Latest / The Neon Show / How AWS, AngleList and Now AI Killed The Old VC Playbook | Nakul, Audacious

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How AWS, AngleList and Now AI Killed The Old VC Playbook | Nakul, Audacious · The Neon Show

• 0:00
  SPEAKER_00: A boy from Kanfur has made it big in Silicon Valley.
• 0:03
  SPEAKER_02: It took me 7-8 years to really get the game of Silicon Valley.
• 0:06
  SPEAKER_02: And I wish somebody in my first year told me all the things that I feel like I know today.
• 0:11
  SPEAKER_02: But Silicon Valley in some ways is like a game of purely exceptional people.
• 0:16
  SPEAKER_02: I started Lightspeed Stand as a more product market thesis driven investor by the time I was leaving.
• 0:21
  SPEAKER_02: I was all the people driven investor.
• 0:23
  SPEAKER_02: You know, Doug Leoni had this statement and never understood it in the beginning.
• 0:26
  SPEAKER_02: In venture, you can lose one extra money, but you can make hundred extra money.
• 0:29
  SPEAKER_02: So if you're on the fence, you should leave it.
• 0:31
  SPEAKER_02: What I realized is this statement holds true only if.
• 0:36
  SPEAKER_02: As a founder, you need to walk into rooms and make people believe other people should say, look, I don't know about this idea, but this person might pull it off.
• 0:43
  SPEAKER_02: That is the kind of reality distortion that's needed, right?
• 0:46
  SPEAKER_02: So the question is like, can I convert my hunger of today into unfair advantages of tomorrow?
• 0:54
  SPEAKER_00: Makum, welcome to the Neon Show.
• 0:57
  SPEAKER_00: Thank you.
• 0:58
  SPEAKER_00: You are one of the most intense VCs that I have met.
• 1:01
  SPEAKER_00: In a positive way.
• 1:03
  SPEAKER_02: Hopefully, yeah, that will uh remain positive.
• 1:06
  SPEAKER_02: Yeah.
• 1:06
  SPEAKER_00: Yeah.
• 1:07
  unknown: Yeah.
• 1:07
  SPEAKER_00: And other thing that you uh shared is that you came to Bay Area at 20 years of 28 years of age.
• 1:14
  SPEAKER_00: And you learned the VC game or the Bay Area games, the Silicon Valley game, the hard way at age of what, 38, 39?
• 1:22
  SPEAKER_02: Uh you know, I came to the Bay Area at 28.
• 1:24
  SPEAKER_00: Yeah.
• 1:25
  SPEAKER_02: Uh, and that was a complete stroke of luck.
• 1:27
  SPEAKER_02: I was really building my career in India, and uh, you know, at that time, my life plan when I joined Battery in Mumbai was that one day, like in a couple of more years after seeing through the financial crisis, I'll just get enough exposure to company building.
• 1:43
  SPEAKER_02: But then my plan was to start a company.
• 1:45
  SPEAKER_02: Uh, and I'd never visited the US.
• 1:47
  SPEAKER_02: So I came to the US completely by a stroke of luck, which is Battery hired me in Mumbai.
• 1:52
  SPEAKER_02: In my very first week, they uh let go of the guy who was leading up India for them.
• 1:57
  SPEAKER_02: And they initially asked me to move here for two, three years and focus on India from here and then go back and set up that office.
• 2:04
  SPEAKER_02: Um, and then I came here and I quickly realized that the US at the time at least, I don't know if it's still true, but Silicon Valley felt like a hundredx bigger opportunity.
• 2:12
  SPEAKER_02: Uh, so I came here, I uh started volunteering for the US partners, initially thinking that I'm in Silicon Valley, I might as well maximize my learning because I'm only here for two years.
• 2:25
  SPEAKER_02: Uh and uh I did feel like I was going to get fired candidly because I felt like Battery was looking for Silicon Valley businesses in India.
• 2:33
  SPEAKER_02: India didn't have those at the time.
• 2:34
  SPEAKER_02: Again, this is 2009.
• 2:35
  SPEAKER_02: This is a different world today.
• 2:38
  SPEAKER_02: Um, and so I thought that okay, I'm going to get fired, which for me was a pretty crazy thing to even say out loud because before that I had been IIT, IM, went to Mumbai, was one of the first few people, maybe first 50 or 75 people in investing in India, and then got to battery ventures, came to Silicon Valley, and then I'm like, oh, I shit, I might get fired.
• 3:00
  SPEAKER_02: Uh but I thought I'll maximize my learning here, and then in that process, I volunteered for enough US partners that I got the chance to reinvent myself when they shut down the India practice completely.
• 3:11
  SPEAKER_02: Long way of saying, I still what I was telling you is that like I came here by happenstance.
• 3:20
  SPEAKER_02: I did well, obviously, but I would still say like it took me seven, eight years to really get the game of Silicon Valley.
• 3:29
  SPEAKER_02: Uh and I wish like somebody had just shaken me in my first year and told me all the things that I feel like I know today and maybe I'm still learning.
• 3:38
  SPEAKER_02: Uh but Silicon Valley in some ways is like a game of purely exceptional people.
• 3:44
  SPEAKER_02: And by definition, there are very, very few exceptional people, right?
• 3:47
  SPEAKER_02: So uh like if you think about it, like there's probably about five million people who live around Silicon Valley, uh like SF, Peninsula, South Bay, something like that.
• 3:56
  SPEAKER_00: All people in tech here.
• 3:58
  SPEAKER_02: Yeah, 5 million plus minus the population, maybe half of that is in tech, right?
• 4:02
  SPEAKER_01: Yeah.
• 4:03
  SPEAKER_02: Uh I don't I don't know how much of it.
• 4:04
  SPEAKER_02: But but if you really have to estimate how many people drive all of the success of Silicon Valley, that number is pro I'm guessing right now.
• 4:15
  SPEAKER_02: Sure.
• 4:15
  SPEAKER_02: But it's probably a 5,000, if I have to really, like maybe about 500 to 1,000 founders who are really driving the future of Silicon Valley.
• 4:25
  SPEAKER_02: Uh of course, a new flood of people keeps coming in every year, right?
• 4:29
  SPEAKER_02: Uh YC startups and all of that.
• 4:32
  SPEAKER_02: Uh but if you think about the 5,000, so 5,000, just guesstimating this, is 0.1%, right?
• 4:40
  SPEAKER_02: Yeah, 0.1% of 5 million.
• 4:42
  SPEAKER_02: So the whole game is about getting to know those exceptional people because A, they are changing the future of the world, and B, being in proximity to them changes your view of where the world is going, but also your bar of execution for yourself, that leads to other recruiting opportunities, that leads to investment opportunities.
• 5:01
  SPEAKER_02: Uh versus when you come in from outside and you think of it like an investor outside the Bay Area, you think of ideas, you think of hey, where the world is going, you have to come up with the thesis.
• 5:14
  SPEAKER_02: Candidly, you don't need to come up with the thesis.
• 5:17
  SPEAKER_02: You just need to spend time with the smartest people on earth, what they are building, they will tell you where the world is going rather than you coming up.
• 5:25
  SPEAKER_02: So I would say the first four, five years, I really spent time think coming up with thesis.
• 5:30
  SPEAKER_02: I was a thesis-driven investor, and I wish I'd just spent all my time getting to know the those 5,000, 10,000 people in the valley, and that would have changed my life.
• 5:41
  SPEAKER_02: Now I just spend my entire day and week thinking who are those exceptional people, and can I get to meet them and can I spend time learning from them?
• 5:51
  SPEAKER_02: And that informs my thinking on every aspect of the game.
• 5:54
  SPEAKER_02: Uh, so accordingly, like we've built Audacious to be a talent-focused form, right?
• 5:58
  SPEAKER_02: We we think we have only two jobs invest in forces of nature, help them recruit.
• 6:03
  SPEAKER_02: Uh, but sorry, long way of saying, yeah, I do feel like that game I really understood by 2018, 29.
• 6:10
  SPEAKER_02: Yeah, something like 2017, 2018.
• 6:12
  SPEAKER_00: You were what, 35, 36 back then?
• 6:16
  SPEAKER_02: Yeah, I'm 1981, so yeah, something like that.
• 6:20
  SPEAKER_02: And I still personally feel like that's a race against time that is permanent for me now, right?
• 6:25
  SPEAKER_02: Because I wish I'd learned that at 25.
• 6:28
  SPEAKER_02: But 25 was just coming into Mumbai.
• 6:33
  SPEAKER_00: So so these are the few things, you know, that define your your life.
• 6:37
  SPEAKER_00: I think there's a huge drive that I see in you.
• 6:39
  SPEAKER_00: There's intensity, the palpitative intensity.
• 6:42
  SPEAKER_00: And there's the I like even though, in my opinion, uh, you know, inside each of us is a kid, I still believe, no matter how old we get.
• 6:50
  SPEAKER_00: So I I see, you know, I'm like a boy from me, right?
• 6:53
  SPEAKER_00: Even I'm 39 years of age, built uh, you know, on the fourth fund of Neon, being an entrepreneur.
• 6:59
  SPEAKER_00: And I see, you know, inside you, you're a boy from Kanpur.
• 7:02
  SPEAKER_00: Right?
• 7:02
  SPEAKER_00: We can't get rid of our roots, and our roots are what defines us.
• 7:06
  SPEAKER_00: What I really appreciate is, you know, uh, in the journey that you had shared with us pre-podcast, you come from a normal family from India, from Kanpur.
• 7:15
  SPEAKER_00: Kanpur is a tier two or a tier three town, right?
• 7:19
  SPEAKER_00: And you mentioned some personal incidences, right?
• 7:22
  SPEAKER_00: You mentioned that your brother was born paralyzed, right?
• 7:25
  SPEAKER_00: And that changed the trajectory of the family.
• 7:28
  SPEAKER_00: And you saw the sacrifices that your father and mother made uh, you know, in their careers, in their lives.
• 7:36
  SPEAKER_00: And some part, you know, your drive, I believe, comes from uh their sacrifices, and in your success, you see their success and their sacrifices.
• 7:46
  SPEAKER_02: Yeah, first of all, thanks for having me.
• 7:49
  SPEAKER_02: Uh, you know, uh it feels like it's been a long time going based on the various uh conversations that led up to it.
• 7:56
  SPEAKER_02: Yeah, I think for me, uh yeah, you know, I think um a like a lot of me today is just a function of my childhood, probably for everyone else.
• 8:06
  SPEAKER_02: Uh but I grew up watching my dad being an entrepreneur, so wanting to be an entrepreneur was pretty much just wanting to follow in his footsteps.
• 8:14
  SPEAKER_02: So the entrepreneurial bugging me was pretty early on.
• 8:17
  SPEAKER_02: But in terms of my personality and what shapes me, is a little bit of that, you know, my teenage years were spent uh in a pretty intense way, in the sense that you know, my from I I was leading a normal life to be clear.
• 8:32
  SPEAKER_02: But for my brother, it was a pretty intense life.
• 8:34
  SPEAKER_02: For my parents, it was a pretty intense life and taking care of him and you know, healthcare bills and stuff.
• 8:40
  SPEAKER_02: And this was India of the 90s, so it wasn't that India was thriving the way it is thriving today, right?
• 8:46
  SPEAKER_02: So so I grew up pretty intense, wanting to have success and felt that hey, the naive take of life I had was that one day I'll make a lot of money and it'll solve my family's problems, which is I call it naive because it's somewhat true.
• 9:00
  SPEAKER_02: Money does solve a lot of problems for especially if you're coming from middle income India, but it doesn't solve everything.
• 9:06
  SPEAKER_02: Yeah, uh, but uh there was also this element of that, hey, you know, one day I'll be super successful, and my family's success has to come through me.
• 9:17
  SPEAKER_02: Uh because uh all the other three members had their work cut out in terms of uh the challenges they had to overcome.
• 9:26
  SPEAKER_02: I was the only one who was having a normal life, and I felt like I owed it to them at some level to really push it.
• 9:34
  SPEAKER_02: Uh, so it did, you know, uh, I still feel like there's an element of me where I feel like uh uh like I can't take tomorrow for granted.
• 9:45
  SPEAKER_02: Uh, you know, this is like it has to come, uh the success has to come, and I need I almost owe it to uh the opportunity awarded to me to have a healthy life in the Bay Area.
• 9:58
  SPEAKER_02: Not everybody gets to live this.
• 9:59
  SPEAKER_02: I feel very grateful for it, but I also bring the intensity to match that gratitude.
• 10:05
  SPEAKER_00: But a boy from Kanpur has made it big in Silicon Valley.
• 10:08
  SPEAKER_00: The truth is that.
• 10:09
  SPEAKER_00: Don't you feel that?
• 10:12
  SPEAKER_02: Uh I I I don't feel that, and I genuinely don't feel that.
• 10:16
  SPEAKER_02: And the reason is look, I think uh partly uh, you know, partly uh it's like this is Silicon Valley.
