20VC: Max Altman on The New Seed War: Can Anyone Compete with Sequoia and a16z | Leaving $2BN on the Table with Reddit | Lessons from Backing Rippling at $25M Post | Why Climate Tech is a Mirage and Disaster

Summary

The Twenty Minute VC (20VC): Max Altman on the New Seed War, Backing Rippling Early, and Why Climate Tech is a Mirage

Host: Harry Stebbings
Guest: Max Altman, Co-Founder & Managing Partner at Saga Ventures
Date: November 21, 2025
Duration: ~73 minutes

Episode Overview

In this candid, wide-ranging conversation, Harry Stebbings sits down with Max Altman of Saga Ventures. They dive deep into the realities of early-stage venture capital today: the challenge of competing with giants like Sequoia and a16z, lessons from missed and great investments like Rippling, Reddit, and why Max believes climate tech is structurally unsuited to venture returns. With honesty, sharp culture commentary, and personal reflection on family (his brothers are Jack and Sam Altman), Max describes the new “knife fight” of seed investing, the impact of background on investing style, and the inner workings of building and differentiating a modern VC fund.

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Key Discussion Points & Insights

1. Max Altman’s Background and Midwest Roots ([03:50]–[05:27])

• Growing Up in the Midwest: Raised in St. Louis, Max contrasts the humble, communal culture of the Midwest with the aggressive, individualistic energy of San Francisco.
  • "The culture in the Midwest is very different. It's very humble, it's very communal." - Max Altman [04:08]
• How Geography Shapes Investing: Midwest upbringing taught him to build real, trusting relationships but perhaps made him less aggressive early on.

2. Early Tech & Investing Experience — Zenefits, Rippling, and Parker Conrad ([06:32]–[10:08])

• First Tech Role at Zenefits: Worked directly with Parker Conrad, whom Max describes as both "crazy" and the best salesperson and product person he's ever met.
• Lessons Learned:
  1. Founder Intuition Matters Most: "The founder needs to have intuition of what they want; the customers aren't going to know." [07:32]
  2. Growth > Everything: "Sales and growth cure everything...the culture was amazing." [08:10]
• Loyalty to Parker Conrad: Even after Parker’s fall at Zenefits, Max remained supportive, emphasizing founder’s resilience and taking early risk on him with Rippling.

3. Building Funds and Dealmaking – Hydrazine, Apollo, Saga ([12:05]–[20:22])

• Evolving Motives: Left working with family (Jack & Sam Altman) to establish his own reputation—part ego, part pride.
  • "I want to be successful in my own right...I left after doing three funds...just for ego and pride, to be completely honest." [11:29]
• Hydrazine (2016, $200M): Strategy was loose: back best people in network, notable investments include Rippling ($1.35M at $25M post), Reddit ($600M post).
• Lessons in Construction & Mistakes:
  • Not following on with winners.
  • "Run out of your living room" approach led to dilution, missed opportunity for larger positions.
  • Key Lesson: "[The] learning was just give money to the best people...be price insensitive." [16:52]
  • Biggest Mistake: Not doubling down on clear winners post-investment.
• Apollo (2020, $200M): Tried extending into hard tech, climate, defense.
  • "We got a little bored...It's more fun to do that stuff...but didn't have a ton of success there." [23:45]

4. On Climate Tech: A Mirage and Disaster? ([25:05]–[26:01])

• Max is blunt: "Climate was a disaster...hey, climate change is real. The government should deal with it. I don't think [VCs can solve it]."
• What's Wrong with Climate Investing?
  • Businesses are "completely dependent on the price of carbon."
  • "When the economy slows, companies will not keep spending billions on carbon credits instead of keeping jobs." [25:50]
  • Climate is a "luxury concern." [25:55]
  • Returns just haven’t matched the narrative or market needs.

5. Seed Investing vs. Multi-Stage Giants ([26:14]–[31:10])

• Competition at Series A: Big brands have locked up later-stage rounds with brand, influence, and deep relationships.
  • "It's a knife fight...If I win against Sequoia at A, it's probably not the deals I want." [26:35]
• How to Compete: Get in earlier or partner with top funds.
• Are Sequoia & a16z Dominating Seed?
  • Not totally. New post-Transformer AI unicorns are led (at seed) by a mix of funds; plenty of first checks for smaller/newer VCs.
  • "There's not something where Sequoia and Andreessen are taking up half of those lead checks at the seed." [29:02]
• Signaling Risk is Real:
  • "If they're not leading your A after seeding you, that's a huge negative signal." [31:27]
  • "Signaling is extremely real—or at least a good way for us to sell, but it's real." [31:45]

6. Deal Sourcing and Building Relationships ([32:11]–[34:42])

• Best Deals Rarely Come from VCs: Instead, "almost none of the best deals I've done have been sent by another fund." [32:11]
• Technical Founders/CTOs Are Best Referrers: Deep engineering networks yield stronger referrals.
• Firm Construction Choices:
  • Saga focuses on concentrated positions (10% target) vs. lots of “brand checks.” Prefers deeper founder relationships over ultra-broad index approach.

7. Fund Structuring, Fundraising, and LP Relations ([35:20]–[44:05])

• Saga Fund I: $125M, 20-25 lead positions, $2–2.5M entry checks, 30% reserves (though recognizes pro rata is often honored only in part).
• Fundraising Insights:
  • Took 5-6 months, focused on institutions and endowments (6 included from day one).
  • "Sam [Altman] told me—don't talk to other LPs until you've got high quality anchors locked in. I didn't listen." [41:18]
• Different LP Types Want Different Things: Endowments want "strategy fit"; family offices care about upside.
• Biggest Surprise: It's less about promising giant returns, more about matching their needs and showing maturity in strategy.

8. Seed Market Today: Pricing, Watermelon Seeds, 1% Ownership ([36:50]–[39:42])

• Rising Valuations: More deals priced at $50–$100M at seed—harder to win, less ownership, but sometimes sensible (for top founders, network, or "brand halo").
  • "If you're going to make a 10x plus [return], just do the f***ing deal anyway." —Harry Stebbings [38:28]
• On "Brand Checks": Max warmed up to doing small checks in winners for halo/network. "Always a good thing to have a CEO of a multi-billion dollar company that you're texting with..." [39:47]

9. On Pro Rata, Collaboration, and Competitive Dynamics ([44:51]–[47:13])

• Pro Rata Reality: Models for 70–80% at best, rarely 100%.
• Most Collaborative Large Fund:
  • "Khosla. We've ended up with 10% alongside them in two deals, very collaborative." [45:48]
• Least Collaborative: "Sequoia's tough, man. ... They're the best of the best." (Laughs) [45:59]
• Fundamental Market Change: "It's not kumbaya. It's a competitive market, we're all competing for a scarce amount of good equity." [70:14]

10. Preemptive Rounds, Raising Advice, and Signaling ([46:28]–[52:59])

• Massive Preemptive Rounds Can Distort Companies: Max usually advises founders not to raise too fast or too much, but understands how brand association (Sequoia, a16z) "king-makes" companies and requires careful timing.
  • "Getting fat and happy early on is not great...you need a lot of fear you're going to run out of money to work harder." [46:46]
• Biggest Mistake Founders Make Raising Series A: Sporadic outreach and sloppy process; should run a tight, coordinated “horse race.” [49:26]
• Strength of VC Networks: Many good deals come from direct, trusted relationships—not cold intros or VC pass-arounds.

11. The "Sphere of Influence" in AI, OpenAI, and Investing Around Giants ([54:40]–[58:46])

• On Building Near AI Labs (e.g. OpenAI): Avoid companies that OpenAI or Anthropic will likely build themselves.
  • "If you think you're going to build something close to OpenAI and they're not going to build it, you're crazy." [55:00]
• Differentiation: Invest in "second order" companies, further away from big labs' product roadmaps (fleetworks example: AI for logistics, supply chains).
• On Leveraging Family—Sam Altman: Max is careful not to press for privileged information, emphasizing integrity and independence.

12. Personal Reflections and Staying Motivated ([58:46]–[61:14])

• Balancing the halo effect (and burdens) of being Sam Altman’s brother.
• Motivation to prove himself with Saga, focusing on building a quiet, "luxury" yet high-performing seed fund—akin to First Round Capital or USV.

13. Changing Industry Structure—Rise of New Boutiques, Squeeze on Old Seed Funds ([61:15]–[64:30])

• Messy Middle: $700M seed funds now squeezed; the future is either massive platforms or tight, high-performing boutiques.
  • "I think it's really challenging to be like a $700 million fund now. You’re either massive, or you have a legacy cachet, or you’re a boutique with a specific offering." [61:57]
• Inevitable Replacement: Each generation’s new seed firms must displace the old.

14. Secondaries, When to Sell, and Managing Duration ([64:30]–[67:44])

• Selling Discipline: Should have sold secondary in Gusto at $10B.
  • "We need to spot when the market is inefficient and some things get overvalued...not wait for that 200x." [64:48]
• Duration Matters: The timing of DPI is as important as the multiple ("4x in 17 years is just 2.6x in 10 years"). [66:16]
• When Sequoia or similar funds "let it ride," it’s because they’re not return-constrained and can take bigger risks.

