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.
00:07:11 · Molly O'Shea, Shardul Shah
[00:07:11] S1: Or they don't know how to define revenue. [00:07:13] S0: Or, yeah, even more basic, right? But I think there's an importance of the fundamentals of building a business, but it all starts with the people. [00:07:23] S1: So, let's get into that. What are the key traits that you're looking for in these founders? What are those indicators? [00:07:27] S0: I don't have a starting point of these are the traits that I look for. I really try to listen to an entrepreneur. I'm not listening for something. I'm not looking for a pattern. I understand the utility of patterns. It supports industrialization. If I could define three patterns, then I could put thousands of entrepreneurs through a filter and make decisions, and I could place statistics at scale. For some people, that's really fun and exciting. To me, that's not a craft. Now, I'm not saying it's a dark art and it's just intuition and a gut instinct that no one but us can appreciate, but the reality is we try to really listen to who someone is, like what are their defining moments in their life that determine their motivation and their grit and their ambition. And sometimes people evolve and change, right? Just like you're thinking about how a podcast can generate a business that supports cash flow so that you can get back to the roots of family office, sometimes the world opens up with more possibilities, depending on the path you take. I think to be a real business partner to someone, it starts with listening versus preconceiving who they have to be in order to have success.
00:07:27 · Shardul Shah, Molly O'Shea
[00:07:27] S0: I don't have a starting point of these are the traits that I look for. I really try to listen to an entrepreneur. I'm not listening for something. I'm not looking for a pattern. I understand the utility of patterns. It supports industrialization. If I could define three patterns, then I could put thousands of entrepreneurs through a filter and make decisions, and I could place statistics at scale. For some people, that's really fun and exciting. To me, that's not a craft. Now, I'm not saying it's a dark art and it's just intuition and a gut instinct that no one but us can appreciate, but the reality is we try to really listen to who someone is, like what are their defining moments in their life that determine their motivation and their grit and their ambition. And sometimes people evolve and change, right? Just like you're thinking about how a podcast can generate a business that supports cash flow so that you can get back to the roots of family office, sometimes the world opens up with more possibilities, depending on the path you take. I think to be a real business partner to someone, it starts with listening versus preconceiving who they have to be in order to have success. [00:08:41] S1: I think Marc Andreessen historically once said that the only industry left once AI has taken over will be venture capital.
00:08:41 · Molly O'Shea, Shardul Shah
[00:08:41] S1: I think Marc Andreessen historically once said that the only industry left once AI has taken over will be venture capital. [00:08:51] S0: Right? It sounds like mathematicians from, I know we don't want to date this, but from a few weeks ago when OpenAI released 700 plus papers, and a number of mathematicians were concerned with the PhDs that they're working on. The last field to be taken over is, of course, ours. But, I think there's an opportunity around relationships and taste and judgment that can persist and be durable, but we're transforming our business with AI, for sure. [00:09:17] S1: So, you mentioned, and you guys have invested in a handful of these AI companies. It is the time and place, you cannot ignore it. It is a major focus. I'm really curious, of the conversations I've had, it seems like the behaviors of these companies were very early on. A lot of the behaviors of this early inning is it's a high testing environment, low retention. I don't know if you're seeing that. I don't know what the key kind of, if I you can deduce any of this down to, all right, we're in this point in time and this is what to expect, or here are the outliers that's what they're doing. But it does seem like we're in a very low retention, high testing environment. I don't know if