20VC Exclusive: Why Mega Platforms Will Win in VC | Why You Cannot Do VC If You Do Not Do Pre-Seed | Why Market Sizing is BS | Where Will Foundation Models Build/Buy Apps vs Where Will They Not with Bucky Moore

Summary

Detailed Summary of 20VC Episode Featuring Bucky Moore

Podcast Information:

• Title: 20VC: Why Mega Platforms Will Win in VC | Why You Cannot Do VC If You Do Not Do Pre-Seed | Why Market Sizing is BS | Where Will Foundation Models Build/Buy Apps vs Where Will They Not with Bucky Moore
• Host: Harry Stebbings
• Guest: Bucky Moore
• Release Date: May 5, 2025

---

1. Introduction and Big Announcement ([00:25] - [04:22])

• Host Introduction: Harry Stebbings introduces the episode, highlighting a significant announcement from Bucky Moore, a seasoned venture capitalist departing from Kleiner Perkins after seven remarkable years.

• Announcement: Bucky Moore reveals his transition to Lightspeed Venture Partners as a partner.

  Quote:

  “The best companies always feel expensive.” — Bucky Moore [00:00]

---

2. Bucky Moore’s Move to Lightspeed and Mega Platforms in VC ([04:22] - [07:15])

• Reason for Move: Bucky discusses his excitement about joining Lightspeed, appreciating its global platform and focus on early-stage enterprise investing which has been pivotal to the firm's success.

• Mega Platforms Advantage: He elaborates on why large venture firms with substantial capital, like Lightspeed, are poised to dominate the next generation of venture capital.

  Quote:

  “We're talking about going from talking about 30 to $50 billion outcomes to multi trillion dollar outcomes in the form of SpaceX or OpenAI or Anthropic.” — Bucky Moore [05:19]

---

3. The Importance of Early-Stage Investing and Mega Platforms’ Role ([07:15] - [12:08])

• Early-Stage Focus: Bucky emphasizes that despite the scale of mega platforms, maintaining dedication to early-stage investing is crucial for sustained success.

• Competitive Edge: He argues that mega platforms can leverage their vast resources to invest in companies with the potential for exponential growth, a conversation unheard of in traditional venture or other asset classes.

  Quote:

  “These companies are growing over 100% year over year doing that kind of run rate. So again, I think the margin question is a valid one.” — Bucky Moore [07:50]

---

4. Sustainable Value Creation in AI and Foundation Models ([09:15] - [16:32])

• AI Model Providers: Bucky discusses the challenges and opportunities in investing in AI model providers, noting high burn rates but immense growth potential.

• Application Layer Development: He highlights the necessity for startups to build specialized applications atop foundational AI models, arguing that mega platforms may not effectively cover the extensive long tail of possible applications.

  Quote:

  “There will be startups and in some cases existing incumbent companies that really figure out where those areas are where deep customer insight and deep focus is required.” — Bucky Moore [10:03]

---

5. Competitive Investing and Domain Specialization ([16:32] - [22:08])

• Competitive Landscape: The episode delves into the intricacies of investing in competitive spaces where multiple players vie for dominance.

• Domain Expertise: Bucky asserts that domain specialization is critical for venture firms to effectively pick and support the right startups, enhancing their ability to build strong, enduring partnerships.

  Quote:

  “Domain specialization really, really helps with that picking aspect of picking who to spend time with.” — Bucky Moore [34:16]

---

6. Fundraising Strategies: Balancing Large Rounds and Capital Efficiency ([22:08] - [27:03])

• Raising Capital: Bucky discusses the trade-offs between raising large funding rounds early and maintaining capital efficiency. He warns against excessive dilution which can limit a startup’s flexibility.

• Founder Relationships: Emphasis is placed on honest conversations with founders about the implications of their fundraising choices, advocating for preservation of optionality and founder autonomy.

  Quote:

  “Preserving optionality makes a huge, huge difference and therefore keeping dollars in and your, you know, the value of your 409A or your post money of your last round as low as possible is very, very beneficial.” — Bucky Moore [22:14]

---

7. Revenue Trajectories and Scaling in AI Enterprises ([27:03] - [32:14])

• Unparalleled Growth: The conversation turns to the extraordinary revenue growth rates of AI companies compared to traditional SaaS firms.

• Investment Signals: Bucky shares insights on the signals that indicate potential for massive growth, such as deep domain expertise combined with AI proficiency within the founding team.

  Quote:

  “Growth rates in the market pool around these companies are like nothing we've ever seen.” — Bucky Moore [29:22]

---

8. The Future of Venture Capital: Collaboration Between Seed and Mega Platforms ([32:14] - [49:29])

• Collaboration vs. Competition: Bucky envisions a future where boutique seed firms and mega platforms collaborate, recognizing each other's strengths. He argues that multi-stage firms rely on seed specialists to source exceptional early-stage opportunities.

• Domain Specialization: Emphasizes that domain expertise enhances a firm's ability to pick and support the right startups, reinforcing the importance of specialized knowledge in venture investing.

  Quote:

  “Multi-stage firms seek to be very collaborative and follow what the seed firms are doing very closely.” — Bucky Moore [48:28]

---

9. Changing Perspectives on AI and Market Dynamics ([49:29] - [55:23])

• AI Sustainability: Bucky reflects on his evolving views regarding the sustainability and enterprise value of AI companies, noting increased awareness of the challenges faced by API-driven AI businesses.

• Scaling Dimensions: He discusses the endless potential for new scaling dimensions in AI, driven by human ingenuity and ongoing research innovations.

  Quote:

  “It's really hard for me to imagine a world in which we just run out of ideas.” — Bucky Moore [55:23]

---

10. Enterprise Adoption of AI and Its Accelerated Pace ([55:23] - [57:43])

• Rapid Adoption: Contrary to traditional beliefs that enterprise adoption is slow, Bucky notes that AI adoption is happening at an unprecedented speed due to the existential imperative companies face.

• Urgency and Opportunity: He explains that the fear of being left behind drives enterprises to adopt AI aggressively, creating immense opportunities for AI-driven startups.

  Quote:

  “There's this like voracious appetite to go and adopt it at all costs in every nook and cranny of the business.” — Bucky Moore [56:46]

---

11. Quick Fire Segment: Key Takeaways and Personal Insights ([57:43] - [61:26])

• Mentorship and Influence: Bucky credits Mike Dauber of Amplify Partners as an unsung hero who mentored him and shaped his venture investment philosophy.

• Founder-Investor Relationships: He expresses a desire for entrepreneurs to view him as a deeply curious and supportive partner who understands when to aid and when to step back.

  Quote:

  “Do you have a deep curiosity in me? Do you have deep and unwavering conviction in my vision?” — Bucky Moore [60:22]

---

12. Final Predictions and Shocking Insights on Venture Capital ([61:26] - End)

• Future of Venture: Bucky predicts a continued rise of both small, specialized firms and large mega platforms, with the middle ground becoming increasingly challenging.

• AI Beliefs: He challenges the prevailing optimistic view of a continuous upward trajectory in AI, suggesting that a plateau is possible without diminishing its societal and entrepreneurial impact.

• Enterprise Adoption: Concludes that AI adoption in enterprises is fundamentally different from past technologies, driven by an urgent existential need.

  Quote:

  “I see a world in which both ends of the barbell really, really continue to rise, meaning small, dedicated specialist firms on one end and large platforms on the other end.” — Bucky Moore [58:55]

---

Conclusion

In this insightful episode of 20VC, Bucky Moore delves deep into the evolving landscape of venture capital, emphasizing the strategic advantage of mega platforms while underscoring the irreplaceable value of early-stage investing. His perspectives on AI integration, sustainable value creation, and the accelerating pace of enterprise adoption provide a nuanced understanding of the current and future dynamics in VC. Moore’s emphasis on founder relationships, domain expertise, and thoughtful capital allocation offers valuable lessons for both aspiring and seasoned investors navigating the fast-paced world of startups and technological innovation.

---

Notable Quotes with Timestamps:

• “The best companies always feel expensive.” — Bucky Moore [00:00]
• “We're talking about going from talking about 30 to $50 billion outcomes to multi trillion dollar outcomes in the form of SpaceX or OpenAI or Anthropic.” — Bucky Moore [05:19]
• “These companies are growing over 100% year over year doing that kind of run rate. So again, I think the margin question is a valid one.” — Bucky Moore [07:50]
• “Preserving optionality makes a huge, huge difference and therefore keeping dollars in and your, you know, the value of your 409A or your post money of your last round as low as possible is very, very beneficial.” — Bucky Moore [22:14]
• “Growth rates in the market pool around these companies are like nothing we've ever seen.” — Bucky Moore [29:22]
• “Multi-stage firms seek to be very collaborative and follow what the seed firms are doing very closely.” — Bucky Moore [48:28]
• “It's really hard for me to imagine a world in which we just run out of ideas.” — Bucky Moore [55:23]
• “There's this like voracious appetite to go and adopt it at all costs in every nook and cranny of the business.” — Bucky Moore [56:46]
• “Do you have a deep curiosity in me? Do you have deep and unwavering conviction in my vision?” — Bucky Moore [60:22]
• “I see a world in which both ends of the barbell really, really continue to rise, meaning small, dedicated specialist firms on one end and large platforms on the other end.” — Bucky Moore [58:55]

---

This comprehensive summary encapsulates the core discussions, insights, and conclusions from the episode, providing a clear and engaging overview for those who haven't listened to the podcast.

