E399: How General Catalyst Finds Billion-Dollar Startups

Summary

Podcast Summary: How I Invest with David Weisburd
Episode: E399: How General Catalyst Finds Billion-Dollar Startups
Date: July 6, 2026
Guest: Yuri (Partner, General Catalyst)

Overview

This episode dives deep into how General Catalyst—a $43B venture capital firm—finds, supports, and backs billion-dollar companies, exploring their philosophy on seed investing, founder relationships, category creation, signaling risk, and the future evolution of private markets. Yuri, a General Catalyst partner with a rich operator and investment background, shares candid insights into early-stage venture decisions, the nuances of building generational companies, and his perspective on how transformative founders shape entire industries.

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Key Discussion Points & Insights

Why a $43B VC Fund Still Invests at the Seed Stage

• Seed is Core to GC’s DNA:
  Despite its size, General Catalyst (GC) sees itself as an early-stage fund at heart, with their most well-known investments (e.g., Stripe, Anduril, Circle) starting as seed-stage relationships.
• Three Core Reasons for Seed Focus:
  • Deep Relationships: Early checks build enduring trust with founders.
  • Superior Returns: Seed provides the best returns due to low entry costs and the ability to secure meaningful ownership upfront, which pays off if companies hit large outcomes.
  • Access to the Future: Seed founders are “living in the future” and are building in a radically different environment (e.g., post-AI/ChatGPT era). Early involvement exposes GC to new paradigms sooner than later-stage investments.
• Quote:
  “Seed is where you form the deepest relationships with founders. It's really the most like if you're the first and true believer, they're going to remember that for the rest of their lives.” – Yuri [01:15]

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Founder-Led Category Creation & the Role of Iconic Companies

• Industry Creation by Founders:
  Many new investment “themes” (AI, defense, space) are born from the success of singular, relentless founders rather than broad market movements.
• Founder Examples:
  • Anduril (Defense): GC invested due to the founder’s vision, not because “defense” was hot; this early exposure shaped GC’s later theses.
  • SpaceX & Tesla: Entire industries (space, electric vehicles) owe their existence to these companies—without SpaceX's success, there “would be no space industry.”
• Quote:
  “The reason AI is a wave today is because of OpenAI. If SpaceX was not successful, there would be no space industry today. ... let [the best founders] guide you to where the opportunities are.” – Yuri [00:00, 03:45]

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Generalist vs. Specialist Seed Investing

• Seed Funds Shouldn’t Be Sector Funds:
  The seed stage is about discovering the next big thing—not about following themes. Sector-focused funds become irrelevant fast.
• Thematic Funds Are Not Durable:
  The best venture funds are generalists; sector-specific strategies are simply ways for emerging managers to get early differentiation.
• Quote:
  “If today somebody pitched you a cloud fund, you would kind of look at them like they're crazy ... thematic funds are always just like a point in time thing.” – Yuri [05:42]

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LPs, Signaling Risk, and the Seed-to-A Series Transition

• Signaling Risk Reality:
  There’s real risk when large funds do seed deals but then “cherry pick” who to support at Series A; it creates negative signals for companies not selected.
• GC’s Solution:
  GC commits to never leading Series A rounds of their seed companies—they buy up to 10% at seed, support companies at pro-rata in follow-ons, but refuse to “cherry-pick” at A.
• Market Signaling and Transparency:
  GC is vocal (web, blog, direct communication) about this policy, reducing adverse selection anxieties among founders and co-investors.
• Quote:
  “We blanket said that we will not cherry pick any of our best companies. At Series A, we will buy ownership upfront ... We've been messaging this ... and I think that that has really helped.” – Yuri [10:00]
• On Information Asymmetry:
  “Nobody has more information on a company than the existing investor... if you’re not following on... it’s quite a bad sign.” – Host [11:46]