15. Personal Wealth, Hedonic Treadmill, and Happiness ([67:44]–[69:27])

• Getting first big hits (Rippling, Reddit) brings some peace, but “the ladder to nowhere” in Silicon Valley wealth is real.
• "I would be less happy as a billionaire than I am now. I’d just want a nicer house, then a boat...” [69:05]

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Notable Quotes & Memorable Moments

• On VC Culture:
  “I think that it is because people say it's a sort of chummy collaborative thing where we're all kumbaya and having fun and then you get to it and someone just elbows you out of the way. It's not. It's a competitive market.” — Max Altman [70:14]

• On Early-Stage Investing with Giants:
  “If I win [a Series A] against Sequoia, it's probably not the ones I want...If you can get 2 or 3% of the next Doordash or Airbnb, we're in great shape.” — Max Altman [26:35 & 18:01]

• On Climate Tech:
  "Climate change is real. The government should deal with it. I don't think [it makes sense for VC]." – Max Altman [25:06]

• On Fundraising:
  "Sam gave me advice that I did not listen to—don’t talk to other LPs until you have your high-quality anchors locked in." [41:18]

• On PR & Brand:
  “I would do a lot more to brand myself as a thought leader...I’m starting on the PR train now.” – Max Altman [75:46]

• On Tech’s Future:
  “People can't wrap their heads around how big these markets are...if you succeed, you aren’t just selling software, you’re replacing the whole thing.” [73:58, 74:31]

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Segment Timestamps

• [03:23] Entry into the interview, reflections on family and early background
• [06:32] Zenefits, Parker Conrad, and first product roles
• [12:05] Motivation for building own fund, departing family partnership
• [13:28] Hydrazine and Apollo funds—strategy, branding, and ethos
• [18:25] Biggest mistakes in fund construction and follow-on
• [21:44] Reddit: Reflection on exit timing and $2B left on the table
• [23:02] Apollo fund, transition to hard tech, climate regrets
• [26:14] Competing with multi-stage giants, the new Series A ‘knife fight’
• [32:11] Sources for best deals—founders, not VCs; power of technical networks
• [35:20] Fund strategy and construction at Saga Ventures
• [41:18] Lessons and tactical truths of institutional fundraising
• [46:28] Preemption on rounds, advising founders on when (not) to raise
• [54:40] Investing near vs. around big AI labs: where new opportunity lives
• [58:46] Navigating fame and pressure as Sam Altman’s brother
• [61:15] Seed fund structural challenges and new generational turnover
• [64:30] When to exit, managing secondaries and DPI duration
• [67:44] Wealth, happiness, and maintaining perspective
• [69:29] Quick-fire questions: underrated founders, biggest BS about VC, regrets, lessons from Sam, advice to managers, belief that changed

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Quick-Fire Takeaways

• Favorite underrated founder: Lux Srini (CTO at Zenefits → Zero Down) [69:54]
• Biggest venture BS: “It’s kumbaya, collaborative—we’re competing for scarce equity.” [70:14]
• Deal regret: Hadrian—should have been more aggressive in relationship-driven dealmaking [70:45]
• Best lesson from Sam Altman: “Figure out what someone truly wants—it’s not always money.” [71:16]
• Advice to new managers: “Be humble. Know what you’re good at, stay in your lane.” [71:40]
• Big belief flip: “I thought you could be a text guy, fly under the radar—not anymore.” [72:00]

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Final Words

Max Altman’s candor and acerbic wit expose both the opportunities and landmines in the rapidly shifting landscape of seed investing. He details not just the victories and losses, but the psychological toll, the new market math, and how, beneath personal relationships and Miami poolside meditation, lies a fiercely competitive modern venture ecosystem.

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For more episodes with top founders and VCs, visit 20vc.com.

Transcript

[A]

This is 20 VC with me, Harry Stebbings now. Joining me in the hot seat today we have Max Altman. Max is the co Founder and Managing Partner at Saga Ventures, a $125 million early stage fund. And before Saga, Max was an investor with Apollo Projects, Hydrazine Capital and Altman Capital, where he deployed over $500 million into breakout names like Rippling and Reddit.

[B]

To name a few.

[A]

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[B]

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[B]

You have now arrived at your destination. Max, dude, you're the final Altman left to interview. And I actually spoke to Jack last night and he told me that I saved the best till last. So no pressure, dude, but welcome to the show.

[C]

Yeah, thanks for having me. I definitely think I'm the most fun of the three. Maybe the most media shy, but the most fun.

[B]

I heard the most intellectual and charming.

[A]

So I will totally take that.

[B]

I want to start though on like.

[A]

A little bit earlier.

[B]

You grew up in the Midwest, which.

[A]

For me is like a Brit.

[B]

We know New York, we know sf, and then there's the middle. So this is the middle, correct?

[C]

Yeah. Grew up in St. Louis, now live in Austin, spent a few years in San Francisco, but then bounced back to near home.

[B]

How does that impact how you think about investing as an investor?

[C]

The culture in the Midwest is very different. It's very humble, it's very communal. And then I remember I got out to San Francisco and I'm like, everyone is so aggressive and individualistic. So I think it helps a ton one in that you build a lot more real relationships and a lot more like close friendships because that's how we grew up. The flip side is we're a little less aggressive and some of the earlier mistakes I made was just being a little bit less pushy than some of the people that might have grown up in Atherton.

[B]

Do you think there are many real relationships in Banchester?

[C]

There are still some. There are less. I think when I got there in San Francisco in 2013, it looked a little more like a smaller town, maybe Austin or St. Louis, where everyone really trusted everybody and had deep connection and naturally it's grown 10, 100x the number of VC funds, the number of startups out there. So I think it looks more like New York where just generally trust in Society, I think breaks down a little bit as you grow.

[B]

Well, this is like pre tourist venture.

[C]

Yeah.

[B]

I think most of people in venture stay at tourists. Like they like going to events. They like telling people at private members clubs that they're VCs and they have single digits. IQs.

[C]

Yes, some of them. I think though, to be fair, there's a lot of wonderful people in the industry and I'm at least fortunate enough that there's dozens of people who I think I have real relationships with.

[B]

The single smartest friend who's a vc, not a family member, Keith Rabboy.

[C]

I mean, whatever people want to say about him, I think he's extremely smart.

[B]

I love Keith. Phenomenal. What do you think the world doesn't see about Keith that you do?

[C]

I mean, he's rough around the edges, he's honest. He probably doesn't agree politically with a lot of people in San Francisco. But that's not taken away from how smart he is, how good of an investor he is. And frankly, the first board I served on was Teespring and he was also on that board. And people can say like, oh, he's kind of a dick or anything, but I mean, my experience was I was a 27 year old and he was like, hey, call me whenever he was taking half an hour hour calls to help me understand how to do the job. So that's my experience with him.

[B]

God, I remember Teespring. These are back in the day. That's like a blast from the past.

[C]

This is a throwback.

[B]

This is like Savage Garden being played. And you're like, this reminds me of school disco.

[C]

That was the Silicon Valley I grew up with.

[B]

Those were nicer times.

[C]

It was a blast. Everyone was just winning and making T shirts and hanging out and you know, it all was good for a little bit.

[A]

I totally.

[B]

It's funny, I spoke to Parker before from obviously Rippling. And I remember being in SF when I was like 18. Zenefits was just like the hottest thing in the world.

[C]

Oh, it was a blast. That was my foray. I was a quant trader after college because I wanted to go to Chicago as a Midwesterner. Hated that. Came out, then joined as the first product manager at Zenefits and got to work for Parker directly for.

[B]

Is that amazing?

[C]

It was amazing. He's crazy, but he's the best salesperson and the best product person that I've ever met in my life.

[B]

How is he crazy?

[C]

First he's that person that on a Sunday night at 9pm will just call you and just say, new idea, you need to get it done before tomorrow. Or if someone screwed up, he would just email them. Wtf? Not any context. Like if anything went wrong, if there was a customer case that looked bad, which just means fix this right now.

[B]

I absolutely love that. What did you learn from the Zenefix experience? Because that was a pretty transformational time in your career as well. It's like first time in tech as well.

[C]

Yeah. What I learned first and foremost is you need especially then to build an absolutely amazing product and customers don't know what they want. So I remember one of the first times, my first week on the job, we would do customer discovery calls and we'd listen in and the customer's like, I want you to build this thing for payroll and this thing for HR tech. And we leave the call. I'm like, okay, great. I'm going to write some specs for, you know, we're going to build that. And Parker's like, no, no, no. They say that they don't actually want that this is what they want to build and we'd go build it and the customers would love it. So I think I learned the founder needs to have intuition of what they want. The customers aren't going to know then.

[B]

2.

[C]

Sales and growth cure everything. In Zenefit's case, maybe to its detriment a little bit, but we were killing it. The culture was amazing. Sales were off the chart, the salespeople were partying. We were just having a great time. Everyone was happy and everyone was loving it. The flip side is if sales cure all ailments, sometimes you might not be paying attention to other things that are going on.

[B]

I'm fortunate to know Nick from Ravolud and interviewed him a couple of times. And he always says culture is kind of bullshit. The only thing you should focus on as a leader is winning. Because the single biggest determinant of human happiness is personal development. And when you are winning, you are growing personally skills in personal and then also you're financially winning. And so just focus on winning and everything else follows.

[C]

I fully agree with you. I mean, first off, when any of my friends are like, I want to join tech, what should I do? And I say, don't care about the product, don't care about anything. Just go work at the fastest growing company. Because winning feels great. It feels amazing. And I think we sort of maybe lost our way a little bit in like the late teens in tech where everyone was, you know, they were making it about their mission and saving the world and we're doing on demand dry cleaning and on demand dog walking. But it's going to help the world this way and you should feel good about yourself. And I'm like, just go build a great business. And like winning is the most fun thing here. And I think we really lost our way for a little bit in terms.

[B]

Of losing the way. And this is unfair of me, but I am intrigued. I take it you're on the Parker side, on the Parker versus Sachs.

[C]

I am. And I think I've been quiet for a while. And I'm really loyal to him both and he's the one that gave me a chance. He taught me how to do venture. He sort of set the bar for what I want to be investing in and frankly let me be one of the earliest investors in rippling. So I'm very loyal to him. But yeah, I think there were some small mistakes made, but they were company wide. They were under all departments, not just his. Everyone knew about it. They weren't ethical mistakes. And he sort of, you know, took the fall. Maybe the CEO has to always do that though.

[B]

It's funny, when I spoke to him, he said it was all Max's fault. He just said all those mistakes were just Max. I took the full fault.

[C]

I built a wonderful product. I made no mistakes.

[B]

What price did you do rippling at 25 US.

[C]

I had a fund that I was leading that Sam was helping out with a little bit in 2016 called hydrazine. We were able to put in a pretty good check co lead it with initialized Gary and Alexis, who also had a great fund that vintage.