Transcript

[Bucky Moore]

The best companies always feel expensive. If you look at like just how unique these companies are on a top line basis, I mean we're talking about billions of dollars of run rate growing in excess of 100% year over year. I don't think we've ever seen that before. Right. We're talking about going from talking about 30 to $50 billion outcomes to multi trillion dollar outcomes in the form of SpaceX or OpenAI or Anthropic. The act of sizing a market is just, at least from my experience, so imprecise that it borders on being a fool's errand.

[Harry Stebbings]

This is 20 VC with me, Harry Stebbings and today we have an exclusive for you, a big move announcement for the world. An old friend, Bucky Moore is announcing his latest move following his departure from Kleiner Perkins where he spent an incredible seven years working with the legend that is Mamoon Hamid to build one of the best early stage practices in venture. Now this was such a joy to do and I'm so thrilled that Bucky chose 20 VC to announce his move on. But before we dive into the show today, I love seeing the team come together to make this show happen. What I don't love is trying to keep track of all the information, the.

[Unknown]

Data and the projects that we're working.

[Harry Stebbings]

On across dozens of platforms, products and tools. That's what why we use Coda, the All In One collaborative workspace that's helped 50,000 teams all over the world get on the same page. Offering the flexibility of docs with the structure of spreadsheets, Coda facilitates deeper teamwork and quicker creativity. And their turnkey AI solution, the intelligence of Coder Brain is a game changer. Powered by Grammarly, Coda is entering a new phase of innovation and expansion, aiming to redefine productivity for the AI era. Whether you're a startup looking to organize the chaos while staying nimble, or an enterprise organization organization looking for better alignment, Coda matches your working style. Its seamless workspace connects to hundreds of your favorite tools including Salesforce, Jira, Asana and Figma, helping your teams transform their rituals and do more faster. If you're a startup team looking to increase alignment and agility, Coda can help you move from planning to execution in record time. To try it for yourself, go to Coda IO 20 VC today and get 6 months free off the team plan. For startups, that's Coda IO to get started for free and get six months off the team plan, that's Coda iO20VC. And while Coda keeps the engine running smoothly. Shopify puts the pedal to the metal when it's time to sell. I spend my time looking into successful businesses of today and tomorrow. And often there's a business that's behind the business, helping drive success for millions. That is Shopify. Shopify is home to the number one checkout on the planet, boosting conversions by up to an astonishing 50%. Meaning way less carts going abandoned and way more sales going into the business. Winner. So if you're into growing your business, your commerce platform better be ready to sell wherever your customers are. Go to shopify.com 20vc to start your $1 per month trial today. That's shopify.com 20vc in letters. And while Shopify helps you drive sales, don't forget what really keeps those customers coming. Back When I was 18, I dreamed about being an investor with zero contacts in the and through persistence, I'm now living that dream. Maybe you're dreaming of your own business. And that's where Shopify steps in. I spend my time exploring successful businesses online. Often there's a business behind the business driving success for millions. That's Shopify. Powering 10% of US commerce, Shopify offers beautiful templates, AI tools for product images and descriptions, easy marketing campaigns, and 247 support their number one checkout. Boosts conversions by 50%. Fewer abandoned carts, more sales. Winner. Turn dreams into success with Shopify. Go to Shopify.com 20VC for your $1 per month trial today. That's Shopify.com 20VC. You have now arrived at your destination.

[Unknown]

Bucky. I did. I'm so excited to make this happen. We've known each other for many years. Thank you so much for joining me today.

[Bucky Moore]

Thanks for having me, Harry. As they often say, longtime listener, first time caller, and it's been really fun to watch your meteoric rise over the years. As you know, I've been watching since the beginning.

[Unknown]

Dude, I so appreciate that. But you have some big news today. And so I just want to start on that. What's the big news for us today? And then we can roll from there.

[Bucky Moore]

Yeah, thanks. So the big news is today I am officially announcing that I've joined Lightspeed Venture Partners as a partner. After seven and a half years at KP and almost 11 years in the venture business, this new chapter in my career is really, really exciting in the sense that I feel like I really get to step into a truly global platform and really play a role in kind of driving what was once the core of the firm forward, which is this early stage enterprise investing that really set the tone for Lightspeed success and what it was able to become today. So I feel really, really grateful to partner with that team. And yeah, that's the next chapter of my career and I think it could be the last.

[Unknown]

A thrilled to hear it. Congratulations. Amazing news. I want to start on like Lightspeed are one of few firms that in the nicest way are walls of money. You, there's gc, there's a couple of other big names who just have pretty much more money than anyone else. Why do you think these mega platform plays are likely to be the winners in the next generation of venture?

[Bucky Moore]

So I think we're in this really unique point in time both in terms of the technology entrepreneurship industry and consequently the venture industry. And that if you look back five or seven years ago, we would be talking about companies like Databricks or Snowflake or even Doordash on the consumer side as sort of the hallmarks of venture success. And I think what we're seeing now is that there's this new shape of company that's emerging that really in some sense puts those to shame. Right? We're talking about going from talking about 30 to $50 billion outcomes to multi trillion dollar outcomes in the form of SpaceX or OpenAI or Anthropic, where Lightspeed is very proudly an investor. And I think what that means is you also sort of have to take a step back and say, okay, so like where is the alpha going to come from in the industry if that's the case? And I think what I'm seeing and sort of have been thinking about for a long time is that these platforms that have the scale of some of those that you mentioned, Lightspeed included, you know, they get to have really interesting conversations about like, hey, what if we invest billion dollars in one of these companies that could be worth trillions of dollars and what if we were to succeed in terms of turning a billion dollars into 10, $20 billion? I think that's just not a conversation that's ever been had in the venture industry and frankly any other asset class that I'm familiar with. And I think for that reason it's really clear to me that having the chip stack that these large platforms have is really uniquely beneficial at this point in time. But what I will say is that none of that matters if you don't maintain a lot of dedication to early stage investing. If you're Sam Altman or you're Dario and you're asking yourself, do I want to hitch my wagon to one of these firms by raising billions of dollars from one of them. You know, you're thinking a lot about like what their brand stands for. And I think that these companies, in spite of running towards these trillion dollar outcomes, are still very much startups and entrepreneurial in the way they think about their DNA and therefore they want to partner with someone who shares that DNA. And I think the only way for a venture firm to sustain that is by staying true to early stage venture, working with raw formation stage companies and spending lots and lots of time kind of trying to figure out who that next wave of entrepreneurs are. And so I think it's really important that Lightspeed continues that focus. And I think that's something they and a few of their peers do a really good job of.

[Unknown]

I love you. Which is why I sometimes ask spicy questions. My two questions from that would be you mentioned some brilliant model providers there. When you look at model providers on the whole taking out OpenAI, I think the one lesson that you have is that they're not really venture investments. People who did anthropic at 4 billion have got about a 3 1/2 to 4x when you combine the dilution and the employee stock payouts. It's not actually that great considering it's now a 12X our model provider companies. And are these mega exit companies actually venture funded assets?

[Bucky Moore]

So I think the story there is still very much being written is the first thing I would say. But I think at this point in time, to your point, these companies have margin compression, they're high burn because they have very high capex in terms of their need to scale their products by purchasing and running lots of compute. But on the other hand you're seeing this also this very, very promising trend play out in the form of these consumer apps and even enterprise apps increasingly that they're starting to lean. And so I think if we look ahead three to five years, the margin profile, growth rates and obviously revenue scale are going to look a lot different for these companies. Right. So at this point in time, I think it's fair to say that you've taken a bit more dilution than you would if you were investing in some kind of a late stage enterprise software company. But on the other hand, I think the scale of the outcomes that are possible with these companies and I think the types of consumer and business facing products they can build atop these models are really just starting. I think if you look at just how unique these companies are on a top line basis, I mean we're talking about billions of dollars of run rate growing in excess of 100% year over year. I don't think we've ever seen that before. Right. Like you talk about ServiceNow doing billions of dollars in ARR and growing, you know, 20, 30% year over year and you're like, this is an amazing company. These companies are growing over 100% year over year doing that kind of run rate. So again, I think the margin question is a valid one. I think the long term cash burn question is a very valid one. But what I'm seeing is I think these companies are just getting started in terms of optimizing the shape of their business by layering these products on top of this very capital intensive asset that you're referring to in the form of these models.