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GC Seed Team & Deal Volume

• Entrepreneurial Mindset:
  GC deliberately builds its seed team by hiring people who previously ran their own funds, rebooting seed practices from scratch inside GC.
• Global, Unified Operation:
  With ~15 people globally, GC aims for 200 seed investments over three years—averaging 1.5 per week—leveraging a single, collaborative global platform.
• Quote:
  “The unique thing about GC is that we really operate as one global firm. ... There’s no GC Europe or GC India. ... We meet together every Monday morning as a single team.” – Yuri [14:03]

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Power Laws and Outcomes: Returns Thinking

• Fund Return Mentality:
  Not every seed needs to be a fund-returner, but each one should have the potential to do so. It's about ownership, not dollars in.
• Power Law Outcomes Unpredictable Early:
  The biggest winners rarely reveal their ultimate potential at seed; key is to back founders who constantly compound and unlock bigger phases.
• Quote:
  “The reality is that markets are so big now ... [Initial projections] of billion-dollar companies became $5 billion ... which became $100 billion publicly traded companies... That was unfathomable 15 years back.” – Yuri [18:43]

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Private vs. Public Markets: Second-Order Effects & Firm Discipline

• Concentration of Capital:
  In 2026, 75% of global VC money flows into five companies; the few “supergiants” (SpaceX, OpenAI, Anthropic, etc.) dominate new capital raises.
• Staying Private Longer:
  More capital enables companies to delay IPOs, increasing their own control and alignment for long-term building; but this is also attracting “tourist capital” and driving up early-stage valuations.
• Founder Choice:
  Some founders see going public as aspirational and credibility-building; others avoid it to escape short-term market scrutiny.
• Quote:
  “The capital is just there for them, right? ... then they can decide when is the right time for them to go public. What is the reason to do it if it's not for capital.” – Yuri [22:20, 24:53]

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What Compounds Most in VC: Relationships & Pay-It-Forward Culture

• Venture’s Ultimate Asset:
  The biggest compounding force is genuine, long-term relationships—helping others selflessly is what builds strong networks and opportunities.
• Quote:
  “The thing that compounds the most is relationship. … If you do that out of genuine desire to help ... that builds strong networks and that builds dividends.” – Yuri [27:03]

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Changing Views: The Role of AI Labs and New Verticals

• AI Labs Won’t Eat Everything:
  While lab-built software gets commoditized fast, there remains immense space for vertical solutions not covered by labs. The success of companies like Cursor—in spite of “shouldn’t exist” logic—proves the market’s appetite for specialized solutions.
• Small Teams Can Still Win:
  Commitment and focus still beat resources: OpenAI and Anthropic outmaneuvered Google despite its compute and scale.
• Quote:
  “Cursor should not exist in a lot of ways in a world where like Codex and cloud code exist ... and yet it's a $60 billion outcome.” – Yuri [28:36]
• Quote:
  “The transformer paper was actually created at Google... OpenAI and Anthropic had no right to exist ... Google missed.” – Yuri [30:42]

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Notable Quotes & Memorable Moments (with Timestamps)

• Founder-First Investing:
  “The best thing that you can do is meet the best founders early and see the world through their eyes.” – Yuri [00:00]
• On Category Creation:
  “Defense at the time was the opposite of cool and popular, but because Palmer is such a unique founder... [that] informed a lot of our global resilience theme.” – Yuri [02:34]
• On Sector Funds:
  “Thematic funds are always just like a point in time thing. Eventually everything just becomes a good venture fund.” – Yuri [05:42]
• Signaling Risk:
  “We will not cherry pick any of our best companies. At Series A, we will buy ownership upfront ... we've been messaging this in the market for the past year.” – Yuri [10:00]
• On Power Law Outcomes:
  “You can never really try and project out to $100 billion outcome. ... The businesses that ... we thought could stretch to $10 billion ended up being a hundred billion.” – Yuri [18:43]
• Relationships Compound:
  “This entire ecosystem is actually a very small ecosystem ... investing in your relationships in a deeply meaningful manner is the thing that pays the greatest dividends.” – Yuri [27:03]
• On AI Labs vs. Startups:
  “Even in a space where the labs are coming after it hot and fast... there's room for other players to come in.” – Yuri [28:36]

