E222: Why 90% of Managers Fail Before Fund 3

29:17And I would probably say it's probably a little bit more towards being open. Again, it's not to everybody who's an LP in your fund. Right. You know, I think it's to a handful of folks that they may not even be your biggest check, but ones that, you know, you have a relationship with that you can be open with. Because the reality of it is everybody's aligned. Right. So, you know, your LPs and your fund for, again, at least 12 years. Right. Whether or not they decide to come in, you know, the next fund or not, you have to earn that. But if they're in your fund, it's a marriage for 12 years minimum.

29:55These are the conversations not many people have, certainly not through podcasts. But I think this is where the relationship alpha is, where the truth lies. One of the most prevalent memes in asset allocation today is that LPs are choosing to back fewer managers and more lead behind fewer arrows, to use the Google analogy. So there's this pressure to cut managers. how do managers balance the desire to have a trusted, long-term, sustainable relationship with LPs, while also, you know, at the same time where in the market, LPs are looking to chop managers? And how do you thread that needle? What are some best practices?

30:40That's obviously, I think, top of mind for folks. There's no silver bullet on any of this. my perspective on this, and it's, you know, I kind of put my old UTEMCO hat on, but also, you know, the ensemble hat at the same time. And the way I would answer this is, it is what it is, right? Meaning like, if you have an issue, whether it's, you know, performance, or, you know, within the organization, like, it's happened, right? It's the reality of it. and it's not the fact that like something like this surface because that happens to every firm right it's it's it's really the question of how do you address it and then how do you communicate it um and i think like the you know i think the advice i would give myself and i give others is you know i think understanding the like one that i think the gravity of what it is right And so you obviously don't want to communicate every little thing to your LPs, not because you want to avoid being transparent, but too, you want them engaged on the things that are the most important.

31:53Right. And if they have, you know, if they're managing, you know, I think you Timco had, I think it was like 16 Corvette VC managers and then some other, you know, legacy ones. If everybody is like, you know, every time, you know, I stub my toe or something, right, and I'm communicating that, the LP doesn't know when to engage on the things that are more important. Right. So there is a threshold of importance. Right. And as an example, right, like, you know, there's probably a lot of even at a small firm that, you know, there can be turnover at at the junior level. Right. So, like, do I communicate that?

32:26Do I not? Right. You know, I don't I'm not sure that that meets kind of the threshold. Right. But if it's someone more senior, then obviously, like that affects, you know, economics. It affects, you know, maybe some strategy things. So that may be something to, you know, communicate, you know, with your LPs. And then tactically, what you may want to do, right, just like a founder manages his or her board, you may want to have this conversation, you know, one-on-one initially, right, with the LPs that you have a very good relationship with, right, that you have this level of trust, right, and see how they react.

33:03and then, you know, and then bring them into the circle of trust where they're already in the circle of trust. And as you need to communicate that with other folks, they can help facilitate that or certainly give you advice, right? Meaning, you know, it's a serious issue for the firm. And, you know, you think it's like, you know, the most important thing going on in your life and in the world globally, right? Because it's the first time you've come up with, you've run across this. The reality of is, you know, for the LPs that have been in the business a long time, They see this, this is actually a more common issue, right?

33:34And so they can actually give you counsel on, you know, how serious this actually is and, you know, what to do in this situation. Again, you think about a founder, right? Who, you know, is in a situation of like, hey, you know, I had this co-founder, right? Support for today's episode comes from Square. It's all in one way for business owners to take payments, book appointments, man staff, and keep everything running in one place. Whether you're selling lattes, cutting hair, running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground.

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35:05I don't know what to do. This could kill the business. The reality of it is if you look at it, if you're a GP and you've invested over many, many companies across cycles, this has happened more than a few times in your broad portfolio. And so you can actually have the data and the, you know, case studies to suggest, hey, like this is kind of how you might want to manage this. Right. Just like GPs have a portfolio of founders, you know, the best LPs also have a portfolio of VCs that they can pull from and draw experiences from. I think that's probably like selectively, I think, seeking counsel with the folks that you trust very, very deeply.