[B]

I always find it interesting to understand a little bit about the person in terms of motivations. I also think that elephants in the room are always good to be called out with a brother like yours. I find these next two questions interesting. And as wonderful as Jack is, I'm obviously referencing Sam. To be fair, Jack is a legit og but like, no offense, no, but.

[C]

I also remember talking to Jack one time and he's like, yo, I built a multibillion dollar business and he's crushed in one of the most successful early stage adventures. He's like, but people still call me Sam's brother.

[B]

Sam Altman's brother raises $12 billion fund and also flies to the moon and cures cancer and is like Sam Altman's brother.

[C]

Yeah, and we have a group chat about this all the time where Jack.

[B]

Just like, you know, is he called Sam Altman's brothers?

[C]

No, it's our family group chat. It's the three of us, but absolutely, Jack can absolutely crush it. And they're like, but Sam Altman's brother raised an a.m. you know, $275 million fund.

[B]

What do you think you're running towards?

[C]

I want to be successful in my own right. Like, ego is a real thing in human nature. And I don't think I ever want to say, hey, Max, you know, crushed it on these funds. But, you know, Sam was loosely involved, and it's like, it's not really his. So, you know, I left after doing three funds with some combination of Sam and Jack to build out my own firm just for ego and pride, to be completely honest.

[B]

Were you nervous about that? And I don't mean that badly, but it's a little bit like a GP at Excel or Sequoia or you name it, spinning out and doing their own. It's like, gosh, I've crushed it with this. But I did have some help.

[C]

Oh, I absolutely did. I think a few things are, like, one, it's fun to make it a little harder. Absolutely. It's gonna be a little harder if Sam's not involved, but, like, that's good. It's good to be pushed and have to, like, work for what you want. I also think I was really fortunate that I kind of grew up with a Sequoia or Founders Fund level, like, training and background. Like, we all lived in a house in the Mission, and all the best people, whether it's like a Peter Thiel or a Keith, are coming by the house talking about investing. You know, I think we had about 17 unicorns across the fund because it's just a small world, and everyone's come and buy. So I'm like, oh, these are the founders of Instacart or Reddit or Rippling or boom. And it's like, this is the bar. So I learned the bar, and I got my really amazing education, so I felt pretty comfortable going in. And I think my sort of ace in the hole is, dude, Harry, I can't fail. You know how embarrassing it would be if it's fun, like, shat the bed, I can't fail. And I think it's a great motivator.

[A]

I totally agree.

[B]

For anyone entering venture, I always say the most important thing is actually just to meet as many founders as possible, because establishing the benchmark of what good is is one of the most important things you can do early in your career. Yours is a little bit of a cheat with those founders and, like, exposure, but I completely agree with you. There so we're kind of running towards wanting to do it on your own. Before we get to Saga, I do just want to touch on hydrazine.

[A]

Why was it called hydrazine?

[B]

This feels like a chemical plant.

[C]

All three of us are very bad at branding. You know, whether it's ChatGPT or the fun Jack and I did together was called Altman Capital. None of us are good at branding. I think one day we were just like, sitting at the kitchen table and we had to give it a name. And there was one day to do it, and I think it was maybe Jack, which is like, call it Hydrazine. There's no real reason for it.

[B]

And the domain was available, and everyone's like, ah, fuck it. The domain's there. How big was the fund?

[C]

That was 200 million.

[B]

That's a lot more than I thought, dude.

[C]

Yeah, I mean, I was sort of.

[B]

Quietly like, did you raise money for it?

[C]

Not for that one, but then the other one that Sam and I did in 2020 called Apollo, I raised money for that.

[B]

Okay, so let's just stick on this one. It's fascinating. So you do that fund, and it's.

[C]

The three of you working on me full time. Sam's helping out a little bit. Jack is barely involved. Helping a tiny bit, bringing us some cool deals, but he's getting really busy with Lattice.

[B]

Yeah, he's just fucking around. Building a billion dollar company.

[C]

Exactly.

[B]

What is that? Okay, so we have that. And then you mentioned rippling at 25. Was that the strategy? Like lead pre seed seed rounds?

[C]

I would say it was a looser strategy. It was give money to the best people. We did Reddit at a higher valuation. We did rippling at what price?

[B]

You do ride it at 600.

[C]

Still pretty good.

[B]

Still pretty good, yeah. How big of checks are you riding?

[C]

The rippling was 1.35 million at 25. Yeah. I just was, like, dumb enough to never beat my chest and talk about things. I sort of maybe grew up more as a Midwesterner from St. Louis who's like, wow, so you have like a.

[B]

5% position on that? On a 25 engine?

[C]

Yes, to start. But we weren't great at really doing our pro rata and holding it all the way through. But it's still going to be a great return for the fund.

[B]

Yeah. But even with a heavy dilution, you still got a 2%. Yeah.

[C]

Wow.

[B]

In a $20 billion company say that.

[C]

Yeah, it's pretty good.

[B]

Did you sell along the way?

[C]

We've sold a tiny bit, frankly, just because our LPs have asked for liquidity because they're mostly endowments and have been squeezed. Parker's amazing and I would never bet against him. So we still hold a bunch of it.

[B]

How do you reflect on that time doing Hydrocene? What are the biggest lessons that you've taken with you?

[C]

Yeah, I mean, I think first and foremost is really fortunate to work with family because you automatically trust that everyone is doing what is best for the firm and not what's best for them. You can also be radically candid with each other. And just like this was a dumb deal, we cannot do this. You screwed up in a way that you might not be able to do with a new partnership. So I think when we were building the firm, we have an equal GP firm, there's no associates right now. Everyone is completely incentivized to do what's best for the firm, not for themselves. And I think we built the firm that way because of what I learned earlier.

[B]

Do you think most venture firms have fucked up cultures because of the hierarchical structure of them?

[C]

I don't know if they're fucked up cultures, but I don't think they're incentivized to have the best returns. If you're an associate at a firm and you're maybe there for five or six years, your job is to get a deal done that's going to get marked up quickly so you look good and then can get promoted or get poached to go to another fund. But you have so little carry and you're probably not going to be there the 12 years until you see any liquidity. You're not incentivized the right way.

[B]

What was the single best deal you did from hydrazine and what's your lesson from it?

[C]

I mean, definitely ripley. Not to keep being on the same drum, but the learning was just give money to the best people that you know in your network.

[B]

I remember be price insensitive because I remember that deal was also. It was expensive for the time. I think it was actually a third. 35 entry.

[C]

25 pre.

[B]

25 pre. And Keith Robboy famously turned it down and initialized it instead. And Keith always tells me it's one of his biggest regrets.

[C]

Yeah, at the time this was 2016. That was really pricey. And I remember actually after everything left, Parker and I, we were both depressed and we were chatting and he came back and we were talking. I think it was like a 17th street sight glass in San Francisco in the Mission. And he's just like, I want to build a laptop leasing company I want to do something, but I have this fire. I cannot lose to Andreessen. I can't lose to David. And I'm like, yo, this guy, he's a chip on his shoulder. He can't lose. He's the best founder I've ever met. Just give him money and the rest will take care of himself.

[B]

Do you kind of think like that? Which is like, fuck it. Don't worry about price. Don't worry about ownership. If someone great comes, just give them money.

[C]

I think mostly, I mean, that being said, we do have a portfolio construction in the current Saga Fund. We do like to own 10%, but I'd rather own 3% of an amazing founder. Then, hey, we have our 15% ownership in this company. That's going to be worth zero. That doesn't help us. If we can even get 2 or 3% of the next doordash or Airbnb, we're in great shape.

[B]

What was the biggest mistake of that fund?

[C]

Not following on to our winners. We were a little bit like, loosey goosey dude, Harry. I was running a $200 million fund from my living room in Pac Heights, just kind of casually typing away, doing some deals, meeting people for coffee, and we didn't have a great portfolio construction strategy, so we just said, great, we have our ownership. Let it be. We weren't trying to put more money into companies.

[B]

And now you're proactive on reserves in a way that's very different.

[C]

Absolutely.

[B]

Do you think you're able to predict your winners sufficiently?

[C]

No, but we're able to tell within six to nine months who's going to be a winner, and I think who's going to peter out.

[B]

Do you think so?

[C]

Yeah. Do you not?

[B]

I actually think it's even quicker than that.

[C]

Sure. Okay.

[B]

Yeah.

[C]

I just wanted to be nice. No, it's two to three months, probably.

[B]

No, I'm with you. After the first board meeting, first few updates, you're like, okay, the way that they run this, the structure, the mindset, the approach, the aggression, I think you see it so quickly.

[C]

Yeah. I mean, I think that the investment we're the most excited about in Saga are now profound. Within three months, I was just like, oh, they're building an office, they're hiring the best people, they're working on Saturday nights, and their product looks amazing, and they're closing deals. And it was obvious within three months.

[B]

It's so interesting. And the flip side of that is it's also obvious when you've got it wrong in three months. Do you Tell founders when you've lost faith in them.

[C]

No, I'm not an asshole.

[B]

Do you think that's an asshole thing?

[C]

No, I think if I've lost faith in you as a person, that's an asshole thing. I think if you see if a.

[B]

Founder continuously lets you down, I don't think it's bad to lose faith in them.

[C]

Okay. I think what I will say to founders is, hey, if it's been years and it's not working, I think I'll say there's absolutely no shame in shutting this down, taking a break, returning 10 cents on the dollar to us. Harry. We don't care if it's 10 cents on the dollar or 50 cents. It doesn't move the needle. We're not in the game of downside protection or just go get acquihired. Go work at an amazing company. It's not working out. And that's okay. I think we tell them that.

[B]

Did you have any zeros in that fund?

[C]

Yeah, we had a lot.

[B]

Any reflections on those?

[C]

The things that failed were things that were built for the market of maybe San Francisco and Manhattan. And the example I might use is on demand dry cleaning app. I love paying extra money to have this nice shirt. Go and get dry cleaned myself and I get to stay in my apartment. But people in Austin and people in St. Louis aren't going to want that. It's clearly not a real scalable VC business. Why the hell are we investing in that?