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Suggested Listening Segments & Key Timestamps

• Seed Investing Philosophy & Founder Mindset: [00:00] – [04:27]
• Generalists vs. Thematic Sector Funds: [05:25] – [06:45]
• Signaling Risk & GC's Unique Policy: [09:18] – [12:37]
• How GC Operates as a Global, Unified Seed Team: [13:55] – [14:50]
• Returns Math & Power Laws: [16:53] – [19:30]
• Private vs. Public Markets Evolution: [20:03] – [24:53]
• On Relationships & What Compounds in VC: [26:58] – [28:32]
• AI Labs, Standalone Startups, and New Verticals: [28:36] – [31:23]

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Tone & Takeaways

The conversation is candid, practical, and grounded in hard-won experience. Yuri emphasizes the primacy of founder relationships and generalist curiosity over the transience of thematic investing. There's a respect for long-term, patient compounding—whether in returns or in human networks—and a conviction that iconic companies (and their founders) reshape markets in unforeseen ways far more than any pre-existing trend. The episode is a masterclass in seed investing fundamentals and an exploration of how the most influential venture firms adapt and lead even as the industry chases its own waves.

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End of summary

Transcript

[Yuri]

The reason AI is a wave today is because of OpenAI. If SpaceX was not successful, there would be no space industry today. The best thing that you can do is meet the best founders early and see the world through their eyes and let them guide you to where the opportunities are.

[Interviewer]

General catalyst today has $43 billion under management. Why in the world would you guys be investing in the seed stage?

[Yuri]

I think it's a very common question actually for a fund our size. But I think that there's two pieces to that question and a little bit of framing. That's Hubble. At the end of the day, we actually think of ourselves very much as an early stage fund. I think our DNA, despite our scale at this point is early stage. Some of the best, most well known investments that we've ever done are actually seed investments or started as seed relationships. Stripe Andrew Mercour Circle like every single one of those, a seed investment first. And so we really believe that seed is the heart of the business, regardless of like the capital or the aum. The reason we think seed is so important, there's actually a multitude of reasons. I think the very first reason is that seed is where you form the deepest relationships with founders. It's really the most like if you're the first and true believer, they're going to remember that for the rest of their lives. And so whether it's 10 years later, 15 years later, the person that wrote you the very first check is someone that you remember forever. The second thing is we fundamentally think that seed has some of the best returns in venture. It is the lowest entry point. From a cost of capital perspective. You can buy up ownership easily at the beginning. And obviously if you own 10% of a company that's valued $10 billion or $100 billion or more, you're going to have incredible returns regardless of how many dollars you put to work. And the last reason that I personally care about a lot is that you get to work with founders who are truly living in the future. And we can talk about that a little bit more. But when you meet seed founders today, as opposed to a growth founder you're meeting a founder for the most part has never built in a world that AI did not exist. If we compare this to a company that's five years old, which would be a typical growth investment, most of them started pre chatgpt, right? And so the founders who are building today are just building fundamentally in a completely different mindset. And I think for us as investors, it's important to capture that as early as possible and see that as early as possible.

[Interviewer]

Said another way, your seed practice helps inform the rest of your investment 100%. Practical examples of that, if you're doing

[Yuri]

your job well, you're meeting a lot of these things before they become categories or themes. And so I'll use and drill as an example. Defense today is a huge theme, right? There's a ton of capital going into defense companies. YC demo day is coming up right now. There's a number of defense companies. There's probably more defense companies in this YC batch than there have ever been before. But I fundamentally think that defense is a theme because of Anduril's success. And I think that we were fortunate to meet Anduril early and partner with them not because defense was cool or popular. In fact, defense at the time was the opposite of cool and popular, but because Palmer is such a unique founder. And so I think that by doing that early and seeing firsthand what can be built in defense as a startup, that actually informed a lot of our. The rest of our global resilience theme at which defense is at the heart of it and investments like Saronic, Nominal and so on came from.

[Interviewer]

By seeing Anduril early, you had more of a prepared mind for the next wave.