[Unknown]

It's so funny, I had Vince from Thrive on the show about a year 15 months ago when they led the 30 billion valuation round. And the thing that's so shocking is when you look at their revenues today, we questioned it and I questioned it and he pushed back quite rightly, but their revenues are about half of that valuation today, just showing the scale and trajectory of the revenue that they've had. So I completely agree and understand that the thing that I'm struggling with today as an investor, Bucky and I just use this show to learn but where is sustainable value generated? Where we're not going to get crushed as an investor. Because you See Now With OpenAI potentially buying windsurf, the desire to move into application layer, you see more and more advancement in the models moving into application. Where is sustainable value created and how do you think about that?

[Bucky Moore]

So my mental model for thinking about this is actually quite similar to when we were asking ourselves when Amazon, Microsoft Azure and Google were rising like which companies would survive that right as they were starting to get into multi product. And I think what we saw in that era was that there are just so many catalysts, categories of software that exist that require unique understanding of the customer pain points, unique resource allocation to build the best product and really just like a set of insights that can only come from focus that I think what we're going to see is a very similar set of dynamics play out here. So sure, in a core market like Cogen or maybe Enterprise Search, where you see companies like Glean being independent today, but OpenAI famously saying, hey, if you're an investor in Glean, you don't get to be an investor in OpenAI which would foreshadow they plan to play in that space. I think what you're seeing is that there are some categories where these model providers are going to be very, very active. But I think what's so amazing about this point in time that we're in is that this long tail of applications is so long and so fat that it's hard for me to see how the model providers are able to play in each of them. And so again, I think what's going to happen is that there will be startups and in some cases existing incumbent companies that really figure out where those areas are where deep customer insight and deep focus is required. And I just have a hard time seeing how the model providers are going to be able to prosecute each of those. And so I'd certainly be a little nervous about how the code gen stuff is going to play out today because it seems like that is just far and away the killer use case for LLMs and therefore the one that these big model providers are going to lean into next. From an application standpoint, of course, the consumer side of things is very tricky as well, given that's sort of the hallmark of all these companies in terms of what they put in front of consumers. But again, I really feel like that dynamic is going to kind of repeat itself and there's going to be so many opportunities that exist outside of that core that you're going to see big, big companies get built. And those companies are either going to have to be acquired by the model providers or they're really going to struggle to compete with because they monopolize all the customer insights that come from being first and going really deep and solving customer problems.

[Unknown]

You mentioned Glean there. And hey, if you invest in Glean, you can't do OpenAI. Is the age of competitive investing over? You mentioned being an investor in Anthropic. You're also an investor in Mistral. Does it matter anymore? Investing in competitors?

[Bucky Moore]

So I think every firm takes a very different view on this. And I can tell you that when we were at Kleiner Perkins, it was, it was something that we, it was kind of a red line that we went, wouldn't cross. And the reason for that is because we invested in so few companies and we go so deep with each of those companies that in our mind it was just too hard to feel like we could really provide that level of service to each company in a way that would make conflicts a non issue. I think it's a little harder for me to speak about kind of how we do things at Lightspeed in that sense. But I think to your point, you're seeing a lot of these later stage investments get made into sort of multiple players. And I think part of that is like there's just so much demand for capital from these big firms that these model providers want. And I think on the other end, it's really hard to say how this is going to play out to the point that I think there's a need for diversification as well on the, on the investor side. And so, you know, one argument would be, hey, pick, pick one of these companies, go all in on them, and you can see that's sort of what Thrive is doing with OpenAI. You could also say the same about Founders Fund. Another would be, hey, who knows how it's going to play out. And I think what you're seeing with say, Andreessen Horowitz is they're trying to invest in every one of these companies. And I think it's a rational strategy so long as you have buy in from the entrepreneurs so as to not ruin that relationship.

[Unknown]

One of the reasons you have competition is because there's a finite number of people who can write such large checks. When we think about the universe of mega platforms, will that universe increase significantly in the next five to 10 years as we see outcome sizes expand or will that remain relatively similar, do you think, as LPs concentrate dollars into known brands?

[Bucky Moore]

So I'm not an LP, but like you, I do spend a lot of time with LPs and what I can tell you right now is that it's harder and harder for me to see how there are too many of these mega platforms that exist in the coming years. And the reason for that is one of commitment from the existing large pools of capital in the LP community. Right? So if you're an LP that wants to fund one of these efforts, you're really making kind of a multifun commitment. As you know, the sophisticated LPs invest with any manager for at least three to four funds. And they know that is the optimal way for them to capture that alpha because it's really hard to be, to be timing the market, as we all know. So I think if you sort of say, okay in the backdrop, it feels like a lot of these big LPs have committed to these platforms. It's pretty hard to see how they can commit to too many more of them just on the basis of the physics of how big they are and how much capital they've committed. So I think what's really, really interesting about this space that we're in in the market right now is like you said, there are These companies that can get really, really big and consume large amounts of capital and generate potentially outsized returns for investors of those large checks. But on the other hand, it doesn't appear as though the supply of capital from, from platforms like the one that I've just joined or some of the others that we've talked about is going to go up in size. And so again, you could argue that these, these five to six firms kind of have this captive opportunity to really helping these companies scale and be their partner. And I think that's a really exciting dynamic for these mega platforms.

[Unknown]

How much bigger do you think they could get? I had a really interesting. We do a Show with Rory O'Driscoll every week. I think Rory is fucking brilliant, by the way. He's like the wise sage who just schools me every week, but he's basically very smart in saying to me, hey, we've seen this fundamental transition of like capital supply from your very, very large Franklin Templeton's, you name it, to thrive and to Lightspeed, who are doing these rounds and doing $30 billion rounds into OpenAI, for example. If we continue to see that transition, how much bigger will these mega platforms get?

[Bucky Moore]

Look, I think that's a tough one because it really is somewhat indexed to this question of how these megatrends like space and robotics and AGI really play out. If we really are talking about companies that are going to get to some level of AGI such that they're going to be not just multi trillions, but potentially larger than that. If we're talking about how Starlink and the kind of assets being built around that could kind of scale to those heights, these companies may not have to go public for a really long time because there will be so much demand to continue supporting them from the private markets, which as you said, are very, very robust right now. So the honest to God answer is I don't know. But I think we're going to find out as an industry over the next few years. And it's really going to come down to how some of these truly blue chip assets that are scaling to those levels, just how they trend and how the market kind of shapes around them.

[Unknown]

Do you think we're going to have an incredibly concentrated supply of these truly blue chip assets? What worries me is that we're going to have the haves and the have nots and everyone will go, well, we've always had that. It's always been a game of 1%. But I mean truly the 1 percents, the 0.001%. Do you think that's the case or do you think there will be a more even distribution of value in the next generation?

[Bucky Moore]

So I think if you polled investors right now and you asked them how many of these really, really valuable companies are going to exist in AI, in defense, in robotics, in space, most of them will tell you there's going to be maybe a few of these companies that get to that really, really massive, unprecedented level of scale. On the other hand, I think we're still really early in the super cycle of each of these areas, right? I mean, I think there's a lot of talk about how it's going to be Helsing and Anduril. There's a lot of talk around how it's going to be OpenAI and anthropic. Maybe Xai, I just don't think we know. And when I look at like a trend like robotics that is still so, so early, but at least in my mind I've convinced myself that this time is truly different in terms of the, in terms of the industrial applicability of these products. It really to me looks like we could be surprised to the upside. But again, this is, this is sort of our job as venture investors is to be very, very optimistic. So I think that is the number one constraint to this whole experiment. Playing out favorably will be like, are there more than one or two of these per, per mega category?

[Unknown]

Price is always very hard when you have one of these prized assets. It always seems painfully expensive in the short term and very prudent in the long term often. How do you think about price sensitivity when paying up for the 0.01% assets?

[Bucky Moore]

So my former partner Mamoon has taught me many things. One quote that sticks with me on this one is the best companies always feel expensive. And I think that's proven true in every example I can think of. I think it's really about determining one, like, is this one of those truly special companies? And obviously the earlier you have to make that decision, the much harder it is and the error rate is going to be higher. And I think therein lies probably some reason to be a little bit more constrained on your thinking around price. On the other hand, and this kind of dovetails into a question of, well, what does it take to win a competitive round these days? I think there's always someone who is going to believe more than the field, right? And so if that is important to the founder, then you sort of have a hard choice to make. Whereas like, if you think that Series A, this is a Very special asset and they're pushing price beyond kind of the way your mind can rationalize it. History would say that those companies always feel expensive. Those companies can run and compound for a very long time. And I think, especially today when we're in a world where, let's say if you talk about like these agent products that are quite literally going from like going after existing software spend to starting to replace human labor, it kind of comes back to this optimism I have around the size of these outcomes. Like, I really believe that, that these software companies that are not just augmenting, but in some cases replacing the work that humans do and the budget allocated towards paying them for that work, these companies are going to get bigger. Right. So I think the way I think about things today is like when you find one of those companies that has demonstrated some path to market leadership relative to the field, because all these categories are very competitive, which is another very challenging dynamic. My view is you really have to.