[B]

My favorite is I remember Shasta once. Did you remember Shasta? Yeah. I'm not picking on them, but Shasta, that's so brutal of me. They once did a frozen yogurt maker with like sachets. That had to be that. And I'm like, it's hardware tough broadly. And then frozen yogurts with the Juicero style. You need our sachets. And I'm like, this feels very demographic specific.

[C]

Yeah. And I do believe that the majority of the best companies, companies are going to be built from San Francisco. But the people need to be a little bit outward looking in what they're building because your market better be the entire United States at a minimum to be able to succeed. I think that's why Rippling is doing great. Parker's like, hey, our main target demographic is a really nice HR woman in Nebraska. So we're going to build a product that she's going to love.

[B]

You enter Reddit at 600 and then you sell out after the IPO. After the IPO and you sell out at what price Again, it was about.

[C]

9 billion when the lockup ended.

[B]

What's the reflection? Reflections on that.

[C]

That was tough. I think the market cap's about 39 billion now. I think it's pretty public. The fund owned just about 7%. You can do the math. That's about maybe 2 billion of gains that could have been. It's a lot. But we're in the business of saying after the lockup we're not public market investors. And LPs are like thank you, you did your job. We would like you to distribute it back. And I think that's reasonable. We aren't public market investors.

[B]

So you would do that again, I.

[C]

Think that has changed my thinking and I think from here it's going to become a discussion on a one off basis because that's the difference between a 5x fund and a 15x fund.

[B]

Because what I've learned is actually quite a lot of LPs on the institutional side have auto sales, which is like the minute you distribute, they sell even if they don't particularly want to. And so actually you can do them a favor by holding it because they're not allowed to hold it.

[C]

Yeah, I believe that. And I think moving forward it's just going to be call your anchor LPs and say let's talk through how we want to handle the situation. Obviously go the other direction. But there's a world where they could all get hundreds of millions of dollars back more.

[B]

Yeah, that's helpful. Apollo. How big was Apollo?

[C]

It was also 200 million.

[B]

Stick with the 200. Same strategy, same strategy.

[C]

We wanted to add a little more hard tech so we sort of branded it as we're doing a little bit more robotics, manufacturing, climate tech. Maybe we can get into that later too because we had less deal flow there and we had great deal flow in.

[B]

Why make that transition? I always worry a lot when we see a generation of venture investors move into hard tech, climate, manufacturing, defence and suddenly it's not CAC to LTV and payback periods on channels that we all understand. It's bomb costs and manufacturing bills that is like what the hell.

[C]

Yeah, I think I mostly agree with you. I do think there are clear winners, maybe an Anduril or a Hadrian that we're in that are clearly going to help the fund. But I do think it's sort of like it's more fun maybe, you know what I mean? It's like we were getting a little bored and it's more fun to do that stuff. And frankly we maybe branded ourselves that way. But we were doing Palantir. We were doing other good things.

[B]

You did Palantir?

[C]

Yeah, a little bit.

[B]

What price high?

[C]

About 4 billion.

[B]

I mean, what's the price now?

[C]

300. But again, we sold on exit, which was like 40. Yeah, we did well. But my heart's not bleeding for you.

[B]

Throughout any of this, to be honest. Max, dude, I'll be fine.

[C]

But I do think most VCs have the position to say once things become liquid and the lockup ends, that their job is to distribute. It's not just us.

[B]

The hard thing is you hear shows like this and you're like, God, hold, hold. And then what you don't see is that the monstrous amount of companies are just like. And then it's in the dumps.

[C]

Yep.

[B]

And like, 10 years later, it's still, you know, have been the same for 10 years. Any lessons from the Apollo?

[C]

Stay focused. I think we got a little bit. Like you just said, we're doing this and we're touching climate tech because we're curious and, like, didn't have a ton of success there.

[B]

Was climate a disaster?

[C]

Yeah, of course it was a disaster. I think it's going to be a disaster. Like, hey, climate change is real. The government should deal with it. I don't think.

[B]

What makes you say that? I agree with you totally, by the way. And I always say climate's not a category in itself.

[C]

We're completely dependent on the price of carbon. And when the economy starts to do less well, and you are a mega company and you need to say, we're spending billions of dollars a year on carbon credits, at the end of the day, it's like, great. So if you spend your money there, you're going to have to lay off people and tell them, hey, by the way, you're unemployed and can't feed your family. Because we really wanted to buy some carbon credits. Because the money, it's the same pot of money. And I don't think that feels good for anyone. That's not how businesses are going to work moving forward.

[B]

Do you think climate is a luxury concern? And what I mean by that is.

[C]

Of course it is. I think it's very real. But.

[B]

Yeah. And so your regret is doing climate?

[C]

Yeah, I think we wanted to be somewhat involved with it, and there were a lot of amazing founders building in it, and they're going to build great things, but they're not going to get us great VC returns.

[B]

Any others?

[C]

Yeah, I think it's sort of stay in your lane. And this has really Set how we've built in saga of like, look, I think I'm a very good seed investor. I think I have a great network and people like me. I think I can slip medium sized checks into a lot of great deals, but I don't think I can go out and win Series A's at this point in my career.

[B]

Why?

[C]

It's a knife fight. And founders found in Sequoia and Index and Khosla, like, like they're amazing firms that have sort of locked it up. I went to go lead a Series A or try to lead a Series A one time and I remember the other term sheet came from Sequoia and I saw the email that the founder got, it was from Mike Vernal and they basically said, hey, Sequoia is on the board of the six most valuable private tech companies in the world and the six of the 10 most largest IPOs of the last 12 months. And by the way, feel free to talk to any of these people about their experience working with Sequoia. And it was like the Collisons, it was like, you know, Dylan at field, it was the guys at Doordash and I'm like, dude, I'm not gonna win this deal. Like, why the hell would they take my money against that? So don't try to do that. I'm clearly gonna lose the deals that I want to lose and if I win them, it's probably not the ones that I want.

[B]

So the takeaway is then that you have to get in before.

[C]

You have to get in before them or partner with them.

[B]

Do you not find that they are there so much earlier now? They're there from precedent. Seed square, half square, Ark, for fuck's sake.

[C]

I don't. I mean if they did, you and I wouldn't have a job, frankly.

[B]

I don't think we do.

[C]

We do what we do.

[B]

Have a good job. Honestly. Why am I in Europe? I'm in Europe because they're not here. I'm in Europe because I can absolutely beat them in Europe at seed and A with a very high win rate. I'm not in the US because why the fuck would they take me when.

[A]

You'Ve got Andreessen or Founders Fund or.

[B]

Benchmark who do the large, large kind of first rounds or any of the great firms with a super low cost of capital so they're less price sensitive than me with the brands that they have and the networks they have, why are they going to take me? I think Seed in SF is for suckers.

[C]

I really don't Agree with you. I also think the data points of the funds I've done will also disagree with you. We've built the model saga is $125 million fund. If we have one winner and we start with 10% of it, and we can't cover the whole market, we only cover a portion of it. The fund's great. If we start with 10%, end up at 7% of IPO, it goes for 10 billion, return 700 million. We just need one. We don't need to be Andreessen, where we leave 10 or 20 seed deals. And I also disagree with you that they have them all locked up. I think there was a stat that came out recently of post Transformer World. In the last four to five years, of all the AI companies that have started that are now worth over a billion, of the first 40 of them, only one person had two lead checks and that was Andreessen. And no one else had two. And if you look through the smattering, there are Green Oaks is in there a lot, Gill's in there. But there's a lot of other random people. And there's really not something where Sequoia and Andreessen is taking up half of those lead checks at the seed.

[B]

You're totally right, I'm totally wrong. And your breakout company is Profound, that you would say, yeah, okay, where's Profound?

[C]

Profound's in New York.

[B]

Oh, right.

[C]

There we fucking go. Yeah, there we go.

[B]

We gotta be everywhere 80s and gens coin proven.

[C]

But I think we have some good companies in San Francisco as well. But yeah, Profound was in New York and we were able to start with a really large position there. And they've obviously had tremendous success. Success. And if that works, the fund's great. And that's our model. We don't need to cover everything. We need to have a few people who love us enough to take our money early on.

[B]

Do you think the multi stage players are doing seed?

[C]

Well, no, I don't think they can. And obviously I'm biased saying this because.

[B]

Obviously I don't know if you saw the graph, but it actually outlined how many investments. I'm slightly butchering numbers, but I think it was. Andreessen's done 70 seed investments over the last two years and Sequoia was second with 26. It's a very active strategy from both. Sure.

[C]

And I think if there's a seed that we're competing against and Marc Andreessen is doing the deal and he's like, I'm going to join your board we're probably going to lose, but I don't think that's what's happening. Not to be an asshole, but usually it's a partner at Andreessen and we can sell against that. We can just say, hey, you are not going to get the time of the day with the GPS. We have a 3 hp only firm. You're going to get the time with us. When you go do your Series A, we will be the conduit, because I agree with you, they need to have a Thrive or a Sequoia or a Kleiner brand at some point to succeed. But work with us now and we will make sure that you graduate and get in that sort of branded Tier one firm by the Series A or the Series B and you're going to be successful. I think it works a lot of the time.

[B]

The one thing I do say to them that really does resonate is the price alignment. And it's like, fundamentally you want people who are price aligned to optimize for the next round. And if you get Andreessen at seed, they're not being like, hey, you should totally go and raise at the best price possible next round, because they want to do it.

[C]

Yeah, and if they don't do it, you're screwed.

[B]

Exactly.

[C]

And I know everyone says this, but, like, the risk of them not following on is massive. Like, I fully believe if they're like, hey, Sequoia led our seed and like, hey, are they doing your A? And they're like, well, they're doing their pro rata, like, this is not a good company. Like, objectively is not a good company.

[B]

So you think signaling is very real?

[C]

Signaling is extremely real. Or at least it's like a good way for us to sell, but it's real.

[B]

I totally agree. You know, the other thing that I think founders don't realize is it's also not always indicative of company quality. And what I mean by that is, like, people leave firms and then you're orphaned. And when you're orphaned, no one's internally pushing to lead your aid because they don't really know you. I just took Vernal's place in managing the position, but I don't really know you.

