Latest / Technovation with Peter High (CIO, CTO, CDO, CXO Interviews) / The Future of European Tech: Phoenix Court Co-Founder Saul Klein on Brexit, Innovation, and Leading the Next Era of Venture Capital

Transcript

The Future of European Tech: Phoenix Court Co-Founder Saul Klein on Brexit, Innovation, and Leading the Next Era of Venture Capital · Technovation with Peter High (CIO, CTO, CDO, CXO Interviews)

0:00
The biggest dividends
0:01
of Brexit
0:02
for the Uk,
0:05
especially as it relates to science and technology,
0:07
If you're looking at
0:09
progressive
0:10
regulation, we have a grown up mature conversation
0:13
with regulators in this country where there 20
0:15
minutes down the road we don't for pretend
0:17
day don't exist, we say the technology and
0:20
science and ubiquitous in society, of course, is
0:23
gonna need guard. So let's... Let's work together.
0:28
Welcome to activation on your host Peter high.
0:31
My guest is saul Climb.
0:33
Solves the c founder and managing partner of
0:35
Phoenix Court, which includes 4 different venture capital
0:39
firms, local globe, Latitude,
0:41
Solar
0:42
and base camp. He's of former partner at
0:45
venture capital for index ventures as well.
0:48
Sol was appointed as a nice executive director
0:50
at the department for science innovation in technology,
0:53
and is also a member of the council
0:54
for science and technology, which advises the prime
0:57
minister of the Uk on science and technology
0:59
policy issues across governments.
1:01
In 20 12, then Uk private minister, David
1:04
Cameron, appointed saul to be the Uk's first
1:06
technology business ambassador to Israel.
1:09
And in 20 16
1:11
saw awarded an Ob for services to business.
1:14
I look forward to drawing upon saul diverse
1:16
perspectives and experiences
1:18
through this conversation. Saul welcome activation. It's great
1:21
to speak with you today. Great to be
1:23
here. Thanks for having me, Peter. Of course.
1:25
Well, Saul, you are the c founder in
1:28
managing partner of Phoenix Court, which I includes
1:32
Mob globe, Latitude,
1:33
Solar and base camp venture capital fund. So
1:36
4 different funds under an umbrella, that is
1:38
Phoenix Court. Talk a bit about that if
1:40
you would,
1:41
the the constitution of a, of an organization
1:43
like Phoenix Court and the rationale and having
1:45
4 different venture capital funds
1:48
underneath it.
1:49
Sure. Well,
1:51
Phoenix Courts
1:53
is
1:53
the name of our space.
1:56
Our home.
1:58
And
2:00
the reason why we've taken the approach of
2:03
having
2:04
different
2:06
funds with different names is because each 1
2:09
of the funds has a very specific
2:12
strategy.
2:14
And,
2:15
you know, from my perspective, it's really important
2:18
that all of the key stakeholders
2:20
for those funds, most importantly,
2:23
the founders
2:24
that we back,
2:26
the c investors
2:27
that we work with,
2:29
the Lps so invest in those funds really
2:32
on and the job that each 1 of
2:35
those funds are doing,
2:37
and simply puts
2:40
local globe
2:42
is focused, and this is really our heritage
2:45
at free seed and seed stage.
2:49
So
2:50
if you think about the air in which
2:52
we operate broadly,
2:54
Em, 1 percent
2:56
of the 3800
2:58
active Vcs
2:59
in Em amir have ever picked 1 unicorn
3:02
at seed stage.
3:04
So your 90 ninth percentile if you've pick
3:07
1 unicorn at seed stage
3:09
in Em mirror.
3:11
We've done 13.
3:13
So
3:15
the job of local globe is to be
3:17
the best
3:19
active Vc in Em, picking unicorns at seed
3:23
stage. So obviously, if you're a seed specialist
3:25
like local globe, you've done
3:28
13, and it happens to be top of
3:29
the list.
3:30
If you're not a seat specialist like Ax
3:33
xl,
3:34
specializes at series a, You've picked free unicorn.
3:36
At succeed. If you're not a deep specialist
3:39
like Sequoia, you picked 6 unicorns at seed
3:42
in Em. So a job of local globe
3:45
is to be number 1 of all active
3:47
investors
3:48
in Em mere Vcs,
3:50
picking unicorns at seed.
3:53
The job of base camp,
3:55
which is
3:56
an angel Lp,
3:59
open not too jargon, but just basically means
4:02
we write small checks in other funds. We've
4:05
been doing that for about 10 or 15
4:07
years.
4:08
We've got 60 plus
4:11
relationships
4:13
around 45
4:15
percent in the Us.
4:17
Around 45
4:18
percent in Em amir and 10 percent in
4:21
Apa pack. And those
4:23
60 plus
4:24
base camp funds,
4:27
solo Gps,
4:29
micro funds.
4:30
If you look at
4:32
their ability to pick unicorns at seed,
4:37
they are number 5
4:39
globally.
4:41
In terms of all active Vcs. And if
4:44
you look at their ability to pick a
4:46
future unicorn,
4:48
companies valued at 02:50 to to million to
4:52
a billion at seed then number 1 globally.
4:55
So if you think of the funnel
4:57
of startups ups, venture back startups globally,
5:01
they're are around a hundred and 50000
5:04
startups globally that are still alive.