[Unknown]

Build conviction and go all in in such transient times. Does market size matter at all or is it worthy doing market sizing work traditional investors used to? Because we really don't know more than ever before.

[Bucky Moore]

Yeah, I mean, the honest answer is it depends, right? Like in a case where I would say it does matter is if you're building, let's say you're building a cybersecurity company where the play is, you have a better solution to something that already exists, you know exactly how much is being spent on that thing, and therefore your opportunity is to go and capture as much of that existing spend on that thing and then grow with that market there. I think market sizing really matters in terms of just being sober about the size of the opportunity and, and honest with yourself about the right way to build that company and capitalize it. I think there's this other case though, where you're doing something fundamentally new. And if you're doing something fundamentally new, the act of sizing a market is just, at least from my experience, so imprecise that it borders on being a fool's errand, number one. Number two, I think you've heard many people say this, but I very much agree with it that the best founders, they're just so creative and have so much ingenuity in terms of their ability to essentially set their rules right. And what I mean by setting their own rules is they get to decide what market they're playing in and they get to convince customers, customers that there's this market that they didn't really think about before, that they should be. And I think in that sense you have this way of kind of dictating that and therefore like trying to size it is just really, really hard. And some of that is like you build new products, some of that is you reframe an existing view of like how to solve a problem into something that kind of comprises a new market. And then there are these like compound startups, right? And this rippling is of course the company that everybody loves to talk about in this sense. But I think what you see with rippling is like, sure, you were kind of starting at thinking about it as a payroll product, but. But they have just been so unbelievably effective at layering on new products that have synergies to the existing core that the market size just keeps getting bigger every quarter. And so I don't spend a lot of time sizing markets, but I do think those companies that are going after an existing market, it would be crazy not to at least think about the size of that.

[Unknown]

Many people have said to me on the show before, like Nabeel at Spark, who's a co investor with you in anthropic the age of spreadsheet investing. It used to work for the last decade of enterprise SaaS. It no longer works in this next generation. Do you agree with that or bluntly, is there still hope for spreadsheet investors in the next decade?

[Bucky Moore]

The window that spreadsheet investors have to gain access to these companies is just a lot narrower in the sense that these really, really blue chip companies that are wielding AI in some interesting way, for example, let's say again, they're building some kind of an agent that is going after a large existing pool of labor and automating that they're just raising so much money early before there is a spreadsheet, that one's ability as a spreadsheet investor to get exposure to those companies at the kind of entry price and stage that they're used to, I think is changing a lot. And so my view is that these spreadsheet investors are just going to keep getting pushed later and later stage and again, I think the book is still being written on whether that's a good thing for the industry. But what I would say is that there's just so much conviction amongst top investors at the early stages for companies like that that they're just willing to take more risk.

[Unknown]

Sometimes in my head I wonder how spicy I can be and then I just think, go for it anyway. It's not fucking live. My question to you is, you mentioned that Money early and a lot of money early. I mean this with respect. I think you mega platforms are destroying seed time and time again. I see 10 on 50 and it is not good for the company. And you beat us. To be clear, you beat the seed funds because you just come in and buy it.

[Bucky Moore]

I get it.

[Unknown]

We do three on 15, you guys come in and drop 10 on 50. It's a market. But I don't think that is good for the companies and rarely do I see that play out well. How do you respond to that? Do you think I'm wrong? How do you feel?

[Bucky Moore]

So I can tell you that I have been involved in multiple situations where companies look back on their fundraising approach and say, hey, we raised too much money at too high a price. And now the flexibility that's afforded to us and not just downside scenarios, but in some cases like baseline based scenarios is more limited than we'd like it to be. So like I'm completely wide eyed about the trade off there. And anytime a founder I work with is thinking about going this path, like I try to have that honest conversation with him and say, hey, if I were you, this is how I think about it. Right? Of course there's a way that you can raise more money at less dilution. And if that's all you're thinking about, then that path may seem like the right path. But on the other hand, there are so many scenarios in which preserving optionality makes a huge, huge difference and therefore keeping dollars in and your, you know, the value of your 409A or your, your post money of your last round as low as possible is very, very beneficial. So to me it's like there are certain companies and certain types of founders that I think are better off and very comfortable going the kind of how do I raise as much money as, as efficient a dilution type of price as possible? And then there are other founders who I think you really, really have to help them understand the downsides of that because they've never done this before. But ultimately it's the founder's choice. And I think in terms of, in terms of how like late stage investors may or may not enable that, I personally would say, like, I take a view on that as well. And like when I believe the company's up for it, when I believe the company has enough pull and enough potential to be a little bit more aggressive with fundraising, I'm okay leaning into it, but I don't feel that way about every company I work with. And I'm honest with the founders about.

[Unknown]

That we have, you know, hundreds of thousands of founders that listen and they'll be going, great, great, this is getting good. But which camp am I in? Am I in the one that could raise more and should raise more, or am I in the one that should stay leaner and be more milestone driven and capital efficient? How would you delineate between the founders that should and should not raise those slightly large jumbo seeds versus normal seeds?

[Bucky Moore]

I think this actually kind of comes back to the market sizing question you asked, which is there are certain companies that have a very deterministic sense of their market opportunity. Let's say they're going and replacing something that already exists. You see this a lot in cyber security, for example. I think these kinds of companies, they, they understand the headroom and they understand if I get this much market share in this period of time, like this is, is how big my business can be and therefore how valuable it can be with a modest degree of confidence. Where I get really conservative in terms of the advice that I give founders that I work with on fundraising is when companies are fleshing out a new market like we just don't know. It could be really large, it could be non existent. I can tell you that the cases where I've been involved with companies is where they've done that wrong is when they just didn't understand their market yet. Right. And I think if you have a poor understanding of your market and there's a non zero chance that that market could be very constrained. Optionality is without a doubt your friend. And I'm very honest about that with the founders I work with.

[Unknown]

When you say optionality is your friend, I could take that in two ways because I could say the market is unknown and the optionality is extended Runway. And so actually raising a larger round will give you more at bats to enable you to have more goes at an unknown market. But I think you meant optionality in a different way of having a lower price.

[Bucky Moore]

No, I definitely did. Sure. In the case where you feel like you're drawing dead, the ability to find a good home for the company and do good by your investors and your employees is, is let's just say, much easier to come by when you keep valuation down. And we all know how that works with corporate acquirers. I was once on a corp dev team, so I know that world very well. But I think there is like another form of optionality where if you really think that the market opportunity or the range of outcomes that you're scaling into is so vast, keeping it lean also allows you to say, hey, if this doesn't work, do I really have to spend, you know, the next four or five years of my life working on this thing that I'm not sure of? Right. Like that time is so precious for great founders. And, and I've been in situations with founders before where it feels like they are kind of drawing debt and the market's not resonating the way that they thought. Sometimes I think having that extra, you know, two or three years of Runway can actually be really, really punitive given the opportunity costs associated with amazing founders time. So I really try on a personal level to be honest with them about look like, is this really what you want to be spending the next two or three years of your life doing? And I think if you go and raise too much money sometimes you can kind of be stuck with that. And there are countless companies in the industry right now where you have really talented founders working on something that's kind of working, but maybe not working to the degree that they hoped. In some sense they're kind of stuck with it. Right. And I really empathize with that. And I'm protective of the founders that I work with because I care about them and I value their time because I think their time is valuable.

[Unknown]

How fast do you know when a company that you've invested in is not working and not what you thought it would be?

[Bucky Moore]

Look, this is a hard one. I mean there's examples like Figma where, you know, they toiled in obscurity for some time and became the amazing.

[Unknown]

Dylan always seemed to be brilliant and across the board, like when you speak to John Lilly who led the A at Greylock, he was like, he was clearly brilliant. The company was not hitting, but like he was brilliant.