[C]

Sure. But they also have, like, $8 billion and they can't spare, like, 10 or 20 to put into the A. And, like, to be honest, almost none of the best deals I've ever done have been sent by another fund because, like, why would they? They're like, hey, there's this great deal. You should really get in. I'm like, if it was a great deal, you wouldn't be sending it to me. You'd be doing everything. And Harry, the same with us. If we have a great deal like profound, we are putting in all of the money we possibly can. We're obviously fighting with Kleiner and Sequoia, which is challenging because they also want as much as but there's not room to bring in other people. So if a VCC sends us a deal, we're not normally excited. The best deals we have come from founders referring their friends, which founder, when.

[B]

They refer a deal, do you take it most seriously or so far has been the best deal referrer.

[C]

It's a great question. We've had a lot of luck from a lot of actually the CTOs to be totally honest, the CTOs in the companies that we are in because they're a little bit less flashy and they're connected to really deep technical people. We've had a lot of success of the them sending us their buddies.

[B]

Love that. VC wise, when they send you a deal, who are you like, okay, I'm on it right now.

[C]

I think Box Group is great because I remember growing up around SV angel and going to the Giants games with Topher and these guys were just awesome. And they're like, hey, our model is to do a little bit here and there. We don't need to lead anything. There's a reason why there's leftovers when they send them to us. And I think Box Group has actually sort of succeeded in building the same model. I remember everyone's like, hey, for those funds, this is not going to work. You don't have enough ownership. You need to hit 10 unicorns. And SV angel was like, okay, we will. And they did. I really take seriously what the two of them send us.

[B]

But you didn't decide that was the structure that you were going to go for. Actually, when you look at yours, you are ownership sensitive. You're not an index fund. Why did you decide not to be the hey, we're gonna be in everything and we're gonna hit 10 winners. And why did you decide for more concentrated.

[C]

I think one of it is playing to my strength. I'm not everywhere. I live in Austin, my two partners live in San Francisco. We cover a lot, but we don't cover the entire thing. We historically have not. I've done basically no pr, which we can probably dig into later. We're not covering the whole universe. So I don't think that we're set up to have a smattering of 10 to 12 unicorns in this fund. And frankly, I enjoy spending a little bit more time with the founders. So we're doing 20 to 25 checks in this first fund.

[B]

We'll get to construction. I just have to ask, you mentioned about being in Austin now. Do you not think that your being in Austin negatively impacts your ability to get deals?

[C]

No, I think there are actually some really strong companies in Austin. Whether it's Base Power or Saronic, there's significantly less than San Francisco. But I found that when I'm in New York or San Francisco, I make make a lot of decisions and a lot of hectic decisions, but I don't make a lot of great decisions. I make the best decisions when I'm in my backyard meditating by the pool, calling the founder and really thinking through it. And I found in San Francisco, I couldn't have that level of clarity of mind.

[B]

Okay, so let's go to the first fund where we're like, okay, we're going to do Saga. I love Bam, by the way. He's such a good guy.

[C]

He's great guy.

[B]

And so we decide this is the team. How did we come to the number 125 for the first fund?

[C]

We were a new partnership. We built a model where we said, hey, we are going to do 20 to 25 lead seed checks, and then we'll probably spend 10% of the fund doing what we're calling these opportunistic deals. Jack and I had invested in owner.com before this. Adam, I think, is an absolute killer. So when he was raising a little bit more, I texted him, I'm like, yo, can you help us out a little bit? Obviously we want on to do a pretty nice sized check in there. And like, we'd be stupid not to, but the construction was around 20 to 25 LEED seed checks, around, you know, two or two and a half million dollar entry price. The math mass then with 30% reserves to about 100, 125 million. And I think it was actually great to prove out that the three of us could work together. Obviously, we're going to size up from here, but I don't think it would have been great to start with.

[B]

300 million is $2.5 million or $2 million. Is that enough as an entry ticket? I find now that seed rounds are five plus. And actually if you want to have a 10% plus, almost 2% to two and a half, it's not enough right now.

[C]

It is not. But we started this 18 months ago and dude, Harry, 18 months ago it was the deals were at 20 or 25. I was not seeing these 50 or 60 million valuation deals even in last year.

[B]

How do you think about this? I think Adsim calls them the watermelon seeds or whatever, the melon seeds or whatever we want to call it, aligned to a fruit. But the great person who leaves Stripe and they're raising 10 on 50, 20 on 100. How do you think about those deals?

[C]

That's what's keeping me up at night. That's why I'm not sleeping for the last six months. I'm extremely price sensitive. I'm just like, hey, we get 25 bullets per fund, and if you paid twice the price, you get half as many bullets. And that's a really tough way to invest. That being said, we can't fully sit out, and at least right now, it.

[B]

Doesn'T mean you get half as many bullets. You can just do the same check and have less ownership.

[C]

Yeah, that's another way to think about it.

[B]

My biggest mistake on the prior fund, it was a $33 million seed fund and $107 million series. A fund that was deliberately meant to be kind of more collaborative. We could have done 11 labs at a 25 and put in 200, 250, and it was 1%. And I was like, we can't do a 1% deal. That would obviously have returned the fund many times over. And very stupidly, I was too tied to ownership.

[C]

Yeah. And that's been me kind of forever. And I think my partners now are luckily pushing me in the opposite direction. And I'm really warming up to it, though. You have to believe if you're coming in at 50 or even 100 for a seed, that there's a way that this thing exits for 50 or 100 or 200 billion. It can no longer exit for 5 billion and have that be a good investment. So you have to believe that's possible. And I kind of think that is the direction where things are going. Not to be on the AI hype train, but I do think we are going to have a lot of exits eight years from now, around the $100 billion mark.

[B]

I have a framework for the three things that I would need in a deal. If it's kind of slightly off strategy, like 1% of 11 apps in this way, or like a situation here with the stripe, it's one financial. Do I think that we're going to make a 10x plus? If you're going to make a 10x plus, just do the fucking deal anyway. Two, does it give us brand halo effects? We're both building firms. If you're investing with Sequoia Kleiner, the best of the best, you do get a brand halo from being associated. And then third, do we get network benefits from being close to Matti? He will share super cool deals from the best in AI in Europe and we will get a network that we didn't have before. And I think if you have those three, if it doesn't tie to the 10%, I'll still do it.

[C]

Yeah, absolutely. And I love that you mentioned the last two of just having the brand cachet and being around the best people. We've done that. I've done that for the last eight years. Like, it's absolutely the right way to invest. You, you go to people's websites, other funds, and they're like, we've invested in all these amazing companies. And you're like, well, I do that too because it really helps. And founders don't care if you did a 25k check or a million dollar check at the seed. They just think that you've invested in the best companies. We actually absolutely should be doing that.

[B]

So you would say to do brand checks because a lot of managers like, oh, I don't know, it's not pure.

[C]

Absolutely. And also, like you just said, it gets you around the right people. It is always a good thing to have a CEO of a multi billion dollar company that you're texting with on a weekly basis. It's never going to be bad for the firm.

[B]

Totally agree with you there. Okay, so we have 125. How is the fundraise process?

[C]

It was pretty easy, relatively speaking, but it was harder than I was maybe expecting.

[B]

How long did it take?

[C]

Five to six months.

[B]

Pretty good, pretty good.

[C]

But I don't know, it felt longer when I was there.

[B]

Why was it harder than you thought?

[C]

We were three partners who had not had traditional VC backgrounds and it was a new partnership. And I think the biggest reason we got no's was everyone's like, you haven't worked together, you're not living in the same city. So we want to hold out and see how these things go and feel it out for fun too. Also, we went right to institutionals. I was fortunate enough to like not be a maybe traditional emerging manager because of the prior fund track record. So we went right to endowments and foundations and some of them loved that. We ended up with I think six endowments in the first fund. But a lot of the endowments don't love new partnerships and first funds. And we were sort of elephant hunting rather than going to some smaller family offices.

[B]

Was that a mistake? In hindsight?

[C]

No. It was amazing because now we have really sticky, amazing capital for the rest of our careers. As long as we, like, perform. Exactly. And then going into fun, too.

[B]

What would you advise managers on anchor hunting?

[C]

This was the advice, and I will give him credit, that Sam gave me that I did not listen to, which is don't talk to other LPs until you have your really high quality anchors locked in. And then of course, we went and talked to everyone and everyone's like, how much capital have you raised? And like, we're about to raise, raise 20 from this person. They're like, okay, so you've raised zero. But we had a few people that I had worked with before in Hydrazine and Apollo. They took a little bit of time, but we got them across the finish line. They came in with some pretty nice checks. And then we went back to the other LPs and like, oh, okay, we're automatically in. These endowments that have worked with you before are in. Clearly, you must be good. So I think wait until you have your anchors locked up.

[B]

Did you notice that different LPs wanted different things? Endowments, foundations, pensions, corporates, family offices. Did you notice a disparate communication requirement?

[C]

Of course, they're all incentivized. Completely different. A fund of funds or someone that works at a family office is incentivized to get the best returns possible because they're paid out on the upside. An endowment or a foundation, for the most part, just wants to keep their brand intact, have a nice relationship with you, make sure you don't do anything dumb. But let's. Why do they care if you're a 7x fund or a 2x fund, at least financially. So we absolutely saw that as like, for the more traditional institutional capital, give them a story and a product that feels good for what they're investing in. For a family office or a fund of funds, tell them how much money they're going to make if they invest with you.

[B]

What's the largest check you have in a 125 fund?

[C]

15. I don't really want more than 15% from anyone else.

[B]

So we have then six core endowments. Did we do the brand as well where we just get in a load of founders to put in community tickets or not really, no.

[C]

And I don't have a good reason to why not. We just sort of said, okay, great, we have this. We hit Our number, we're done. I think in the future we might spend a little more time getting that in.

[B]

What was the biggest surprise about the fundraise?

[C]

That the goal was not to. To tell the LPs how much money you're going to make them, even though they're financially. My job is to get LPs the most money back and I thought that's what they wanted to hear. But I think what they want to hear is you have a strategy that fits exactly what their portfolio wants.