5:08
And picking
5:10
the 1 percent that could become a unicorn
5:15
is really challenging.
5:17
So what we've tried to do is to
5:19
build
5:19
signals
5:20
at the top of the funnel,
5:22
local globe number 1 in Em picking unicorns
5:25
at seed,
5:26
base camp number 5 globally picking unicorns at
5:29
seeds.
5:30
And then we have sister funds,
5:34
latitude
5:35
that focuses at the series b or c
5:39
stage,
5:40
and then solar, which we piloted a couple
5:43
years ago
5:45
with a partner in the Uk called M
5:47
and g, which is a big domestic
5:50
asset all,
5:53
s
5:53
starts at Series d and continues to hold
5:57
its position through Ipo. So what loads
6:01
funds allow us to do is very simply
6:05
try being 1 of the best in the
6:07
world
6:08
picking
6:09
unicorns at seed with local globe and base
6:12
can,
6:13
and then
6:14
concentrates
6:15
capital
6:17
and time
6:18
at series b c with latitude
6:22
and series d plus solar with of companies
6:25
that are most likely to become very material.
6:28
And just to give you a sense of
6:31
where we sat
6:32
coming into 20 24.
6:34
In 20 23,
6:37
we had 46
6:38
companies across our funds that did more than
6:41
25000000
6:42
in revenue,
6:44
and we had 26 companies across our funds
6:47
that did over a hundred million dollars in
6:49
revenue.
6:50
So your average
6:52
venture
6:53
funds would have maybe 1 percent of companies
6:57
doing over a hundred million in revenue. We
6:59
have over 10 percent of companies doing over
7:01
a hundred million in revenue,
7:03
and we think that's because we really focus
7:06
on picking
7:07
at seed, and then using the access
7:11
insight and engagement that we have with those
7:13
companies
7:15
and others that we've met, but maybe not
7:17
invested in all that base account managers have
7:19
invested to concentrate capital
7:22
with latitude and solar. So it gives us
7:25
the ability really to...
7:27
In the ideal world,
7:29
ba founder,
7:31
from seed
7:33
through that public listing.
7:35
At the risk of asking me to be
7:37
a modest here soul? What is the differentiating
7:39
factor, You you noted building signals and I'd
7:41
love to understand what some of those signals
7:43
are that are allowing you to to have
7:46
such outs size performance.
7:49
Well, I I... You know,
7:51
having been in this industry and by this
7:54
industry, I would say
7:56
instead of the technology
7:57
industry for 30 years now, which is over
8:00
half my life and all of my professional
8:03
life,
8:04
in the Us in Europe in Israel.
8:07
As a humanity's graduate,
8:11
I can only give you a humanity's
8:13
answer. You know, which really bothers us. So
8:15
what we started to do about 8 years
8:17
ago was to build data
8:20
and so software
8:22
around our workflow and process, and we use
8:25
software,
8:26
you know, to
8:29
not just look at the hundred and 50000
8:32
venture backed companies that are out there, which
8:34
I think a lot of people
8:36
do and have done. I mean, we started
8:37
doing that 10 years ago when I was
8:39
at index and that's kind of I would
8:41
say table stakes for a big fund.
8:44
I've always been less interested in third party
8:48
data Have always been more interested in first
8:50
party data.
8:52
So what we've done really in the last
8:54
8 years is build a lot of first
8:57
party
8:58
data and insights that have been baked into
9:01
our software, our systems and our workflow.
9:05
So if there are a hundred and 50000
9:06
companies we could back, we've got
9:09
10000
9:10
companies
9:12
in our pipeline,
9:14
either that we've invested in or that we've
9:16
previously met
9:18
but didn't invest in because we were too
9:20
stupid or we were too slow or they
9:23
were different companies at the time.
9:25
But we still continue to to track them
9:28
and their progress. And then as I said,
9:30
the sort of the 5000
9:31
also
9:32
underlying portfolio companies that these base managers have
9:36
invested. So effectively, what you then have
9:39
is sort of 4 to 5 percent of
9:41
the global venture,
9:43
but starting with the number 1 picker in
9:46
a mirror seed, and the number 5 global
9:50
picker
9:50
at seed. So the signal should be higher
9:54
then for latitude
9:56
and solar to sort of think about capital
9:59
concentration. But to be honest with you, even
10:01
though that product is 8 years in the
10:03
May king.
10:05
As you would know, software
10:07
grows, and it develops. And if it's baked
10:10
into your workflow,
10:12
you know, it just keeps on getting better.
10:13
So we're actually only at
10:16
version 0.3
10:18
on that software right now.
10:21
Remarkable progress, Salt. Thank you so much for
10:23
for noting that. So I would love to
10:25
dig a little bit further if I could
10:27
into the European market. Obviously, it's a market.
10:29
You know quite well as someone who has
10:31
spent so much time both growing up as
10:33
well as, professionally in Europe, and especially in
10:36
the Uk.
10:38
Among other places as you previously noted. It's
10:40
fascinating to see we were just if we've
10:42
spoke pre previously about the fact that if
10:44
you look at the top companies by market
10:46
cap, only 3 of the top 30 are
10:48
in Europe. And only 1 of those 3
10:51
is a technology
10:52
organization. You know, by contrast, we're here in
10:54
Us. The top 5 of my... By top
10:56
30 companies you mean in all sectors? Yeah.
