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.
00:32:17 · Shardul Shah
[00:32:17] S0: Let's try to separate two parts of it. One is a healthy conversation as a business partner. There's different styles, like you can be prescriptive, which is you don't need, you should do, which is an approach often people take as investors. They have the credibility and skill to do that because they may have operated a company before. My style, which is not for everyone, is probably a little bit more Socratic. Why do you think you need all that money? What are you going to do with that? What's your motivation to? And maybe that's the right answer, or maybe it's not, but I try to help someone get to the best judgment call and decision for their business without a personal agenda. It's really what's in the best service of a company. Separately, think there's something super interesting that's happening right now that I found completely counterintuitive, again, as a UChicago economist, which is the higher the price and the more capital raised, the more likely an entrepreneur is to recruit talent. And the reason it's counterintuitive to me is it defies basic arithmetic. If I were an employee, I'd prefer shares at a lower stock option price because I'd have a lower tax bill and I'd have more upside. But, what's happening in the world today is like a luxury product effect, where a higher price implies scarcity, and so there's actually more demand, which drives conversions. And this is a phenomenon that I'm not totally comfortable with because, again, it's not fulfilling basic arithmetic, but that I'm learning to accept and recognize and coach entrepreneurs in a slightly different
00:33:55 · Molly O'Shea
[00:33:55] S1: I see. Maybe this is a trick question, but what is the largest check that you guys can write without risking or hurting the fund performance?