35:49to summarize one is you don't want to be like the girl who cried wolf you don't have to send every every day and you're going to seem like you're not able to regulate your own emotions you want but you do want more transparency so probably the default human benchmark to of communication is probably lower than the ideal one so for some reason gps on average which are way below their kind of optimal level of communication. And also you want to make sure that your communication and the narrative that you're putting out, even if it's transparent, that you explain it in the right way. And you might want to test that on a couple of trusted circle before you kind of blast it out to 150 LPs.

36:33Yeah, absolutely. I go back to, you know, what are the best practices that you would give a founder on communication? Right. And, you know, it should be similar to how you communicate with your LPs. It really shouldn't be that different. Right. I mean, there's a little bit of nuance to it. But at the end of the day, you know, you want your founder to not text you on every little thing that, you know, is an issue that comes up in the business. You know, surface the ones that are relevant, you know, maybe on a quarterly basis. Right. With, you know, in this, you know, you'd like to have that discussion one on one prior to the board meeting.

37:11right if it really warrants it um and you also want a founder to have a plan of action right in advance you know not not not ask you hey what i do in this for this problem but say here's the problem this is my course of action um you know am i missing something right what is your feedback on the course of action that i'm planning to pursue one of these things that i've been thinking about is this concept of rooting things. So rooting investment thesis. So everybody might make the same buy decision to buy Bitcoin. But if I spent a year thinking about why, when it goes up and down, I'm not going to sell.

37:51So it's great if you bought Bitcoin at$100. If it goes up to$200 and then goes down to$140 and you sold, then you gave up the other$120 ,000, the other, you know the the thousand x and i think this rootedness is also applies to relationships and lps if you assume that on a long enough time horizon and i've literally talked to jonathan gray from blackstone cliff astinus from aqr about this very topic if cliff astinus and jonathan gray have had issues in their franchise i guarantee with enough time uh any gp on this planet will have those issues and the way that they they handled it also by over communicating meeting with lps But I would also add kind of the subtext of what they were saying is they built this trust also over time ahead of that.

38:37So if you think about it as the trust and the relationship as a tree trunk, you could strengthen the roots of that tree trunk through trust ahead of the crisis. Because just and no one wants to be transactionalized. And if you're only talking to your LPs when you need them or when there's a crisis, it's not going to feel good for them. And you're likely on that chopping block that we talked about. But if you build that relationship ahead of time, not only will they maybe not take capital from you, if there's a good market opportunity, the smart LPs, the very top, top quartile LPs might even double down on you and allow you to actually, you know, build, build, build your alpha and build your franchise during difficult times.

39:19it's easy to you know sometimes say these things this is very hard to do in practice right so it's not like oh there's like a there's an instruction manual you do this and you do this at this cadence i think it's just if you just think about it right as a priority for the firm um then you know it'll naturally kind of follow um you know some of the things that you do right it's an aspiration i guess in some ways right you kind of have to aspire to build partnerships with their LPs, even if some of those don't look like that today. Right. And then this, the second thing I'd say, and look, I, I was, I was guilty as this, uh, guilty of this when I was at UTEMCO as well.

39:57Right. Like, you know, I'm not, I'm not casting stones on, on, um, on anybody here. Um, but you may over communicate, you may do everything to try to establish a great relationship with your LP, but that LP may just not reciprocate. That's going to happen. right that's okay right um but i think like again if you're thinking about playing long ball and durability um you just kind of have to go the extra effort to recognize that hey they're you know they're managing a bunch of stuff not just your fund and not just venture and so you may be sending them all this you know all these different materials you know asking to catch up when you visit you know you know wherever they're based and they may not you know get back to you that's okay right I think making the effort you know making sure that you're thinking of them is in itself I think what it means to be a good you know a good partner right say all this stuff and I think some people's reaction is like I tried that right but I'm not getting any love back and that's happened to us also but every now and then you know you'll get a note and say hey you know like we you know one of the things that we pride ourselves on since we since we started was we will write a mid-year letter, right?

