looking for passive capital, you're saying, give me money at the highest price and leave me alone. Just give me the capital. At that point, what really matters to you? What really matters to you is just price because everyone's going to leave you alone. Leave you alone is pretty much a commodity. There's not different levels of leave you alone, at least as far as I can tell. It's pretty much, don't call me and leave me alone. And then there's price. And so I think, look, I think firms like Tiger have a brand and real credit to them because they've got good returns. But there are others who have brands in that market. So I do think that a lot of that competition is coming on price. And I think I would be worried if I was in that

• 9:53Speaker 05

  business and I would look for ways to try and differentiate like speed, like they're saying, hey, we'll give you a term sheet on the first call. And I think the Tiger guys are really smart and they've done a great job, but how can they differ? So they say, hey, we're really easy to work with. We're really fast. I mean, like, we can give you a term sheet on our first call. I'm going to be at a really aggressive price. And they're smart because they're saying that's what their customer wants. But I think those things are easier to copy if people can move fast enough and raise the capital and get the flywheel going. I think it's harder to copy, hey, I'm really going to change outcomes for you. You know, if you're a CEO, I'm going to change outcomes. I'm not just going to give you capital like everyone else. I'm going to create the difference between maybe a 10x opportunity, a 20x opportunity.

• 10:33Harry Stebbings?

  I now want to move to Hans Tung at GGV.

• 10:35Speaker 06

  This is something I haven't shared in public before. I remember joining GGV in 2013, having discussion with Glenn, Jeff, and then my other partners, G Shing and Jenny at that time. And one of the things I mentioned is that, you know, Sequoia has been amazing VC. Their track record over the last 20 years is incredible. But I mentioned that I think back in 2013, the model to look at will ends up being something what Tiger Global is building because it's multi-stage and it is a public fund that if you do that well, the profits of that can help the subsidize growth of their private equity business and they can afford to engage third party due diligence for them instead of doing everything themselves in-house. Now free up in a bandwidth due diligence and be able to process more companies, analyze more trends at the same time.

• 11:17Speaker 06

  And then you invest globally, then you have insights from multiple geographies that help to build conviction. If something's emerging, whether that business model risk is a lot or more or less proven because you've seen it elsewhere already. Yes, there's going to be a lot of localization that's different, so you've got to know each local market well enough. Be able to judge if the right amount of localization has been implemented to make this model work elsewhere. But you will have a lot more data points than anyone else to make those calls. And that's what makes this job much more interesting because we're all knowing the pattern recognition business. That was 2013 and today, obviously Tiger and a spin-off addition had both done well and continue to grow. And in our AUM for GGV, the first 10 years was a billion, the second 10 years is eight billion. And I'm very interested to see what we're going to do in our third decade.

• 12:00Speaker 06

  But we also have been growing AUM to give us the opportunity to invest multi-stage, to invest globally and to build that conviction, which we think over time will lower our risk of portfolio and generate higher alpha in the thesis that we have conviction in. So you don't have to do all the deals and it's fine for addition and Tiger end up doing many of them. But when you're on so many deals, the time you have spent on each board or each company is a lot less. So I think that I'm happy to share that I think we are becoming a preferred partner for Tiger as a number of other firms have become. We spend time helping the portfolio, generating value and for some fund that has many more portfolio, we are going to be a great one for them to work with because we'll make sure that when we're in together, do well.

• 12:41Harry Stebbings?

  Do you think, Ian, you've all spoken before about the unbundling of venture into investing itself, board membership, portfolio services. Do you think Tiger is the embodiment of that unbundling? As you said there with the consultancy services that they provide, not taking board seats, just investing. Do you think we are going to see the unbundling truly in this manner?

• 13:00Speaker 06

  I think that Tiger hasn't decided to build up a portfolio services team yet. You see Kotu in the early stage of that. So it's interesting to see who decides to adopt more of a variation of the recent model to have a large operating team. And you talked to Folks at Andreessen, they're not trying to go global. They do mostly in primarily US and they will double here and there, but primarily focus on the US market because it's operationally heavy to scale their model. So I always wonder since 2013, is there somewhere in between where we have provided most essential services on platform on a more global basis? Allow us to invest a large enough AUM that's growing to invest globally as the preferred partner share what we're seeing on a global basis. And is that the happy medium that we think could work?

• 13:41Speaker 06

  And this is why you see us expanding into LatAm, expanding into India, going back to our roots in Southeast Asia, investing in more geographies than before with a larger AUM. And many of the companies in these geographies are falling into a similar thesis. So if we're helping somebody in one country, the knowledge from rice sharing or food delivery or ad tech can be shared with multiple companies because they're all kind of riding on the same tide. And a lot of them enjoy swapping notes with each other and we help to facilitate that. So that's one way of making up for the fact that we're not going to have the largest AUM in the world, we're not going to have the largest operating team in the world. But we have enough of everything so that we can facilitate more of the sharing amongst founders themselves so that we can ride the right trends together. So that's our answer to that. And so far, it seems to have been working well for us.

• 14:28Harry Stebbings?

  And now I want to move to our final guest with Kareem Zaki, general partner at Thrive Capital.