[Yuri]

By having a front row seat to what they're able to do, it just changed our perspective. What can be done in defense and industrials?

[Interviewer]

Is there something that investor could do in terms of preparing for the next wave or is it just knowing where to focus your time and energy?

[Yuri]

This is kind of speaking to like founders living at the tip of the spear, like living in the future. The best thing that you can do is meet the best founders early and see the world through their eyes and let them guide you to where the opportunities are. You know, I think the reason AI is a wave today is because of OpenAI. And so I think if you were looking at OpenAI in 2017 or 2016, when it was just getting started, it would have looked very weird. But Sam and Ilya and everybody else that was around the table at the time were such exceptional founders that you really wanted to bet on them above anything else. Right. I think it's just important to meet those founders as early as possible and just like keep an open mind.

[Interviewer]

Same with SpaceX as well as Space Technologies, these category definers. Do you think there's a world where if OpenAI was not successful or SpaceX wasn't successful, the entire industry would not proliferate?

[Yuri]

If SpaceX was not successful, I think there would be no space industry today. Even the most successful space startups, whether it's like Rocket Lab which is public, or Stokespace which is private, I think they are being built and to some extent I would even argue Blue Origin which Jeff Bezos funded, are being built on the shoulders of SpaceX. The other example I was going to use, I actually it's another Elon company. I think there would be no electric cars without Tesla. I think that Tesla and like not only no electric cars, I think there would probably be some self driving cars like Waymos maybe would still exist. But Tesla is so far ahead on personal full self driving capabilities that I just don't know that anyone would have gotten anywhere near it without them. So I actually think that Elon has pushed two industries that would not have existed otherwise.

[Interviewer]

To your point, I've developed this pretty strong conviction that seed done right needs to look like a generalist fund, should not be a sector fund.

[Sponsor/Announcer]

Why?

[Interviewer]

Because all the returns in seed come from the next generation of startups. So by definition if you're out there marketing a fund for 24 months, your thesis is already stale.

[Yuri]

This shows up every couple of years like people will do AI funds or cloud funds or intranet funds. And if you think about it, if you project to the future, like if today somebody pitched you a cloud fund, you would kind of look at them like they're crazy or the idea of an Internet focused fund makes no sense. So I think thematic funds are always just like a point in time thing. Eventually everything just becomes a good venture fund. And most great venture funds, I think if you think about the best venture funds even outside of gc, they're almost all generalists.

[Interviewer]

Why do you think there's such a bias for these sector funds at the seed stage? Why do you think they exist as

[Yuri]

an emerging manager, which is something that I did before joining gc, you're always trying to differentiate yourself and one of the easiest ways to differentiate yourself is just say I'm going to pick this one area that maybe is not popular today and I'm going to put a stake in the ground and become the expert in that area. And I think if you pick that area well, that will give you maybe like one or two years or maybe two or three years of breathing room to just like run and own it. There were crypto funds, there were AI funds, there were probably Internet and cloud funds before that. But I think that that is an advantage that is not durable. You'll have to get away from it, but it's a good way to start

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[Interviewer]

there's also this argument that venture capital is so idiosyncratic you could have an extremely seasoned LP that's invested in buyout, credit, real estate, maybe even for 30 years. Extremely experienced, they go into venture capital. They try to port over these intuitions from other asset classes like sector specialists and buyout and lower middle market. Great strategy, enduring strategy, but some of these strategies just do not work in venture.

[Yuri]

I think that they can work at growth like the closer you get to real growth, the more it probably starts looking like private equity. I do think that on the early stage side it just has to be generalist. And if you're looking at it as an lp like picking sector specialists at early stages, probably not the right approach. You want to pick people who are exceptionally good at finding exceptional talent.

[Interviewer]

Just to play devil's advocate. What oftentimes founders really fear at the early stage is having a large fund invest and then not follow on the next round. How does General Catalyst, how do you solve around this problem?

