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?
00:15:35 · Shardul Shah, Molly O'Shea
[00:15:35] S0: Thank you, I hope you're going to help us with that. The heart of Index is humble. We really put the emphasis on our founders. They deserve the spotlight. That results in a bit of discomfort with putting the spotlight on ourselves. And in the past, thirty years ago, when we were just getting started as a firm focused on Europe, a market that was underappreciated by, great investors on the West Coast, we had an underdog mentality. I think in light of the returns that we've generated and the relationships we've forged with great entrepreneurs, we're no longer an underdog. But we need to grow out of the discomfort of playing that role. And so, we've got more to do, in our own way, that's authentic. It's not at all guided by competition and how they do or don't participate. I think the core of it is to be authentic to ourselves. [00:16:33] S1: If it's not price, what is the hardest part of winning deals in this crazy market right now? [00:16:39] S0: I think it's always conviction. Can you find belief in an entrepreneur? For [00:16:45] S1: me,
00:16:45 · Molly O'Shea, Shardul Shah
[00:16:45] S1: me, [00:16:47] S0: part of that is related to the connection that I feel. Again, at Index, we're an equal partnership, so there's very little ego, there's very little credit on who led what investment, which is why, again, we're so proud of having so many different partners participate in our outcomes. It's about finding who's going to have the most connection with an entrepreneur to find belief to drive the investment. I'm really idiosyncratic. Not everyone connects with me, nor do I connect with everyone. So, finding that connection is the hardest part. Once we have it, we move fast, we move aggressively at the appropriate price, and we can win. [00:17:22] S1: What's a typical partner meeting like?