[Bucky Moore]

But I think you have a lot of very special founders whose companies don't work, number one. And so you can say that about a number of founders and a number of companies. But I think you're starting to see more and more evidence of these companies that just took longer than people, than people thought. Right. I mean there are just so many now it's not just Figma that I think you kind of have to stay open minded to that. And there's another dynamic at play here, which is that I think that so much of the low hanging fruit has been picked off the tree in terms of like software business businesses that you can build that you're starting to see the most interesting companies be those where there's just something deeply technical like a problem they have to go and solve that's never been solved before. And I think in doing so that can take in some cases like multiple years to get it right. And so, you know, a recent example of this is Clay, right? Clay is this company that's growing very, very fast on the sales tech side. And if I'm not mistaken, it was like five or six years of very little to no growth before, before it took off. And so I think you have to be open minded to those outcomes. And, and I personally try to lean into those outcomes because I think sometimes if something takes many years to get right, that can also be something that's very defensible and hard to replicate. And so I think the game has changed a little bit on this front and I think that these more deeply technical software products just take more time and you do have to be more open minded to these timelines being a little bit different than like the canonical. It either works in the first 12 months or not.

[Unknown]

I'm a little bit worried, if I'm honest, that the game has changed so much in terms of revenue trajectory and scaling. When you look at your macaws or your lovables or your bolts or your, you name it, their revenue scaling is so unparalleled. And then you look at a generation of now series A companies or series B companies that are doubling maybe 2 1/2 xing and they're going from 7 to 14 or 14 to 28. When I send that to you, Bucky, for a series B or C, I think you're going to stack, rank it against the AI companies and go, this just isn't that interesting. Am I right to be concerned about that? And are we in a fundamentally different world of revenue trajectory scale look, So.

[Bucky Moore]

I think core to any VC's job is the ability to prioritize and ruthlessly reprioritize. And part of that is just like what are the best ideas that I have in front of me at any given point in time? I'm going to spend time on those. And right now, to your point, the bar is going up for what best idea looks like when it comes to growth rates and momentum. But I really think you're right to say that what great looks like has really changed. I think the book is still being written on some of those companies that you mentioned and their peers in terms of just how durable that revenue is. Again, I'm not going to repeat myself and go down that rabbit hole hole, but I think what you're seeing is that the pent up demand for intelligence and all of these different areas of like, work is just so unbelievably high that the growth rates in the market pool around these companies are like nothing we've ever seen. And I can tell you now, as an investor, when I'm out there looking for new ideas, I am often looking for the signals that I saw in companies like Glean or companies like Windsurf that have just had this incredible market pull and reception. And I can tell you that it's almost made me at least I feel like I've become a more discerning investor in the sense that there are signals that I saw for those companies that were sort of foreshadowing of what was to come that I can now look for in other companies.

[Unknown]

What are those signals? That's fascinating. You have such a unique perspective from Glean and Windsurf in particular. What are those signals?

[Bucky Moore]

So first I have to give kudos to my former partners Mamoon and Lee Marie for being the leads and involved in those two companies. But what I would say is those two companies in particular, to me, found this zeitgeist at the senior most decision maker level. If you go and talk to a CIO or a CTO of a large enterprise today, they're furiously seeking out ways to apply AI to their business. And the reason for that is because their CEO and their board told them, you're going to get fired. Because the entire fate of our company depends on leaning into AI if you don't help us do this. So there is this veracity and this appetite to bring new solutions that sort of comprise, like what it means to bring AI into business, into these companies like I've never seen before. And I think Glean found that very early on. And the rest is history. It's just been on an incredible trajectory and I think scaling into a true household name that embodies what the AI app business of tomorrow looks like. I think similarly with Windsurf, they did a really, really good job of going to these large enterprise technology leaders and helping them understand where the future was going and the role that they could play in shepherding them that way. And I think you're going to see more and more of that where once there's like a magic moment that a CIO sees, there's a bit of this mimesis that picks up where every CIO is going to hear about the fact that they adopted this technology successfully and then they're going to want to go and do it themselves. And so I personally am looking for companies like that that I think really can kind of be something that the CIO walks into the boardroom and says, hey, like this is that thing that you asked me to do. I've adopted it. It's working. Employees are happy, we're getting all these productivity gains and I think we're just scratching at the surface of where that's going to show up. Like, you're going to see it in finance, you're certainly going to see more of it in software engineering, you're going to see it in cybersecurity. And again, I think like Glean and Windsurf are just good cursory examples of like that trend that's going to continue playing out and why I'm so bullish on these enterprise apps.

[Unknown]

It's so funny you said about the signals that we said about the revenue trajectories being faster and more clear than they've ever been, which was a leading question for me because I always think about sourcing, selecting, securing and servicing the four pillars of venture. And you said before about believing picking is more important than winning as a lead investor, which goes against what we just said, which is if the signals are clearer than ever, it takes less to pick the winner and it's more emphasis on winning. So I'm fascinated. Why do you think picking is more important than winning as a lead investor at a multi stage firm?

[Bucky Moore]

Yeah. So let's unpack this by first talking about what it takes to win in one of these really competitive opportunities. I feel like there's this sort of meme going around that it's all about famous VC picking you up in his helicopter and flying you to his house on an island, or the courtside seats at the warriors or Knicks game, or the Michelin star meal with a famous person joining. Look, these parlor tricks exist. Every firm engages in them depending on founders. Like they either respond positively to it or not. But ultimately what I found in practice is that none of that stuff really matters. What matters is did you put the work in to develop a deep connection and a deep set of insights with that founder, their vision and the company that they're trying to build. And that just takes time. And I think it takes time in the sense that every process I've been in that has been highly competitive, the winner, if it wasn't me, was the person that had been doing that work for the better course of a year. And I'll give you a quote. A founder told me once, when an opportunity didn't go my way, he said, the person that I went with, they just had insights about the business that not even my existing investors had. And the only way to develop those insights is from spending time thinking about the business at the level the founders do more than just about anyone but the founders. And so how this comes back to picking is you have to pick which companies and which people to do that with. And if you don't and you rock up to one of these processes that is is very competitive. There's always going to be someone who is at a great firm with a great brand who has done that work and that person will win. I see it every day.

[Unknown]

So is the future of vanture domain specialization.

[Bucky Moore]

So I think this is like a very good segue into like theoretically why domain expertise and specializing in domains matters, which is like if the game really becomes how do I pick which founders to spend time with and how when I meet a new company, can I readjust my prioritization of spending time developing insights and rapport with that founder and that company? Domain specialization really, really helps there being domain focused really, really helps with that picking aspect of picking who to spend time with, who to position yourself with for when they, when they do decide to raise. And then ultimately when they do decide to raise, being able to like reinforce that like, hey, did I pick the right person to spend time with or not? Or am I just running away with this because I've spent so much time on it, which is a whole nother bias you have to manage.

[Unknown]

It's so funny, I have so many LPs who ask me this question and I actually disagree with you on the picking element there. I don't think domain specialization particularly helps you pick. I think generational defining founders are quite obvious, respectfully. That said, I think to your point, they choose you because you're the smartest, so it doesn't help you pick, it helps you win because they go. Bucky, to your point, made me think about it in a different way. And Harry was super nice, but he didn't make me smarter and he didn't know the market like Bucky did. And so totally to your point, it helps you win. Do you even need to pick? My friend, you're now at lightspeed. You can just wait. I mean, part of me as a friend would say to you, just wait until the sea pay up like Vince did at thrive for the 30 billion round and ride it, baby.

[Bucky Moore]

Look. So that strategy can definitely work. But I would argue, and this is maybe world's smallest violin, that picking is actually much, much harder. Harder in these larger firms that have notoriety in the market. And the reason for that is because the opportunity set that they have access to and the number of founders that are willing to lean in and work with them is just higher. And so you just have more inventory to choose from. And I think because you have a little bit of magnetism to you as a platform that a lesser known firm doesn't, you just end up having a lot more at the top of funnel to sift through. And I think if you're not very diligent about how you prioritize and manage that, picking actually can be like the failure mode of a lot of GPS at these funnels.

[Unknown]

What do you mean? They pick duds. And that becomes apparent quickly.

[Bucky Moore]

I think ultimately it's really hard when there's so many founders that are coming in your door, which many firms like Lightspeed or Kleiner Perkins have the luxury of experiencing. It's very, very hard to figure out what is the 9 out of 101 and the 10 out of 10 1. And I think you can talk about that in the context of who the great founders are. You can talk about that in the context of momentum. But my point is it's a very humbling job for that reason. And I think to say that no one has to pick that's at an existing firm because the great companies are the great companies. That just hasn't been my experience.

[Unknown]

On the picking side, when you've picked and you've picked wrong, what did you not see that you wish you had seen?