41:12Like, and it's, you know, the first one, it was, you know, it took like months to write it because we never wrote one of these before. It actually wasn't that it was like, okay, when I go back and read it. But we've made it, we've made the effort to write a mid-year letter every single year. And then, you know, what's the greatest feeling in the world is when someone that you reached out to multiple times doesn't respond. But on this latest one, you know, they say, hey, like, you know, great, great mid-year letter, right? Really enjoyed reading it. Right. And so like. It's it's you kind of have to you get credit for being active and being thoughtful and and being consistent.

41:51Right. You'll get feedback occasionally, probably not as much as you would like. But, you know, you should make sure that you're always acting like you're thinking of them. Right. I think that's that's kind of like an like, I don't know, like one principle to to to think about. So Rahul Mugdal, he's one of the greatest fundraisers alive, if not the greatest. He's raised$99 billion. And he tells a story on the podcast I did with him in that he talked to a$1.2 billion foundation. The CIO told him that just that past year, he got 934 voicemails, not calls, but voicemails from managers, not in his portfolio and not even talking to him about investing, about how he should invest.

42:39And this is just this very, I guess, visceral way of showing how busy LPs are, how overwhelmed they are. It truly is oftentimes not you. It's them, not you. Did you find you were at UTEMCO, which in many ways is today, I think it has 60, maybe 70 billion. It's endowment. It's one of, if not the most kind of coveted LPs in the world. Tell me about your lived experience as a LP at such a prominent endowment. So I joined, you know, right a little bit before the new CIO Britt Harris joined. Britt was actually in our office, I don't know, like a month ago. And he had come from TRS, which is the Teachers Retirement System of Texas.

43:32And so I think one of the things that I really give Britt a lot of credit is, I think, further institutionalizing what was already a great endowment. And what I mean by that is the way that you operate a$2 billion endowment versus a$60 or$70 billion endowment, intuitively has to be different. One of the exciting things about UTEMCO is that the size of the endowment grew very, very dramatically over the last 20, 30 years. Right. And there's a lot of history to it. But some of it being in Texas, this was money coming from the Permian Basin. Right. Like just some random historical context there. And so UTEMCO had this really amazing opportunity and task of not being short on cash and cash inflows, but making sure that it was being invested at scale, but in a very thoughtful and strategic way.

44:44And to do it, I'd say, relatively quickly. And as that endowment, I think, grew, I think the UTMCA board, I think, rightly recognized the need to really institutionalize and really helped evolve the endowment from smaller endowment to one that frankly rivals the size of a pension fund. I think UTMPCO is number one or number two, depending on how you measure it. But effectively, it's like the largest endowment in the world. And so when I was there, I was kind of thinking about what processes that we want to apply you know, across UTEMCO to bring, you know, an additional level of rigor, but also a way to invest more repeatedly and consistently.

45:38Right. And, you know, what that tends to mean is, like, I think formalizing, you know, the investment process, you know, how opportunities got surfaced. as the organization grew, making sure that everybody in different parts of the organization were informed on what was coming down the pipeline. Again, an endowment is not just venture. Not everybody who sits around the table is equally versed in what that means, how to invest. Not everybody's heard of Sequoia. And so making sure that there was a mechanism in place to you know, get everybody on the same page. And, you know, in some ways kind of standardize, you know, that process.

46:23You know, at the time, you know, you know, whenever you put new process in place, you know, and you're learning and you're figuring things out and doing something new, like there are moments where it's not that fun, right? But, you know, now that, you know, I, you know, I'm in the C.D. Ensemble, you know, founded the, you know, co-founded the firm, it's really important to put process in place, right? So you're not collecting a bunch of shiny objects for one thing, right? And then two, you can have repeatability in your performance, right? And the grandest scale is an endowment. Like the endowment is gonna live beyond me, beyond you, beyond my kids, everybody's kids for generations.

47:07That's the hope, right? And so the time horizon is almost infinite. And so we have to, you know, in order to fund, you know, my scholarship and then maybe my kids will go to UT on a full ride, too. You have to create like repeatability, you know, consistency. And that was kind of an important lesson that we applied to Ensemble. So, you know, we're, you know, I kind of bucket ourselves as an emerging manager. Right. But when we've put together Ensemble, we always had the mentality, again, of being aspirationally, like institutional, right? And so taking some of the lessons, you know, not from like, you know, True Ventures Fund 1, but from True Ventures Fund 5, right?