11:00
Across sectors, that... Exactly mark market capitalization based.
11:04
And, the top 5, anywhere in the world,
11:06
are Microsoft Apple Nvidia, alphabet,
11:08
Amazon, all Us based, all technology centric. And
11:11
then if you go further down a list,
11:12
a lot more Us based companies and a
11:14
lot of those technology based as well. Now,
11:17
you're talking to about your
11:19
rationale reason for being,
11:22
optimistic enough to be an investor. Or and
11:24
and maybe that's the wrong way of framing
11:25
and maybe it is just that you've got
11:27
the tools to be able to pick in
11:28
a very difficult environment to pick the winners
11:31
relative to sort of a a place like,
11:34
here in the Us.
11:36
Look, I I think it's a great question
11:39
and, you know, the problem with a snapshots,
11:42
you know, is it's really backward looking. It's
11:45
not forward looking. So, you know, if you
11:48
look at... And I do this a lot,
11:50
as you as you rightly say, 7 actually
11:52
out of the top in companies in the
11:54
world
11:55
are not only
11:57
tech companies, but their venture backed tech companies.
12:00
What 1 of the 7 is actually a
12:03
set of a a Taiwanese,
12:05
tech companies,
12:06
Ts c that was backed by European c
12:09
we see actually philips
12:11
and and a sort of a sovereign, the
12:14
country. But in the same way, you know,
12:17
so that you got 7 other the world's
12:18
top 10 companies that are
12:20
tech companies. As you said, and all of
12:22
them had venture backing and you know, none
12:24
of them existed 40, 50 years ago. So
12:27
the way I would sort of look at
12:28
this is Zoom right outs and say, in
12:31
a sense venture capital started in 19 71
12:34
in Silicon Valley with the birth of the
12:37
micro processor. And the first age
12:40
adventure
12:41
started in 19 71 a year after I
12:43
was born and I would argue ended with
12:46
the Nets scape Ipo, which is, like, at
12:48
the beginning of my
12:50
kind of
12:51
professional career,
12:53
94 95.
12:55
And in that first age
12:57
adventure, the
12:58
iconic companies that were created in that first
13:01
age adventure were, let's call it 80 percent
13:05
hard tech.
13:07
Stem,
13:08
Pcs,
13:09
networking.
13:10
I'm looking at you that micro... At Cisco,
13:14
Intel apple,
13:17
and then, you know, the soft tech winners
13:19
there were Microsoft oracle.
13:22
The next age
13:24
adventure was
13:26
starting with the Nets Ipo, let's say it
13:28
ended
13:29
when the WH0
13:32
said Covid was a global pandemic. And arguably,
13:35
the next stage flipped it on its head
13:37
and it was 80 percent soft tech.
13:40
Google,
13:42
Amazon,
13:43
Netflix,
13:45
Uber,
13:46
Air airbnb and, the list goes on. And
13:48
20 percent, maybe but only 10 percent hot
13:50
And the way we sort of look at
13:52
the world is,
13:53
you know, the next
13:56
adventure.
13:57
Is gonna be more like 50 50. And
13:59
what is hard tech?
14:02
It's not just soft tech, but it's technology
14:05
that is for facilitated
14:07
by
14:08
radical
14:09
breakthroughs in science,
14:12
engineering and technology.
14:15
And if you look
14:16
outside my window, I can see the
14:19
Institute. Now the Quick institute is not the
14:22
broad
14:23
shoots, but it is the world's second best,
14:26
sensor for genomics
14:28
and computational biology.
14:30
So there 4000
14:31
researchers across the road and 4 nobel prize
14:34
winners. And then if I walk 5 minutes
14:37
literally
14:38
to some pancreas in Kings cross the global
14:41
headquarters
14:43
note the global headquarters
14:45
of alphabet
14:46
Ai
14:48
division. Called deep mind,
14:50
you know, which is also spun off iso
14:52
morph,
14:53
which, you know, is
14:56
operating at the intersection of Ai
14:58
and computational chemistry and biology. If I get
15:02
on the train,
15:04
at Kings cross and avoid platform 9 and
15:08
3 quarters and don't get a hogwarts. I
15:10
got a Cambridge,
15:12
you know, I'm at 1 of the world's,
15:15
not Britain not Europe,
15:17
1 of the world's top 3 universities, Cambridge
15:20
University,
15:21
if I go to the other direction, I'm
15:23
at 1 of the world's
15:25
top 3 universities called Oxford University.
15:28
If I go 20 30 minute walk, I
15:31
at Uc,
15:32
top 10 global,
15:34
and imperial. So we've got 4 out of
15:36
the world
15:37
top 10
15:38
universities
15:40
within an hour or so
15:42
from the office. And if you believe that
15:46
innovation is no longer just the preserve
15:49
of Palo Alto in Silicon Valley.
15:52
But you believe that innovation is now, you
15:55
know, the preserve
15:57
of an ecosystem that's only been doing it
16:00
for 20 years. Remember we are 30 years
16:03
behind in our development.