• 10:28
  SPEAKER_02: Look around you.
• 10:29
  SPEAKER_02: Like there are people uh on the VC side who've backed the last like hundred billion dollar company, OpenAI.
• 10:36
  SPEAKER_02: Like he we know that Coastal has backed OpenAI and Square.
• 10:40
  SPEAKER_02: There are people at Sequoia who've backed so many things.
• 10:43
  SPEAKER_02: My former firm, Lightspeed Ravi Matre, has backed Rubrik and uh Anthropic and stuff.
• 10:50
  SPEAKER_02: So, you know, I I don't think it's easy for people to ever feel they've arrived in Silicon Valley.
• 10:56
  SPEAKER_02: I definitely don't feel so.
• 10:58
  SPEAKER_02: I I feel like I've earned my right to be here.
• 11:01
  SPEAKER_02: I I do believe that.
• 11:03
  SPEAKER_02: I I feel I've earned my right to raise funds, I've earned my I you know, there's a track record on paper that I show on an Excel sheet to my LPs, and that's why they give me the money to manage and invest.
• 11:14
  SPEAKER_02: But I I I feel like there's a lot to accomplish to truly call yourself that you've accomplished a lot in Silicon Valley.
• 11:21
  SPEAKER_02: The opportunity set here is insanely large.
• 11:24
  SPEAKER_02: So, you know, I think like if you're outside Silicon Valley, there's this element of can you hustle your way to success?
• 11:33
  SPEAKER_02: Uh yes.
• 11:35
  SPEAKER_02: Then in that definition, I've probably gone a long distance.
• 11:39
  SPEAKER_02: But I would say like the opportunity set here is so insanely large.
• 11:44
  SPEAKER_02: I mean, look at Anthropic, it could be a trillion dollar company, OpenAI, it could be a trillion dollar company.
• 11:49
  SPEAKER_02: So if you've backed a company uh as a VC that became a$5 billion company,$2 billion company, right?
• 11:56
  SPEAKER_02: That's good, but it's not game-changing in the Silicon Valley scheme of things.
• 12:02
  SPEAKER_02: And so I think like, yeah, I don't feel so, but uh hopefully that's a good thing for me to constantly feel.
• 12:08
  SPEAKER_02: Uh yeah.
• 12:09
  SPEAKER_00: And you mentioned that you know the game of Silicon Valley is hanging out with those 5,000 people that are exceptional and that matter, and then they define the game how it's played.
• 12:20
  SPEAKER_00: But today, where would you say you have?
• 12:22
  SPEAKER_00: You are at 5,000 out of 5,000, you are at 2,000 out of 5,000.
• 12:27
  SPEAKER_02: I I don't know the answer, but uh I I'd guess that as audacious we do feel as a firm we get in front of our fair share of the next set of people who are starting that.
• 12:40
  SPEAKER_02: And yeah, look, Kane, like uh when recently I launched a podcast, I was able to get like several legends back to back and stuff.
• 12:50
  SPEAKER_02: So I do think we have access to the people who've made it uh because of our relationships, and that's just not just me, it's me and my entire team here.
• 12:59
  SPEAKER_02: Um the bigger question is like, uh are we as an early stage venture firm getting access to the next set of people, the next 5,000, next 2,000 people?
• 13:11
  SPEAKER_02: Uh I think we have good access there.
• 13:13
  SPEAKER_02: Uh then the question is: do you have access to get in front of them?
• 13:16
  SPEAKER_02: Do you have the wisdom to actually invest in the right ones?
• 13:20
  SPEAKER_02: So that's the venture game, which is sourcing, picking, winning, helping.
• 13:23
  SPEAKER_02: Yeah, right.
• 13:23
  SPEAKER_02: Uh if you say pure sourcing, probably, yeah.
• 13:27
  SPEAKER_02: I I think we've created a good footprint here.
• 13:30
  SPEAKER_02: Uh but then it multiplies with each other.
• 13:33
  SPEAKER_02: Did you see it?
• 13:34
  SPEAKER_02: Then did you pick it well?
• 13:35
  SPEAKER_02: Did you win it?
• 13:36
  SPEAKER_02: Did you help enough companies that they will create the winnability on the next one that you compete on?
• 13:42
  SPEAKER_02: Uh, our belief is yeah, we will get more than our fair share.
• 13:45
  SPEAKER_02: That's why we are otherwise, why be in business?
• 13:47
  SPEAKER_02: Pack up your bags and leave.
• 13:49
  SPEAKER_02: Uh so we do believe that yeah, we will create an unfair market share of those cap tables in our portfolio.
• 13:56
  SPEAKER_02: Uh but it's being played right now.
• 13:59
  SPEAKER_02: That game is being played every week, every month.
• 14:02
  SPEAKER_02: Yeah.
• 14:02
  SPEAKER_00: So the the intensity of the game never loses here, right?
• 14:07
  SPEAKER_00: You have to always be in your toes.
• 14:09
  SPEAKER_00: You can't take it for granted.
• 14:11
  SPEAKER_02: Yeah, because I think like, look, that's uh, but it's not just in Silicon Valley.
• 14:17
  SPEAKER_02: I'm guessing it's the same in Bangalore today or Mumbai.
• 14:20
  SPEAKER_02: It's there's always a younger said or a younger knuckle waiting, right?
• 14:26
  SPEAKER_02: We are not the only ones who have hustle or intelligence or have hunger, right?
• 14:31
  SPEAKER_02: Uh there's always that.
• 14:32
  SPEAKER_02: Uh so I don't know what things are uniqueness.
• 14:37
  SPEAKER_02: I think the question is, and so in Silicon Valley, especially, it's attracting all kinds of hungry, very smart people, much smarter than me at least.
• 14:45
  SPEAKER_02: And so the question is like, can you can you fail?
• 14:48
  SPEAKER_02: So I I try to think of it more as can I convert my hunger of today into unfair advantages of tomorrow, right?
• 14:55
  SPEAKER_02: So can we meet enough of those amazing people?
• 14:59
  SPEAKER_02: Do they become part of the community of the firm that they can create unfair advantages to win the next deal that we are trying to compete on with very smart and hungry people, right?
• 15:09
  SPEAKER_02: So I think yeah, you you you stay you stay on your toes because the world is a competitive place.
• 15:16
  SPEAKER_02: And uh yeah, there are lots of amazing VC firms here and lots of amazing spin-outs happening now.
• 15:21
  SPEAKER_02: So lots of amazing seed firms now.
• 15:24
  SPEAKER_02: Uh but some of the legends also are as hungry as ever, right?
• 15:29
  SPEAKER_00: And uh, you know, you started Auditors at a very interesting time in history.
• 15:34
  SPEAKER_01: Yeah.
• 15:34
  SPEAKER_00: You know, you put in your papers in I think August 2019, by the time you were out of light speed, it was March 2020.
• 15:41
  SPEAKER_01: Yeah.
• 15:41
  SPEAKER_00: COVID had hit, the world was shut down.
• 15:45
  SPEAKER_00: And as soon as you went into your first fundraise, uh right, uh it took 14 months.
• 15:51
  SPEAKER_00: And for uh you were a like, I think one of the youngest GPs, if I would say at light speed.
• 15:57
  SPEAKER_02: Uh I don't know.
• 15:58
  SPEAKER_02: Uh, but I was one of the yeah, of the eight people who were kind of senior at that time.
• 16:03
  SPEAKER_02: Yeah, I was probably on the younger side.
• 16:04
  SPEAKER_02: I don't think I was the youngest, but yeah.
• 16:06
  SPEAKER_00: Yeah, yeah.
• 16:07
  SPEAKER_00: But but for a for a GP at light speed, you know, it took it to your heart that you know uh it took 14 months to raise, you know.
• 16:16
  SPEAKER_00: And it was not a very large sum, it was ninety million dollars from Silicon Valley school scale.
• 16:21
  SPEAKER_00: So you would have, I think, expected it to close in three months.
• 16:24
  SPEAKER_02: Yeah, no, I I I I thought so.
• 16:27
  SPEAKER_02: I think uh in you know it in in in that moment it felt pretty ego-bruising.
• 16:34
  SPEAKER_02: Uh in retrospect, I think it's probably good for our DNA forever because we will never take capital for granted.
• 16:40
  SPEAKER_02: And uh, but what happened essentially, yeah, like when I resigned, uh, there was no mention of COVID anywhere in the world.
• 16:47
  SPEAKER_02: Uh, by the time I was leaving, it was the first month of COVID lockdowns.
• 16:51
  SPEAKER_02: Uh, I also think like ultimately, maybe that's just an excuse.
• 16:55
  SPEAKER_02: It could have, it should have still happened faster, right?
• 16:58
  SPEAKER_02: And so uh, but COVID happened.
• 17:01
  SPEAKER_02: I I think the world was dramatically changing.
• 17:03
  SPEAKER_02: LPs were not used to Zoom-based decision making.
• 17:06
  SPEAKER_02: Uh, I think one of the things I underestimated was how long LP fundraising dynamics work.
• 17:12
  SPEAKER_02: So there's something called pre-marketing, which is you tell LPs in advance that, hey, I'm going to raise in this quarter.
• 17:18
  SPEAKER_02: I hadn't thought of that.
• 17:19
  SPEAKER_02: I I thought I'll just leave, I'll go out, I'll tell my story.
• 17:22
  SPEAKER_02: It's a good immigrant story, and I was a rising star, so I could get it done.
• 17:26
  SPEAKER_02: It doesn't work that way.
• 17:27
  SPEAKER_02: You have to tell people in advance, and there's some rookie mistakes I was making regardless of the COVID dynamics.
• 17:33
  SPEAKER_02: Uh, I was also probably earlier than the typical person who leaves or left at the time because my I'd been at light speed for six years, so my track record hadn't fully formed.
• 17:44
  SPEAKER_02: Now it's much full, much more baked.
• 17:46
  SPEAKER_02: So at that time, it felt that the combo of my track record was less than baked.
• 17:52
  SPEAKER_02: Uh, you know, I was making some rookie mistakes on fundraising uh and in COVID.
• 17:58
  SPEAKER_02: So that combo led to it being a long race.
• 18:01
  SPEAKER_02: I still probably wake up slightly angry every day that why did that that take that much time?
• 18:07
  SPEAKER_02: In retrospect, it was good because you know, uh I I feel like uh every eight to ten years you probably need a punch in your gut to keep you humble and hungry.
• 18:18
  SPEAKER_02: And but in the moment it sucked.
• 18:21
  SPEAKER_02: No question.
• 18:23
  SPEAKER_02: Uh, and I've I had a lot of questions for myself as to what am I doing wrong, or yeah, all kinds of uh the inside baseball that happens in your mind when things are tough.
• 18:33
  SPEAKER_00: Because assuming a GPA at LightSpeed would have, you know, and starting a firm at such an early stage, which is probably I think feeding into LightFeed, uh right, would have access to all the LPs of Lightspeed at that point.
• 18:45
  SPEAKER_02: So I think the way it works is slightly different.
• 18:49
  SPEAKER_02: I I didn't have an LP intro problem.
• 18:51
  SPEAKER_02: So typically I had enough friends who were making a lot of intros.
• 18:55
  SPEAKER_02: Uh but I think people have the legitimate question, and it's the right question to ask, which is hey, you being inside a great firm like Lightspeed, you had access to those founders because of Lightspeed or because of you?
• 19:06
  SPEAKER_02: And so that question has to be answered during the diligence, and some will lean in yes or no.
• 19:11
  unknown: Yeah.
• 19:11
  SPEAKER_02: That's so I I don't and I think now spin-outs are happening pretty common.
• 19:17
  SPEAKER_02: At that time, actually, like again, like 2020, when I was leaving, yeah, spin outs was not common.
• 19:24
  SPEAKER_02: Like I was probably one of the first, or if not the first, of this current crop of spin-outs.
• 19:30
  SPEAKER_02: So I think then it also becomes like what are people used to, right?
• 19:35
  SPEAKER_02: And if people are used to the idea that, hey, big firms are big, like spin outs don't happen.
• 19:40
  SPEAKER_02: And typically, uh, you know, the people who start their own firms are people who either don't get those jobs and accordingly they start with as angels and they raise$50 million funds versus straight up saying 90 million for fund one.
• 19:53
  SPEAKER_02: Like all of those dynamics have changed to the opposite now.
• 19:57
  SPEAKER_02: Now it's pretty normal for somebody to spin out raise 200 million right off the bat.
• 20:01
  SPEAKER_02: Uh at that time, actually, I remember in one of my first meetings, somebody said, hey, 90 million, or like I was saying 75 on the cover, and people were like 75 is a little big big uh for a first fund.
• 20:15
  SPEAKER_02: I didn't feel so.
• 20:16
  SPEAKER_02: Uh, but I got that comment also on the other side.
• 20:20
  SPEAKER_02: So I think the world has changed and you can't evaluate the world for, but it took long, it was ego bruising.
• 20:26
  SPEAKER_02: In retrospect, that's probably good, but in that moment it fucking sucked.
