00:23:24 · Shardul Shah
[00:23:24] S0: We have a lot of domain expertise within Index, whether Jan in FinTech or Marton in marketplaces, myself in infrastructure security, Nina in robotics, Danny in consumer there's a lot of domain expertise. And so, I can appreciate why you might ask about what's our thesis and thematic approach. But it's actually all about the people. And so, when I think about a more recent wave of entrepreneurs, we weren't targeting 26 and under founders when we decided to invest in Flapping Airplanes or Ben and Asher at Flapping Airplanes and Aidan, excuse me, or Joon, Michael and Percy at Simile, or Moore and Stefan, at Hone, or Karin at Cartesia. We don't have a 26 screen. But when all roads pointed to Ben as one of the most special entrepreneurs of his generation, we wanted to invest before we knew what he was working on. And in fact, before he knew what he was working on. And as a consequence, you actually see a variety of different themes. You talked about mind reading with I love science fiction, right? And so, simulation is super fun to think about as a core pillar in most science fiction. But I wasn't going into a meeting with Joon thinking about I want to invest in a simulation company. I saw him, I understood him, I felt him, and wanted to get behind him no matter what he was doing. Parag, at Parallel, again, he did not know the business he was creating, but we had belief in him that went beyond his celebrity, which is I think one of the reasons he asked me to join the board at this Heath stage because I didn't invest in him because of his celebrity, I invested in him because of my view of his character and his competence. There isn't really a thematic overlay. We don't think in terms of coverage. We don't think about these statistical measures. What we really aim for is are we the largest and most influential entrepreneur in category defining companies? To do that, we try to get involved as early as possible. Sometimes we make mistakes. We don't connect with the entrepreneur. Then, we try to get involved as quickly as we can. The idea of domain expertise, the idea of diverse perspectives gives us an apparatus to make those catch ups as quickly as possible, and then we have great diversity of funds from a seed fund, a venture fund, and a growth fund to then execute on the strategy.
00:26:10 · Molly O'Shea, Shardul Shah
[00:26:10] S1: What is flapping airplanes? [00:26:11] S0: Well, you should definitely talk to Ben, Asher, and Aidan. It's the greatest army of 23 year olds who are building a vertically integrated business. It's sensational, the technology that they've built. It's astounding the level of interest they have from some of the key players in the industry, and I'm pretty confident they're going to break some world records, in the next couple months. [00:26:40] S1: Of what? [00:26:41] S0: You'll have to wait and see. [00:26:43] S1: No hints. [00:26:44] S0: No hints. Just some world records. Just a big world record. [00:26:48] S1: Oh, cool. I'll hold you on the whole account. Anybody else breaking records? [00:26:56] S0: Records are meant to be broken. Right? Wiz was the fastest growing company, it was the largest tech M and A of all time, and then the next year, it was supplanted. In my zip code of enterprise, I'd never seen a company, until the last six months, sell multi million dollar contracts, we're talking $5,000,000 to $15,000,000 contracts per year, within the first year of commercialization. So, records are constantly being broken, but flapping is working out something really significant. [00:27:28] S1: Damn. By the way, I interviewed Gilly Ronen at the start of the year, and he looks back and thinks that Wiz sold too early. They could have been valued a little bit more. He thinks they got a good deal.
00:27:28 · Molly O'Shea, Shardul Shah
[00:27:28] S1: Damn. By the way, I interviewed Gilly Ronen at the start of the year, and he looks back and thinks that Wiz sold too early. They could have been valued a little bit more. He thinks they got a good deal. [00:27:48] S0: Yeah, Gilly is a friend. He and I served on the board of O'Dolome together. We both joined the board of the seed round of Wiz. We took really different approaches to that investment from start to finish. I think we're both super proud of what they accomplished in that period of time, but we have so much belief in the entrepreneurs that it's very convenient to say that they sold early, but the truth is that both he and I believe it. I think public market security companies are approaching a trillion dollars of value. Again, I think that's in one direction. The category is resilient, it's permanent, it's why we've been focused on it for over a decade. But who the players are, I think, will evolve. As one example, 7AI, which is a company we invested in together with Ashim at Greylock, I think has one of the largest opportunities in Secur to rewrite the foundations and take on multiple different players and converge budgets as a type of solution, and that could not have been possible five, ten years ago. [00:29:00] S1: Do you think it's better to have a singular product and offering rather than multiple things changing all the time?
00:29:00 · Molly O'Shea, Shardul Shah
[00:29:00] S1: Do you think it's better to have a singular product and offering rather than multiple things changing all the time? [00:29:04] S0: It depends on the customer. Again, we used to talk about it like you don't get fired for using IBM. Some folks feel more safe and secure as a Microsoft shop. I think there will be an audience that feels more safe and secure as a Palo Alto Networks shop. Personally, prefer would a parachute with loose stitched fabric together or one clean sheet that has the latest and greatest material science at play. To me, the choice is clear, but different folks have different tastes.
00:29:40 · Molly O'Shea
[00:29:40] S1: Damn, Shardul! My god! Glad we got into the topic of cybersecurity. This is really good. How good is AI at real professional work? Mercor's AI Productivity Index, or APEX, tracks it with every major Frontier model release. Bill with partners like Harvey and Cognition. See where the Frontier actually stands at mercor.com/apex. Today's episode is sponsored by VCX by Fundrise, the public ticker for private tech, allowing investors of all sizes to invest in venture capital. Learn more at getvcx.com. Public is a multi asset investing platform where you can automate your investing with AI agents. Create your own custom agent with a simple prompt. Agents can monitor markets, execute trading strategies, and manage your cash across stocks, bonds, options, crypto, and more. Want to buy at market close and sell the next days open? Just tell your agent. Automate your investing at public.com. Founders scale faster on Deel. Set up payroll for any country in minutes, hire anyone anywhere, get visas handled fast, and get back to building. Visit deal.com/sorcery. That's deel.com/sorcery. As we talk about the new investments and the portfolio build out in this AI era, we didn't ask about numbers. I know I asked about valuations, but what are the kinds of checks that you guys are writing across stages?
00:31:07 · Shardul Shah, Molly O'Shea
[00:31:07] S0: Yeah, it can be as little as one over $100,000,000 There's nothing particularly unique or different about the size of capital. The decision making is fast. What we think most about is what are the needs of companies to appropriately capitalize and attack a market opportunity. [00:31:28] S1: Let's break that down further because there are companies that are very compute intensive and they need lots of money to cover GPUs or whatever kind of compute that they want. How do you demark that? How do you separate that type of company versus something that will need a smaller check? [00:31:42] S0: We have both in our seed funds, we have both in our venture funds, we have both in our growth funds. We don't have a strict demarcation. [00:31:49] S1: I think the point that I'm trying to get at is for new companies that are being created today, how do you right size or meet with the founders to be like, hey, you probably don't need $200,000,000 to start. You don't need to buy all these GPUs. Maybe you can rent some. Maybe you can do all this other stuff. Versus, I think for a while, people were just going after large checks because they think they needed to aggregate or consume so much.