[Yuri]

It's a great question. So I think what you're referring to is something that we usually call signaling risk. It depends on how the fund positions itself and how the market looks at the fundamental. There are a lot of peer firms of ours who really treat seed as a feeder towards Series A. And what will happen is they'll invest in a bunch of seeds and then they'll cherry pick their best Series A's and they'll double down on them. And so then I think people will ask, well, like what's wrong with the other companies? And that is the signaling risk. It's like if you did not lead the A round of your best company, by definition it feels like you do not believe in that company. What we did is we and this is unique to GC because at gc, the we have three partners who are running the early stage practice together, particularly focused on seeds. So myself, Jeanette and Niraj and each one of us actually had our own seed funds before joining gc. So I had a fund called Wayfinder. Jeanette had a fund called La Familia focused on Europe. Niosh had a fund called Venture highway focused on India. And they were all seed venture funds. And so we acutely feel like what it looks like on the other side of a large venture fund coming in and participating. And the decision that we made pretty consciously is we blanket said that we will not cherry pick any of our best companies. At Series A, we will buy ownership upfront. At seed, we want to get around 10%, we'll invest, we'll partner, we'll do our parada at the A. But we actually will skip leading any of our seed companies rounds at Series A because we just want to get rid of signaling risk. We don't want anyone to think that we're picking the best ones. And we've been messaging this in the market for the past year. We have this on our blog, on our website. We tell this to founders up front, we tell this to co investors, we tell this to LPs. And I think that that has really helped. It gives founders confidence that they're not going to have to explain to anyone what's GC doing because they can show it in black and white. It also helps when we work with peer firms that they know that when we're referring deal flow to them, there's no adverse selection in that deal flow. And I don't know that anybody else has done that. It takes a lot of confidence in partnering early to do that and it forces you to not do any option checks early, which I think a lot of firms just haven't been willing or able to do.

[Interviewer]

A lot of people think this idea of signaling risk is overblown. I strongly disagree. And the reason for that is nobody has more information on a company than the existing investor. And to your point, especially if you have $43 billion and you're not following on to your company and you have that option, it's quite a bad sign.

[Yuri]

The way to think about it as a founder is if things are going exceptionally well, no one's going to care. If things are going exceptionally poorly, no one's going to care. But there's a big, you know, 80% in the middle where things are going fine and it's not super obvious, but they're going reasonably well. And in those cases, I think people do care. And that is where we just want to completely kill all signaling risk. We don't want anyone to feel that like we're cherry picking. We want, we will support all of our companies to the extent possible. And so far that has like we've been doing this now for about a year, year and a half and it's worked super well.

[Interviewer]

A lot of top founders love to hire former top founders. General Callis has made the decision to bring in three people that had their own fund versus just worked on another firm. Was that a conscious decision?

[Yuri]

It was very much a conscious decision and it's a better conversation for Haman who had made that conscious decision. But I think that stepping back actually like GC fundamentally is a very entrepreneurial place. Beyond the fact that we have three managers who each ran their fund. There's actually like other companies that we're incubating inside the management company in service of the founders. And so I think that there's a lot of desire for an entrepreneurial mindset. And I think that if you had built your own firm before, then that is part of that mindset. The reason we did this specifically around seed and acquired three seed firms is SG grew a lot of the gravity because of the assets and the check sizes went towards growth. And I think there was a real desire to, on Haman's part and the team's part to pull back the gravity towards early stage. And it felt that the best way to do that was to actually bring firm builders who wanted to build seed firms inside of the company and let them build the seed practice from nearly from scratch. Like Reboot the seed practice inside of the company. And I think the best way to do that is bring people who are entrepreneurially minded.

[Interviewer]

So you guys are looking to do roughly 200 seed checks in your seed portfolio. How do you go about investing in 200 companies?

[Yuri]

The unique thing about GC is that we really operate as one global firm. Like there's no GC Europe or GC India. There's just gc. And so across gc, we have teammates who are in San Francisco and New York and London and Berlin and Bangalore. And all of us operate together. We're one team. We meet together every Monday morning as a single team. We're in one WhatsApp. We all collaborate on deals. And so we think that over the next like three years, we'll probably do around 200C deals, which I think averages out to about one and a half seed deals a week globally. Right. And to give you context on that, that's about 15 people globally who are investing at seed. And so I think that from a cadence perspective and a relationship perspective and a management perspective, it actually is like a very reasonable amount of deals to do over a three year period of time. And it actually is in line. We looked at the math on this like in Fund 12. We did, I think right around 200 deals.