• 20:31
  SPEAKER_00: And uh it it also I believed uh showed you that you have to start winning again back from zero.
• 20:40
  unknown: Right?
• 20:40
  SPEAKER_00: There is very much so, yeah, because the the brand and everything is is gone now.
• 20:46
  SPEAKER_02: Yeah, I I think uh you know, it didn't uh it probably didn't instantly hit me because you know, again, on even on fundraising but also on competitive deals, uh I would say the bigger shock was more that we started investing in January 21, and then the first two years of investing got effectively completely like became redundant because of the chat GPT moment that came around November, I think November of 22 or December of 22.
• 21:19
  SPEAKER_02: Um so I I felt the world completely changed, and also like in December 21, the market started crashing.
• 21:25
  SPEAKER_02: So we started investing in the peak of a bull run.
• 21:27
  SPEAKER_02: So we started fundraising in the first few months of COVID, so that became tough.
• 21:32
  SPEAKER_02: Then we started investing in the peak of a bull run.
• 21:34
  SPEAKER_02: Actually, the first few markups were very quick.
• 21:36
  SPEAKER_02: Like uh I remember our second investment ever got like 2x marked up by Excel, which is obviously a great firm, within like three months of us doing that investment.
• 21:47
  SPEAKER_02: So, like I would say, like even on fundraising, like we got Stepstone, which is one of the a green spring at the time, one of the marquee LP names very quickly.
• 21:57
  SPEAKER_02: We got markups quickly after we started investing.
• 22:01
  SPEAKER_02: So I'd say for us, it was more that every year had its own hiccup, weird hiccup.
• 22:07
  SPEAKER_02: 2020 was COVID.
• 22:09
  SPEAKER_02: 21 was the peak of a bull run.
• 22:11
  SPEAKER_02: We got markups quickly, but December 21, the market crashed.
• 22:14
  SPEAKER_02: And then 22 was a slow year, like because it was all bloom and doom in the markets.
• 22:18
  SPEAKER_02: But then the end of 22, Chat GPT came out, the world changed.
• 22:23
  SPEAKER_02: I'd say the mistake, we probably should have, we should have like shook off the two years of portfolio build-out that we had done and just thought only AI going forward.
• 22:34
  SPEAKER_02: But we probably were somewhat, we were like a little like, hey, we have this two-year portfolio that we've built, that's all pre-AI.
• 22:43
  SPEAKER_02: What will happen to this?
• 22:45
  SPEAKER_02: And how do we get those companies to a better place?
• 22:48
  SPEAKER_02: Which all of us were facing.
• 22:49
  SPEAKER_02: So we were not the only ones.
• 22:50
  SPEAKER_02: But I would say the first two, three years was such a roller coaster that we probably took time.
• 22:54
  SPEAKER_02: So I don't think it was so much as we didn't feel the burn in the first few months of anything.
• 23:00
  SPEAKER_02: It was just second innings of the fundraise felt harder than the first innings.
• 23:05
  SPEAKER_02: The low-hanging fruit we got quickly.
• 23:06
  SPEAKER_02: Same thing on winning competitive deals as a new firm.
• 23:09
  SPEAKER_02: We got that going quickly.
• 23:12
  SPEAKER_02: But it's really like if you are on a 30-year journey to build something, you are you have to expect that there'll be some dark days.
• 23:19
  SPEAKER_02: And for us, those dark days came in the first three years in very different ways.
• 23:24
  SPEAKER_02: And thankfully, we powered through.
• 23:27
  SPEAKER_02: But it wasn't one moment where it felt, oh shit, this is hard.
• 23:31
  SPEAKER_02: It felt some good days and some bad days.
• 23:34
  SPEAKER_02: And does that make sense?
• 23:36
  SPEAKER_02: Yeah, yeah.
• 23:36
  SPEAKER_00: And so you mentioned that uh once ChatGPT came in and you are seeing the world changing, you you became slow in deployment at that period in time.
• 23:47
  SPEAKER_01: Yeah.
• 23:48
  SPEAKER_00: Right.
• 23:48
  SPEAKER_00: And then you have to revise a firm to completely become AI native if you have to hunt for the best AI founders.
• 23:55
  unknown: Yeah.
• 23:56
  SPEAKER_02: Yeah.
• 23:56
  SPEAKER_02: So I'd say we um yeah, 23 we took it slow.
• 24:01
  SPEAKER_02: In retrospect, I don't know if that was the right call.
• 24:04
  SPEAKER_02: We should have probably gone wholesale into AI, learned the game, maybe it's deploy slow or not, is irrelevant.
• 24:10
  SPEAKER_02: Uh the best thing we did was we deployed our first fund over four years instead of the typical two years, which was happening around that time for everyone.
• 24:19
  SPEAKER_02: Because if we had deployed over two years, imagine 21 and 22, our entire first fund would be a pre-AI fund and we'd be toast.
• 24:25
  SPEAKER_02: Uh so thankfully we took our time.
• 24:28
  SPEAKER_02: And in fact, we raised our second fund uh in March of 24.
• 24:35
  SPEAKER_02: If we closed it very quickly, like three months raise, but we didn't open it till January of 25.
• 24:42
  SPEAKER_02: The reason is we felt like we need to get as much AI exposure into our first one.
• 24:46
  SPEAKER_02: So that in retrospect will be a good move.
• 24:48
  SPEAKER_02: Uh where I think we could have done better is that in 23 we should have shifted our entire focus and said we need to learn how this new world is getting written and built and just go wholesale and uh on this.
• 25:04
  SPEAKER_02: Uh we could have made a harder shift towards that, uh, which we probably made by 24 or mid-24.
• 25:12
  SPEAKER_02: We should have done it harder.
• 25:14
  SPEAKER_00: You also realize another thing in venture.
• 25:16
  SPEAKER_00: I think you acted preemptively on that.
• 25:18
  SPEAKER_00: That the game of AI is just not getting played at early stage.
• 25:21
  SPEAKER_00: It's also getting played at good growth stage, and probably a billion entry prices also cheap.
• 25:26
  SPEAKER_02: Yeah.
• 25:28
  SPEAKER_02: That was also, you know, I think one of the biggest things is like um there's just luck that hits you or serendipity hits you if you act enough, right?
• 25:37
  SPEAKER_02: So candidly, the way we didn't think of it as this is an AI aspect that you should also play at growth.
• 25:45
  SPEAKER_02: What we were thinking is we are a seed stage firm, how do we ensure that we are constantly calibrated with what greatness looks like at different stages of company building?
• 25:54
  SPEAKER_02: So at the very inception of the fund, we carved out three to five million dollars for us to do small checks in series A's and B's, initially A's and B's, with the idea that hey, if we love a founder, we love the market, but it's past our stage, we should still put in a small check just to be in proximity to greatness constantly.
• 26:11
  SPEAKER_02: Where that played a role was that uh in parallel, we had also built our value prop to founders is all about building A plus teams.
• 26:18
  SPEAKER_02: So I think around maybe a year and a half ago, uh, yeah, I think a year and a half ago, uh, what happened is that we ended up investing in a company called Reflection AI, which my friend Ravi Raj at Lightspeed was doing, and you know, he he mentioned it and he showed me the team, and I was like on literally on at we were sitting at a bar and he was just talking about something he was doing recently, and uh he showed me his investment memo on the phone that hey, this is how stacked this team is, and I was like, this looks looks incredible, I want to be involved in some way.
• 26:52
  SPEAKER_02: So I pitched them reflection the value prop of recruiting, and they liked it, and that triggered a cycle where then we got involved with Decagon, Avoca, and some others.
• 27:02
  SPEAKER_02: Or to say it wasn't like very planned out that hey, in AI we need to play this game, but there was at some point an internalization that market sizes have changed in tech.
• 27:13
  SPEAKER_02: Success is no longer a five-10 billion dollar company, success is now a hundred billion dollar plus company, and so the way I internalized it was we have uh uh we we have one play, which is we insert ourselves into seed companies, seed stitch companies with 10 to 14 percent ownership or something like that, right?
• 27:33
  SPEAKER_02: If we can catch them, but if we miss them, we should have a second bite at the apple where you know we should still be able to catch greatness.
• 27:41
  SPEAKER_02: Uh, and that's what we kind of started feeling.
• 27:44
  SPEAKER_02: So with reflection decagon, it was more that hey, let's make sure we are constantly in business with greatness.
• 27:50
  SPEAKER_02: But the reason you can get in later and it can still be very value accruing, is that in AI, like market sizes can be 100 billion in tech more broadly now, right?
• 28:00
  SPEAKER_02: Databricks and others are also like it's not just AI.
• 28:03
  SPEAKER_02: And so I think market sizes increasing has also changed the ability to play power law at later stage, uh, which is why I think the venture game has shifted wholesale, not just like the we are we are only doing a small part of this, but like a lot of the venture guys have gone towards playing that game.
• 28:22
  SPEAKER_02: And so I think there's a little bit of a glut in early stage, which hopefully we will benefit from because we still feel like we can help at the earlier stages.
• 28:30
  SPEAKER_00: So now you are saying the venture game has changed, right?
• 28:33
  SPEAKER_00: You have been like what almost 20 years in venture now?
• 28:36
  SPEAKER_02: Uh if you count my days in India, yeah, but uh in the US, maybe 16, 17 years.
• 28:41
  SPEAKER_00: Yeah, so let's let's just talk about those 16 years.
• 28:44
  SPEAKER_00: How has venture game evolved in every cycle?
• 28:47
  SPEAKER_00: And I believe the firms were at top of this game kept evolving very rapidly.
• 28:53
  SPEAKER_02: Yeah, so I would say um, you know, when I came here in 2009, um, and recent was just getting started, and they were uh Angelus was just getting started, and then YC was becoming a force, right?
• 29:06
  SPEAKER_02: YC had started, but it was becoming a force in those years.
• 29:09
  SPEAKER_02: So I'd say that first wave of 2009 or 10, 2010 to 2017, 18, maybe till 2020, even it was more that uh, and recent changed the game in terms of Twitter and media as a strategy of marketing the form.
• 29:29
  SPEAKER_02: Uh YC changed the game in terms of how many founders had access to funding, right?
• 29:34
  SPEAKER_02: So YC democratized this opportunity for even an Indian founder to move and get access to Silicon Valley's best networks and best guidance.
• 29:43
  SPEAKER_02: Um, and Angel List changed the game in terms of maybe small investors becoming a real asset class, right?
• 29:49
  SPEAKER_02: So before Angel List and before YC and all and AWS crashed the cost of launching company.
• 29:56
  SPEAKER_02: So all of these things came together that seed became an asset class.
• 29:59
  SPEAKER_02: Seed was not a category.
• 30:00
  SPEAKER_02: Like before all of this, people would raise$8,$10 million straight up for CDZ to put up their own servers and do a lot of those things.
• 30:09
  SPEAKER_02: But they now, like by 2012 with cloud and everything, with$3 million, you could get a lot done, get in the hands of customers.
• 30:17
  SPEAKER_02: And so all of that happened and the seed asset class came.
• 30:19
  SPEAKER_02: But it took all of this, like YC, Angel List, AWS crashing the cost of launching a company.
• 30:25
  SPEAKER_02: Uh so I'd say, so what happened is like in 2010, let's say there was this concept of a top 20 firm.
• 30:33
  SPEAKER_01: Yeah.
• 30:34
  SPEAKER_02: Right?
• 30:34
  SPEAKER_02: There were 20 good firms, and maybe there was another 100 firms, but 20 good firms, right?
• 30:39
  SPEAKER_02: Uh, I think slowly what it's become even power law there, right?
• 30:43
  SPEAKER_02: There's now 500 VC firms, or maybe more, right?
• 30:46
  SPEAKER_02: And uh, but there are a few very, very dominant firms.
• 30:49
  SPEAKER_02: So Sequoia, uh, Founders Fund, Lightspeed, Andreessen, Benchmark, obviously.
• 30:56
  SPEAKER_02: Uh, and then there's a then there's a spectrum of people who can all hustle and fight, right?
• 31:01
  SPEAKER_02: So I think VC became a much more crowded landscape in the last five, six years.
• 31:06
  SPEAKER_02: Market sizes became extremely large, and the number of companies became much, much bigger, right?
• 31:13
  SPEAKER_02: The number of seed deals uh that get done in any given year is insane.
• 31:18
  SPEAKER_02: So I would say market the VC market has gone from a boutique market where there were few good firms, few amazing founders to meet, and it was all based on something called proprietary relationships.
• 31:28
  SPEAKER_02: To today, like there are 500 VC firms, thousands of companies to meet, uh, and market sizes are larger, so prices are high because people preemptively are willing to put up a higher entry uh valuation because they feel like hey, we can underwrite this to 10, 20, 30 billion dollars, which was another unicorn used to be a billion.
• 31:48
  SPEAKER_02: Now nobody cares about a billion dollar valuation candidate.
• 31:51
  SPEAKER_02: It's just a step in the way.