47:49And saying, well, you know, how do we look more like them? How do we avoid, you know, maybe some hard lessons? And so how do we make ourselves institutional? Vinod Khosa popularized a$0 million business versus a$0 billion business, how they function from day one. And you did see a simulation of dozens, if not hundreds of funds, venture funds at UTIMCO, including some of the best funds in the world. What were some practices that the very top GPs or the GPs that made it, let's just define it in the outcome, what did they do from the very beginning that was different from the ones that were even second or third quartile?

48:32The best managers were the ones that could give you a sense of, you know, what they were looking at, how they saw the world in a given moment. Right. So that goes back to like over communicating and transparency.

48:47So I'd say that's kind of, you know, the outcome of it was, you know, knowing kind of where folks were spending time, how they kind of thought about the world. You may not agree with it or, you know, you may have questions about it, but you had a sense of like who they were and like how they were thinking about things. I think the second thing that the best managers did was, you know, I think go out of their way to make sure that you knew what they were thinking, you know, meaning that they would travel, you know, countless managers would make the effort to travel, you know, down to Austin. Austin's a great place, right?

49:23But some of our managers were in Berlin or, you know, Tel Aviv, but they would make that trip be very proactive about, you know, certainly you can read it in a mid-year letter or an update, but more importantly, to build on that relationship, that personal relationship, and that takes effort. So I think the best managers did that. And then I think three, the best managers also made sure that the LP relationship was with the firm, in addition to maybe having a strong, you know, like a close relationship with a specific partner. And so when I would go and visit specific managers, I'd have the opportunity to go meet with like, you know, multiple folks on the team, right.

50:04I'd have exposure to the whole partnership. I'd meet with folks. And, you know, that way you can kind of, the LP has a sense of, you know, how is this, how are these, you know, how is this partnership functioning, right? Are folks on the same page? You know, how are they, you know, how are they complimentary? Not when you're diligencing them on whether or not to re-upping this fund or to invest in the fund, but, you know, how they're, you know, working together, you know, after you've committed to the fund, right, as they're deploying the fund. But those are just, I think, some of the ways that, you know, GPs, I think, have, you know, like thoughtfully, I think, worked with, you know, some of their LPs.

50:43It's downstream of this partnership mentality. If you have a true partner, you're not going to send them a letter and you're going to make an effort to actually meet with them. And again, like, this is a hard thing to do. I'm not again, it sounds like, like, you listen to this, like, oh, of course, like, but Conrad, like, you know, I'm a solo GP, right? Or Conrad, you know, there's only like three people on the team, right? Like, we had to experience all this also. And, you know, there's some times where we probably could, you know, communicated better, could have done things better. The reality of it is like, Like, again, this is aspirational, right?

51:21So you have to make this a priority and kind of work towards best in class, right? But if you're not thinking about it, then you're not like, you know, it's like you go to the gym, like, you know, and you're not working a specific muscle continuously. There's no expectation that, like, you're going to, you know, run faster when you go on the track or something, right? You kind of have to constantly cultivate this, even knowing that, you know, this isn't going to like excellence is not overnight. Right. It's this mentality. And we kind of we practice this ourselves. I think a lot of the credit goes to Gopi, who's my other co-founder, who's our head of data science, head of engineering, of taking this like mentality of building software.

52:05Right. Which is like V1 is not going to be like lights out. Right. V1 is probably going to be maybe pretty, pretty crappy. right? But we're going to constantly iterate. It's not a point in time. And this is kind of it. This is a constant iteration. And our aspiration is to get to like V infinite, where every version of it will continuously be better. I know for a fact, next week, we're going to be better. The product's going to be better than the week before. And next year, it's going to be like dramatically different. And so we have that mentality, not just in us building product for, you know, for ensemble, but ideally in how we're managing, like, you know, marketing, how we're managing, you know, managing relationships with their LPs, like we're nowhere, we know we're not the best.