[B]

I think it's also a way to show naivety with respect, which is like, if you come out with these big numbers of, oh, we're going to. I have so many young gps, I sound so fucking old despite being quite young. But I've been doing this 11 years and they're like, oh, you know, if we really fuck up, we'll be like a 7.8x. And if we really hit it up and you're like, do you know how hard it is to do a 5X? Like, it's hard. And so I think you can show your immaturity and naivety if you throw out numbers.

[C]

Absolutely. I was fortunate enough to have data from the earlier funds to say we have absolutely crushed it and we're now at like about 4x DPI. I think we can get to 5 or 6 and we knocked it out of the park. 10 is insane. Like our goal here is to get you to four or five and that's amazing. Like, if someone comes in and says, we're going to get you an 8x, I would kind of walk out of the room.

[B]

Totally agree with you there. And so we have 20 to 25 positions, 3 million each.

[C]

Reserves?

[B]

A little bit, but you're not doing much reserves there.

[C]

We have a third for the reserves.

[B]

Not really, mate. Do you think you take sub fees, you're 100 and then you're at two and a half 30, you're at 75.

[C]

Yeah. So we have like 25%. Realistically, Harry, question for you. Do you think pro rata is a real legal right?

[B]

No, but I think it's a moral obligation that you earn, which is like, I don't think anyone should have a right to in the future. Bullshit. I think you earn the right to step up and write another check.

[C]

Yeah, I 100% agree with you. And you have to earn the right for doing your pro rata in the Series A and the Series B and the Series C. But I think we've got to a point where Sequoia or Kleiner or someone leads you around, you're not often getting your full pro rata. And I think you have to be honest with yourself on that. So I think a lot of the times that I've learned is like, hey, model in the pro rata. But you're only going to get 70 or 80% of it. We've never had 100% of ours taken away, but we've definitely had cases in a really great.

[B]

Who's the worst?

[C]

No one's the worst. They're doing their job. What am I supposed to do?

[B]

Number one rule of an interview, when they and their voice goes up a notch in terms of tone, no one's the worst.

[C]

You're like, okay, but I mean, realistically, we're in a place.

[B]

Who's the most collaborative? Large fund.

[C]

I've had a great time working with Khosla in this fund. We've had two deals where we've ended up at the seed with 10% and they've ended up with 10%. And we've just had a great time working together.

[B]

Who's the least collaborative?

[C]

Sequoia's tough, man. I don't blame them. They're the best of the best. And I don't blame you them.

[B]

That's very funny. So I don't think it's like a legal right. I think it's something you earn the right to, and I think good founders understand that and will fight for you to have it.

[C]

Yeah. And in our cases, the founders that we've spent the most time with, they always go to bat. We get 70, 80% of our pro rata even in the best deal. But often they say, hey, can you step back a little tiny bit?

[B]

We're seeing incredible preemption on rounds like never before. You've obviously mentioned and profound a lot. There's this incredible preemption on rounds. Do you tell founders the money's there, take it. You have to. Or do you worry that actually too much money too quickly will distort the company?

[C]

It'll absolutely distort the company. Getting fat and happy early on is not great. People used to say, hey, be ramen profitable. And maybe we're not in the days anymore of sleeping on a mattress in the ground eating ramen. But I don't think it's good to say, hey, we can just burn through money trying tons of different things. There's no rush. Let's throw big parties. You need to have a lot of fear that you're going to run out of money every day to be pushed to Work harder.

[B]

So do you tell them not to raise that round?

[C]

Yeah.

[B]

How often do they listen?

[C]

They didn't listen once in this fund, but for the most part they listen. And I think what we tell them is, I think Marc Andreessen said it really well on my brother Jack's podcast is like VC's job is to be a brand for the company until the company can build its own brand long term. So I'm like, well then our job as a new fund is to make sure we get them the best brand, whether it's the Thrive or Sequoia or Kleiner to lead their A. So we're like, hey, hold tight. Please listen to us and run a really clean series a process and get one of those best people on your cap table. And then, then hiring will be easier, selling will be easier, raising capital will be easier.

[B]

Super interesting. You said that. You say, hey, don't. It can distort you. It can also king make you. And what you see with a Harvey or a bridge or any of these kind of king made companies or a rillet even, I don't know if you saw rillet, but it raised from Sequoia and then iconic, very quick succession. It makes everyone else scared to enter the space. And so if you tell companies, and this is where I don't have the answer or I'm kind of oscillating with you on this, if you tell them not to because I share your concern, then someone else can kingmake in that time and that makes it very hard to get the oxygen back in the room.

[C]

Oh, absolutely. One of my biggest fears for companies that we've invested in is Andreessen coming out and putting $100 million right off the bat into one of their competitors. That's absolutely terrifying. So I do believe, yes, we need to get get all of the gravity behind our best companies. We need all the best investors. They need to get hundreds of millions of dollars to build out their moat and have their war chest against any of their competitors. I just don't think that should maybe happen right at the seed, maybe wait until after the aid to do that.

[B]

Do you think profound raised too much too soon? No, they didn't raise that much in quick succession.

[C]

I think it's really hard if you get Sequoia to offer you money and be on your cap table and have that amazing brand halo effect to not take and I think someone always should.

[B]

You said about raising a clean series A, interesting description. How do you advise founders on raising a clean series A? What does that Mean, I think it.

[C]

Looks a lot better and feels a lot better if someone's raising 30 million and someone has a lead check that comes in with 20, and then they fill in the rest after that. People do these wonky things where they're like, well, we raised five from this person and we have this thing, soft circle. And then you get to your lead and they're like, there's only room for us to do under half of this deal. We're out. And I'm like, don't do that. I promise you they're going to set out if you filled up two thirds behind it. And I think a clean Series A also looks like a nice process. The metaphor I always give them is, it's like a big horse race where all the VCs are chasing you. And what you want to do is maybe have one horse start first, so you maybe talk to a potential lead like a week or two before. Then you send the deck out to everyone. But you want all. All eight horses chasing after you at the same time. You don't want to have this as like a random, sloppy process.

[B]

I totally agree. I think the biggest mistake they make is they speak kind of sporadically. And what they forget is. And I don't think people know this, but like the WhatsApp, especially in Europe. WhatsApp, I don't know what you have in the US but the WhatsApp group channels with associates, with junior partners. And I'm not being derogatory, but just truth, where they're like, met Max, honestly, company not growing as fast as I thought. Easy pass for us. That can be seriously detrimental when there's 20 other funds on it.

[C]

Absolutely. Why would you not say, we're about to start this race. Work with your lead seed investor, get the deck ready, and when you're ready, open the gates. AKA have me and my partners introduce you to one of the GPS at all of the firms and then have the fundraise process start. They have to do it that way. They should do it that way.

[B]

It's the biggest way that they fuck up. And actually, it really frustrates me when that happens. So it's also so annoying that you. They kind of. I don't know if they just want to be independent, but you'll speak to them. They'll be like, oh, I reached out to all these people. I'm like, why? I know Mamoon at Kleiner.

[A]

Why reach out to someone else on.

[B]

The team who's more junior and who doesn't know the space as well? Who's the wrong partner?

[C]

I think there's two things to that. One is it's really hard if like a more junior partner from an Andreessen or someone like that reaches out or an associate, another fan firm reaches out from a branded firm and they're like, we want to talk to you. You're like, oh, I feel great about myself. Oh my God, I can't control myself.

[B]

Often they've done work on a space, they've mind mapped it and they're like the one who's covering insurance.

[C]

Yeah. And they go talk or you know, Harry, like there are a lot of people in this industry that say they know, you know, it's sort of like name drop. They know everybody. And then we're going to make this introduction to like you said, Mamoon or Alfred Lynn and they can't. And I think there's a few seed funders, I think both of us in this room can just text those people directly. And I think some of the founders don't believe that we can necessarily do that and it will be as easy as it is for us to do it.

[B]

Do you find there's more and more low dilution rounds? This is another thing I'm finding, which is before it was generally rounds were 20% dilution, you'd have 15 for a lead and 5% for angels and pro rata. Now more and more I'm seeing just the 10 percents.

[C]

Yeah, I think it's just economics, to be honest. There's now hundreds of billions of capital chasing slightly more companies. I think the experiment we're going through right now and went through in 2020 is like, hey, if we put 10 times as much capital into the market, there better be 10 times as much good equity to be sold and 10 times as many amazing companies being built. And there's definitely more, but there's two or three more. So now we have this system where there's just so much capital chasing, not that many great deals. So the founders have all of the sway and all of the decision making of how they want to run their process.

[B]

Are you enjoying this time?

[C]

I like it. It's fun. People are building really cool things and that's what's getting me excited, is during that lull I was talking about when it was on demand dry cleaning. That's not fun. I can't get out of bed to go invest in that. But now we're seeing people that are really swinging for the fences. Like, it's fun to think about, you know, Anduril or Hadrian Manufacturing or, you know, Saranic and Austin or it's fun to just be investing in these really cool companies. That wasn't the case before.

[B]

Do you think Trump has done more for US tech to help or to hurt it?

[C]

Help. I'm generally someone that less regulation's a good thing. It is. Opening up the M and A market, having people feel like we have a hot IPO market is wonderful because it gets money back to the LPs and the VCs. Get that money back and just everything is healthier and I think it's clearly.

[B]

Better on the H1B. Where did you sit on that? I sit in the uk where it seems like an obviously moronic decision.

[C]

Terrible. Like maybe, maybe the worst decision related to tech that this administration has had. Like, first off, why would you not want an amazing engineer immigrating to your country? Just like straight up, we want all of the best, smartest people going to work in our country. And then also it's really bad for the small guy. Like, cool. Amazon, Google, they're like, well, we got this really great engineer who graduated from IIT. We want him 100k, no big deal. But if you're a seed or series A company, it's completely hamstringing you. I was really frustrated to see that.

[B]

But I mean, I actually went on to see NBC. I said, it's like the biggest opportunity for Europe, it's great.

[C]

Or Canada, it's great for you guys.