• 31:52
  SPEAKER_02: And so I think like the market has just completely changed and gone from boutique industry to a really the modern banking industry, so to speak.
• 32:01
  SPEAKER_02: Like this is the big financial services play now.
• 32:03
  SPEAKER_02: And accordingly, you see the difference in the environment a little bit, like it's much more mainstream, Silicon Valley.
• 32:10
  SPEAKER_02: Uh yeah, so it feels very dramatically different than you know, when we used to invest uh at that time at CDJ, like you would have like two and a half, three weeks due diligence a company.
• 32:22
  SPEAKER_02: Now it's probably six days for a good good one.
• 32:25
  SPEAKER_02: Like at seed, sometimes things move faster, you know.
• 32:29
  SPEAKER_00: And it's more competitive now, much more competitive, yeah.
• 32:33
  SPEAKER_02: For for I think all the deals worth it, you have to there's always going to be a company out of many, many companies any given year which are not competitive and which will be game-changing companies.
• 32:45
  SPEAKER_02: No question in my mind, at least.
• 32:47
  SPEAKER_02: Because uh venture is a game of outliers, not everything is obvious, and the underrated founder is always going to make big things happen.
• 32:57
  SPEAKER_02: But there's a lot of I think hot deal or not hot is completely orthogonal to eventual success.
• 33:03
  SPEAKER_02: Yeah, there are hot rounds that end up doing well, they're not hot rounds that end up doing well from an investment perspective, and likewise for companies, right?
• 33:12
  SPEAKER_02: But yeah, for a lot of things, it's very competitive right now, and I think it's a permanent feature.
• 33:18
  SPEAKER_02: So we all need to get used to it.
• 33:20
  SPEAKER_02: Like this is not a temporary thing.
• 33:22
  SPEAKER_00: You got your green card in 2019, is that right, right?
• 33:26
  SPEAKER_00: And as soon as so probably Audacious was in your mind for some point of time.
• 33:30
  SPEAKER_00: Yeah.
• 33:31
  SPEAKER_00: Right?
• 33:31
  SPEAKER_00: So as any immigrant founder, especially from India, you are waiting to get your green card to take the entrepreneurial charge.
• 33:39
  SPEAKER_02: Yeah.
• 33:39
  SPEAKER_02: So I I technically got it around December 2018, I think.
• 33:44
  SPEAKER_02: And then I was just waiting for a few months to see through it.
• 33:48
  SPEAKER_02: Meaning, uh, you know, uh, you don't want to resign immediately.
• 33:52
  SPEAKER_02: But yeah, so yeah, to answer question, uh or the thing you're pointing is uh yeah, I've always wanted to eventually start my own thing.
• 34:00
  SPEAKER_02: That's how I got into venture.
• 34:01
  SPEAKER_02: I thought I'll only do it for three years.
• 34:04
  SPEAKER_02: Then battery moved me here, so I ended up getting uh on an H1B visa, which you know life has been very good to me and generous to me, so I don't have any complaints, but it did mean that I ended up being on an H1B visa for 10 years, and I got uh kind of I I became a career VC by happenstance.
• 34:24
  SPEAKER_02: I didn't plan for that to be my career.
• 34:27
  SPEAKER_02: By the time I got my green card, I still wanted to do something of my own, but by then I had no other skill.
• 34:32
  SPEAKER_02: Like today, I don't have any other skill sets, right?
• 34:35
  SPEAKER_02: Uh, I've not run a sales team, I've not run an engineering team, and so I felt like you know, and I was 39 by the 10 by the time.
• 34:43
  SPEAKER_02: And so I just felt like in your late 30s, early 40s, you want to walk into a room with some unfair advantages.
• 34:49
  SPEAKER_02: Uh, if you're still like you're constantly learning, but if you have no unfair advantages, at some point you've not accumulated advantages at all.
• 34:56
  SPEAKER_02: And so I think I felt like my unfair advantages was was only in the VC game.
• 35:00
  SPEAKER_02: And that I still feel that hey, uh, you know, you even at that time, despite COVID and all of that, I was able to raise a first institutional fund of some scale, and then have been able to do that multiple like since then also, uh, and be in good companies and all of that.
• 35:18
  SPEAKER_02: But yeah, I so the idea of Audacious had been growing for years and years and years.
• 35:23
  SPEAKER_00: So, what were you not able to do in your journey as a VC earlier across let's say battery and lifespan that you're able to do now?
• 35:31
  SPEAKER_02: It's a very good question.
• 35:33
  SPEAKER_02: Um is the question more that why why start Audacious at but like in in terms of what you're able to do now?
• 35:43
  SPEAKER_02: Yeah, yeah.
• 35:43
  SPEAKER_02: I'd say uh there there are pros and cons, by the way.
• 35:46
  SPEAKER_02: I mean, there are things I could do at light speed, which I am still earning my way to do at Audacious.
• 35:52
  SPEAKER_02: So there's also the other side of it.
• 35:54
  SPEAKER_02: I think the answer to your question that what I can do now is that's great, is uh I think Silicon Valley values entrepreneurship.
• 36:02
  SPEAKER_02: Yeah.
• 36:03
  SPEAKER_02: And so they they're like, let's say I'm at a big firm, you know, you know, this ex-person is who's a big person is somebody else's relationships.
• 36:12
  SPEAKER_02: You want to be careful about not stepping on toes, and you have to be careful about things.
• 36:18
  SPEAKER_02: When I started Audacious, I was a free agent.
• 36:21
  SPEAKER_02: I could reach out to anyone, right?
• 36:23
  SPEAKER_02: And I think in Silicon Valley, people respond to entrepreneurship and high agency and stuff.
• 36:29
  SPEAKER_02: So I even got some of the best of the best in Silicon Valley, like Frank Slutman and others invested in the firm, which I probably did had some access, but I unlocked that access even more once I started the firm.
• 36:40
  SPEAKER_02: And today I feel like I can reach out to anyone without overthinking it.
• 36:44
  SPEAKER_02: So there's an element of freedom that comes with it.
• 36:47
  SPEAKER_01: Yeah.
• 36:47
  SPEAKER_02: Uh the uh other pieces, I think like um when you are part of a system, that system has its pros and cons.
• 36:57
  SPEAKER_02: Let's even talk about the pros, but you have to kind of align with that system's direction, right?
• 37:02
  SPEAKER_02: Versus hair, I think the best part that I have found for myself, I wouldn't recommend that this is a one-size-fits-all for everyone.
• 37:09
  SPEAKER_02: Is I wake up, the problems are mine, the solutions are mine, I feel very high agency about it in a way that, you know, the three of us, MZ, Sam, my talent partner, and MZ, my partner, of audacious and me.
• 37:27
  SPEAKER_02: We wake up, you know, we create the system that attacks the problems that we have, right?
• 37:32
  SPEAKER_02: So there's an authenticity that it allows to live with, where uh, you know, we don't blame other people for our problems.
• 37:40
  SPEAKER_02: You don't inherit somebody else's created problem, and you don't inherit somebody else's created solutions either.
• 37:47
  SPEAKER_02: Uh, so if we can go at it for 20 years and more, what audacious will be on that day would have been something that we would have built, both in its pros and cons.
• 37:57
  SPEAKER_02: And that there's a freedom that is attached to that.
• 38:00
  SPEAKER_02: At least free freedom freeing it frees your mind.
• 38:03
  SPEAKER_02: Uh, so I would say that is, but that's true about any entrepreneurial journey.
• 38:07
  SPEAKER_02: So it's no different here.
• 38:09
  SPEAKER_02: I'd say those are the things that you you know, we decide the strategy, we can change the strategy uh if we feel like hey, this is more aligned with our superpowers.
• 38:18
  SPEAKER_02: And so just ability to be nimble uh rather than uh be part of a large system where you have to also fit into the system strategy.
• 38:29
  SPEAKER_00: And so freedom is one part, just like playing across the spectrum is is one part because a firm doesn't need to, let's say, in Silicon Valley has proved it examples like anthropic, like ownership doesn't mean big outcome.
• 38:45
  SPEAKER_02: Yeah, so I would say there is an element of uh you have to earn your right to do those things with LPs also.
• 38:52
  SPEAKER_02: So look, everybody has accountability.
• 38:55
  SPEAKER_01: Yeah.
• 38:56
  SPEAKER_02: Uh if I am at a big firm, I have accountability to my partners there.
• 39:00
  SPEAKER_02: Maybe my bosses, those bosses have accountability to the LPs they've raised here.
• 39:06
  SPEAKER_02: I have accountability to LPs that I let's say pitch for a certain type of strategy.
• 39:12
  SPEAKER_02: If I veer two away from that strategy, then they they have the right to say, hey, the next fund we want, don't want.
• 39:18
  SPEAKER_02: And then I have the right to raise a different fund.
• 39:21
  SPEAKER_02: All of that is true, but it's my point is like this is uh still uh uh you're still part of an ecosystem where everybody has the ability to make good decisions for their own uh thing.
• 39:33
  SPEAKER_02: And so if we said suddenly say things or start doing invest in a way that is irresponsible, then we'll also bear the consequences.
• 39:42
  SPEAKER_02: So I I still think ultimately you want to raise capital for a certain strategy.
• 39:49
  SPEAKER_02: You get the license to do some like 5% of 10% of that fund on adjacent strategies to hit serendipity, as long as you report well on that and say, hey, this is a bucket we are creating to explore.
• 40:02
  SPEAKER_02: And as that bucket feels very promising, then you do more there.
• 40:06
  SPEAKER_02: Uh so you know, we send out a quarterly letter, as does every other GPE, where we try to be as transparent about the experiments we are running in pockets or like are these large experiments, small experiments, whether it's investing experiments, recruiting experiments.
• 40:20
  SPEAKER_02: I'll give you an example.
• 40:20
  SPEAKER_02: Like when uh in 2022, uh when we started the firm, I did feel this element that hey, SaaS is long in the tooth.
• 40:29
  SPEAKER_02: Yeah, like it was the 12th year of SaaS, and the obvious ideas had already been built and stuff.
• 40:34
  SPEAKER_02: And so we were like like stretching that hey, what what can happen in B2B FinTech?
• 40:39
  SPEAKER_02: Like, what are still insanely large markets where enterprises can put enterprise opportunities exist in early stage?
• 40:45
  SPEAKER_02: So we're doing B2B fintech, then we were trying picks and shovels in crypto because crypto was rising a lot.
• 40:50
  SPEAKER_02: But we then communicated to RLPs that hey, crypto we are dipping our toes.
• 40:54
  SPEAKER_02: So in the$90 million fund, we only did like about 3 million of investments.
• 40:58
  SPEAKER_02: But even for that three, we proactively communicated that we had dip art.
• 41:03
  SPEAKER_02: We recruited actually an intern from Stanford who was crypto dedicated for MZ and me to constantly learn from a younger person on how this community is thinking and working and what is the ethos, not just technology.
• 41:16
  SPEAKER_02: Technology you can read and you know have enough conversations with founders, but we wanted to get kind of get a sense of the how the crypto community looks and feels and behaves.
• 41:27
  SPEAKER_02: Uh, so we did that, and then ultimately we felt that that is not the biggest opportunity for us, and then of course AI came.
• 41:35
  SPEAKER_02: So you can run experiments, but you if you've raised money from institutions, you better be responsible stewards of that capital rather than you know a little.
• 41:46
  SPEAKER_02: At least that's the tack we've taken.
• 41:48
  SPEAKER_02: Maybe it's it leads to some conservative behavior, but we try to be responsible.
• 41:54
  SPEAKER_02: Uh we feel like hey, people have given us this capital to be responsible stewards.
• 41:59
  SPEAKER_00: So let's say in in one company across the two funds, how much would you have concentrated in one company?
• 42:07
  SPEAKER_02: Uh I would say uh we are early in this journey because look, we are only uh six years since we did our first fundraising meeting ever, right?
• 42:15
  SPEAKER_02: So five years into deployment and staff.
• 42:18
  SPEAKER_02: So we're still early, I would say.
• 42:19
  SPEAKER_02: All that to say, uh my expectation is that in our largest investments over time, where we keep adding, we might get to eight, ten percent definitively.
• 42:30
  SPEAKER_00: From a single fund.
• 42:31
  SPEAKER_02: From a single fund on one company and like seed series A and B.
• 42:35
  SPEAKER_02: We right now, uh I would say the largest is probably around six, seven percent.
• 42:41
  SPEAKER_02: Um yeah, I think I I think the largest, uh, which actually was a pre-AI company and then went sideways to nothing almost, to be clear, was a seven percent investment.
• 42:51
  SPEAKER_02: Uh like between seed series A and B.
• 42:53
  SPEAKER_02: We let the seed, we did A and B, and that was a seven percent investment that actually went completely sideways because it was a pre-AI company and all of that.
• 43:02
  SPEAKER_02: Uh so we expect that repeatedly every fund we want to at least have one where we can have enough uh conviction that we get to 8, 10%.