52:51We're far from it, I think, in a lot of different ways. But we're constantly looking inward and saying, hey, like, what can we do better? And then having the expectation that a lot of the things we do aren't going to work, and they may fail. But that's not an excuse not to constantly try to, you know, try new things to push the boundaries and do better. If you think about it, all venture performance or any asset class is relative. If you think of this as relationship alpha, so you have your returns, you have your information alpha, you have this relationship alpha, a little bit goes a long way if your peer group is never flying to, maybe Austin's a little bit easier, but maybe it's North Dakota or Alaska and you're flying once a year, that goes a long way.

53:37So a little bit goes a long way as well. So let's talk about Ensemble, your fund. Mutual friend told me that you have a 12x mark on your fund one. First of all, is that true? And two is tell me about how you went about constructing fund one. Well, one, yes, like we're very proud of the performance in our fund one. It was our pilot fund. And, you know, we had the great fortune and maybe misfortune of like of, you know, having a very novel concept at the time when we raised the first fund in 2018, which was around this idea that you could bring a product engineering culture and mindset to a venture fund.

54:23Right. So, you know, obviously that means being data driven, but really having this very different approach of in order to get better. Right. We're going to go build software. We're going to go build product. Right. We're not going to throw more people at it. Like we're not going to we're not going to we want to grow exponentially or step function through software versus grow linearly through people. And so at the time, right, the use of software and data was not super obvious. And so it was a very difficult fund to raise, right? Kind of pass the hat. It was a very, it was also a small fund, but we had the opportunity to go incubate this actually within Kauffman Fellows to really experiment, test this out.

55:12And our sole objective in that phone one was to really prove that we could use data and use software and product in a way that could significantly change how a venture firm would function, and then in turn, deliver better performance than, you know, like, you know, the typical venture fund, right? So that was kind of the thesis, right? Could we radically, you know, implement more product engineering into a venture firm? You know, did we expect it to be, you know, like a 12x fund? and hopefully like, you know, you know, greater than that, which we think it can given some of our positions, it's it outperformed our kind of wildest imagination, right, of, you know, of very, very specifically, you know, finding great teams, right, not just great founders, you know, early, right, through a bunch of different signal that we could measure and track.

56:14and then also use that early advantage to translate into collaboration with other funds and then earning access. Right. And so that was the thesis that we proved. We had 12 investments. I think it was like five or six of the 12 ended up being ended up companies being valued over a billion. Right. So we had, you know, big Zoom in that portfolio as an example. We have Perot, which is a prominent indie in that portfolio. And so that was, I think, the initial proof of concept that allowed us to go think about, you know, the natural question after that is, well, how do you scale this strategy? Right.

56:56You can you scale this strategy? Right. When you're writing bigger checks, can you actually earn bigger access? Can you actually collaborate with other funds? Can you have this kind of repeat hit rate in the next fund? And so that thesis around using data and product and engineering has evolved significantly since our fund one. And the best reflection of that is from, you know, the founders, we're now a team of 12. Half of the folks on the team are data scientists and engineers. And then the other half are investors and like folks in operations. So people kind of say, oh, well, every fund is a data driven fund now.

57:46Like, I hope that's the case, right? Because I think that'll actually deliver better allocation of capital. So I want more and more folks to be data driven. But, you know, two, like there's a spectrum of what it means to be product engineering focused, you know, fund. And, you know, we've extended, I think, that software advantage into every aspect of the venture fund. So not just on the sourcing side, but also in the winning and value add side. We've built products to help our founders access customers, you know, find great people to hire and then, you know, other functions as well. Give me a very specific example of how data helps you make better investments.

58:27The simplest way to describe it is thinking about how venture has been done, you know, since the very beginning, right? And the evolution of that, and maybe the minimal evolution of that, which is historically, you know, when venture first started, you put your firm on Sandhill Road, right? And, you know, founders, you know, there weren't that many firms. And so, you know, founders would find out about X firm and go visit you. Right. Over time, that's evolved to, you know, more nodes. Right. In other cities and other places. And, you know, founders don't necessarily just come to specific firms, but you basically find opportunities based on folks in your immediate network.