16:07
You could argue
16:08
that if you did 1 of those day
16:11
0 lines
16:12
of how fast did Skype gets to a
16:15
hundred million users,
16:16
how fast did Instagram gets to a hundred
16:19
million users? How fast did chat Gp
16:22
gets to a hundred million users. We're ahead
16:24
of you.
16:27
Very, very interesting. I I... You know, as
16:29
as somebody who also has government
16:32
appointments as well. I I And in addition
16:35
to all that you've described and and your
16:38
investments in in startups
16:41
across Europe. Talk a bit about your your
16:43
perspective on
16:44
the rule of Brexit in all of this.
16:46
As you talk about the inherent advantages, which
16:50
are many and and and,
16:52
very well catalog a moment ago. It would...
16:54
It seem at least for most
16:56
authenticator that that that die... I'm in conversation
16:58
with. But that's an impediment
17:01
that the... To some of what you've described
17:03
as well, but it would love your perspective
17:04
on it.
17:05
But my perspective
17:07
on this is partially again
17:10
informed by humanities
17:12
and partially informed by social science.
17:15
So, you know,
17:18
although I did study history
17:20
to to certainly my late teens, I remember,
17:23
you know, even as a young kid,
17:26
reading about the norman
17:28
invasion, and the battle of Hastings in 10
17:30
66,
17:32
and instead of, like,
17:34
realizing that, you know, we've been trading
17:37
with France a thousand years now.
17:42
And there's lots of things that have happened
17:44
in those thousand years there wars
17:48
area.
17:50
You know,
17:52
matt,
17:53
Bismarck.
17:55
I mean, you name it. Right?
17:58
And you know what? We still trade with
18:00
France.
18:01
If I wanna go to Paris,
18:03
I'm sitting in a room called Paris, it's
18:05
closer for me to get to paris on
18:07
the Euro star, than it is for you
18:09
to go from San Francisco to La
18:12
or from New York to Boston.
18:14
So,
18:15
you know, there is the sort of the
18:18
historian in in me that says, if you
18:20
take a thousand year view,
18:22
kinda get over it. And then there is
18:25
the social scientist,
18:28
which is, you know, I'm a big fan
18:30
of Carlos Perez is work, which you may
18:33
be
18:34
familiar with, but she talks about,
18:37
you know,
18:38
the waves
18:41
or of
18:43
sort of innovation. And, you know, she talks
18:45
about 50 hundred year waves. And again,
18:48
you know, if you go back to
18:51
the information aid,
18:53
which is starting in sort of 9 71
18:57
with the birth of the semiconductor,
18:59
you connect semiconductors,
19:01
to computers, you connect computers to networks,
19:06
that gets us the Internet.
19:08
You know, you put data in the cloud.
19:10
That gets us the cloud. You have devices
19:13
that are connected to the Internet and people
19:15
can put in pockets, that gets us mobile,
19:18
I'm not even gotten to Ai or genomics
19:21
or whatever.
19:22
Yes. If you just look at the proven
19:24
waves,
19:26
That means and Pcs, number 1,
19:30
Internet number 2, cloud number 3,
19:32
mobile number 04:52
19:37
years after
19:39
t
19:41
were with us.
19:43
You know, what is the most talked about
19:45
company in the world today? It's Nvidia?
19:48
You know, what else has being talked about
19:51
a lot in last year or so are.
19:54
You know, what company
19:57
is likely to go public
19:59
in London
20:00
in the next
20:02
4 weeks,
20:03
a semiconductor
20:04
company.
20:06
You know, what is the most valuable European
20:10
technology company that's within a 4 hour train
20:12
ride from here Asm,
20:15
you know, supplier to the semiconductor
20:18
industry. We talked about
20:20
Ps c,
20:22
how much would Philips stake
20:25
have been worth today, the 27
20:27
percent
20:28
that they bought for 50000000
20:30
dollars
20:31
and then sold their whole position in 2008.
20:36
How much would that have been worth today?
20:38
230000000000
20:40
dollars.
20:42
So my point in all of that is
20:45
you know,
20:46
small political cycles
20:48
like the European Union
20:51
or Brexit
20:52
are way smaller
20:54
then the waves that we're talking about here
20:57
when we talk about innovation.
20:59
So that's the social science lens.
21:02
And then the historical
21:03
lens, the human bean lens is like, people
21:06
still work with each other. People still trade
21:09
and you know what. There's this really cool
21:11
thing that Ben ser
21:13
helped to develop
21:15
through da funding called Tcp
21:17
Ip, that is the transport layer.
21:20
For Paris
21:22
information age. And last time I checked, we
21:24
were not firewall in conversations with France, with
21:27
Germany,
21:28
with Belgium or anyone else in the European
21:31
Union.
21:32
And arguably,
21:33
and I voted remain to be clear,
21:37
The only dividend
21:39
or the biggest dividends
21:40
of Brexit
21:41
for the Uk,
21:44
especially as it relates to science and technology,
21:47
is that we have, obviously, all of the
21:49
same historical,
21:50
social science, advantages. You know, we're back in
21:54
horizon, and we're working closely with all of
21:56
our European colleagues,
21:58
we're coin investing in 1 another's markets.
22:01
But if you're looking at
22:03
progressive
22:05
regulation, which whilst time I checked, most leaders
22:08
of Us companies were going to congress and
22:11
saying
22:12
please regulate me like this.