• 43:12
  SPEAKER_02: Uh, but you know, at seed it's not obvious right off the start.
• 43:16
  SPEAKER_02: There are companies that start slow and then become behemoths.
• 43:19
  SPEAKER_02: There are companies that are very fast off the bat and then might not work out.
• 43:23
  SPEAKER_02: So I personally think that the the way we at least have communicated to LPs is we want to take we want to invest at seed enough that we take good ownership.
• 43:33
  SPEAKER_02: Uh and then at we almost follow a U curve where series A, we are still we are investing, but uh watchful, it's around series B or C, where we really back up the truck to get to the 10%.
• 43:45
  SPEAKER_02: Uh, because by then we have three, four years of data, traction, the market environment, the founder scalability, all of that.
• 43:53
  SPEAKER_00: And you know, uh improbable outcomes, the definition of it has changed a lot in the last two years.
• 43:59
  SPEAKER_00: What is an improbable outcome?
• 44:00
  SPEAKER_00: Probable outcome for you today.
• 44:02
  SPEAKER_02: Yeah, improbable outcome, you know, it it uh as we were like thinking through the early days of Audacious and the phrases that we would use, that's what we codified in the uh website then candidly.
• 44:14
  SPEAKER_02: But we actually uh it all started with us constantly discussing what is an audacious investment, like what what represents our actual thinking.
• 44:24
  SPEAKER_02: Uh and the foundational thesis of the firm was that there are very, very few exceptional people.
• 44:29
  SPEAKER_02: I would say that was on day zero.
• 44:30
  SPEAKER_02: Uh I I started in my uh like light speed stint as a more product market thesis-driven investor.
• 44:37
  SPEAKER_02: By the time I was leaving, I was all a people-driven investor.
• 44:40
  SPEAKER_02: And my biggest learning was there are very, very few exceptional people.
• 44:43
  SPEAKER_02: This is my point about learning it by 2018 or something.
• 44:47
  SPEAKER_02: Uh and if there are very, very few exceptional people, what is what why why are there so few exceptional people?
• 44:54
  SPEAKER_02: Because I think it takes a lot to build a great company.
• 44:57
  SPEAKER_02: Uh, you have to fundraise, you have to get capital behind you, you have to do the early product market fit, then you have to scale the product market fit, you have to probably upgrade your exec team multiple times.
• 45:06
  SPEAKER_02: And so uh the kind of person who can scale through that and through ups and downs of the market environment, competitive landscape, and scale themselves to be a leader from a founder, all of that is just rare.
• 45:21
  SPEAKER_02: So, as if we were writing all of that in our internal dialogue, we would all all often come like, hey, this person is capable of improbable outcomes.
• 45:30
  SPEAKER_02: It was maybe the term formed in the years uh rather than an instant.
• 45:38
  SPEAKER_02: Uh, so what I mean by that is the improbable outcome of creating a durable company, a large durable company that will stand the test of time.
• 45:47
  SPEAKER_02: There are very, very few people capable of it, and we are in business to find those and partner with those capable uh few, right?
• 45:53
  SPEAKER_02: So that's what we mean.
• 45:55
  SPEAKER_02: That now the scale of improbable today has gone from let's say 5 billion, 10 billion to 20 billion to 100 billion or more.
• 46:02
  SPEAKER_02: Uh but that's a function of market size.
• 46:05
  SPEAKER_02: The number of people who are capable of that level of growth is still a very small number.
• 46:12
  SPEAKER_00: Uh among, you know, uh obviously, whenever you are betting on a founder, you are putting that founder in a category of exception.
• 46:22
  SPEAKER_00: Do you have any five or ten measures when you measure the exception?
• 46:27
  SPEAKER_00: Because like every every VC generically specifies team, product, you know, market.
• 46:32
  SPEAKER_00: But now we are talking only of exception.
• 46:34
  SPEAKER_00: So do you have an internal framework to mark a founder as exception across parameters, or they can't be measured in parameters?
• 46:42
  SPEAKER_02: We uh we have some framework.
• 46:45
  SPEAKER_02: I've actually blogged about it.
• 46:47
  SPEAKER_02: Uh I I generally look for five traits, but candidly I keep thinking, am I missing something?
• 46:52
  SPEAKER_02: So, like I'll a fifth trait was added during the forming of Audacious.
• 46:56
  SPEAKER_02: So uh the first few were uh the five traits are uh high IQ.
• 47:02
  SPEAKER_02: Company building is a multi-variable problem, and there's a lot of amorphous data.
• 47:06
  SPEAKER_02: So if you don't have the IQ high enough to uh work on multiple variables and power through amorphous signals and still make good decisions and correct bad decisions when you are like you're not going to make it, right?
• 47:20
  SPEAKER_02: And high IQ can't be coached.
• 47:21
  SPEAKER_02: So either you have high IQ or not.
• 47:23
  SPEAKER_02: So high IQ, uh, extreme ambition.
• 47:26
  SPEAKER_02: Some people wake up, they want to be rich, and there's a number in their mind, and that's good enough for them, and that's there's no judgment there.
• 47:33
  SPEAKER_02: Some people, they're athletes, they just want to win, right?
• 47:36
  SPEAKER_02: And whether that's winning is defined by a mission that they want to see in the world or just because they're competitive and they want to win at the biggest stages.
• 47:43
  SPEAKER_02: There's no number that will satisfy them.
• 47:45
  SPEAKER_02: We are trying to look for those kinds of people that that there's no number.
• 47:48
  SPEAKER_02: Third is um uh what I call ability to make people believe.
• 47:53
  SPEAKER_02: So I feel like communication skills, everybody agrees that is a key trait, but good communication skills is misleading.
• 48:01
  SPEAKER_02: Everybody has good communication skills, you have good communication skills, I have good communication skills.
• 48:05
  SPEAKER_02: But as a founder, you need to walk into rooms and make people believe.
• 48:09
  SPEAKER_02: When they when they walk out, the other people should say, look, I don't know about this idea, but this person might pull it off.
• 48:15
  SPEAKER_02: That is the kind of reality distortion that's needed, right?
• 48:18
  SPEAKER_02: Uh, so we look for people who can have ability to make people believe.
• 48:22
  SPEAKER_02: Fourth is grit factor, you'll have dark days and you'll have to power through them.
• 48:27
  SPEAKER_02: Fifth is urgency.
• 48:29
  SPEAKER_02: Now, the issue with that, this goes back to the heart of your question, which is we could score all of this.
• 48:36
  SPEAKER_02: A, we can be bad judge judges in that moment.
• 48:39
  SPEAKER_02: We get a few set of meetings, the environment matters, the day matters, maybe they have seven back-to-back meetings, maybe I had seven back-to-back meetings.
• 48:46
  SPEAKER_02: So I think we are always very cautious that hey, there's no perfect formula to this, otherwise, we'd always make the right decisions, or everybody else, and we'll just copy their formula.
• 48:56
  SPEAKER_02: Uh so I just think those are the variables I look for, and if those traits start coming together, even if it's not perfect, I start leaning in.
• 49:08
  SPEAKER_02: Uh, I think the thing I've realized, uh, you know, Doug Leoni had this statement uh years ago.
• 49:15
  SPEAKER_02: Like I had listened to it and I never understood it in the beginning.
• 49:18
  SPEAKER_02: Uh, his point was like, hey, if you in venture, you can lose one extra money, but you can make hundred X your money.
• 49:24
  SPEAKER_02: So if you're on the fence, you should lean in.
• 49:26
  SPEAKER_02: And when I first heard it, I candidly thought, but how will that work?
• 49:30
  SPEAKER_02: Because then you'll do a lot of investment.
• 49:31
  SPEAKER_02: I get the asymmetric risk reward, but you'll create a portfolio that will become like drowning of the time.
• 49:38
  SPEAKER_02: What I realized is his statement holds true only if you have a high bar on founder quality.
• 49:44
  SPEAKER_02: If you have a high bar on founder quality, which is rarely are you impressed with people, then when you are on the fence, you should lean in.
• 49:50
  SPEAKER_02: If you actually have a lower bar where you get impressed quickly, then when you're on the fence, you should lean out.
• 49:56
  SPEAKER_02: Uh because you already have a lower bar.
• 49:58
  SPEAKER_02: And so now the question is people don't know whether they have a higher bar or not, right?
• 50:01
  SPEAKER_02: How will I know?
• 50:02
  SPEAKER_02: Uh, right.
• 50:03
  SPEAKER_02: And so that's the intuition where you have to apply, uh, you know, but we feel we because of all these things I've said, improbable outcomes or whatever I've internalized, I feel like we have a high bar on founders.
• 50:17
  SPEAKER_02: And so when we are on the fence, if one thing is here or there, we generally tend to lean in.
• 50:23
  SPEAKER_02: That's something we have trained in this journey now.
• 50:25
  SPEAKER_02: Uh, that hey, we have a high bar, if we are almost there, it probably is this person is exceptional.
• 50:31
  SPEAKER_02: Uh, we still make a lot of mistakes though.
• 50:34
  SPEAKER_02: So I wish there was a formula and we'd just follow it.
• 50:38
  SPEAKER_00: And and you have also said about uh pattern matching, you know, stops working at some point.
• 50:44
  SPEAKER_00: And your last 20 outlier founders, the 21st might not look like them.
• 50:50
  SPEAKER_02: Yeah.
• 50:50
  SPEAKER_02: So you know it's something we've adjusted here also, like as an example.
• 50:54
  SPEAKER_02: Um, it used to be that in B2B founders would be younger, B2B founders would always come from having experience of working in companies.
• 51:02
  SPEAKER_02: Uh now, if you look at so many companies, cursor, uh like our list is endless, right?
• 51:08
  SPEAKER_02: Uh they're all young founders, they're in their 20s.
• 51:11
  SPEAKER_02: It never used to be.
• 51:12
  SPEAKER_02: I think box was the exception, dropboxes somewhere in between of B2C and B2B.
• 51:17
  SPEAKER_02: Uh but now there are so many young founders in the early 20s who are building unbelievably large B2B businesses.
• 51:25
  SPEAKER_02: So we had to adjust on that, right?
• 51:27
  SPEAKER_02: Uh so you can create this formula of traits that is based on a prior set of uh data points, and that could just be misleading for a full decade.
• 51:37
  SPEAKER_02: Uh, right.
• 51:38
  SPEAKER_02: So you have to constantly update your priors on this.
• 51:41
  SPEAKER_02: Um, yeah.
• 51:43
  SPEAKER_00: So so when uh you know, let's say you have raised two funds, 90, 150, what could be a third fund look like?
• 51:49
  SPEAKER_00: 250, 300?
• 51:50
  SPEAKER_02: Something like that, yeah.
• 51:51
  SPEAKER_00: So see as as you are getting bigger, you would be competing with the bigger funds uh in the in the valley.
• 51:59
  SPEAKER_00: And there are like at least 500 known names.
• 52:03
  SPEAKER_01: Yeah.
• 52:04
  SPEAKER_00: Here.
• 52:05
  SPEAKER_00: So where do you think where does audacious moat stand out in in the crowd?
• 52:12
  SPEAKER_02: I'd say uh so one is that uh we've always taken the tack off or or the view that hey, we want to compete for the best ones, which there are some investments we make where there's no other term sheet, and there's some where we make uh where there are multiple other term sheets, and in those sets we win or lose.
• 52:29
  SPEAKER_02: We have always maintained this idea that you shouldn't.
• 52:34
  SPEAKER_02: One of the things that Lightspeed taught me was that you shouldn't submit to doing doable deals, which is just because you can win it doesn't mean it's a good investment, and vice versa is also true that just because nobody else is.
• 52:47
  SPEAKER_02: So we don't think of win rate as we think of win rate as orthogonal to good good picking.
• 52:53
  SPEAKER_02: Yeah, let me put it this way.
• 52:54
  SPEAKER_02: Uh, and even then we had the 90 million now, times have changed, right?
• 52:58
  SPEAKER_02: So 90, I felt uh at the time probably was slightly smaller where I would have wanted that first fund size to be for the market conditions.
• 53:09
  SPEAKER_02: Today I definitely feel we have to be at 250 to 300.
• 53:12
  SPEAKER_02: Um, but we have adjusted like our last several investments are closer to the$8 to 14 million dollar round sizes, and we have to adjust our strategy a little bit, and that puts you in slightly uncomfortable positions uh from a portfolio construction and stuff.
• 53:31
  SPEAKER_02: Um, but you have to adjust to it.
• 53:33
  SPEAKER_02: Uh so uh so I would say the competitive landscape hasn't changed that much from our first one.
• 53:41
  SPEAKER_02: Uh uh we we we felt like even then when we were getting started, the true competition was multi-stage firms.
• 53:48
  SPEAKER_02: That uh of course there are some good firms that see it first round is amazing, and a few others uh that we think are abstract and SUSE and others.
• 53:57
  SPEAKER_02: Uh but I think the major competition is come comes from multi-stage.
