The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:43:37 · Venky Ganesan, Harry Stebbings
[00:43:37] S0: And Sarah and Mike are amazing. Amazing. No no question about that. You know, I spent a lot of time with them, with LPs. And I think, first of all, a lot of them have two complaints. One, they're like, enough TV over PI. I need to get some DPI. So I think if you deliver DPI, I think you're already in the right side of the table. And I think it's easier to come back to them to ask for more capital when you deliver DPI. Right? So that's one. Second, I don't think people can afford not to be in the AI economy, and I'll tell you why. Most of them have much bigger private equity portfolios than they have venture portfolios. Like in many cases, three to four x exposure to private equity. A lot of private equity over the last few years have been software, and those positions are directly impacted by AI. If you want to hedge against your private equity portfolio, you've got to be in the AI economy. And so that's the piece that forces them to come back. So if you are someone who has given people DPI you can credibly make the case that you are gonna be a player in the AI economy, I think you can raise money from LPs. [00:44:43] S1: You gotta have given DPI. We see companies scale faster than ever. As we said, we see prices that are very high. How do you think about the internal conversation of, woah, x company is now valued at 10,000,000,000. Can we take some chips off the table? What does
00:44:43 · Harry Stebbings, Venky Ganesan
[00:44:43] S1: You gotta have given DPI. We see companies scale faster than ever. As we said, we see prices that are very high. How do you think about the internal conversation of, woah, x company is now valued at 10,000,000,000. Can we take some chips off the table? What does [00:44:58] S0: that discussion look like? And any lessons on how to sell successfully? I think you have to step back and look at any situation in which you have a 30, 40x on your dollar and ask yourself, should I take some off the table? And I think the right time to do that is when the entrepreneur is thinking about taking some right off the table. And I think if you were to work in conjunction with them... [00:45:24] S1: What if it's not material? I'm I'm... Fuck this. I'm using this as a consulting lesson. You can invoice me later. I have a company where we are like 40 x up. Yeah. And you're like, wow, wow, fantastic. Should... You got a 100 k in there. Return 4,000,000 back to a $100,000,000 fund that it's in. I don't think it's a
00:45:24 · Harry Stebbings, Venky Ganesan
[00:45:24] S1: What if it's not material? I'm I'm... Fuck this. I'm using this as a consulting lesson. You can invoice me later. I have a company where we are like 40 x up. Yeah. And you're like, wow, wow, fantastic. Should... You got a 100 k in there. Return 4,000,000 back to a $100,000,000 fund that it's in. I don't think it's a [00:45:40] S0: it's a size issue. It's just to me, like, look, lock in the gains. If you go back to the SaaS portfolio in 2021, there were valuations done at, let's say, pretty high prices. If people had taken 10%, 15% off the table, even if it's small, it locks in, allows you to go long. The other thing I tell entrepreneurs is that just like when you take some trips to the table, you're more likely to go long, so are we, right? Because we can now afford to go along with you. And so it aligns. And so to me Will you ever settle with your position? Generally, no. Not unless the company is being sold. Not interested. I think that's a different situation. I mean, the only time I think is like if you do not have a relationship with the founder and you've... Like, that's that's different. But if you... As long as you are and you're in, you're gonna ride... We'd ride [00:46:25] S1: and die with our founders. Jason Lemkin says on the show, you know, whenever a founder leaves, like, I ride it to zero. When a founder founder's is gone, gone, it's zero, zero, zero. Do you find it to be the same when the founder leaves? You're like, we're supportive, of course, and we're still here, but, like, mentally, you're like, that's a zero?
00:46:25 · Harry Stebbings, Venky Ganesan
[00:46:25] S1: and die with our founders. Jason Lemkin says on the show, you know, whenever a founder leaves, like, I ride it to zero. When a founder founder's is gone, gone, it's zero, zero, zero. Do you find it to be the same when the founder leaves? You're like, we're supportive, of course, and we're still here, but, like, mentally, you're like, that's a zero? [00:46:42] S0: I mean, my friend and your friend, Nikesh Arora, would disagree with you and say he goes on founder mode. I mean, look. There are people like Nikesh, G2 Patel at Cisco. They go on founder mode as an exec. It's sort of an insult to people like that when you say, oh, the founder leaves. Look at the situation. Who replaced them? Founder mode is a mode of working. It's not it's not tied to anyone personally. I think anyone can be a founder in terms of the founder... Working in the founder mode. And I think some people do. And I mean, Frank Slootman. Frank joined Data Domain, Snowflake, ServiceNow. In each of those places, he acted like a founder. He didn't act like an exec.
00:46:42 · Venky Ganesan, Harry Stebbings
[00:46:42] S0: I mean, my friend and your friend, Nikesh Arora, would disagree with you and say he goes on founder mode. I mean, look. There are people like Nikesh, G2 Patel at Cisco. They go on founder mode as an exec. It's sort of an insult to people like that when you say, oh, the founder leaves. Look at the situation. Who replaced them? Founder mode is a mode of working. It's not it's not tied to anyone personally. I think anyone can be a founder in terms of the founder... Working in the founder mode. And I think some people do. And I mean, Frank Slootman. Frank joined Data Domain, Snowflake, ServiceNow. In each of those places, he acted like a founder. He didn't act like an exec. [00:47:19] S1: By the way, Nikesh, please don't kill me. I love you more than ever, and I've always loved you, and it was Venky that said it. It wasn't me that said it. I'll give you Venky's address later. I'm gonna get brutally You're definitely here. I'm terrified of Nick Ash. Are you kidding me? So, yes. That's very funny. Can I ask you then? We see so many sales now. It's like, you know, Fei Fei Li sells for 8,200,000,000. It's like, it's amazing. A phenomenal exit. Well done to everyone involved. Yesterday's news. I mean, OpenRooter's so yesterday's news. We've all forgotten about it. And I don't mean this glibly or any... I know that sounds so child of this ecosystem, which I'm not, sadly. Are we just gonna see a load more exits now?
00:48:03 · Venky Ganesan, Harry Stebbings
[00:48:03] S0: Yeah. I think you're going to see because I think there's competitive pressure. There is also this notion that we have a regulatory regime that will let you do M and As, right? There's been a backlog of M and As that was supposed to happen. Didn't happen because we had a different regulatory regime. There's this notion that this may not continue forever. So one, you have a window of time. Also have competitive pressure. When AMD buys a real world model, does NVIDIA need to do something? Do other people need to react? And so I think every acquisition forces a bunch of competitive dynamics we have to consider. And then people have equity prices, right? AMD is now a trillion dollar company. Dollars 8,500,000,000 is still, I think, less than 0.1% of the company. So you can do stuff because of this combination of things. And then the notion that, you know, anything that lets you catch up in the AI view is very high. Like, did Meta do a good job paying up for scale? I think they would say, yeah. If you look at the market cap ad of Muse to Meta, maybe that 15,000,000,000 seems cheap now. I'm also, like, so happy for Zuck. It feels like he's kind of almost got like [00:49:08] S1: a cofounder in Alex Wang who he can delegate some of the shit to. Do you know what [00:49:12] S0: I mean? I mean, Zuck is a great capital allocator. Go back and look at the history of his capital allocation has been phenomenal. Best best of CEOs. He bought Instagram for a billion dollars.