22:15
You know, we have a grown up mature
22:18
conversation with regulators in this country where there
22:20
20 minutes down the road, and we don't
22:22
for 10 days don't exist like Bill early
22:25
and and others on the West Coast
22:28
you know, we say the technology and science
22:30
and ubiquitous in society, of course, it's gonna
22:33
need Guard rails. So let's let's work together.
22:37
Real really great perspectives. Thank you so much
22:39
for sharing those. And I'm I wanna double
22:41
click on a couple things you said. You
22:42
you've you've spoken about the third age of
22:44
venture, a, a new Era that's emerging 1
22:46
with policy alignment and a balance of soft
22:49
and hard tactical you noted 50 50, is
22:52
your projection. And a commitment to long term
22:54
impactful solutions to societal challenges.
22:57
I would love to have you talk a
22:58
bit about, yeah, as you are making investments
23:01
putting your money where your mouth is on
23:03
this. Talk a bit about, do some of
23:05
the things that excite you most as you
23:06
look to third age venture.
23:09
Well,
23:10
in terms of putting our money where Our
23:11
mouth is, the vehicle that we didn't talk
23:14
about at the beginning, which is actually out...
23:16
The fifth fund
23:18
for 1 of a better word or the
23:19
fifth estates,
23:21
you know, within Phoenix court,
23:24
When we created Phoenix courses as instead of
23:27
an institutional vehicle in 20 15, we made
23:30
a decision to do the following things Warren,
23:34
allocate 10 percent of profits in the management
23:36
company
23:37
and 2 percent of carry in all of
23:40
our funds into a foundation.
23:42
The foundation is designed to make real to
23:46
put our money where our mouth is, our
23:49
purpose,
23:50
as a business, which is to be a
23:52
good long term neighbor and to help people
23:54
realize their full potential. And being a good
23:57
long term neighbor as anyone knows
24:00
starts at home.
24:02
So
24:03
80 percent of the
24:06
allocation
24:07
from our foundation, Phoenix court works,
24:10
works is there because it's very active in
24:13
our neighborhood. 80 percent goes within a square
24:15
mile of our office, and that supports around
24:18
currently 35
24:20
organizations, including the primary schools, the secondary schools,
24:24
the doctor surgeries,
24:26
the youth centers,
24:27
the social enterprises, and you could say, like,
24:30
why are you doing that in the middle
24:32
of, you know, you got Google across the
24:34
road. You got matter Across road. You've got
24:37
deep mind. You've got universal music. You've got
24:40
H. You got all of these universities. You've
24:42
got the British library. Like, it's like, this
24:45
is 1 of the richest cities in AG7
24:49
economy.
24:50
What do you doing it? Like, what's wrong
24:52
with your neighborhood? Well I'll tell you If
24:54
you are the neighborhood between 3 of the
24:57
biggest transport hubs in 1 of the biggest
24:59
cities in the world for the last hundred
25:01
and 50 years, you're also the poorest neighbor.
25:05
To this neighborhood,
25:06
the health outcomes for people who live in
25:08
this neighborhood or, if you're an adult, you'll
25:10
live 20 years less than in high gates.
25:13
Which is 15 20 minutes off the road.
25:16
If you are a kid, 5 out of
25:18
10 kids,
25:20
receive preschool meals,
25:21
because their parents at a household level earn
25:25
less than 10000
25:26
dollars a year.
25:29
If you are a kid in Summers town,
25:32
which is our neighborhood, 7 out of 10
25:35
kids
25:35
are on social care. So
25:38
you know, when we say
25:39
being a good long term neighbor
25:42
and helping people realize their full potential
25:45
that starts in our neighborhoods,
25:47
80 percent,
25:49
and it's real because it costs us.
25:52
It's from the profit to the management company
25:55
is from the carry of the fund. So
25:58
as far as I'm aware, other than generation,
26:02
I think we're 1 of the few bonds
26:04
in the private markets
26:05
who who do this. And we do it,
26:07
you know, not just because we think it's
26:09
the right thing to do. But because actually,
26:12
to go back to why
26:15
do I feel like this is new Palo
26:18
alto as I said, we've got all of
26:20
the innovation capabilities, the science, the technology,
26:23
the capital base, you know, the number of
26:26
founders,
26:27
success launch entrepreneur. That flywheel is turning. Yes.
26:30
It's only been turning for 20 years not
26:32
50 years. But, you know, as you know,
26:34
we're flywheel start to turn, they start to
26:37
turn fast and actually,
26:39
new Palo alto. So after the bay is
26:41
second only to the Bay area globally,
26:44
in terms of an innovation cluster,
26:46
in terms of outcomes access to capital,
26:50
and importantly,
26:51
Ip and R and d talent,
26:54
We talk about a new palo alto, so
26:57
not as... Oh, we wanna be the next
26:59
Silicon Valley.
27:01
I don't wanna be the next silicon Valley.
27:03
You know, Silicon Valley will always be Mecca
27:05
and Mode medina for startups.
27:08
We wanna be a different
27:10
silicon Valley.
27:12
So when we say new,
27:14
it's not the next.