[B]

Phenomenal. Sadly, we continue to put on a suicide vest and shoot ourselves.

[A]

When we were talking about companies, companies.

[B]

That you like, dude, this was beforehand you said about a sphere of influence of AI labs and how that builds our framework for investment thesis. I put. What the fuck does that mean?

[C]

Okay, that means I could not explain it well enough.

[B]

Sphere of influence of AI labs. Help me out.

[C]

I was a CS and math guy, I was not an English guy. I think what I mean is when, when OpenAI and Anthropic started getting popular, everyone's like, we're going to build things that are adjacent to that and they are, you know, AI voice or AI video gen. Because right now, you know, OpenAI is worth $30 billion and is, you know, offering chat. And I was like, look, it's not because of inside information and it's not because I know that he's one of the most ambitious people in the world. But like they're trying to be a multi trillion dollar public company and so will Anthropic. And that means they're going to have to try Everything. Amazon tried making a freaking phone. You know what I mean? They're going to try everything. So if you have the naivety to think you're going to build something that's really close to what OpenAI is building and they're not going to build it, you're crazy. You know what I mean? So I think we've really stayed away from things that OpenAI will encroach on and just offer a better product. Everyone's like, oh my God, they had this Dev day thing and it's going to kill a couple dozen companies in San Francisco.

[B]

How often do you think they actually do kill them? And that's what I mean, if you look at an 11 labs, no one would touch that because that's voice. I mean, Sam's going to come for that. Well, turns out he didn't.

[A]

Yeah.

[C]

And I think there are a few examples where they just have got Shopify.

[B]

And Stripe partnership of the decade.

[C]

Yeah. But I think you're forgetting the ones that are like, hey, we whipped this up in a weekend and. And it's sort of some API thing that OpenAI is going to build. I think 11 Labs is the exception to the rule. So this kind of led us to lead in what we're calling like second order effect AI companies that are further away from what OpenAI looks like. When it's a $3 trillion company, how.

[B]

Do you determine whether it's further away?

[C]

It's a little bit of an art, not a science. I think I just try to visualize. I meditate and I visualize what they're going to offer. When it's a three billion dollar company.

[B]

I sit in the pool and I think, will they do this or not?

[A]

Yeah.

[C]

But I think the two real things that I think about, one, what are these world class engineers that are sitting in downtown San Francisco going to build and what do they not want to touch? So when we're looking at companies, we did a company called fleetworks that we're pretty excited about and they are doing while it's in the AI voice space. It is for supply chain, trucking, logistics and they're helping them match things better for shipping. And I don't think the people there are going to want to be calling and dealing with a shipment of oranges from, you know, Miami to New York that are late. I think they want to stay sort of in their ivory castle a little bit.

[B]

If you have the chance to use every advantage to your benefit. And it's not public information, but it's like allowed, you're both private companies. It's not insider information. Can you not just call your bro up and say, hey, are you gonna go into trucking and logistics? He goes, nah. Or are you gonna go into profound? A lot of people with profound or peak were like, oh, well, OpenAI will do it. Can you always call him up and say, hey, dude, are you gonna do it like he would with me or Parker?

[C]

I think I could. I don't. I think for a lot of reasons is first and foremost, like, the company's under scrutiny, obviously. I don't want to put him in a weird position where he's leaking anything. It just. It doesn't seem like good for OpenAI, and it doesn't feel good. Like, I kind of want. And you might say, this is stupid to, like, earn this on my own. Right.

[B]

I get you. I'm sorry. If it was your buddy, if it was a adjacent company to rippling, you'd probably text Parker and be like, hey, dude, is this on the product roadmap?

[C]

Yeah, sure.

[B]

We're super busy, dude. Do you know what I mean?

[A]

It's not actually that different.

[C]

Yeah. I think I just want to be really sensitive as my brother that, like, he is not putting himself in a compromised position at all, sharing information he shouldn't.

[B]

Has his fame made your life harder or easier?

[C]

Both. I mean, like, hey, let's be honest. Like, clearly it allows me to have more success in investing where it's just, like, I have, because of him, some brand halo effect, and people are like, oh, Max, do you invest in AI? And I'm like, I can. You know what I mean? Like, there's something I around that. It definitely helps. It helps a little bit with deal flow. I think it makes it worse of, like, dude, when I'm in San Francisco and you're out at, like, a party on a Saturday night, you know, someone will ask about it. You know, my friend wants to go work at OpenAI. Can you help him get a job? I'm a little bit.

[B]

Do you get that?

[C]

Yeah. San Francisco, of course. In Austin, I don't. San Francisco, I get that all the time.

[B]

Oh, God.

[C]

Gross, right? Oh, I love a lot of the people there. The culture can be challenging for.

[B]

Do you not just find it transactional where it's like, also, like. It's like, with me, okay, it sounds awful, but people will be really nice to me, and I think, oh, they like me. No, they just want to get on the show, and it's like, they just want to meet your brother or ask you A favor with your brother and they'll wait till three coffees down and then like, by the way, yeah. You're like, oh no, it's coming, it's coming.

[C]

Yeah, of course. And I think I've been fortunate enough to know who's like that and have my sort of crew there that's not like that. But I do think it gives me more motivation to sort of prove that I can be an amazing investor myself and build out a huge brand for Saga. And I think that will take some of the pressure off of that, to be honest. It's definitely a driving factor for me. And frankly, like, we have not done the pr, but that's part of the reason that I'm doing it now, to show that like I'm a really good investor myself.

[B]

Why not doing the PR?

[C]

It was a mistake. So in 2015, 2016, when I started doing this, it was very much just. Just hang out with great people, like, be a mensch for a decade, do like a lot of favors, be really likable and you're gonna get into the good deals. There's now too many VC funds and too many companies. And I think right now you do have to do PR and build your brand. And I think it just took me a little bit longer, frankly, to be able to come to that realization. But yeah, moving forward and you are the first, I think the PR train is gonna start a little bit.

[B]

D what do you want with saga?

[C]

I want to build, I think what like a first round capital looked like when I grew up. I want to have something where 10 or 15 years from now we are maybe a quiet luxury brand a la like a Thrive or a usv where everyone's like, hey, they are the premier early stage brand. They're not as loud as everyone, but we think of them as excellence where.

[B]

So you don't want to get bigger.

[C]

And bigger and bigger, a little bigger. I think we'd like to be, you know, five or six gps, two or three of them associates. So we have the incentives cap out around maybe 3,400 million per fund.

[B]

How do you feel about the prior generation of seed firms in the Valley? Because I think there's a really hard chasm to be in transparently, which is you have seen the movement earlier from large multi stage funds with large costs of capital and bigger and bigger teams so they can actually equip them to do seed. And they've done that pretty well, your founders funds to your sequoias. And then you have this new generation which is your convictions Your use and many new great firms. And then there's kind of the firms founded in 2008, 2016. Wow. You're in a bit of a messy middle.

[C]

Oh, for sure. I think it's really challenging to be like a $700 million fund now. I think you're either a really massive, powerful platform like an Andreessen or a gc or you have the legacy cachet like a Sequoia or Recline, or you have to be a boutique firm that has a very specific offering and stays small. And you kind of. I know you're.

[B]

Do you think like a first round or Floodgate or Uncork or a boutique seed firm that stayed boutique? You know, Felicis, I would actually put differently because I think they cleverly scaled AUM into a multi stage very efficiently. But I think that boutique seed firm of old is in a tough spot.

[C]

I think so. But I also think think it's sort of just like every generation has a refresh. I mean, you mentioned Sarah, I think Conviction is going to be a great firm. I think there's room to have a new set of firms maybe every decade. And to be honest, like, I kind.

[B]

Of think not on top of the old, though.

[C]

No replacing. Yeah, I think they have to replace. There's not room for most.

[B]

And so they are replacing the floodgates, the uncorks, the first rounds because the multi stage players have come in so efficiently. You can't have your bro. You, Sarah, me, come in and not have a displacement.

[C]

Yeah, I think you have to. And I think I was fortunate enough. I actually interned for Steve Anderson at baseline in 2009, who I think was one of the most amazing investors and taught me a ton. And then he kind of rode off into the sunset after hitting Twitter and Instagram and is like an almond farmer or something now living a great life. And those guys were absolutely amazing and really set the stage for what seed investors looks like. But I kind of think, yeah, we have to compete with them, we have to do better than them. There's not room for all of us. And frankly, I kind of think, Harry, you were younger when you started, so you might have a little more time. I got like 15 years of this until I'm really good and then I'm kind of over elephant and a new set of seed funds will replace me.

[B]

What did you learn from Steve Anderson? He's one of the OGs.

[C]

Yeah, it was crazy. I mean, I think I, like Paul Graham connected me to Ron Conway and then Ron's like, oh, know you, you should meet this guy, Steve Anderson. I was like 20 years old and I was like, okay, cool, VC job sounds great. He was, I think, really focused on just doing a few things well and not covering the whole market. And he sort of stayed in his lane. He was liked by a lot of people and he just didn't try to cover everything. He's like, at a fund of his size, he just needed to have one or two good wins per fund. I think he had more than that, and I think it's kind of guiding how I'm building this.

[B]

How do you think about selling and when to sell? We see this extension in private markets where companies take much longer to go public, obviously, and secondaries are a much more active thought process for managers. I think trading, sadly, has become a lot more prominent part of our job, actually, as investors.

[C]

It has, and I think historically I've held longer. We've also had some, frankly, that had the. Their five $10 billion valuations in 2022.

[B]

What did you hold when you should have sold?

[C]

It might not have hurt to sell Gusto. I think Gusto is a great business, but I think they were valued at $10 billion at one point, and I think they're still going to be a strong business. I don't know if they're going to have explosive growth from there. Great guys, but couldn't have hurt to take it a little bit off the table. I think our job has definitely changed now. We need to spot when the market is inefficient and there's too much hype and some things just get overvalued. And especially as a seed investor, not a growth stage investor. If we can show that we're 100x or get money off the table at 100x, we don't need to wait for that 2 or 300x. So we have to sort of make our own again. It's almost like a gut instinct when we think it's overpriced. This all being said, some of the best advice I've got is that last double or that last triple comes really fast, where things grow quickly. And then they're around $500 million to a $2 billion valuation and they sputter in a little bit. And then at the very end they just go. And people are like, hey, hold Anduril. Hold more rippling. Hold more. SpaceX is going to double. And it's the difference between your 3x firm and your 6x firms. It's really hard to let these things go, Harry.