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[Yuri]

So that's actually already what we've already done it. We did this last time. And I don't know the exact number on Fund 11, but I think it's like right around there as well.

[Interviewer]

There's this heuristic in venture capital which, for the record, I don't subscribe to, which is every single investment has to return the fund. Does General Catalyst subscribe to this idea?

[Yuri]

So I don't know that it has to return the fund, but we definitely think of investments in the context of can they return the fund? And I think if you think of it in the context of like a four and a half billion dollar fund, right, if you own 10% of a company, you probably want to see like a 40, $50 billion outcome to be able to return the fund. Which sounds crazy, it's a very large number. But the especially at the seed, Well, I mean 10% is 10%, but thinking about like a $50 billion outcome, for sure, it's very difficult to project. And so I do think that and we have this conversation internally all the time around, like can a C check really move the needle? I don't think the money in matters. What matters is the ownership. And if you own 10% of a generational company, first of all, of course you would love to own it at a lower cost of entry. And second of all, I think we have the proof points that those businesses can materially impact and even return the fund. Not every deal has to do it, but I think that in every fund vintage there's usually, whether it's GC or for other funds, there's usually like one deal that truly drives the fund. And sometimes even like if you do crossover investing from fund to fund, it might drive multiple fund cycles.

[Interviewer]

I had a former partner at Founders Fund say quite a counterintuitive thing, which is that the real power law outcomes don't necessarily look like power loss from the beginning, but you see a way to 5 to 10x and then they just start compounding. They find something out and they just start scaling. You've seen now thousands of investments. As a venture capitalist, do you look at power Lao outcomes as something that can be seen at the very start, or is it just a matter of just constant compounding into great founders?

[Yuri]

It's a great question. I mean, I definitely think that you can never really try and project out to $100 billion outcome. I think you can justify some crazy decision making if you do that. I usually try to imagine what does the world need to look like for it to be a 100x investment. So if I invest a $20 million valuation, I try to think of what does it need to be to be a $2 billion company or maybe after dilution, like a $4 or $5 billion company. I think that the reality is that the markets are so big now, and I think that's maybe one thing that we underestimated like 14, 15 years back, is that when these businesses are compounding, they can compound for a very, very long period of time. And so the businesses that 15, 16 years ago we thought would be billion dollar businesses became $5 billion businesses. The businesses that we thought maybe could stretch to be $10 billion businesses ended up being a hundred billion publicly traded companies. And that was unfathomable 15 years back. And so I don't think you need to underwrite to that, but you do want to find these founders who, you know, they'll get to the next phase and then they'll unlock the phase after that and they'll just keep building these enduring businesses year after year after year. And compounding at 30, 40% a year for a long period of time at scale, ends up being a very impressive number.

[Interviewer]

Before we started recording, we were Talking about the second order effects of everything going on the market. SpaceX going IPO trading at a couple trillion dollars as of today. And what does that lead to? I recently had Matt Wiltire, who runs growth at Wellington, talk about this disparity between the public and the private markets. So in the public markets, there's only four tech companies that are underwriting more than 30% annual growth in the entire world. So if you wanted to own growth, you had to own one of these four companies. Now with SpaceX, there's five in the private markets. Even though people see these large rounds happening and these mass evaluations, there's still only about $350 billion being deployed on a yearly basis. And if you start thinking about the second order effects, you have Anthropic OpenAI and other companies start to go public at a trillion dollars. You have ventures start to outperform the public markets, which for the last 5 to 10 years actually QQQ has outperformed most venture firms. But if you have this return to normal where the top companies are staying private, they continue to outperform at some level, LPs are going to look at that and say should I be allocating more into the private markets versus the public markets? If right now I'm 60, 40, the most innovative endowments and some other investors are like 95 5. Is there going to be more cycle into the private markets? And what will happen as a second order effect? If more capital goes into private markets, companies can now stay private longer. SpaceX could do the next round as a private company. Anthropic and OpenAI could continue to do that. The reason Anthropic, SpaceX and OpenAI are going public is no secret. It's because they need access to more capital. Why do they want access to more capital? It's because there's not enough capital in the private markets already today Q1 2026, 75% of all venture capital money globally, venture capital has gone into five companies. So another way, if the venture capital market was twice the size, each one of these companies could do an extra round. So if you look at it just purely from a capital market standpoint, forget about market size or total addressable market or gdp, take those alta aside and you just look at how long could companies stay private in the future you're going to have potential for another 2-3x return on companies that previously were forced to go public.