27:16
It's a different 1, and it's 1 that
27:18
is based on values,
27:21
and governance,
27:23
not just a single stakeholder
27:25
economy
27:27
where the stakeholder is
27:29
the
27:30
investor,
27:31
or the founder.
27:33
Because I think it's successful as Silicon Valley
27:35
has been in to be clear, the Bay
27:37
area has created
27:40
10000000000000
27:41
dollars
27:42
worth of enterprise value from Vc backed startup.
27:46
Which is 34
27:47
percent of the global total,
27:49
which is why I say it's Mac and
27:51
Mode medina. It hasn't always turned out that
27:53
work for people.
27:55
And, you know, this is where talked before
27:59
we went live about sort of
28:01
cultural
28:03
divisions. It's not always clear to me
28:06
you know, that the Us model
28:10
while having created
28:11
enormous economic value,
28:14
incredible
28:15
growth
28:16
historically,
28:17
you know, is aiming at a level of
28:20
equitable
28:21
distribution
28:22
that is creating AAA
28:24
political and cultural environments
28:27
you know, where people are looking at the
28:29
next 10 years and saying, I feel really
28:31
good about what I'm gonna get in November.
28:35
To answer your question. Yes. Yeah. What does
28:38
that actually mean as it relates to our
28:40
investments? Well, obviously,
28:42
the bet, if you like rational bet is,
28:46
if you
28:47
effectively
28:49
have a business model, where you're taking money
28:51
out of your business to put into
28:54
a deprived local neighborhood.
28:58
You will attract a certain type of team
29:00
member, which is very values aligned. You will
29:04
attract a certain type of founder
29:06
whose very values aligned and impact driven, and
29:10
I've never met a great founder that isn't
29:12
mission driven. And then you will also a
29:14
hope fully attract and work with
29:17
Lps who share your values who are long
29:20
term in their thinking,
29:22
And so, you know, again, it's not just
29:24
the right thing to do it's in my
29:26
view, the rational thing to do because our
29:29
team, the founders that we back, and the
29:32
people who trust us to invest their capital
29:36
to get a great return, that's our flywheel.
29:39
The better our returns,
29:41
the more money we get to put into
29:43
the neighborhood.
29:45
An analogy that I... I'm intrigued with, and
29:48
I wonder if if if this makes some
29:49
sense to you. If you look at the
29:51
greatest rock artists from the Uk versus the
29:53
Us. The Uk has the beatles, the the
29:56
you know, that Z rolling Stones, the kinks,
29:59
etcetera. On our side, it's all individuals. Right?
30:02
It's Bruce springs. It's Bob Dillon.
30:04
And in in many ways that's sort of,
30:06
like, emblem, it has said, you know, I'm
30:08
not the first to develop this analysis of
30:11
the individual of the Us.
30:13
Versus the sort of team activity if you
30:16
will, of the Uk, for instance, we'll use
30:18
the Uk rather than all of Europe as
30:19
it's where you are seated currently and and
30:21
we're the predominant part of our conversation has
30:24
been focused.
30:25
And And know, I wonder to what extent
30:27
that then extends as you're kind of describing.
30:29
So for forgive, I'm piggyback me on your
30:31
on your,
30:32
idea here as opposed to formulating a new
30:34
1 for our conversation of the nature in
30:37
which work is done? I don't know. I...
30:38
What do you think of that analogy and
30:39
its application and and,
30:42
yeah, how you're investing and what you're seeing
30:44
in the progress you're making.
30:46
I mean, and all honesty, I hadn't really
30:48
thought about it, but I think it's really
30:50
interesting thing thing to think about, you know,
30:53
I I'm sure
30:55
there's some healthy counts or examples
30:58
in the Us,
30:59
you know,
31:01
immediately, the doors
31:02
sprang to mine, but then you're gonna blake
31:04
Jim Morrison back at me, I think, you
31:08
know, we've got a lot to learn, and
31:11
we still have a lot to learn from
31:13
the Us. I think, you know, while
31:17
you know, there is this sort of narrative
31:20
of individual ism
31:22
in the Us. You know, there are all
31:24
so this understanding and recognition that neighborhoods communities,
31:30
organizations,
31:32
great companies get built by teams, not just
31:35
by
31:36
individuals. Now, the narrative
31:38
may focus on the individual, but I thought
31:41
know, there was this incredible moments in the
31:43
last couple of years when Alan elon Musk
31:45
was to the extent that he ever a
31:46
feels pressure,
31:48
you know, being
31:50
sort of
31:51
challenge at how, you know, how can you
31:53
run Tesla and how can you run Spacex
31:57
and how can you run the boring company
31:59
and you just or Twitter and you do
32:01
all of this stuff
32:03
and then, you know, I love
32:06
watching the the Tesla earnings calls.
32:10
And, you know, there was this cooler that
32:12
he did and as as an English graduate
32:16
and as someone who wrote plays and
32:19
and did drama,
32:20
you know, in my in my teens in
32:23
university is, I kind of appreciates
32:25
the drama and the scripting.
32:28
And, you know, he basically, he opened the
32:30
earnings call.