[Bucky Moore]

I would say the single biggest thing that I've changed my mind on as an investor in the 11 or so years that I've been doing this comes down to, you know, what I did before investing, which is I was, as I said, I was a member of Cisco's corporate development team. And at a place like Cisco, when you're a member of a corporate development team, your job is to go and look at markets and technology and figure out like what are lucrative markets, what are the dynamic markets and then what is the right technology that the company should have to go and prosecute that market. Notice I did not mention founder quality or quality of execution in that entire statement. So I think when you come from a role like that and you move into venture, it's very tempting to kind of like apply that same lens to looking for great companies. And again, I can't say anything about this that hasn't already been said. But like, it's very, very obvious to anyone who's been doing this for a long time. Like you just get this visceral feel for it's all about the founders. And so I would say that like, the thing that I've really changed my mind on is I used to kind of go around developing theses and trying to figure out like where the world was going on the level of markets and technology. And now what I've realized is it's not to say that work doesn't matter. It's actually very important and very useful. But really all it does is it gives you a flashlight to say, okay, these are the areas where I want to go figure out if there's amazing founders or not. And I think the hardest thing to do when you're a thesis driven investor is to go do that work and have the humility and the restraint to conclude that there aren't great founders in that space. And that's okay because I'm going to go move on to the next one because what matters is I find those people. So I would say that's the thing that I've changed my mind on. And then to answer your question, the bad investments that I've made, they've been because I've downweighted the execution capacity of the team and the quality of the team that the founders can build around them at the expense of my intrigue for the product and the technology.

[Unknown]

Do you believe we have too much money chasing too few amazing entrepreneurs, us?

[Bucky Moore]

Honestly, Harry, I think I'm just too much of an optimist at heart to say that there's too much capital flowing in. I think that seriously, I think it's easy to say that on the bad days, but ultimately there is just so much amazing work to go and do. And really we're bound, I think more by, I think we're bound really by like, can we help enough of these founders that come from unlikely backgrounds go and pursue their visions? And so I personally have a view that I think the industry is in a healthy place. And it's just hard for me to say there's too much capital chasing too few opportunities. I feel like I'm seeing the future every day, candidly, and I just can't spend time on every single one of these.

[Unknown]

Do you agree with the challenge that I'm facing, Bucky? So I'm going all over the shop today, but it's very hot in London. I told you, and I'm so enjoying this. Before there were like two or three companies that were competitors. When you were looking at a market and you'd be going, I need to analyze them, I need to understand them. I need to meet them, whatever it is. Now there's 15, often more. It feels like the competitive set for every company has exploded exponentially. Do you agree? And how do you think about that when investing in one determining ultimate value creation?

[Bucky Moore]

So I would certainly agree with this. I think it's the single biggest challenge of making C and Series A investments right now. Like, let's take these AI app categories that we're meeting every day, for example. It used to be the case, as you said, there might be, like, one or two players that you'd have to pick between, and now it's probably more like 4 to 6. And so I can tell you like a. Like sort of a recent example in an anonymized way. Like, one of the most recent investments I made was in an AI app company. And I can tell you that we had been spending time with this team, really, since they'd raised a very small seed round, and we had been really excited about the category, building a lot of altitude on it, but everyone's product was under development, so it was really hard for us to determine who had the best product. So, okay, that's fine. Then figure out who the best founder is. Right. And there was a set of founders that had deep domain expertise in this area, but very light on the AI side of things. And then there was a set of founders that had very deep AI expertise and very light on the domain expertise. And I can tell you that we waited to pick the company that we pursued, and we succeeded at pursuing an investment in the one that we wanted. But I can tell you the price was a lot higher than it would have been had we leaned in earlier. Right. And I think what that came down to is we wanted to see whose products were good, whose weren't. And I can tell you, with hindsight, there's this instinct that I've kind of honed in on, especially with these AI app investments, which is you think it's the domain expertise that matters. It is, without a doubt, the AI expertise that is more scarce and therefore matters more. More. And so I can tell you right now that there are these companies out there that have deep domain experts building application layer AI companies, but they're really struggling to recruit the AI engineering talent that you need. And given how fast this technology is moving, like, you have to have people in the company that have these innate instincts for how to wield it and how to understand where it's going and therefore build for that future versus build for today. And I think if you don't have people on your team that are like truly AI native and truly AI engineers, you're just not going to nail that the way the team that does will. And like, you know, a good example of this that's public would be Harvey, right? Like, like Harvey actually has the perfect union of like a former lawyer and someone who has deep, deep AI engineering expertise in the form of their cto. And they've been able to recruit an incredible engineering team of AI practitioners because that leader is someone who has that expertise. The other form factor of this that I don't think works as well is when you have CTOs that are, say domain experts, like they've built something in the category they're working in, but they don't have that AI engineering expertise. They're just not able to get the talent in the building that I think think you need to be a market leader in one of these big categories.

[Unknown]

So interesting. You said that we had to pay up a lot more than we would have done if we came in early. Bucky, I don't think you can do venture unless you start from the beginning. And what I mean by that is the idea that you could do B and beyond and do great I think is so much harder, almost impossible today. And I think you see that with all of the mega platforms also doing pre seed. And who did, who won from Windsor? Neil Mater Green Oaks led the seed. Neil is a prolific seed investor and brilliant at it, by the way. DST are prolific seed investors, the huge growth firm of old. I don't think you can win venture unless you're doing pre seed. Discuss. Do you agree?

[Bucky Moore]

Yeah. So this kind of comes back to my view that I shared with you about how if you're going to build one of these mega platforms and sustain a compelling position in the market with what one, you really do have to stay dedicated to like the craft of like helping people build things from scratch. And to do that you have to be in the pre seed and seed business. And I think the moment you stop doing that is the moment you lose the instincts for just like how fast these companies can change and how quickly the story can improve, such that you kind of sit back and are looking for perfection instead of really seeing what these companies can be. And like, I actually think that these AI app companies we keep talking about is a great example of like, if you looked at Harvey at the Series A and you saw its profit product, you probably weren't that impressed. It was just a very early product. The scaffolding of it was clear what was possible with Better models was clear, but it was still a very early and raw product. And I think one of the mistakes that you could say a lot of investors have made in this wave of AI investing as it relates to these app companies is they've failed to imagine what they can be as the models get better, as their understanding of the pain point gets better, as they spend more time with customers. And so I think where this comes back to this question is if you're not spending time with early stage companies and you have that sense of just how fast things can change when companies are moving fast past, you start to lose sight of that and you make mistakes where you start to take a fixed view of these companies rather than a more fluid and dynamic one. And so I agree strongly with your statement and I think it's especially important for these really, really large funds to be playing there actively.

[Unknown]

But I would add, amend yours and say for the reason of access sounded very nice, empathy and wonderful. I completely agree. We're also empathetic, yes, completely. But actually it's a game of access. And I speak to so many of my friends here at just series B and beyond firms and they're like, Harry, can you send this 50 customer call log to one of your companies that I've done, I want the first meeting. And you're like you did 50 customer calls for a meeting or like you did this 28 page market analysis for a first meeting. The cost of first meeting entry has gone through the roof. And so you cannot not get that first meeting unless you've been at the.

[Harry Stebbings]

Pre seed or the seed.

[Bucky Moore]

Look, I would say it's possible if you make a very, very small investment in a company at the very early stages, to use that as a wedge to build a compelling relationship with an entrepreneur. But it is by no means a given. I can tell you countless examples of where let's just say later stage firms, or even just firms that weren't necessarily the lead investor in the early days did something, let's just call it low conviction, thinking they were going to get access where it just didn't serve them. So I think it really comes down to this kind of, this point about picking once again, which is like, hey, if you're going to start doing that as a later stage firm, you've got to be committed to putting the legwork in to actually use that as a wedge to develop that relationship that does give you the access, because I think the check itself does not. And so where this comes back to picking once again is like, let's Say you do that 100 times, which of those hundred are you going to put that work in with? Right. And so you have to have taste, judgment and sort of an instinct for as these companies are developing, like which of those do I need to, to really spend time with? And I think that goes for any investor at any stage, which is again why I believe picking is more important than you do.

[Unknown]

If you go really early, you bring in a question of multi stage investing in terms of signaling and the risk that comes with signaling. People go back and forth on it. I do see it impacting companies. When you have your Excels and your indexes, maybe this is more of a European thing where the markets are kind of more consolidated, but your Excelsior indexes lead A pre seed or seed and don't do an A, it kills companies. Do you agree or not?