59:11So maybe you used to work at Stripe or maybe you've been in venture for X number of years, had companies went public. And so you're backing the folks that are leaving those companies. Right. But it tends to be a very kind of finite network of folks and you really don't know where to hunt. And so you're you know, think of it almost like a random walk. You're top of funnel. You're meeting a bunch of folks. And, you know, very few of them end up translating into investments. And the headline of that, and I always found this really odd, is, you know, VCs would always say, hey, you know, hey, you know, and I was like, you, Tim, like, hey, Mr.

59:51LP, you know, I met 10 ,000 companies or 1 ,000 companies last year. Right. And I made one, you know, I made one or two investments. Right. Out of meeting a thousand companies. And you're like, you know, and they're like they're so proud because it demonstrates the rigor that they have. And, you know, how how high a bar that they have. The reality of it is that conversion is pretty bad. If you think of any other, you know, sales organization, right, you get fired, right? If you had to meet a thousand people and you signed up one customer or, you know, like a PE firm doesn't work like that, right?

1:00:28And so the question is, is, well, how do you actually change that funnel very dramatically, right? Because the reality of it is you don't want to be spending time aimlessly meeting folks, right? Even folks that get recommended to you, right? Because you still have that conversion rate. The reality of it is you want to redistribute your time, right? from the low value activities of first meetings to the high value activities of building the relationship, finding them early, and then positioning yourself to win what is, you know, very, very competitive, you know, deals. And so it's shifting kind of what that funnel looks like from, you know, a pyramid to maybe, you know, a diamond in terms of like time allocation.

1:01:08And so what we've done is build a platform internally, we call it Unity. We have offshoot products called Discovery. You know, we have a value add product called GTM 2.0. There's multiple products that we have internally. But within Unity, what we're trying to do is dramatically change, you know, where time is spent. Right. So if you can actually refocus all of your energy on a smaller set of opportunities that have a higher probability of generating a big outcome, not a guarantee, then you can fundamentally reallocate all of your time to diligencing these opportunities and also winning them. And so the question is like, well, what does that look like?

1:01:53And so for us, you know, that means not just having a box checking exercise of, hey, we, you know, we use ChatGPT or we buy a bunch of data from so and so that anybody can do, right? It means, you know, building things, you know, vertically integrating, right? So building our own product internally, right? Like we don't, you know, there's nowhere else to get kind of what we do, right? because we've actually built all the infrastructure internally, right? Not just, you know, the application layer. And that also means fundamentally building new process in the firm, right? So how we meet as a team and how we run our process looks very, very different than what I did at Norwest and also on Bain Capital.

1:02:40We run it like a software company, right? Every month we know what opportunities that we're going to be focused on. We're probably 70 % outbound as a result of that. And then I'd say the latest kind of evolution of the firm is we've actually changed how we've hired. Right. And so that's probably the biggest distinction between, you know, at least outside looking in of what it means to be a, you know, a data driven fund is that we fundamentally re-architected what the organization looks like. So not only is my co-founder, one of my co-founders, you know, head of data science, head of engineering, right?

1:03:16Gopi came from IBM Watson. But we've hired, our most recent hires have been, you know, two of which have been on the engineering side, right? And so half of us are on the engineering and data science side, right? It's not a box checking exercise to say, okay, hey, you know, we have the enterprise license for ChatGPT and we've hired a data scientist, right? Like we're good to go. like we're data driven and we're going to have the advantage, right? The reality of it is like, you're constantly iterating, you're constantly building new product. And, you know, the new product that we'll release at the end of the year, like we just thought about six months ago, right.

1:03:54Or even three months ago. And so we're constantly like, you know, innovating and building new things internally, you know, versus, you know, like waiting for ChatGPT to release, you know, ChatGPT 5 and, you know, or doing a deep research report or something, right? Like, great. Like anybody can go do that, right? It's fundamentally changing how your investment process is, your decision process, and then what your organization looks like. Give me some of your secret sauce. What is some data that you're looking at that narrows down your top of funnel dramatically that you look for investing at the early stage?