32:32
And then for the 80 99
32:34
percent of the call, you know, just had
32:36
this sort of
32:37
lineup
32:38
of
32:39
total
32:40
rockstar stars
32:42
talking about, oh, software
32:45
or
32:47
factory charging
32:48
or hardware developments
32:51
or
32:53
insurance
32:54
or the financials and all of them to
32:56
a person was, like,
32:59
absolutely
33:00
clearly world class of what they did. And
33:03
all of them said, oh, you know, for
33:05
the 5 or 10 years that I've been
33:07
at Tesla.
33:08
It's like he just sort of pulled away
33:10
the curtain.
33:12
And said you might think this is all
33:14
about me, but actually,
33:16
you know, there's just like this pillar team
33:19
here.
33:19
And the bit that he took for himself
33:21
in the middle,
33:23
which I thought was, like, kind of amazing
33:25
as well is when he talks about opt...
33:27
Is it optimus the robots. That they're building
33:30
that. And he effectively,
33:32
not in a polished Steve jobs type way,
33:35
but sort of just took the lid off
33:37
you know, this humanoid
33:39
robots, you know, that was picking up tissue
33:42
and holding it in their hand and the
33:44
sort of the fine tactile movements and talking
33:47
about the back, you know, like, a car
33:49
is just a robot on wheels, and you
33:51
just like,
33:52
okay.
33:53
Nothing gets to that scale unless you have
33:57
exceptional
33:58
individuals, not just him,
34:00
but amazing teams. And to be clear, at
34:03
least when it comes to
34:06
growing
34:06
companies
34:08
as you pointed out that are sort of
34:10
some of the top companies in the world,
34:13
you know, we're still
34:15
many decades,
34:16
I think behind where the Us
34:19
is today. Although I think, as I said,
34:22
you know, with matching up fast,
34:24
and we're quite fast learners,
34:27
and we've got some smart people
34:30
in
34:31
Europe and in new Palo alto.
34:34
So thank you again for those reflections. I
34:36
I wanna,
34:37
another aspect that I've read about your last
34:39
fee is the necessity to demi dismiss a
34:41
by venture. You've talked about how venture capital
34:44
has to be more accessible or more diverse
34:46
and more transparent to drive lasting value creation.
34:50
Can you talk a bit about your perspectives
34:52
there and progress made so far?
34:55
Yeah. Look, I think it goes back to
34:58
your
34:59
point about
35:00
what are the biggest companies in the world
35:02
right now.
35:04
And, you know, because they're so big. We
35:06
forget that these are venture backed businesses
35:09
that, you know, an angel wrote a seed
35:11
check, a Vc Wrote, series a check. And,
35:15
you know, when these companies are doing tens
35:18
of billions of dollars in revenue a quarter
35:21
and those are the smaller ones. You know,
35:23
we just don't think of them as startups,
35:25
but all of these companies were venture backed.
35:29
And,
35:30
you know, what we've don't recognize
35:32
because it's very hard for us to zoom
35:35
out people don't typically do that and everything
35:38
in our world is having us to zoom
35:40
in is to sort of, you know, focus
35:43
on the stream,
35:44
you know, our attention is constantly
35:47
being competed for and bombarded again. So
35:51
We don't zoom out. But when you zoom
35:53
out, 7 of these 10 companies
35:56
are startups,
35:57
really?
35:59
That, you know, got to extraordinary scale and
36:02
got there
36:03
because Capital at some point in in time
36:07
said, you know,
36:08
these are founders
36:10
worth backing. And
36:12
I think it's pretty scary
36:14
when just with those 7 companies
36:18
you've got 17000000000000
36:20
dollars
36:21
of enterprise value, and people don't know how
36:25
venture capital works. I think that's really scary.
36:27
It it it's sort of a big failure
36:30
at a social
36:31
and an economic level
36:34
that
36:35
you know, the the the way that these
36:37
companies get finance and built
36:40
is basically
36:41
still a kind of a cottage
36:44
industry
36:45
that people talk about in medieval terms, like,
36:48
it's Artisan.
36:49
It's, you know, an
36:51
apprenticeship business, like,
36:53
basically, that's a way of excluding people in
36:57
my minds,
36:58
and it's done a great job of excluding
37:01
people.
37:02
Venture because this try to sort of aggregates,
37:04
you know, the returns
37:06
and the insights and the knowledge,
37:09
you know, in the same way,
37:11
that before the reformation, sorry I'm being a
37:14
historian again, Latin
37:16
and Greek
37:18
did before, you know, we had publishing
37:21
before we had Martin in Luther.
37:24
So, you know,
37:25
most of
37:27
the way we think about venture capital, which
37:30
has produced these 5 or saying 7 largest
37:33
companies in the world is still
37:35
medieval or at best the renaissance.
37:38
And here we are in the 20 first
37:40
century, dealing with Ai
37:42
and
37:43
genomics
37:44
and distributed ledger technology,
37:47
and quantum,
37:49
you know, let alone, cloud mobile,
37:52
on the Internet and semiconductors.
37:55
So
37:56
I think, you know, it's time that we
37:58
sought not even in
38:00
people,
38:01
just like not even bothering to believe that
38:04
anyone other than the high reese should have
38:07
knowledge or be educated.
38:09
Very interesting. I was also 1 of my
38:11
majors as the university was history, So I
38:13
love all these analog. I appreciate you sharing
38:15
those. I wanted to ask you that somebody
38:16
who has spent considerable time and and made
38:19
considerable investments
38:20
in Israel.