• 14:33Speaker 07

  We notice a lot of complaints about Tiger investing. We think it's natural and totally inevitable. As technology investing goes from this niche asset class venture that was smaller people to actually being a good business. And so every asset manager is going to come compete in space because it's not about do they like tech or they think tech's interesting. It's just a good business now to be investing behind it. Kudos to Tiger and the team. They're really smart and they're finding their own way to kind of compete in market and that's on speed and friendly terms to founders. And I think a lot of investors are complaining because they haven't had to really compete as much before. There's just been a ton of passive success in the industry. So many funds enjoyed success because they happened to live in the epicenter of the greatest boom of entrepreneurial success the world has ever seen.

• 15:12Speaker 07

  And it was a totally different game back then. And I think the competition looked different. It was kind of the man with one eye, king of the blind or however that line goes. And if you were somewhat good, you cleaned up in the market back then. It's a different game now because you're kind of seeing competition from lots of different lenses. And it's broken from this niche category into a much larger one. From our standpoint, it doesn't bother us too much because we've always been competing. One, you know, we've never had it easy breaking in as a firm. Two, we were a New York based firm and so we had to crawl our way into a lot of West Coast deals. We had to be a part of bootstrapping the New York ecosystem. We had to start our own companies to generate our own deal flow. And then a lot of older firms are evolving to compete. But if you don't compete, I think this era of passive success, because you're at the right place at the right time, is starting to shift away. I think another reason people are complaining is what Tiger's doing is maybe making them feel insignificant.

• 15:57Speaker 07

  Tiger clearly has massive ambitions and investors who are seemingly, you know, a big part of this tech ecosystem are looking a little smaller now. And I think it's forcing them to wonder kind of where do they fit in this whole thing. And if you haven't wrestled with that question before, it's a hard one. So it's natural that it makes you uncomfortable and pushback on the things that make you uncomfortable. So the fact that the game's changing, the way investing's changing is totally inevitable. And just a factor of competition, the industry becoming attractive.

• 16:23Harry Stebbings?

  What does venture look like in 10 years, do you think? Do we have 10 Tigers? Is every asset manager going to make, you know, $10 billion a year in?

• 16:29Speaker 07

  No, I think there's just going to be different styles and it's going to evolve based on, people are going to leverage the strategies that they've used to win in their own games to try to compete. You know, obviously there were SoftBank and there's Tiger and the people will come and they'll use the strategy. SoftBank came with lots of capital, make ambitious bets and focus on these capital intensive industries. Tiger came from the public world and, you know, betting in high quality assets, passive investing style, being really friendly with founders. I think we can kind of start to see it. Maybe the Blackstones start to come to this world and they just offer to buy these companies outright. And so I don't think it's going to be one dominant strategy as much as people are going to take what they're good at, what helped them succeed in their other category and try to fit it in this technology world. And the reality is technology is going to get so broad that everyone's going to find their own way and their own niche. I mean, I think from our standpoint and how we'll be competing 10 years from now is for the builder mindset.

• 17:14Speaker 07

  That's what drives it as core. We're not financial investors. And as I talked about, some people are really good at that. They can do the risk adjusted models, they can price it to a 3X and we know how to do that math, but that's just not our lens.

• 17:27Harry Stebbings?

  So I really want to hear your thoughts on our episode today. I'm debating whether to do more of these shorter clip filled episodes. And so I'd love to hear your thoughts and feedback. You can let me know on Twitter at Harry Stabbings. But before we leave you today. There is no set recipe for creating an industry defining company. But one issue that occupies every successful startup is managing equity properly. Well, that's where Legy comes in. Legy is the next generation equity management product built for scaling teams. When you really understand your cap table and share ownership, you motivate and engage your team and have more transparent conversations with investors. With Legy, your employees have rich dashboards that actually tell them what their share options mean and powerful scenario modeling means real collaboration with investors during fundraising.

• 18:09Harry Stebbings?

  As a 20 VC listener, when you sign up to Legy's growth or scale plans, you get your first month absolutely free. Go to legy.com/20vc, that's L E D G Y dot com forward slash 20 VC to find out more. And speaking of your employees feeling empowered there with Legy, you have to check out BetterUp, the leading human transformation company, helping teams reach peak performance and individuals find their greatness. BetterUp creates personal and professional growth journeys that build mental fitness, develop leadership skills and deepen social connections. And now with over a million coaching sessions completed and counting, they have the largest data set on how individual growth connects to organizational impact. Through personalized coaching, content and community, individuals can unlock their potential,

• 18:52Harry Stebbings?

  prevent burnout and find more meaning and purpose in their work. And guess what? This means to retaining and attracting the best talent so that your company is ready for the next challenge. Better you, better all, BetterUp. Learn more at betterup.com. And finally, what about outside your team? Relationships are everything and I've been using Affinity's Relationship Intelligence Platform as my CRM for many years to both manage my network and to find managing closed investment deals. The relationship insights in the platform have enabled over 1,700 venture capital firms around the world to use their networks, to engage founders and CEOs and drive deals. One thing I particularly appreciate is that every contact and startup record in our CRM is enriched with affinity data, making my work to filter in and filter out potential investments even easier.

• 19:37Harry Stebbings?

  Affinity's new unicorn report uses that data to benchmark a successful unicorn investment as it grows and you can get access to that report today. Visit affinity.co forward slash unicorn to get it and sign up for a demo of affinity. It really is a must. As always, I so appreciate all your thoughts and feedback on the show and I cannot wait to bring you an incredible episode with Sahil Bloom on Friday.