00:00:00 · Shardul Shah, Molly O'Shea
[00:00:00] S0: Wiz was, like, the fastest growing company. It was the largest tech m and a of all time. [00:00:04] S1: Index has an AUM around 17,000,000,000. That's what was last reported by Bloomberg. You had an 11 x DPI on Index's 20 '12 fund compared with an industry average of 1.5 x. [00:00:16] S0: We're no longer an underdog. The industry of venture is industrializing, and it's something very different over the last five years than the prior twenty five. We are in an era of agent to agent work, but we're transforming our business with AI for sure. [00:00:30] S1: What is Flapping Airplanes? [00:00:31] S0: It's the greatest army of 23 year olds. Sensational, the technology that they've built, and I'm pretty confident they're going to break some world records in the next couple Of what? You'll have to wait and see. [00:00:55] S1: Shardul, welcome to Sourcery. [00:00:57] S0: Thanks very much for having me. [00:00:58] S1: Thank you for having me here in the Index Ventures New York office. We just got back from your SF office last week, which also was beautiful. Know you've got a lot of travertine around here, some nice interior design, like all the good stuff. We talked to a couple of your portfolio companies. June from Simile who was like, I was not, that was a crazy conversation. For people who haven't watched it yet, I'm going to totally bait you, but I thought I was having my brain read the entire time. [00:01:31] S0: Was actually happening.
00:01:31 · Shardul Shah, Molly O'Shea
[00:01:31] S0: Was actually happening. [00:01:32] S1: He said he did a simulation on me beforehand, so he predicted the whole thing. And then we also talked to Parallel, and what I think will be really interesting to talk to you about today is the history and the evolution of Index and where it meets today in this era of AI wacky craziness. One thing that Parallel mentioned was like, we were so used to triple triple double doubles back then and what he expected when he was at Twitter and back in like, you know, historic tech days, but now he's expecting a thousand X. The measurement of the venture world and startups has completely changed with the proliferation of AI. So I want to go through that. But yeah, I mean, I guess to start, so Index has an AUM around $17,000,000,000 that's what was last reported by Bloomberg, so I'd love to get your perspective. You joined the firm back in 2008, so give us the state of Index Ventures. [00:02:28] S0: So, I started at Index as an intern in 2004. My god! I don't think that really counts, although I'm really proud [00:02:34] S1: of does count.
00:02:34 · Molly O'Shea, Shardul Shah
[00:02:34] S1: of does count. [00:02:36] S0: But I came back in 2008. When we started Index thirty years ago, it was three people, and today we're 93. So, I spend more time thinking and sweating and dreaming about our people than our AUM. I think it's actually the most important metric. And I think how we've changed and how we've not changed is super interesting. And I think part of respecting where we came from shouldn't limit where we need to go. And so, Although I like that you picked up on the travertine, I think you've also noticed a bunch of the other tastes. Like pumpkins? There are pumpkins, there's eclectic music, there's eclectic literature. The linen in this room is also fantastic. That, I think, has been true for Index from the beginning to today. There's an enormous attention to taste. When you think and talk about measurement, I think it's super interesting. The industry of venture is industrializing, and it's something very different over the last five years than the prior twenty five. And I think in that phase of industrialization, so many people are thinking about, patterns or numbers and measurement and scale that, it kind of, creates more distinction around how focused Index is on taste. [00:04:00] S1: So, let's go into your portfolio a bit. You have some pretty big name hits, like you were an investor in Wiz, I named a couple of the other companies today, but what are some of the companies that you've been most proud to back? I would start
00:04:00 · Molly O'Shea, Shardul Shah
[00:04:00] S1: So, let's go into your portfolio a bit. You have some pretty big name hits, like you were an investor in Wiz, I named a couple of the other companies today, but what are some of the companies that you've been most proud to back? I would start [00:04:18] S0: by saying what I'm most proud of is the number of different partners at Index that have contributed to success. Usually in venture, there's the power law that leads to concentration, not only in terms of returns, but concentration of returns amongst very few partners. And so, it's at the root of why succession is really difficult in the venture industry, but you often have a couple of star partners at big name firms. What's amazing about Index is Jan, Martin, Danny, Sahir, Nina, Hannah, myself all have association with terrific investments. And that's just the current generation. If I think about prior generations, each of Neil, Giuseppe, Mike, Dom, Bernard contributed to outlier outcomes, and that's really unusual and rare, and I think at the heart of what we're most proud of. [00:05:10] S1: And so, what are the names of indexes like Hall of Fame? [00:05:14] S0: There's many. So, if I think about some of our most important investments, Revolut, which is probably the largest technology company ever out of Europe, Datadog, Wiz, Adyen, Robinhood, Figma, ClickHouse, Roblox, the list goes on.
00:05:14 · Shardul Shah, Molly O'Shea
[00:05:14] S0: There's many. So, if I think about some of our most important investments, Revolut, which is probably the largest technology company ever out of Europe, Datadog, Wiz, Adyen, Robinhood, Figma, ClickHouse, Roblox, the list goes on. [00:05:35] S1: In terms of evaluating startups today, I want to go back to this because I think it's really interesting, your point on venture being industrialized. How you're evaluating companies today, I would assume, is completely different than ever before. Maybe it always comes back to the founder, but there are many things that go into that analysis. How has that changed, and what are you looking for that's different?
00:05:35 · Molly O'Shea, Shardul Shah
[00:05:35] S1: In terms of evaluating startups today, I want to go back to this because I think it's really interesting, your point on venture being industrialized. How you're evaluating companies today, I would assume, is completely different than ever before. Maybe it always comes back to the founder, but there are many things that go into that analysis. How has that changed, and what are you looking for that's different? [00:06:01] S0: I think it is all about the people, particularly at early stage. Take Wiz as an example. When we invested, we invested on my birthday before there was a business plan, And so, there wasn't a market, there wasn't a business model, there wasn't metrics to analyze. It was literally all about the people. Now, I had an advantage because I served on Assaf, Roy, Ami, and Yinon's board ten years prior, and so I knew them as human beings. I knew their flaws, I knew their idiosyncrasies, and I still had belief in who they were. I think that's the craft that we've been really honing, which is how to really listen to entrepreneurs to find belief in them, versus looking for phenotypes or specific attributes that we check a list of. Of course, entrepreneurs have to build durable businesses. And so, particularly in markets like this, where abundance comes with exuberance, there's no doubt that sometimes entrepreneurs can confuse revenue with durable business models. And so, there is an art to study [00:07:11] S1: Or they don't know how to define revenue.