[Yuri]

I definitely think that there's more and more money pouring into private markets. And there's a bit of a debate of like a lot of the money is concentrating in a few deals at the growth stage. And somebody actually like asked me recently like are there still early stage deals happening? I just kind of looked at them like they're crazy because my calendar is just so full of early stage founders. I think that the effect that's really going to happen is obviously like early stage valuations will probably continue creeping up because some of the money will trickle not just into growth deals, but it will continue coming earlier and earlier. And we already see that and we saw that in 2021 there was a lot of what I would call tourist capital. So a lot of these growth funds, or even in some cases hedge funds showed up and started doing seed investment. They there was no discipline around any valuation or Pricing or anything like that. And valuations just ballooned. And then like the moment the market corrected, they disappeared. And so I think you'll probably see some of that happening again just because of you're seeing these incredible private companies now ipoing at equally incredible valuations. I think there is a question for founders. Like there are some founders who never want to run a public company. They don't want to do public earning reports. They don't want to do like a quarterly report on a phone call. There's also some founders who they're dying to ring the bell. You know, they want to go on TV or like be on NASDAQ or New York Stock Exchange and they want to celebrate with their team. I have at least one founder in my portfolio who like for him being public is the milestone, just wants to get there. He thinks it's just like such an important milestone for the company. He thinks he will buy credibility to the company. There's like a lot of other things beyond capital that he's actually thinking about it because that company could stay private for as long as it wants. And so I do think that founders will have more optionality here. Right. I think there are a lot of companies that are now in, maybe not a lot, but there's certainly a number of companies that are now in the a hundred billion dollar valuation range or even hundreds of billion dollar valuation range that historically would have been public by now because there would have been no capital available to them privately. And now there is capital available to them and we're like laughing at like serious, like how many letters are there in their series anthropic? I think SpaceX had an even higher serious number and databricks has like an equally high serious number. But like the capital is just there for them, right? And so I think that then they can decide when is the right time for them to go public. What is the reason to do it if it's not for capital. And some will decide to stay private forever. And some will decide to go public.

[Interviewer]

I talked to hundreds of people about this topic, about the private markets staying private versus going public. The best steel man on this argument of going private and continuously staying private is if you're acquisitive, if you're a company that needs to make a lot of acquisitions, having public currency do that is extremely efficient. Even saw SpaceX execute with cursor, essentially with this promise of a public company. All things being equal, it does feel to me that the very best founders, whether Elon, Collison brothers, they I think SpaceX year 24, they went public. They try to avoid the public markets as long as humanly possible in order to align all the organization around long term thinking versus this quarterly thinking. And I do find that to be a consistent signal alongside the very top founders.

[Yuri]

That's generally true. I also think there's just a lot more scrutiny in the public markets around M and A. Not just from a dollar perspective, but regulatory perspective. And that will probably, I think as companies stay private longer, I think the laws and the scrutiny will adjust there as well. There's a real question of like, if Adobe was a private company and they tried acquiring figma, what would that have looked like a couple of years back? Would it have been the same scrutiny? But I think the laws there will probably catch up quickly so that, that will not be a thing for that long. I think the currency question is the real of being able to use your equity dollar like super, super liquid equity dollars. But at this point I think a lot of the best private companies I've heard are doing quarterly redemptions for their employees anyway. And so I think that there's enough liquidity in the private markets for the best, best private companies. That, that is becoming less of an issue as well, but probably not. You know, there's an entire cohort of these companies that are maybe in like the 10 to $50 billion range, which are very good, but will not have the exact same liquidity as they would have had if they were in the public market. So I think that a lot of that will still continue evolving over the next five, 10 years. I will caveat all of that, that like I spend all my time thinking about seed, where liquidity and public private conversations are usually like 10 to 15 years away.