• 54:02
  SPEAKER_02: And so you have to get there faster than them because they already have the unfair advantage of a brand, right?
• 54:07
  SPEAKER_02: And so you have to get there faster than them, compete.
• 54:10
  SPEAKER_02: Now, we want to part of competing is is there a tangible value prop that you can say to the founder?
• 54:17
  SPEAKER_02: I've always felt like you can't outbrand Mark Andreessen.
• 54:22
  SPEAKER_02: Mark Andreessen started Netscape, yeah.
• 54:26
  SPEAKER_02: So you're not going to outbrand Mark Andreessen and people like that, right?
• 54:31
  SPEAKER_02: So you have to create an orthogonal value prop where the founder at least feels hey, on these things, this other great firm which has existed for 40 years is amazing.
• 54:40
  SPEAKER_02: But on this one thing, this other which is critical to me, this new firm, Audacious, is amazing.
• 54:46
  SPEAKER_02: We felt right at the starting of our journey that hiring is the number one thing that matters, talent density is everything.
• 54:54
  SPEAKER_02: And so, can we create a very tangible value prop for founders on that in the way that we are the best in that game?
• 54:59
  SPEAKER_02: So we I feel we've created that.
• 55:01
  SPEAKER_02: So, just to give you a sense, we don't just give recruiting advice.
• 55:05
  SPEAKER_02: Uh, we have three people in the Philippines, you know, several recruiters here.
• 55:10
  SPEAKER_02: Any given week, we are outreaching to 4,000 people.
• 55:13
  SPEAKER_02: There's hundreds of calls happening every week.
• 55:16
  SPEAKER_02: Any given month, we are introducing about 150 people to our portfolio companies, and they're all uh IC level engineering and IC level sales.
• 55:24
  SPEAKER_02: So we focused on two skills engineering and skills.
• 55:27
  SPEAKER_02: So our pitch to found us today, if we meet a new founder, is hey, we believe talent density is everything.
• 55:36
  SPEAKER_02: We have only two jobs, invest in forces of nature, which is you, and then help you recruit an amazing team.
• 55:41
  SPEAKER_02: Uh on that one thing, we are better than everybody else.
• 55:44
  SPEAKER_02: And we can help you go from two amazing people to 20 amazing people in the most operational way possible, and then I show them our engine.
• 55:51
  SPEAKER_02: And again, it's a pretty relentless, operationally heavy engine to get them the best in-class candidates on IC engineering, and uh because most of the talent partners or 99% of the talent partners focus on exec recruiting, and even there, they give advice on exec recruiting.
• 56:06
  SPEAKER_02: So that the cat, so it's the difference is not in opinion, it's tangible, which is I help you recruit IC level engineering and salespeople, and I don't just help from an advice perspective, I actively create pipelines of those people.
• 56:20
  SPEAKER_02: The proof is in the pudding.
• 56:22
  SPEAKER_02: Here are like 150 people that I will double opt in intro this month.
• 56:28
  SPEAKER_02: So I think that is the so then what happens sometimes is like if somebody really like there was an investment uh we made a couple of years ago called Maxima, where uh, you know, we got there like on the same day.
• 56:43
  SPEAKER_02: It was a very, very quick process.
• 56:44
  SPEAKER_02: I think we met them on the Monday, on Tuesday night, we made the offer.
• 56:47
  SPEAKER_02: Tuesday night, they also got uh some other offers.
• 56:50
  SPEAKER_02: One of them was from Kleiner Perkins.
• 56:52
  SPEAKER_02: Obviously, Kleiner Perkins is an unbelievably amazing firm.
• 56:55
  SPEAKER_02: But we were able to navigate it where the founder wanted both of us, and it became a$10 million round co-led by both of us.
• 57:02
  SPEAKER_02: So you play all the ways of salesmanship around something, but I think around that something has to be tangible and real.
• 57:12
  SPEAKER_02: You might get away with just salesmanship in one or two situations, but ultimately your reputation will catch up, right?
• 57:18
  SPEAKER_02: So that's why we said what is that tangible thing is recruiting.
• 57:22
  SPEAKER_02: Uh, and so far it's done well for us.
• 57:25
  SPEAKER_02: And then over time we'll probably add more things uh to that value prop.
• 57:31
  SPEAKER_02: Um yeah.
• 57:32
  SPEAKER_00: We have also spoken about multiple times power law of recruiting.
• 57:35
  SPEAKER_02: Yeah.
• 57:37
  SPEAKER_02: Yeah.
• 57:38
  SPEAKER_02: Uh so my view there is um I think again, it goes back to very, very few exceptional people.
• 57:45
  SPEAKER_02: I think the power law of startups is a well-established thing that few investments matter, few companies matter, power law is how the venture match works, and all of that.
• 57:55
  SPEAKER_02: Uh, as I started doing this uh at Audacious, I realized actually there's a power law of people.
• 58:01
  SPEAKER_02: And it starts with founders, but it extends to the first 10 engineers, the first VPs of sales.
• 58:06
  SPEAKER_02: Like in everything, there is a power law, right?
• 58:08
  SPEAKER_02: And so uh so that's why like Audacious exists to create the highest talent density.
• 58:16
  SPEAKER_02: Uh the the talent we are trying to maximize the density of 10x engineers and 10x salespeople in your company and accordingly our portfolio, right?
• 58:25
  SPEAKER_02: That's how we exist.
• 58:26
  SPEAKER_02: By definition, 10x people are fewer than you know, if everybody eats 10x, then 10x doesn't matter, it's not differentiated.
• 58:33
  SPEAKER_02: Uh so we think of it as yeah, there's a power law of people, and we exist both on the investment side to find that power law person who's a founder, and on the recruiting side, the power law engineer, the power law salespeople who can make magic happen, right?
• 58:51
  SPEAKER_02: And if that magic happens and it starts compounding, the company gets to product market fit.
• 58:55
  SPEAKER_02: That then leads to very fast scaling and all of that.
• 59:00
  SPEAKER_00: So in a few ways, I think that you know, second-time founders, it's very easy to pick up, you know, the game of exceptional people, are they exceptional by just seeing the previous companies they created, the exit happened, the talent that they hired.
• 59:15
  SPEAKER_00: Yeah but for extremely young first-time founders, it's a hit of miss.
• 59:20
  SPEAKER_00: And I think that's why YC is so great.
• 59:22
  SPEAKER_00: Okay, right?
• 59:23
  SPEAKER_00: They they throw so many dots and give so many young founders a chance that all exceptional 21 or year old gravitate towards uh YC.
• 59:33
  SPEAKER_00: In your case, how do you judge or find out exceptional 21 year old uh when nobody else has?
• 59:43
  SPEAKER_00: Because you are in the game of talent.
• 59:44
  SPEAKER_02: Yeah, yeah.
• 59:45
  SPEAKER_02: Honestly, it's not easy.
• 59:47
  SPEAKER_02: Uh, and I wish I had better answers than I have.
• 59:50
  SPEAKER_02: Uh so I'd say.
• 59:54
  SPEAKER_00: And you cannot throw 100 darts like Vice does.
• 59:56
  SPEAKER_00: Yeah.
• 59:57
  SPEAKER_02: So I I I I I I hear your question and I feel the pain of that, which is it the more a person goes through life, the more signals they have created for the world to see that hey, I am exceptional.
• 1:00:09
  SPEAKER_02: And so you go younger and younger, there's not enough signal.
• 1:00:12
  SPEAKER_02: Is every Stanford uh person going to be an amazing founder?
• 1:00:17
  SPEAKER_02: You know, that's not enough, right?
• 1:00:19
  SPEAKER_02: So then, of course, there are people who use signals like, okay, Olympiads, like actually, uh, I think Jesse Zang from Decagon recently wrote a post about why Olympiads are actually a great signal because you have to, it's not just math on like a hundred things, and it's not about speed, it's actually like sitting with a problem that you are trying to solve over hours and hours, and so it shows the grit factor that applies to startups, right?
• 1:00:45
  SPEAKER_02: So some people have done a great job of taking that as a signal and focusing on that market.
• 1:00:50
  SPEAKER_02: Others might say immigrants, right?
• 1:00:52
  SPEAKER_02: So um I think there's a certain immigrant mafia, Indian immigrant mafia that has done well.
• 1:00:58
  SPEAKER_02: And and I think the other piece that can happen is referrals are a great way to know.
• 1:01:02
  SPEAKER_02: So we spend a lot of time around back channel references, although they can cut both ways, and I can talk about why they cut both ways.
• 1:01:09
  SPEAKER_02: But what is the best signal on the person, right?
• 1:01:12
  SPEAKER_02: The best signal on the person is somebody else who's exceptional themselves who has worked with this person, right?
• 1:01:19
  SPEAKER_02: If I just meet you two two or three times, I'm not a psychologist, I could opine, but I I'm fooling myself.
• 1:01:27
  SPEAKER_02: But if this other person who's exceptional, uh in my belief, and they have worked with you for even six months, and they say, Hey, I've worked with this person for six months, I know this person is exceptional for these reasons, then that is a good signal.
• 1:01:40
  SPEAKER_02: So I think we try to get some signal around the person on who has worked with them, who has uh yeah, like worked with them in some capacity.
• 1:01:50
  SPEAKER_02: The younger you go again, this becomes trickier.
• 1:01:53
  SPEAKER_02: Uh, so I think there's signals on the CV, maybe like school or Olympiad and stuff, or the side projects they would have done.
• 1:02:02
  SPEAKER_02: You also try to understand, like, like the conversation in those founder meetings needs to allow for the kind of conversation that a question that could also be slightly off topic and try to understand what has this person overcome in their personal journey, right?
• 1:02:19
  SPEAKER_02: And so you want to create an environment where they feel comfortable talking about that stuff.
• 1:02:24
  SPEAKER_02: But I still would say uh it's it's a little bit like uh it's a tricky thing again, uh, because people know how to answer these questions well too.
• 1:02:34
  SPEAKER_02: They are smart people, right?
• 1:02:36
  SPEAKER_02: So the the most dangerous thing I always feel in my five criteria or whatever it is, is high IQ and ability to make people believe.
• 1:02:43
  SPEAKER_02: That combo is very dangerous because if the rest is missing, they will convince me that the rest is there or that this market is amazing.
• 1:02:49
  SPEAKER_02: And so uh, so we try to they did our, I would say try to create environments in those founder conversations where we can understand the person behind that idea, what have they accomplished, what has been their journey, uh how their teenage years were, and all of that.
• 1:03:06
  SPEAKER_02: Uh, we try to do back channel references on any situation that we lean in on.
• 1:03:11
  SPEAKER_02: Although we are very aware that they can be misleading because the person we are calling could be a closer friend of the founder than us, and they might just chalk them up.
• 1:03:18
  SPEAKER_02: And again, if this person is smart, they know how to gamify those things.
• 1:03:23
  SPEAKER_02: And then you're putting together those signals and how they answer.
• 1:03:26
  SPEAKER_02: You know, one of the things that is underrated or under talked about is like one of the ways to assess a person's substance is to be able to engage on the idea deeply.
• 1:03:36
  SPEAKER_02: So if I start talking to somebody, let's say I start talking to somebody about a topic that I am not very well aware of, right?
• 1:03:44
  SPEAKER_02: Uh nuclear energy, right?
• 1:03:46
  SPEAKER_02: Let's something like that.
• 1:03:48
  SPEAKER_02: Okay, then I might not be able to judge the substance, but if they're talking about application layer software, even if I don't love their answers, I might like the substance of that answer, right?
• 1:03:56
  SPEAKER_02: Like they could talk, we could talk about pricing for 20 minutes, and I might not agree with them, but I might say, hey, they're coming out at it with first principles, and actually I'm coming off feeling positive about the person, even if we are on the opposite sides of the debate.
• 1:04:10
  SPEAKER_02: So I think like ability to engage on the idea and that domain actually is also a way to assess the quality or the substance of the person, and that is regardless of age.
• 1:04:23
  SPEAKER_00: I want to dive deep into talent, right?
• 1:04:26
  SPEAKER_00: Any stories that you can share on identifying talent before anybody else?
• 1:04:31
  SPEAKER_00: Because we talked about in theory.
• 1:04:33
  SPEAKER_01: Yeah.
• 1:04:34
  SPEAKER_00: I want to give audience some of the examples, right?
• 1:04:37
  SPEAKER_00: Obviously, winning companies like WorkWest very early.
• 1:04:40
  SPEAKER_00: I think in WorkWest, you entered at 12 million valuation before like it's almost like nobody knew about it.
• 1:04:45
  SPEAKER_02: Yeah, yeah.
• 1:04:46
  SPEAKER_02: That's uh although I would say there the example is more that uh Michael Greenwich was a second time founder, or maybe third time even.
• 1:04:54
  SPEAKER_02: His last company had done well, he had raised from some top-tier firms, but then he uh, you know, there was a departure there.
• 1:05:03
  SPEAKER_02: Uh so I I think there actually it was more that I met Michael on a Saturday for coffee.
