00:39:26 · Aydin Senkut, Eric Newcomer
And if you cannot write a minimum check, it's going to be very difficult to be part of those companies. And I never want to be at the table and say, well, we can only do this small little portion here in terms of companies we back. I always want to have full purview of all the great companies we can invest but then it's also a fine balance of once you become too large I also don't want to be happy with like whatever like 11% IRR or like the size is so much that even when everything goes into the right you just look at it as like well physically like where this is going to go like because physics and math is physics and math. So I think it's just finding the right balance is really important and we're just going to keep blazing our own paths. And the most important thing for us is also to stay true to our founders. Like can we do enough to support them? And we were also talking about that even in this world when everybody is seemingly founder friendly, what people don't talk about is the founder's trust. Like what do you do actually to earn that trust? Like the fact that we vote our shares with the founders and all the things we do. [00:40:29] S1: Even if they defraud you or what do you have limits to
00:40:31 · Aydin Senkut
[00:40:31] S0: that? It's so funny. I mean, this is something that people ask. I think in the history of Felicis, nobody has defrauded us. But let's say out of the 500 plus bets, let's say that there were only two situations where things have gone sideways and unexpected and negative ways. But the reality is like you can only lose 1x your money but if you don't get into the very best companies, you're just never going to be great. So I think one of the biggest misconceptions about this business is, Oh, we're like risk managers or I'm avoiding failure. I'm awaiting failure. Actually, biggest failure for me was not to be brave enough. You know, like I can go on and on about like Brian Chesky from Airbnb emailing me before YC, I didn't really like you. Sure you don't want to write an angel check at $2,500,000 valuation? That became a $60,000,000,000 plus company. Same thing happened with Pinterest. Like my founder, Sandeep, was in the wedding of the founder. We're like, God, like if they build a mobile app, it would be so great. We pass and six months later, guess what they do? They launch a mobile app. And all we had to do is have faith and invest in the company. So every time we got... Or like Airbnb, I got afraid of legal risk. Every time we thought about the risk versus if the world can go wildly... If the things can go wildly right, that was like the much bigger failure than actually we manage the risk. So that's all I'm going to say. And honestly the other thing that's inspiring to me is this whole idea of voting our shares with the founders was something that came from the founders. Kind of like what you did with the emergence list. You're like, you know what? If we're going to pick the best founders why don't we ask the founders themselves? What I realized is a lot of VCs do things that they think are the right thing to do for the founders. I'm like, how about I do something really radical? Let me ask the founders what they want. And they said, look, we want to know that you're never going to vote against us so we can trust you. Not like you're on the board, but we can actually trust you so we can talk about the hard things. And the second thing is like, look, being a founder is really tough. Like it breaks people's marriages, it breaks people and we're like, how can we make you unbreakable? So let us spend our own money.
00:42:36 · Aydin Senkut, Eric Newcomer
Like whether it's coaching, mentorship, we had 100 plus founders take advantage of this great founder pledge we have that we put 1% of every check we write they can use for self development or anything that can help them. So what I love about that is just like something that no other VC does. What the founders want to see is like, don't tell me something that every other VC offers or puts on the table. Tell me something that only you people do. Is your, I don't know, put your finger in [00:43:01] S1: the air read on the bubble moment? Or how much do you feel like this is a... We used to have to talk about .com, but 2021 was such a crazy period. Now I think we just look back at 2021. Does 2026 feel like 2021 to you?
00:43:01 · Eric Newcomer, Aydin Senkut
[00:43:01] S1: the air read on the bubble moment? Or how much do you feel like this is a... We used to have to talk about .com, but 2021 was such a crazy period. Now I think we just look back at 2021. Does 2026 feel like 2021 to you? [00:43:17] S0: I spent like not even a second thinking about bubbles. Like all I care about is the underlying business value. Like a great example is we've invested Supabase. It was right after the COVID bubble, valuations crashed. For three years nothing happened to that company. And people are like, you guys are idiots. You pay too high of a price. What's going to happen to that company? And I think what happens is if you basically let the market affect your decisions, you're never going to have the bravery to find the right things. Underlying, Supabase had insane growth. They grew revenues 1000x since we invested. What really mattered to me is that the underlying business performance was growing 1000x. And more importantly, we had a thesis that that was going to follow hyper demand for a backend platform that takes advantage of like crypto needed backend and all the AI apps needed backend. And people look around and there was no like friendly backend and Supabase became that. [00:44:17] S1: It's become key to a lot of these like vibe coded
00:44:19 · Aydin Senkut
[00:44:19] S0: So where I'm going with this is you can now look at it and say like just make a generalist comment and say, Oh my God, there's a bubble. Like what does that even mean? Like the only thing that matters is we have a job and that is, are you picking the best companies as in not the best companies like whether there is a bubble or not, you just look at the underlying performance and all that's changed with the bubble is that you have performance. And I can tell you that's worth 1x the revenue or 10x the revenue or 100x the revenue. The multiple can change but the underlying value of the company doesn't change. And the way that I think about it is if you can find companies where the underlying value grows a 1000x, whether the market moves like 20% or 30%, we're to do okay. You know what I mean? Even if the market takes a 50% hit, which I don't want for anyone, our job is to say, You know what? There something in our book that has grown so much that even with that hit, at some point we're going to be able to monetize it. And even with the biggest setbacks and crashes in the market and bubble bursting, guess what happened a couple years later? The market comes back roaring even stronger. You know what I mean? So like we're not just going to say, Oh my God, it's a bubble. We're like slowing down. We're to stop. And that's by the way when people lose the biggest opportunities. Because in this business you cannot take pauses and you cannot stop. You cannot look at the market and say, Oh my God, this is just crazy. Our job is to find the very best companies even in that environment.
00:45:44 · Eric Newcomer, Aydin Senkut
[00:45:44] S1: How do you price with that philosophy? It's sort of like, what do I think sort of other investors are going to pay you? What tends to be your valuation philosophy? [00:45:53] S0: I don't really think as much as what the other investors are going to pay is that I basically think about what will be the terminal value of the company. More than the investors themselves, the question that we ask is how can this company be so important that it is an independent company? And today that lens is like you have to be at a billion to 10,000,000,000 revenues. And by the way, you can't wait eight to ten years to get there. You've got to get there in three to five years. But the other thing is if you find the right zip codes, like let me give you an example. If you find anything in like the overall like AI infrastructure and chip industry, like you have multiple trillion dollar companies. And we have this like interesting like theorem that any company will easily spend up to 1% to 2% of their market cap to acquire a company. The question is for a $5,000,000,000,000 company, that's $100,000,000,000 For a $5,000,000,000 company, that's like $100,000,000 So if you're in the right zip code and even when things don't go right, but you build something so critical, there is going to be an acquire for a very large amount.