38:21
If you could talk a little bit about
38:22
what you see as the the the secret
38:24
sauce of that economy, which, again, is a
38:27
very small country even grand scheme of things,
38:29
and yet has produced remarkable value, talent now
38:33
tremendous,
38:34
talk a bit about your perspectives on on
38:35
that economy if you would, and what excites
38:37
you about about it enough to put your
38:38
money there?
38:40
Sure. I mean, and then, again,
38:42
we we put our bodies and
38:44
apparently there from 20 10 to 20 12.
38:47
And I think, you know, it was an
38:49
incredible experience. I mean,
38:51
and for our family, our, we have 3
38:53
kids, but our old... We didn't out we
38:56
didn't have our third at the time. So
38:57
the older 2 work
38:59
know, very young and and and at primary
39:01
school. So, you know, we felt it was
39:03
a good opportunity to spend 18, 24 months.
39:06
Somewhere else, my wife had family out there.
39:09
And to be honest, I was a pretty
39:10
big skeptic
39:12
about israel going there. And then though, you
39:14
know, I'm Jewish. I didn't really
39:17
have a very nuanced view of israel. I
39:20
had a very much a
39:22
a media driven
39:25
view of Israel. And what I saw on
39:27
the ground as you said, it's like, there's
39:29
just extraordinary
39:31
place where the strike needs of the society,
39:34
and, I mean, I'm not gonna talk about
39:36
it because there are 2
39:38
the best person on this I'm sure you're
39:41
and and some of your are listeners have
39:43
Reds.
39:44
Some of his work is Saul sin, who
39:46
wrote startup up nation and then more recently
39:49
which I think is a brilliant follow up
39:51
wrote book called the genius of Israel, which
39:53
is about,
39:54
you know, beyond tech the sort of the
39:57
resilience
39:58
of the
39:59
Israeli society,
40:01
not just the economy.
40:03
And there are sort of factors in Israel
40:05
that may be unique to Israel, but action
40:08
you know, in the reading of his latest
40:10
book, I think are lessons for the world,
40:12
You know, the social structures, I mean, the
40:15
teamwork, you know, to go back to your
40:18
solo
40:19
versus bands,
40:20
analogy,
40:21
people work as teams
40:23
in israel.
40:25
In a just an extraordinary way across society,
40:28
you see that again and again,
40:30
often for reasons of resilience.
40:34
But, you know, David k ben, who was
40:36
1 of the founders of of the state
40:38
of Israel when he
40:41
retired from being the prime minister,
40:43
he went south to the deserts.
40:46
And
40:47
I think, you know, the story goes and
40:50
someone will be able to correct me as,
40:52
you know, he was walking through
40:54
a place in the Na. And he saw
40:56
some young when he some things.
40:59
Looking to sort of set up a community.
41:02
And he found it very inspiring that, you
41:04
know, in the midst of the place where
41:06
nothing grows
41:07
a desert.
41:09
In a here of people
41:11
looking to set up a community. So there's
41:14
up pioneering
41:16
spirits.
41:17
You know, that's like crossing the Mason Dixon
41:20
line that you have in Israel.
41:23
There is a sense
41:24
you know, which
41:25
great innovation needs as well is that everyone
41:29
is against us.
41:30
And then you have the social structure
41:33
whether it's sort of the Id or even
41:35
just gonna your family for Friday night dinner
41:38
that creates all of these social cues that
41:41
are about collective action.
41:43
And so, yeah. I mean, you know, on
41:46
a dollar for dollar basis, Israel is the
41:49
most productive
41:50
innovation economy in the world hands down.
41:53
And it's why, you know, when we look
41:55
at where do we focus our investing,
41:59
There's not a lot we can add to
42:00
the Bay area. There's not that much we
42:02
can add to new York, but the only
42:04
other 2 or 3 cities in the world
42:06
that have produce more than a hundred unicorns
42:09
of London and Tel aviv.
42:11
So we're very active still in in Tel
42:15
aviv and it's real. And, you know, I
42:17
would just recommend for those that haven't read
42:20
both start nation, which is, you know, probably
42:23
12 years old now and and it tells
42:25
the story of
42:27
tech in Israel and how tech became 40
42:31
percent of Gdp.
42:32
But actually, I find
42:34
saul latest book, the genius of Israel, even
42:37
more interesting because it talks about, you know,
42:39
how at a societal level, you know, Israel
42:42
is and of got this remarkable
42:45
resilience
42:46
despite
42:48
everything that's going on there.
42:51
The best setting
42:53
perspective certainly solved. Thank you so much for
42:55
sharing those. And thank you more generally for
42:57
a really thought provoking
42:59
conversation covering numerous areas that are emblem of
43:02
your your your broad,
43:05
broad mind and perspectives and curiosity,
43:08
really pre sheet you taking a little time
43:10
for me today.
43:11
Brilliant, and well, thanks so much for the
43:13
time and, you know, look forward to
43:16
hopefully seeing you in person when you hunt
43:18
through London.
43:19
And
43:21
yeah,
43:22
looking forward to any thoughts or comments,
43:25
your list have on some of it things
43:26
that I've got wrong in our conversation.