• 1:05:09
  SPEAKER_02: Multiple people pinged me about him raising his round.
• 1:05:12
  SPEAKER_02: I met him for coffee on a Saturday.
• 1:05:14
  SPEAKER_02: I think I spent two hours with him.
• 1:05:16
  SPEAKER_02: Like, you know, again, I walking in, I didn't know if that would become a very actionable thing for me.
• 1:05:21
  SPEAKER_02: Um and I came away feeling he's he's extremely smart.
• 1:05:26
  SPEAKER_00: This is which year?
• 1:05:27
  SPEAKER_02: Uh this is 20 uh 19 January.
• 1:05:32
  SPEAKER_02: So this was my last investment at Light Speed.
• 1:05:35
  SPEAKER_02: Uh but I came a feeling he was extremely, extremely smart.
• 1:05:39
  SPEAKER_02: He uh was uh obsessed with product and distribution because I think he felt a little bit that last time he uh did not push as much on distribution, as much on product.
• 1:05:51
  SPEAKER_02: Uh because he's a technical founder.
• 1:05:53
  SPEAKER_02: Uh and I feel like a founder has to be obsessed with both, not one.
• 1:05:58
  SPEAKER_02: But third is he was coming back for vengeance.
• 1:06:00
  SPEAKER_02: So for me, more than the idea, that combo of high IQ and drive, obsession with both product and distribution this time, and coming back for vengeance.
• 1:06:11
  SPEAKER_02: That hey, that is an incomplete part of my story, the last one, felt great.
• 1:06:16
  SPEAKER_02: And so as I dug in, I just worked.
• 1:06:19
  SPEAKER_02: Now, why did the rest of the market there were some other uh competitive term sheets, but it wasn't a very, very crowded round in that round.
• 1:06:27
  SPEAKER_02: Uh and I think it may have been that the market assessed it as hey, he's coming out of this last startup, it didn't work out, and there was probably some FUD around that situation.
• 1:06:39
  SPEAKER_02: So uh I wouldn't call that one an undiscovered talent, in my view, right?
• 1:06:44
  SPEAKER_02: Uh the other situation, like I think you know, all these situations are so different.
• 1:06:50
  SPEAKER_02: So, as an example, like I did a uh investment called Multiverse at Seed uh in London, 26 post.
• 1:06:57
  SPEAKER_02: Today it's about a$2 billion company.
• 1:07:00
  SPEAKER_02: It does about$200,$300 million of reverse.
• 1:07:02
  SPEAKER_00: Which year you did it?
• 1:07:04
  SPEAKER_02: 2017, I think.
• 1:07:06
  SPEAKER_02: Um, so that one was actually, yeah, there was no not much competition.
• 1:07:10
  SPEAKER_02: Um, I had a thesis around next-gen next gen of education.
• 1:07:15
  SPEAKER_02: My thesis was that I grew up revering IITs.
• 1:07:19
  SPEAKER_02: Uh, and in the US, my generation probably grew up revering Stanford and Harvard and stuff.
• 1:07:25
  SPEAKER_02: But I already felt like for this current generation, YC is the new Stanford, right?
• 1:07:30
  SPEAKER_02: And in the future it'll be something else, right?
• 1:07:32
  SPEAKER_02: So modern education should look different last.
• 1:07:35
  SPEAKER_02: And so I met the founder, and like the way they articulated this idea of multiverse, which was instead of college, you it's it was they were building an alternate to college education by uh 18-year-old skipping college to instead do 15-month apprenticeships at companies like Google and stuff, where they get paid, but they also learn.
• 1:07:56
  SPEAKER_02: So they four days they work, fifth day a tutor or a mentor would teach them.
• 1:08:01
  SPEAKER_02: And so at the end of 15 months, they would get an apprenticeship degree.
• 1:08:04
  SPEAKER_02: If at some point they felt like, hey, I want to go back to college, they can always go back.
• 1:08:07
  SPEAKER_02: Worst case, they lose a year.
• 1:08:09
  SPEAKER_02: But that idea where 18-year-olds can actually go and get paid at companies like Google, learn on the job, also get trained on some skill, coding, accounting, whatever.
• 1:08:18
  SPEAKER_02: They had six streams at the time.
• 1:08:20
  SPEAKER_02: Uh, but you know, the the founder he wasn't coming from a tech market, he had been in a recruiting firm before.
• 1:08:28
  SPEAKER_02: So there was not that much heat around.
• 1:08:30
  SPEAKER_02: And that founder scaled all the way.
• 1:08:31
  SPEAKER_02: Like he's still the founder CEO, and I think he could build a five, ten billion dollar company.
• 1:08:36
  SPEAKER_02: It after me, they raised from index, general catalyst, bond capital, like you know, some of the best names.
• 1:08:43
  SPEAKER_02: Uh, and I'm still on the board of the company.
• 1:08:46
  SPEAKER_02: There it again, it goes back to the reason I was able to engage wasn't that I spotted talent that I didn't uh or the rest of the it was more my ability to engage on the topic gave me confidence that this person has a lot more substance and he's able to change my mind on many topics or many subtopics around this idea, and that got me the confidence.
• 1:09:10
  SPEAKER_02: So I think it's difficult for me to say on the founder side.
• 1:09:13
  SPEAKER_02: On the talent side, you know, uh tandidly, we are we are not making the final decision recruiting, right?
• 1:09:24
  SPEAKER_02: The founder is making that.
• 1:09:25
  SPEAKER_02: So we really are creating a pipeline of amazing people, and we just hold the bar high on trying to understand what's the special sauce.
• 1:09:32
  SPEAKER_02: So there are deliverable is right, is really that why you should meet rather than why you should recruit, if that makes sense.
• 1:09:41
  SPEAKER_02: And why you should meet should be a pointed value prop, right?
• 1:09:45
  SPEAKER_02: Uh or value.
• 1:09:46
  SPEAKER_02: It shouldn't be, hey, good guy coming from a good company.
• 1:09:50
  SPEAKER_02: You it there should be more like, hey, why is this person's slope high?
• 1:09:54
  SPEAKER_02: Why they are good for a startup, why they might be an exceptional engineer, and you should then dig in on these topics.
• 1:10:00
  SPEAKER_02: So I think there in our recruiter calls, we try to focus on that as to can we tangibly say this is why this person might be exceptional, right?
• 1:10:08
  SPEAKER_02: It could be like we do actually go after the last 10 years of physics and maths olympiad type people, or we go after people who've shown some side hustle and technology that they have a job but they're doing some other thing on the side, or we try to find people who've just been promoted four times in two years or something like that.
• 1:10:26
  SPEAKER_02: So we need to articulate why.
• 1:10:28
  SPEAKER_02: If we can't articulate why this person is exceptional, we shouldn't submit them.
• 1:10:31
  SPEAKER_02: So, like our conversion on submission, so we track this number.
• 1:10:35
  SPEAKER_02: Uh of the people we submit to our founders, as to the you should meet, how many do they accept?
• 1:10:42
  SPEAKER_02: And our monthly, I think, rate is somewhere between 80 to 95 percent.
• 1:10:47
  SPEAKER_02: In some months, it's 95%.
• 1:10:49
  SPEAKER_02: I think that's very, very high relative to uh any, if you look at third-party recruiting agencies, it's because there's a trust that if Audacious is sending this person, they're not doing because we don't charge for it, right?
• 1:11:00
  SPEAKER_02: So there's no other benefit for us.
• 1:11:02
  SPEAKER_02: You in fact, we actively tell our founders that don't waste your time.
• 1:11:06
  SPEAKER_02: The only benefit for us from this submission is that if this person joining increases your odds of success.
• 1:11:12
  SPEAKER_02: If this person takes your time on the calendar and wastes your time, then actually I we did wrong for our own investment.
• 1:11:18
  SPEAKER_02: So, because of that alignment of interest, uh, I think there's a lot of trust, and accordingly, but we hold the bar high on that assessing that quality, why why this person should is worthy of your time.
• 1:11:31
  SPEAKER_00: What have been your two biggest failures, though Auditious journey is small at Audacious, and two from the previous journey?
• 1:11:39
  SPEAKER_02: I think on the prior journey, it's more misses that I actually maybe throughout, right?
• 1:11:44
  SPEAKER_02: Like uh, so I'll give you a real example.
• 1:11:47
  SPEAKER_02: Like, I met the Figma founder Dylan multiple times during his series B.
• 1:11:54
  SPEAKER_02: Uh, and at that time, this was 2017, I think.
• 1:11:59
  SPEAKER_02: Uh he was doing about 4 million dollars of ARR, so it was still early.
• 1:12:04
  SPEAKER_02: And I just after meeting, I thought he was special.
• 1:12:07
  SPEAKER_02: I I mean, clearly that has played out.
• 1:12:11
  SPEAKER_02: Uh so I had multiple meetings.
• 1:12:13
  SPEAKER_02: I even brought him in to meet three or four partners, but ultimately we felt and I felt that the that round was done at 400 pre.
• 1:12:20
  SPEAKER_02: For 2017, 100x AR current ARR just felt very high.
• 1:12:25
  SPEAKER_02: And maybe kind of dismissively with the because of the price, I didn't lean in.
• 1:12:32
  SPEAKER_02: Uh, in retrospect, probably the biggest mistake of my light speed state, right?
• 1:12:36
  SPEAKER_02: Uh, like we should have pounded the table and done everything possible to get it.
• 1:12:41
  SPEAKER_02: Clear regret, made a mistake.
• 1:12:43
  SPEAKER_02: So I think it was a good reminder.
• 1:12:45
  SPEAKER_02: Now, looking back, that you know, don't let price be the number one reason you're if everything else is aligned, you should double check, triple check with yourself as yeah, why are you passing just on the valuation?
• 1:12:58
  SPEAKER_02: Right?
• 1:12:58
  SPEAKER_02: Valuation will always be high for exceptional people, right?
• 1:13:02
  SPEAKER_02: Now the question is like somebody's always moving the frontier.
• 1:13:05
  SPEAKER_02: At that time, 100x ARR felt crazy.
• 1:13:07
  SPEAKER_02: Today something else feels crazy.
• 1:13:09
  SPEAKER_02: Uh, so there was always be crazy deals, and there's probably uh multiple other examples of I could have done that and regretted it.
• 1:13:16
  SPEAKER_02: In that specific case, I do remember I did think very highly of Dylan.
• 1:13:22
  SPEAKER_02: I mean, it's very hard to not think he's an exceptional person within one meeting that happens.
• 1:13:27
  SPEAKER_02: Um and I had some questions maybe on market size of designers, which was could have been answered, but maybe I was wrong about questioning the time.
• 1:13:38
  SPEAKER_02: But the biggest hangup I had was price, uh, right, and then I just passed.
• 1:13:43
  SPEAKER_02: Uh that was a probably a big mistake.
• 1:13:46
  SPEAKER_02: Um I'm trying to recall.
• 1:13:48
  SPEAKER_02: Uh I would probably say the more macro mistake again goes back to in my first three years at Lightspeed, I probably sucked as an investor.
• 1:13:59
  SPEAKER_02: The reason is I was trying to find I had too many thesis ideas, and I was trying to find that idea in the but the thing I realized midway was that let's say you're it's 2010, 2011, the iPhone has just come out three years ago, the ideas are maturing, and in that year Uber is coming out, right?
• 1:14:18
  SPEAKER_02: You could if you don't meet Uber and you come up with a lot of thesis and you come up with some theses that work well, but if you didn't meet Uber in that year, yeah, or not chase that down, everything else didn't matter, right?
• 1:14:30
  SPEAKER_02: Let's say.
• 1:14:31
  SPEAKER_02: So, what I realized is by having thesis, at least for me, I ended up chasing often the local maxima founder, where who's the best person doing this idea at this point of time?
• 1:14:42
  SPEAKER_02: There were two mistakes of that.
• 1:14:44
  SPEAKER_02: One is there could be better ideas out there right now on that in that year.
• 1:14:48
  SPEAKER_02: Uh, second is uh that even for that idea, if that idea is right, there might be a better founder that comes at it in two years.
• 1:14:57
  SPEAKER_02: And because your urge to do so, I would say like I the bigger mistake in my light speed stint beyond the individual investment, although I think Figma was probably the biggest one that I regret, was that I spent three, four years trying to be more of a thesis-driven investor, and towards the second half, I shifted.
• 1:15:13
  SPEAKER_02: So that's why with Michael Grinich, when you asked me about work OS, I didn't even talk much about the idea.
• 1:15:18
  SPEAKER_02: And the reason is odd zero existed, Okta existed, uh, but I just thought this guy might pull it off, right?
• 1:15:27
  SPEAKER_02: And so by the time I was like around that time, and around there was an investment I made called People.ai, where he really meeting him changed my mind on hey, there are very few exceptional people, let's just be in business with them.
• 1:15:40
  SPEAKER_02: Win or lose.
• 1:15:40
  SPEAKER_02: I'd rather win or lose with the exceptional people.