[B]

There's two Points there. The one on duration is like when you actually look at the numbers when you have have a forex DPI fund and it takes 17 years.

[C]

Not great.

[B]

It's actually the same as a 2.6x fund in 10 years. And that really struck me because you're like 4x amazing. But actually the power of duration and time and the importance of time really has an impact on your material returns.

[C]

Yeah. Oh, if you hold for 15 years, it needs to be 7.8x to make it worth it.

[B]

And then on the last double. I completely agree. Again, it was Brian Singh who taught me about the last double and how, as you said on your Andrews, going from 18 to 36 is not actually that fundamentally monumental a movement of company. It can go there just with progressing as planned. But the 18 billion in value you're probably not going to see in the rest of your entire portfolio.

[C]

No, I know. And you risk losing it, which is really scary.

[B]

Do you think it gets better when you're just rich already? And I think I actually have a theory on this, which is like when you're Sequoia, you have a let it ride mentality because honestly, you're not about shit. I've got to return money to LP so I can get my next fund. You don't need more money personally, so it's not going to move the needle for you there. It's a let it ride mentality.

[C]

Absolutely. And I mean, there's something to be said of like, if you're still early in your career and making money and you're like, hey, I can get out. I can sell this for a few hundred million. Not to you, but back to the LPs and you take a nice chunk yourself. Or I can wait and see if it goes to half a billion. It's pretty hard to not take what's on the table if you don't need the money. Let it ride all the way up.

[B]

What was your first big hit personally, financially?

[C]

Rippling and Reddit. We sold a little bit of rippling on the way up just because our LPs wanted money.

[B]

And did you notice that change in your mindset?

[C]

Yeah, it's a lot more relaxed where you're just like, hey, let's let this thing go. You do have to be careful in our industry though, because it's just we're around a lot of people that have done really well and I think it's hard to not get on the ladder to nowhere where you want more and more and more. So I'm pretty careful.

[B]

Do you feel like you're on that. Like, one thing that I've. I was very lucky when. Because I grew up so young in this business where people were so much richer than me that almost the competition just wasn't there. Do you know what I mean? Like, at 20, you'd hang out with Doug Leone, and I have no money, and Doug's obviously very.

[A]

It's fine. Yeah.

[C]

I think I'm unfortunately in a little different position where I'm closer age to those people and just around them a lot. And I think for me, it's just very important to say for my own happiness and ability to succeed at work, to sort of stay off of that hedonic treadmill.

[B]

Do you genuinely think that they are happy? In large part.

[C]

Some of them are. Some of them are not.

[B]

Take every billionaire that you know. You know a lot. I'm sure I know a lot. I would say one is happy.

[C]

Yeah. I know a few that are. I think it's the ones that have kind of prioritized family and things. I think I would be less happy as a billionaire than I am right now.

[B]

Why?

[C]

Because of the things you're talking about. I would want a nicer house, and then I'd want a boat, and I want to constantly just upgrade my life. And I don't think I would just be happy with what I had. It's really dangerous because it's like, hey, I bought a $20 million house, but my buddy down the street has a $40 million house, and I'm good friends with him, and I go over there. There. It's really challenging, I think, to just say, I don't want that.

[B]

What single purchase has brought you the most happiness?

[C]

I got some really sick outdoor speakers from my backyard. I love listening to music. I love sort of meditating and just chilling back there. And it was absolutely worth it.

[B]

Dude, we're going to do a quick fire. So I say a short statement. You give me your immediate thoughts. Okay.

[C]

Yep.

[B]

Favorite underrated founder of the last five years. So, like, Parker's amazing, but very much in the mainstream. Who do people not talk about enough? Who's a killer?

[C]

I think Lux Srini, who was the CTO at Zenefits, went on to build Zero Down. It didn't quite work out, but the timing was wrong. And then joined leading a special kind of special architectural projects at Rippling has just been an amazing guy to watch over the last decade.

[B]

What's the biggest BS about Venture today?

[C]

Oh, boy. I think that it is because people say it's A sort of chummy collaborative thing where we're all kumbaya and having fun and then you get to it and someone just elbows you out of the way. It's not. It's a competitive market. We're all competing for a scarce amount of good equity.

[B]

Well, I think we've just seen the complete commoditization of Vansha. And this is essentially Wall street now.

[C]

Yeah, absolutely. We look much more like a hedge fund or PE World than we do VC from 10 years ago.

[B]

What deal do you regret passing on most?

[C]

Hadrian. I was friends with Chris, just like, socially. We were hanging out a ton during COVID whiteboarding things. And I remember I just like, wasn't. Maybe I wasn't as aggressive those days, so I didn't give him an offer. And then, like, he talked to me like two weeks later and he's like, hey, like, Delian's leading around and everything, you know? And I was like, well, you know, why didn't you talk to me? Why didn't you talk to me? We were sitting together for like weeks on end. I was like, oh, maybe. Maybe I should be a little more aggressive offering term sheets.

[B]

What's the biggest lesson you've learned from Sam about how to analyze people?

[C]

Figure out what someone truly wants. And the answer is not always money. It might be title, it might be recognition, it might be the ability to work on what they want. So when you're either hiring someone or trying to partner with them in any way, truly understand what is the most important thing to them. It can't just be compensation.

[B]

What's the biggest advice you have to an emerging manager raising their first time fund?

[C]

Be humble and know to stay in your lane. The worst thing you can do is come right out of the gate and say, we're going to lead Series A's. Know what you're good at. That might be seed, that might be box group strategy. That might be coming in. But just stay in your lane and be honest with yourself.

[B]

What did you believe about venture capital? That you've since changed your mind?

[C]

That you could be what I call a text guy, where you can kind of just sit at home and text people and build great relationships and fly totally under the radar? I don't think you can do that anymore.

[B]

I agree. And I think that's aligned to the.

[C]

Of course you don't.

[B]

Yeah, to the commoditization adventure. That was my theory, though, 10 years ago. Mike Maples always says I look for an insight development in founders, a unique way that you see the world that others don't share. And the insight development I had 10 years ago was I thought we'd see the commoditization of Van Share and that you fundamentally need to show yourself differently as it got more and more crowded.

[C]

Yeah. And I remember when I first got to San Francisco, like Andreessen was more up and coming and I was like, no, like it's, you know, it's Sequoia and Founders Fund and Benchmark and there are just these loud, splashy people. I don't see this working. I was clearly wrong and they got it right. Just like you.

[B]

I think they will do so well, I have to say.

[C]

Absolutely.

[B]

Like when you look at also the size of X is expanding so much. I was always like, oh, well, the rate of return is just expected to be lower and they'll be happy with that. No, no, not necessarily. Because if DataBricks is a 2 to $500 billion company, the return won't be low. Like Josh with his check into OpenAI. I don't want to bring anything, but at 30 billion, I was like, dude, come on. Well, actually there could be a 30x on a billion dollar check or more.

[C]

And absolutely. I think people are like, how is Thrive going to deploy? Deploy all this money? Well, there needs to be these multi hundred billion dollar exits and turns out there are or it's not just going to be OpenAI. I think it's going to be a lot of them.

[B]

You know what I like about Mark Andreessen? I saw a tweet from him yesterday and it was a newspaper article from the early days of the Internet and it said serious concerns about amount of Internet users. And I spoke to an LP yesterday and theirs was really OpenAI. They've got all the users they could get for AI. And I was like, really? Okay. And it just, I like the optimism. I don't understand people who are negative about the future and do what we do.

[C]

Yeah. People also just can't wrap their head around the size of some of these markets. Like the example always is like, oh, you're selling software to customer service agents to improve their efficiency. It's like, well, what if you just like were the whole market cap of all customer service agencies, I think that's like 400 billion of value right now.

[B]

I spoke to a bank in Europe the other day and they said about customer service, how much do you spend a year on customer service?

[C]

Guess that number 30 million. If it's a big bank. I don't know, is this like Barclays or something?

[B]

It was 520.

[C]

520 million.

[B]

It's a big bank.

[C]

It's a big bank. So you're not selling software to it, you're selling the whole thing. The whole 520 million.

[B]

That's a lot of fucking money to go to customer service.

[C]

And even if the cost of labor goes down and it's like you can.

[B]

Capture 50% of that, this bank spends 350 million on KYC alone.

[C]

I think people forget all the time just how big these markets are. One of the companies we're really excited about, we invested in is Stand, which is redoing the insurance market in California as all of the big, big insurance companies are pulling out there. And they're basically saying we can now use fly drones over and visualize the houses and help underwrite exactly what we think the fire risk is. Because, Harry, right now if you're in a fire zone in California, your Premiums are like 5%, like literally 5% of the home. Like if you have a $5 million home, you're spending 250,000 a year on home insurance and fire risk zones. So they're like, great. Other people are modeling this based off the zip code. We are actually going to be able to have computer vision and model this and we're going to be our own home insurance broker. Harry, if they succeed, the market cap of the big ones in the US are 100 billion. I think Allstate's private. They're worth 300 billion. It's so freaking big and people can't get their head around that final one.

[B]

For you, what would you do if you weren't scared?

[C]

I think I would do a lot more to sort of brand myself as a thought leader. I've definitely been a little bit bit more PR shy. It wasn't like, you know, I always had like stage fright growing up. I think I would be that guy who's just like, hey, I'm going to host these fireside chats and I'm going to like be the person who is everywhere and their face is everywhere.

[B]

Dude, I've so enjoyed this. For me, the joys is when it's like a real conversation and when it totally does not follow a structure which.

[C]

This one did not.

[B]

Clearly did not. But thank you so much for doing this with me, man. It's so nice to. In person.

[C]

Yeah, absolutely.

[A]

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