[Interviewer]

You've been a founder and VC for your entire career. What's compounded the most for you?

[Yuri]

The thing that compounds the most is relationship. Does that mean the Valley is built on paying it forward for people? It's helping people not because you get something in return for it, but just because it's the right thing to do. And if you do that enough and you do it out of genuine desire to help, and I've been on the receiving end of that help where people have helped me where there was nothing for them in return. I think that builds strong networks and that builds dividends because you start getting deal flow, you start getting opportunities, you start getting introductions. This entire ecosystem is actually a very small ecosystem despite, despite the companies it produces. And so I think that like investing in your relationships and doing that not in a transactional manner, but actually like in a deeply meaningful manner is the thing that pays the greatest dividends. There are people who have given me over the years a lot of opportunities here where there really, truly was nothing for them to gain from that other than just like taking a chance on me. Because of that, I've been able to pay it back to them in other ways, whether it's opportunities or introductions or something else. And I try to really like, live my own life that way. Like, I will take phone calls with people who reach out cold if it's something interesting, not because there's something specific there, but I just think that, like, this is how this entire ecosystem operates and I try to pay it forward for the next generation as well.

[Interviewer]

What have you changed your mind on the most in the last 12 months?

[Yuri]

I think that I was much more worried about the labs eating all software 12 months ago than I am today. The labs are entering many product areas and directions. Software development is becoming much more commoditized than it's ever been. But I think the reality of it is that there's still so much opportunity to verticalize within a product area or category and the labs are just not going to do that. Like they'll offer some surface level solution that integrates well with their own chat products or their own APIs, but to really solve workflows and deliver outcomes for a company or for a person, there's a ton of space between what a lab is implementing on their own and what the company or the person needs. And so I was much more worried like 12 to 18 months ago, I was much more worried of what, if any of this will be durable. And the thing that we continue seeing is that these companies, whether they're building in legal or design or any number of coding, the cursor should not exist in a lot of ways in a world where like Codex and cloud code exist like the. And yet it's a $60 billion outcome. It's incredible. It's like, I think, the largest private outcome of all time. Right. And so to me that is validation to the fact that like, even in a space where like the labs are like coming after it hot and fast and have incredible solutions, there's still, because the markets are so large and people have preferences in taste and preferences in the way that they want their solutions and outcomes delivered, there's room for other players to come in. And we see this now in open source. I'm just using coding as an example and we obviously saw this with cursor. And so on. So I really am like, much, much more bullish on standalone companies versus 12 months ago.

[Interviewer]

It reminds me of the quote that the only thing that has really changed the world is a small group of committed people. If you get a small group of highly intelligent, highly committed people at a company like Cursor, they could actually head to head compete against maybe a larger group less committed to that specific vertical.

[Yuri]

Absolutely. I mean, I think that the most glaring example here is not even Cursor. It's OpenAI and Anthropic in the sense that the transformer paper was actually created at Google. Right. Google had it. Google had all the resources, all the compute, everything that they needed to win the space in a lot of ways. Like OpenAI and Anthropic had no right to exist in the face of that. And Google missed. Right. And instead you had first OpenAI with a tiny team being able to build a product that competed with Google on day one. And then you could have said the exact same thing. It's like, okay, well, now OpenAI is one, and then anthropic comes along and does the exact same thing and does it at an even faster pace. So I think that's absolutely true.

[Interviewer]

Oh, Yuri, this has been absolute masterclass. Thanks so much for jumping on.

[Yuri]

Thank you for having me.