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
00:09:59 · Shardul Shah, Molly O'Shea
[00:09:59] S0: you're noticing It's a super interesting framework. There is a question of, what is durable? And I think the challenge to that question is the world is moving so fast. When model capabilities are emerging from every year to every six months to every few months, the world is completely changing. And so, what could have been retentive yesterday may not be retentive tomorrow. And so, the evolution is changing in terms of assessment of durable business models as a function of the market environment. So, what doesn't change? We look for entrepreneurs that are really adaptable. An example of what I listen for in entrepreneurs is duality. I look for people who can hold duality with comfort. An example of this is to be very imaginative, like left brain creative, as you were, or I should say as your parents were, and you're born in this creative household, yet have detailed orientation and operational excellence. When people have a left brain, right brain together in one, it's really rare, and very profound and powerful. It enables adaptability. And so, when you can feel someone's duality, at least for me, it can inspire belief. That makes them more resilient to a market environment that's changing very rapidly and identifying the market or the business model or the product that might be more retentive and valuable to an end customer, whoever that is. [00:11:35] S1: How do you think about price sensitivity and valuations?
00:11:35 · Molly O'Shea, Shardul Shah
[00:11:35] S1: How do you think about price sensitivity and valuations? [00:11:39] S0: I don't. You don't? No, not really. I'm a University of Chicago economist, econ student, I shouldn't say I'm an economist. I believe in supply and demand, like Economics 101. Today, the private markets are still relatively small in terms of total capital and assets in the world. It's one direction there's only going to be more flow of capital into private markets. Although I do believe there will be more outcomes that are bigger on average and higher in terms of amplitude, it's still a finite set. And so, you're going to have more capital chasing relatively few outcomes. That means prices should go up. That's number one. Number two, it's perfectly rational to have irrational behavior in highly competitive markets. So, prices are high. Fact. Prices will get higher. That's a fact. The question is, are you partnering with the best entrepreneurs? It's not meant to be a truism, but we found at Index, one of our sins of omission is being queued on price. Whether it's GitHub or a variety of other mistakes that we've made, when we've been queued on price, we haven't exposed ourselves to the best outcomes. [00:13:03] S1: Say more about that.
00:13:03 · Molly O'Shea, Shardul Shah
[00:13:03] S1: Say more about that. [00:13:04] S0: Sure. When we're 25% off on price, it doesn't matter. Really? Yeah, absolutely. I think when we're 2X off on price, then the question is, what does someone else believe that we do not? And that's a really interesting opportunity for inspection, but it's not losing on price, it's not winning on price, it's a sense of belief in what the opportunity for a company is. But when you're within 25%, the answer is you should go for it.
00:13:32 · Molly O'Shea
[00:13:32] S1: This episode is brought to you by Brex, my favorite. You become what you spend on. And I refuse to spend my time on work that shouldn't exist. Expense reports, receipt chasing, and manual closes. The companies building what's next from Vercel, OpenAI, Anthropic, Granola, and Deepgram all made the same call. They all run on Brex. Brex is the intelligent finance platform that combines cards, expenses, and banking into a single stack with agentic finance built in. AI agents that handle expenses automatically, enforce policy before spend happens, and close your books in minutes. That's why Sourcery runs on Brex, so I can spend time on building and not busy work. It's time to get Brex AF! Learn more at brex.com/sorcery. That's brex.com/sourcery. Bye. From Handshake to Signature Faster, Harvey, the AI platform built for legal work, is trusted by 80% of the Am Law 100 and over 20% of the Fortune five hundred. Learn more today at harvey.ai. That's harvey.ai. AI needs more than chips. It needs power, land, and infrastructure. Zone develops next generation data center campuses, partnering with AI companies, site developers, and technology leaders to bring compute online faster and at scale. Zone is building the foundation of the AI frontier. Visit zonefrontier.com to learn more. That's zonefrontier.com to learn more. So Index sits in the bucket of mega funds. You guys are very large. As a fund that is also a bit under the radar, you you guys don't do many interviews, like the brand is like high quality, but it's kind of quiet. How do you think about competition? How are you competing with the likes of these highly marketed funds?