1:04:30People always ask that. I'll give you a couple of examples of it. It's not like a Harvard Business School study, right, which is, you know, you know, the person that's like, you know, left handed that went to Stanford that, you know, you know, came from, you know, an immigrant family is going to be like, you know, the amazing founder, right? Like, it's not formulaic like that. The reality of it is there's a bunch of different signal. Think of it as like stacking alphas, right? It's where each individual signal may not be that relevant, but the amalgamation of multiple signals actually drives meaningful alphas.

1:05:08That's like point one, just in terms of like philosophy. The second one I think is contextualization. And that's what, you know, LLMs and what AI has really helped accelerate for us. meaning, you know, if you're building a company that's in the consumer world versus building something in the healthcare world, selling to, you know, health systems, how you build that team will look dramatically different, right? You could, each team could be very, very high quality. You know, both founders could have, you know, come from, I don't know, like Stripe or something, right? But how you build that team out and what that team looks like, and maybe what your co-founders will look like will look dramatically different, right?

1:05:50And it's intuitive because you go to market motion for a consumer company is very different than a healthcare AI company selling into health systems, right? And so because we built the infrastructure, all of our data is not just a stacking of a bunch of different signals, but it's the contextualization and knowing and understanding what a company does, right? So saying, hey, this is a great team, but not a great team for a consumer company, right? Or, hey, this is actually a great team within healthcare, within the AI, and also relative to the stage, like you have to contextualize it. So that's kind of like, I offer that because it's an important framework, right?

1:06:33And then like on the specifics, like one example that you can actually track and measure that folks kind of use intuitively, and I mentioned this earlier, is like, did people on the team work together in the past? Right. And so like, you know, what will happen in the traditional sense is you'll meet a founder and then you'll maybe meet the head of engineering and be like, oh, like awesome. Like, oh, like no, no wonder there's great chemistry that they, you know, seem to work well as a team because, oh, they had worked together for four or five years, maybe not in the last job, but, you know, in a prior job at like Facebook or something.

1:07:09Right. So you're like, oh, that, that actually is great. That makes a lot sense, right? There's probably less team risk there. Because, you know, they've known each other, they worked each other, they kind of know, you know, the skeletons in their closets or something, right. But it's kind of it's like, you know, ex ante, right? After the fact of you meeting the founder, what we've done, and it's not the only thing we look at, and sometimes it's less important. But you know, when founders choose to come together to work together, or their first, second, third hires are folks that they had worked together in the past, there's a lot of interesting signal where A players tend to want to work together again because they have the context of knowing how people work in high-pressure environments when the company's growing really quickly, or they're handpicking the best within a certain group.

1:08:05We do a fair amount of A &D or defense investing under the broader umbrella of deep tech. And you see folks at Andrel kind of leave together in pockets. Andrel may not love that, but you're seeing someone who's leaving as a founder being very selective about the folks that they're bringing to the team. Right. Maybe an old colleague, not in the same group as this other group at Andrew. Like we've seen that, you know, across the board. The reality of it is like you can actually measure that. Right. The challenge is, is that a human just can't do that at scale. Right. But, you know, building a product, you can measure that one attribute, but you can also look at a thousand attributes and you can do that across, you know, 100 ,000 companies.

1:08:59And you could do that across, you know, 30, 40, 50 million people. Right. Because the beauty of software infrastructure is that it's infinitely customizable and it's infinitely scalable. Right. So we don't have to go hire and build a giant team. Right. Which is like people are linear. Right. Whereas software and, you know, and data, you know, can be exponential. And it's at the very least, it's a step function. And so that's kind of our framework of how we solve problems. Awesome. Well, this has been a fascinating conversation. I appreciate you jumping on and looking forward to continuing this conversation live.

1:09:38This is great. Thanks, David. Thanks for listening to my conversation. If you enjoyed this episode, please share with a friend. This helps us grow. Also provides the very best feedback when we review the episode's analytics. Thank you for your support.