[Bucky Moore]

So what I'd say is that when a larger, let's call it multi stage firm does lead a seed round and decides not to lead the next round, that is certainly something that like the next round of investors are going to want to understand better and think about and will sort of take as a signal. Like there's no doubt about it. I'm not going to deny that. I will also say that any seed investor competing with a multi stage firm will go very, very out of their way to instill this, this wild fear in the founder's mind about the risk of that. And I can tell you that what I've seen in practice is that I don't think is as much of a risk and perhaps I'm biased. I mean I have worked at a smaller firm before and kind of been on that side of the fence. But what I would say is that like when a firm doesn't want to go and do that Series A, it's really just the fact that the company hasn't necessarily achieved the milestones that they agreed upon with the entrepreneur in the early days for the company to be series A ready. And so sometimes that's a downside scenario where let's just say like things didn't go as well as you'd hoped, maybe they took longer and you just have to go and raise because you have a Runway issue. But usually what I find is that it's like, it's just like the quality of the company at that stage and how they've executed against the milestones that they set forth that determines like the series A success rather than say like the whimsical taste of the multi stage firm that led the seat. So What I found is like there are absolutely cases where you know, a multi stage firm will say, hey, like we feel good about our ownership, like we feel good about the amount of money we have in the company, like we want to help you raise a series A from someone else and we'll do pro rata and if that company is a good company and it's hit its milestones, that that round will get done. And it does all the time. And you know, often it's another multi stage firm that comes in and does that. But I can tell you that like there is this meme sort of where a company doesn't perform to expectations and then the fact that the series A comes together seems to kind of be blamed on the fact that the multi stage firm didn't want to follow on. And I just don't believe that there.

[Unknown]

Is a hard answer which is if you back yourself and you believe that you're going to crush it. If you crush it and you hit your numbers, a great firm will follow on. If they don't, you'll get someone else. The hard part is the middle ground which is like when you kind of do okay and you don't get the support or when you're orphaned. I've seen that happen a lot, especially with the respectfully, like, you know, changes in venture that we've seen in the last year, two years, a lot of companies have been orphaned. And it does make it harder when you don't have an internal champion.

[Bucky Moore]

I think that's fair.

[Unknown]

When we think about the next generation of venture or the next decade of venture, do we play collaboratively together in it? And I mean this nicely, not conflictingly, but like, you know, I'm a, I'm more of a seed only manager. I've got smaller funds obviously. Like do boutique seed specialists and these mega platforms play collaboratively or do the mega platforms bluntly just have a different cost of capital and eat seed?

[Bucky Moore]

I think the answer is somewhere in the middle, which is that of course multi stage firms, by virtue of being multi stage, they want to be first, right? That's where the generational returns get made, made. And we've seen that time and time again. If you look at some of the best venture investments in history, they've been these seed investments in these companies that have gone on to grow really, really large. And they've come from an investor who's continued to concentrate more and more capital in that company over time so that they have a large amount of ownership. At the end of the day, that is where I think the competition lies and that's obvious, right? But I also think that the great seed firms, one, they're heavily reliant on collaboration with the multi stage firms to be kind of sources of capital for downstream reality. And conversely, I think that every good multi stage firm is humble about the fact that there will be companies that were either non obvious to them or not visible to them that these seed firms will find and will be good partners to. And so I think for a multi stage firm to alienate those seed funds and say, hey, we just don't want to work together at all would just be crazy. And I can tell you that none of the multi stage firms that I know well do anything but seek to be very collaborative and follow what the seed firms are doing very closely. For that reason.

[Unknown]

What have you changed your mind on most in the last 12 months? Like for me, 12 months ago I was quite dubious, honestly of OpenAI's long term sustainability and enterprise value. Now I think it's unwavering that there'll be a $2 trillion company unwavering.

[Bucky Moore]

So I think for me, the thing I've changed my mind on the most in the last 12 months specific to AI is how to think about like the net revenue mix of companies like OpenAI Anthropic. And so look, I remember when investors were considering participating in a $30 billion valuation round for OpenAI AI, the question in the room was like, should we even value this ChatGPT thing as anything, right? Like is it, is it worth anything or is it just a proof of concept to show what the model is capable of? And conversely, I think people were looking at these API businesses where they make the model available to developers and saying, hey, this is going to be like Stripe or Twilio or you know, the next great API driven business. And I think what's happened in practice I didn't anticipate, which is that it turns out that these API driven businesses are really, really tricky. One, you have this kind of 100x year over year decrease in prices per token. So you have like downward pricing pressure that is inevitable driven by the competition. Two is you have this like almost zero switching cost where let's say, you know, Claude releases a new, a new version of its model and I think it's better and performs better against my evals and I'm currently using OpenAI, it's not terribly hard in most application areas to switch to that model. So you have downward pricing pressure, you have zero switching costs and you have a lot of competition. And then you have this kind of, of ever increasing sense of CapEx to drive that innovation forward that I think just like kind of is a death by a thousand cuts kind of impact on the quality of those API revenue businesses. And so I think what you're going to see is that those businesses where you have, where a company has the flagship model that everybody wants for a given use case, like you could say Anthropic's been very dominant, for example, in Cogen, those businesses will look very healthy. But the moment another player releases a better model in that use case, like the revenue is going to yo, yo. And so, so what I've really come around to is that it's these products that are going to be built on top of these models, even inside of the model labs, not just by third parties that are going to be much, much more compelling businesses long term than say the model APIs themselves.

[Unknown]

Does Anthropic not have to acquire then and move into the application layer?

[Bucky Moore]

It seems very likely to me that in some form or another every single one of these frontier model labs will begin building both business and consumer facing products. And I think what you're seeing with OpenAI is certainly foreshadowing of that, that you could argue X is trying to build its own super app around its models, of course, and, and it's hard for me to see how each one of these players doesn't kind of end up in that place. Now there is a unique play here which is, you know, ssi, Ilias Hitscaver and Daniel Gross's company, which said we're not going to do that. And you could say, hey, that's a really contrarian move. But what it allows them to do is keep a very lean team and kind of go straight shot towards AGI as they famously talked about.

[Unknown]

And so what does it allow you that the other strategy does not, not focus, but does that increase your velocity to AGI?

[Bucky Moore]

The argument that I would, that I would make would be today there are a lot of decisions that trickle into the R and D and research organizations of say an OpenAI that are in service of helping them build better products in the short term, right? Like the model needs to behave a certain way. So ChatGPT can be better, deep research can be better or whatever it may be. There are for sure short term optimizations being made there and I've seen it with my own eyes when I talk to people that work at those companies. The argument for not getting caught up in that is you can just be entirely long term. You can make Bolder research bets. You can, you can allocate resources differently, you can maintain a smaller team that's more focused, as you said. So I think that's really the argument is like having to generate revenue and build a business that you can take public someday is, is, is going to come with short term thinking. And if you sort of say, hey, let's, let's assume we have access to capital that we need and let's say we can just kind of sweep all that aside, what does that value? I think it buys you less distraction and more ambition.

[Unknown]

Did you do ssi?

[Bucky Moore]

I suspect SSI will announce their fundraising and their investors and talk more widely about that.

[Unknown]

My question was more like, do you just have to be in every landmark company when you have as much money as you do? It's like, fuck it, it reaches a certain size, we have to be in it.

[Bucky Moore]

My sense is, without going overboard on conflicts of interest, being in as many of these companies as possible, given what I know today is very rational, but I also think it's rational and becoming to say, hey, we believe in one of them. We're just going to concentrate all of our resources in that. I think there's no middle ground. You either have to be in all of them or you have to pick one of them. That's my view.

[Unknown]

Can I ask, what do most people believe about AI that you think is wrong?

[Bucky Moore]

It seems like most people believe that this path to AGI is just this ever increasing upward slope. Again, I don't have strong intuitions on whether that's true or not, but my instinct is we should be much, much more open minded to the possibility that we could arrive at some form of plateau and still have an incredible outcome for society and an incredible outcome for entrepreneurs and venture investors. And so in a sense you could say, hey, AGI is already here in certain pockets. Like, there are clearly things that these products can do that an army of the smartest humans in the world would never ever be able to try. Right now that we have test time compute, the same thing that brought us AlphaGo is sort of bringing an equivalent of that in all these different domains, where unlike the human brain, these AIs can just try hundreds, thousands of different paths to get to the best possible answer, whereas we kind of have to think about the best one. So in a sense humans are still predicting the next token token. Whereas I think that these models with test time compute infrastructure are able to figure out, how can I try this a thousand times and then decide what the best next token is? Right. And so I think as a result, like to me, AGI feels like it's here in a lot of ways. And even if we were to kind of say, hey, the capabilities that we have today are it and it's not going to get any better, we are so early in bringing these capabilities to bear in society and an industry that I personally think it's an incredible wave of technology even if the progress halts today. And I think there's a lot of people kind of holding out for this, this moment of singularity. And I'm not sure it's as black and white in that as that. I'm not sure it's as critical as that for the industry to play out favorably for all these different stakeholders.

[Unknown]

My question to you is what do you think the likelihood is plateauing like we saw in self driving for many years, or a continuing progression efficiency that we have been seeing over the last year?