• 1:15:43
  SPEAKER_02: That was probably the bigger mistake I made in the first three, four years.
• 1:15:46
  SPEAKER_02: And the second, I would say is I probably once I internalized that I should have done many more short set goal.
• 1:15:54
  SPEAKER_02: But that I understood only after starting Audacious.
• 1:15:56
  SPEAKER_02: Short set goal is in itself a strategy to create the surface area of the extreme outline.
• 1:16:02
  SPEAKER_00: You mean more number of companies?
• 1:16:03
  SPEAKER_02: Yeah.
• 1:16:04
  SPEAKER_02: Because if your bar on people quality, it only works if the you have learned the people lesson.
• 1:16:10
  SPEAKER_02: But if your bar on people quality is high and you're constantly hustling to do them, uh to find them uh and invest in them, um then I think uh then I I think when you're on the fence, you should lean in, is the point I'm making.
• 1:16:28
  SPEAKER_02: And you know, you can overthink a lot of things, and really your goal is that goes back to the Doug Leone point, like, hey, the best one will be 100x, right?
• 1:16:38
  SPEAKER_02: And so if the best one is 100x, it pays off for a lot of mistakes.
• 1:16:43
  SPEAKER_02: Uh but if you miss the 100x one and do a bunch of 4xs, it they don't pay enough for so like you can't afford to miss the 100x one.
• 1:16:52
  SPEAKER_02: Yeah, right.
• 1:16:52
  SPEAKER_02: And that decision, it's not clear on the day you're investing, which will be the 100x versus the 4x, even if they're both are good decisions.
• 1:16:59
  SPEAKER_02: So I feel like in retrospect, short set goal is something I should have internalized even as a VC at light speed.
• 1:17:05
  SPEAKER_02: I really probably internalize that after starting Audacious and when I was accountable for the full portfolio as a whole, to LPs.
• 1:17:13
  SPEAKER_00: Any any failures at Audacious?
• 1:17:15
  SPEAKER_00: Not just passes, but any kind of failures.
• 1:17:18
  SPEAKER_02: You know, I will say um look, looking hindsight, is obviously 2020.
• 1:17:24
  SPEAKER_02: So I would say uh one of the big mistakes is when I started the firm, we didn't even announce a fundraiser as an example.
• 1:17:34
  SPEAKER_02: We closed 90 million, we didn't even announce it because we thought uh, hey, we have the network, VC is more about a ground game of exceptional people.
• 1:17:43
  SPEAKER_02: We have the network to get to them, we have the uh track record and salesmanship to close them.
• 1:17:48
  SPEAKER_02: But I think around 2020, the world changed.
• 1:17:50
  SPEAKER_02: Everything went COVID, yeah, and the world went online completely, and you know, it went to a world where online brand mattered a lot more, and that is how brands got propagated a lot faster now.
• 1:18:04
  SPEAKER_02: It was always happening at some level, but I grew up in venture admiring the kind of people like Peter Fenton or Jim Getz and others who were not really promoting themselves online.
• 1:18:15
  SPEAKER_02: And I think the mistake I probably made was that um I should have marketed audacious on day zero, if I'm being completely candid.
• 1:18:22
  SPEAKER_02: Um, and that we is something we have started changing in the last one to two years.
• 1:18:27
  SPEAKER_02: Uh, so that would be a more macro mistake.
• 1:18:31
  SPEAKER_02: Yeah.
• 1:18:31
  SPEAKER_02: Uh probably attacking the AI opportunity much more aggressively, dropping everything else.
• 1:18:36
  SPEAKER_02: Uh, you know, but I think that I don't think it was too slow, so it was fine.
• 1:18:44
  SPEAKER_02: Um we have several companies now that feel like okay, they're they're probably not in the first iteration of or the first year uh cohort of great AI companies, but I think the next cohort we have could market share of them.
• 1:18:59
  SPEAKER_02: Um, you know, like they are always individual passes that, you know, like I think I was telling you, like uh I met this company called People GPD, which eventually it was at that time it was just two founders and almost nothing.
• 1:19:12
  SPEAKER_02: I cold emailed them because I had a thesis on that space.
• 1:19:15
  SPEAKER_02: Uh met them, didn't do enough because I, you know, again, young founders at my heuristic hadn't evolved on that front.
• 1:19:24
  SPEAKER_02: And, you know, they were starting when they were 22, it was called People GPD.
• 1:19:28
  SPEAKER_02: It felt like a wrapper around LinkedIn, all of that.
• 1:19:30
  SPEAKER_02: I passed a mistake.
• 1:19:31
  SPEAKER_02: It became juice box.
• 1:19:33
  SPEAKER_02: Today we are customers of that, right?
• 1:19:36
  SPEAKER_02: You see it everywhere.
• 1:19:37
  SPEAKER_02: We we pay them, we pay them uh like literally multiple tens of thousands of dollars.
• 1:19:42
  SPEAKER_02: And I've joked about this with the founder, uh, that biggest mistake we made, right?
• 1:19:46
  SPEAKER_02: Uh, but there were there were others like the uh actually the even bigger mistake.
• 1:19:50
  SPEAKER_02: Uh there was a company, I uh there was a founder I met, he was leaving Coinbase.
• 1:19:56
  SPEAKER_02: Um somebody said, send it to me.
• 1:19:58
  SPEAKER_02: He was starting a fintech company.
• 1:20:00
  SPEAKER_02: I passed on that.
• 1:20:01
  SPEAKER_02: A year later, same guy was introduced to me.
• 1:20:04
  SPEAKER_02: Uh he was, but it was like positioned as GPT for data or something like that, like some data company.
• 1:20:11
  SPEAKER_02: Uh I think I uh got there too late or something.
• 1:20:15
  SPEAKER_02: Like intro was made to me by the time I responded, the round was done and recently the seed round.
• 1:20:20
  SPEAKER_02: But today that company is called Phal, and that that company will probably be a$10 billion company.
• 1:20:24
  SPEAKER_00: You see it on buses everywhere.
• 1:20:26
  SPEAKER_02: Yeah.
• 1:20:27
  SPEAKER_02: So uh that feels like clearly I should have stayed on top of that relationship even after passing on that initial investment with the crypto or fintech company or something, right?
• 1:20:37
  SPEAKER_00: Awoka was shared to me during seed.
• 1:20:39
  SPEAKER_02: Yeah.
• 1:20:40
  SPEAKER_02: Yeah.
• 1:20:41
  SPEAKER_02: So I think uh there are lots of the older you grow, the anti-portfolio grows.
• 1:20:46
  SPEAKER_02: It doesn't shrink, it you know.
• 1:20:49
  SPEAKER_02: Uh but I think the more macro is where the system itself, or the huge the thinking itself was wrong, right?
• 1:20:57
  SPEAKER_02: That's where I regret it more candidly.
• 1:20:59
  SPEAKER_02: Uh so that's where the Figma pass is less about for me that individual investment.
• 1:21:03
  SPEAKER_02: Of course, that's a very costly mistake, but it's more that my the thinking that was wrong was that I let the price dictate the decision.
• 1:21:12
  SPEAKER_02: Uh, even though I felt like Dylan was special.
• 1:21:14
  SPEAKER_02: And I wish I had flipped that.
• 1:21:16
  SPEAKER_00: You have been through many economic cycles, right?
• 1:21:20
  SPEAKER_00: Probably you would have asked the question to yourself or your team when does a bubble really feel like a bubble?
• 1:21:25
  SPEAKER_02: Yeah.
• 1:21:28
  SPEAKER_02: You know, I take the stance on that that venture is all about optimism and staying power, probably staying power and optimism, the combo of that.
• 1:21:42
  SPEAKER_02: So let's say we overdo bullishness in a bad in a year like 2021, if we had gone extremely fast.
• 1:21:52
  SPEAKER_02: Um a firm that does it very aggressively and doesn't have the capability of raising the next fund and the following fund, then yeah, you're toast.
• 1:22:02
  SPEAKER_02: And so in that moment, that would have happened because we were raising our first fund, and if we had gone extremely fast, it could have happened that the third fund, maybe the second fund we would have raised, but the third fund would be a tough one.
• 1:22:12
  SPEAKER_02: But if in venture, like ultimately, because it's such an outliers game, it always feels frothy uh for the most exceptional people.
• 1:22:23
  SPEAKER_02: Even in a year like 2010, I remember like VCs were like, How can you pay this multiple?
• 1:22:28
  SPEAKER_02: This is crazy.
• 1:22:28
  SPEAKER_02: Well, those multiples were lower than 2017 by a long distance, right?
• 1:22:32
  SPEAKER_02: Uh, and I also remember in 2017 people were calling it a bubble, and then it went on till 2021, right?
• 1:22:39
  SPEAKER_02: So I I personally have learned that we are not macroeconomic thinkers, or at least I am not a macroeconomic thinker.
• 1:22:47
  SPEAKER_02: I can't call when the bubble will burst or when there is a bubble.
• 1:22:51
  SPEAKER_02: Uh, I sit in front of the founder and I make the decision of do I love this founder, do I love this market, and can I get this done for the ownership that I need for my business model and stuff, and that can evolve.
• 1:23:06
  SPEAKER_02: Um so to answer your question, I would say we think of put uh time diversity of the fund a little bit as a con counter to that and staying power, meaning time diversity, meaning like we probably will never invest a full fund in 18 months.
• 1:23:22
  SPEAKER_02: I think it's unlikely for our DNA to do that.
• 1:23:25
  SPEAKER_02: Uh, first fund was four years, but second fund is three years, and I think two and a half to three years is because we think time diversity is underrated.
• 1:23:32
  SPEAKER_02: The second thing that goes through our mind is staying powered.
• 1:23:34
  SPEAKER_02: Like, have we earned the right to continue raising multiple funds if even if you have a bad fund?
• 1:23:39
  SPEAKER_02: Because probably every firm has something like that.
• 1:23:42
  SPEAKER_02: Yeah.
• 1:23:42
  SPEAKER_02: And probably for that mistake, either that or that they lost touch with the ground game of what tech trends are shifting or what kind of founders are winning.
• 1:23:52
  SPEAKER_02: And that will happen to everyone every now and then in the staying power matters.
• 1:23:56
  SPEAKER_02: Can you learn?
• 1:23:57
  SPEAKER_02: Do you have the time to learn from the mistake that is, right?
• 1:23:59
  SPEAKER_02: And correct the mistake.
• 1:24:01
  SPEAKER_02: Uh so I don't try to call the bubble candidly.
• 1:24:05
  SPEAKER_02: I don't think I have the skill for that.
• 1:24:07
  SPEAKER_00: So let's say globally, and this is probably my last question, you know.
• 1:24:11
  SPEAKER_00: Globally, of all the people that will create 10 billion to 100 billion companies, uh are you only looking at Bay Area to uh and uh obviously Bay Area will create 50% of those outcomes?
• 1:24:25
  SPEAKER_02: We don't uh so okay, we have a strong bias towards Bay Area and New York, very strong bias.
• 1:24:32
  SPEAKER_02: Uh and the reason is really that we ask the person, especially if they're in North America, why are you not if you're ambitious, why are you not in these two places?
• 1:24:41
  SPEAKER_02: And we do believe ambitious people gravitate towards it.
• 1:24:44
  SPEAKER_02: That said, we do believe talent is everywhere.
• 1:24:46
  SPEAKER_02: I mean, you're an immigrant you're from India, I'm an immigrant from India, like talent is everywhere, so we deeply believe that.
• 1:24:52
  SPEAKER_02: And so we are open to hearing an alternate version where somebody convinces us that, hey, this is why I am here.
• 1:24:58
  SPEAKER_02: Could be family, could be other reasons, and then we evaluate, but we hold the bar high.
• 1:25:02
  SPEAKER_02: That is this person somebody who's a Bay Area level person in terms of because the the um the bar for starting a great company remains the same wherever you are.
• 1:25:13
  SPEAKER_02: I do think the odds of success are higher in the Bay Area because of talent density, how that founder themselves will be able to have a learning curve here in this ecosystem, the kind of talent they can hire.
• 1:25:24
  SPEAKER_02: VC money is more available for Bay Area companies.
• 1:25:26
  SPEAKER_02: So it the odds are meaningfully higher.
• 1:25:29
  SPEAKER_02: We have made exceptions outside, but yeah, we have a strong bias towards Bay Area and your companies.
• 1:25:35
  SPEAKER_00: Thank you so much, Napa.
• 1:25:36
  SPEAKER_00: Amazing learning from this episode.
• 1:25:38
  SPEAKER_02: Thank you for having me.
• 1:25:39
  SPEAKER_00: Got to know you so much better through this interaction.
• 1:25:42
  SPEAKER_00: And hopefully we'll work together.
• 1:25:44
  SPEAKER_02: Uh yeah, hopefully we'll make it happen.
• 1:25:46
  SPEAKER_02: Thank you very much.
• 1:25:47
  SPEAKER_02: Thank you so much.