[Bucky Moore]

It looked as though pre training was no longer as lucrative a scaling dimension as it was originally positioned as I think there were a lot of people that were rationally saying, hey, progress is going to slow down and things might be the way they are now. Then this test time compute paradigm came along and now we have things like post training and reinforcement learning that are presenting additional scaling dimensions that I think it's just really hard to say. And it's really hard to say because there are these amazingly talented people inside of all these research labs that are every day trying new things and trying to figure out what that next scaling dimension might be. So I think the right way to frame the answer is like, when do we run out of new scaling dimensions? And right now that appears to be very unlikely, at least in the near term. But at some point it could happen. But I also have just learned to never bet against human ingenuity. And given the best and the brightest are now so heavily concentrated inside of these big labs trying new things every day. I personally believe there will always be new scaling dimensions. And whether the next one is as steep in terms of progress as the last is hard to say. But it's really hard for me to imagine a world in which we just run out of ideas.

[Unknown]

Final one. Before we do a quick fire. One thing I'm just fascinated by is that everyone always says enterprise adoption always goes basically much slower than you think. But when you look at actually adoption cycles today, it would seem that's not the case. It would seem enterprises are adopting AI faster than they've adopted any other prior technology cycle. To what extent does the Conventional wisdom hold that enterprises adopt slowly versus this is fundamentally different.

[Bucky Moore]

So I think this is fundamentally different. And if you compare it to cloud, for example, adoption was fairly slow in the beginning, right? Kind of gradually, then suddenly here. I think the difference is that there's this broad based consensus that failure to embrace AI to the fullest extent as a company is just like existential to its existence. And I think if you start to kind of ask yourself like, what does it mean for the entire industry to conclude that like, if I don't adopt this technology, I'm going to be left behind, what you start to see is this like voracious appetite to go and adopt it at all costs in every nook and cranny of the business. And I think this honestly explains why you're seeing these companies grow faster than we've ever imagined. I think it explains why investors are so bullish on these app layer companies because they're going and Talking to these CIOs and hearing things they've never heard before, like I have to adopt this everywhere I'm going to get fired type of urgency. So you're just seeing unprecedented appetite and urgency because of this view that if I don't adopt this technology, my company will perish. And again, I think that's just yet another reason why we're in this really, really unique point in time for entrepreneurs and investors.

[Unknown]

Dude, listen, I've so enjoyed this. I want to do a quick fire. So I say a short statement. You give me your immediate thoughts. Does that sound okay?

[Bucky Moore]

Okay, let's try it.

[Unknown]

You spent years with Mamoon. We both love him. What was your biggest takeaway from investing?

[Bucky Moore]

I think Mamoon is known as someone who is very metrics driven and I think that could not be more false. He has this incredible taste in people.

[Unknown]

Stack Rank. Okay. Market Traction Team Team Traction Market Why?

[Bucky Moore]

I've already told you why I think people are more important than everything. Some of the biggest mistakes I've made as an investor is when I've ignored traction because I've had reservations about the market. Market traction is so hard to manufacture. And I think that traction signifies a quality of founder that is good enough to figure out how to overcome any market size limitations that exist. And so I've learned to overweight that.

[Unknown]

To what extent is liquidity a short term temporary constraint problem versus a permanent structural challenge?

[Bucky Moore]

I do not think it's a permanent structural challenge because I believe that in the same way that great entrepreneurs flock towards white space, there will be solutions and new products that get devised by investment managers to solve for these liquidity challenges that we're faced with today.

[Unknown]

What do you believe about the future of vanture that you think most people would find shocking?

[Bucky Moore]

I see a world in which both ends of the barbell really, really continue to rise, meaning small, dedicated specialist firms on one end and large platforms on the other end. And I think that uncanny valley in between is. Is going to be an increasingly challenging place to be over time if this notion of trillion dollar companies continues to play out the way it seems to be today.

[Unknown]

And that uncanny valley is like your $500 million to $2 billion funds.

[Bucky Moore]

I think that's fair to say.

[Unknown]

Who is an unsung hero in venture, do you think? You've seen many great operators in venture, you've worked with them. Who do you think is an unsung hero?

[Bucky Moore]

Look, I think someone who's been very generous to me over the years is the person that actually hired me into Venture. It's this guy named Mike Dauber who's a partner at Amplify Partners, which is a wonderful new firm that's really, really gotten off to an incredible start again with focus on both early stage and these more deeply technical software businesses. They've since branched out quite a bit. But what I can tell you about Mike is he is just an incredible mentor and he has imparted so much belief and wisdom on so many young people in this industry and I think helped a lot of people gain the confidence and sort of the clarity of purpose around what it means to do this job well and why they're capable of doing it. And I'll be forever grateful for Mike for just always believing in me. Every time I've made a change in my career, every time I've had a tough decision to make, I've called Mike and he's really, really been someone whose feedback I value immensely.

[Unknown]

How would you most love to hear your entrepreneurs discuss you and working with you?

[Bucky Moore]

So I think the first thing I'd say is we both love having each other in our lives, right? I think that's the core thing that I think is just so important for that founder investor relationship to have have. And obviously there's like some derivatives of that that create that dynamic, right? One of those is like, does this investor have a deep curiosity in me? Do they have deep and unwavering conviction in my vision? And do they have the instincts as to when to be helpful and how to be helpful and most importantly, when not to be helpful and when to get out of the way.

[Unknown]

Totally agree with you there. I love that. Also loving being in each other's lives. I say this to a lot of founders I work with. This is hard. If we don't enjoy hanging out and like you don't like me and I don't like you you. It's just not fun. It's funny how few people say that. Final one for you. When you look forward 10 years, where do you want you and Lightspeed to be?

[Bucky Moore]

I'd love to see Lightspeed continue to assert itself as a truly global, multi stage generalist platform. I would love to be a part of shaping that legacy in the sense that I have driven and helped driven excellence in the early stage enterprise investing at the firm does I don't know.

[Unknown]

How long I've known you for, it's quite a few years. At this point I feel like this was very much in the works. I so appreciate you putting up with my wayward questions, my pushbacks and you've been fantastic.

[Bucky Moore]

Thanks Harry. This is a lot of fun and hope to do it again soon.

[Harry Stebbings]

I so enjoyed doing that show with Bucky. I'd known Bucky for years so to make that one happen with the move was really special for me. If you want to watch the episode.

[Unknown]

You can find it on YouTube by.

[Harry Stebbings]

Searching for 2020 VC. That's 20 VC. But before we leave you today, I love seeing the team come together to make this show happen. What I don't love is trying to keep track of all the information, the.

[Unknown]

Data and the projects that we're working.

[Harry Stebbings]

On across dozens of platforms, products and tools. That's why we use Coda, the all in one collaborative workspace that's helped 50,000 teams all over the world get on the same page. Offering the flexibility of docs with the structure of spreadsheets, Coda facilitates deeper teamwork and quicker creativity and their turnkey AI solution. The intelligence of Coda Brain is a game changer. Powered by Grammarly, Coda is entering a new phase of innovation and expansion, aiming to redefine productivity for the AI era. Whether you're a startup looking to organize the chaos while staying nimble or an enterprise organization looking for better alignment, Coda matches your work working style. Its seamless workspace connects to hundreds of your favorite tools including Salesforce, Jira, Asana and Figma, helping your teams transform their rituals and do more faster. If you're a startup team looking to increase alignment and agility, Coda can help you move from planning to execution in record time. To try it for yourself, go to Coda iO20VC today and get six months free off the team plan for startups. That's Coda iO20VC to get started for free and get six months off the team plan. That's Coda IO 20VC. And while Coda keeps the engine running smoothly, Shopify puts the pedal to the metal when it's time to sell. I spend my time looking into successful businesses of today and tomorrow. And often there's a business that's behind the business. Help helping drive success for millions. That is Shopify. Shopify is home to the number one checkout on the planet, boosting conversions by up to an astonishing 50%. Meaning way less carts going abandoned and way more sales going into the business. Winner. So if you're into growing your business, your commerce platform better be ready to sell wherever your customers are. Go to shopify.com 20vc to start your $1 per month trial today. That's shopify.com 20vc in letters. And while Shopify helps you drive sales, don't forget what really keeps those customers coming. Back When I was 18, I dreamed about being an investor with zero contacts in the industry. And through persistence, I'm now living that dream. Maybe you're dreaming of your own business and that's where Shopify steps in. I spend my time exploring successful businesses online. Often there's a business behind the business drop driving success for millions. That's Shopify. Powering 10% of US commerce, Shopify offers beautiful templates, AI tools for product images and descriptions, easy marketing campaigns and 247 support their number one checkout boosts conversions by 50%. Fewer abandoned carts, more sales. Winner Turn dreams into success with Shopify. Go to Shopify.com 24 for your $1 per month trial today. That's Shopify.com 20VC. As always, I super appreciate all the support. We have an incredible show with Jason lemkin and Rory O'Driscoll coming on Thursday. So stay tuned for that. A lot of news to cover.