Martin Mignot, Partner at Index Ventures: How founders are building and leading companies in the AI era

24:27Martin Mignot:Most firms are the biggest firms. They're very much US firms. Maybe they have sort of satellites in Europe. You mentioned earlier how Index is one global multistage team. Yeah. And that's very unusual. It is, yeah. What's the thesis behind that? The view is that frontiers don't matter. I mean, it may be changing right now, there may be a different discourse right now, but our view remains that with technology, frontiers have kind of disappeared. And it's all within the Western world. It's just one whole interconnected ecosystem and that the best founders can come from anywhere. And that was the original thesis when we started Index.

25:15We had this website with these little graphics where it's like, there's opportunities everywhere you look. That was the little thing that was moving at the bottom. And that's how we started. Our first successes were in the Nordics and in the Baltics. You know, Skype and MySQL and King, they were all in kind of forgotten region at the time. No one was really looking at these places. And that's what got us going. And so that was the core thesis. That's how we got the first success. And that's remained true. And so that's why we want to look at all those opportunities. But again, we want to invest in the very best global companies or the very best companies within that ecosystem.

25:54And what we see with a lot of these companies is that they can come from anywhere, but their aspirations are global. And so very quickly, regardless of where they start, they will want to operate in London, in Paris, in New York, in San Francisco. And having one team that is fully aligned and in the flow and in sync on all those companies and all the opportunities in real time gives us a massive advantage both to see these companies before anyone else sees them, but also to win the entrepreneurs over. You know, like when you have these European teams that, you know, maybe they're all in Europe, maybe one is in Europe and the other is in New York or in San Francisco, we can be with them wherever they are.

26:42We can meet them where they are and we can then help them get to where they want to go. And I think that's the most beautiful thing at Index when it really, when we were in full focus one team mode, that we can really all mobilize to either win an entrepreneur over or help him or her be successful as one team across all those deals, which is where the opportunity always is. The biggest company, by definition, will want to tackle a global market.

27:13Martin Mignot:And it's definitely something I notice looking at other firms, is that there's sometimes geographic tensions or there's strange structures in place. And so I can really see a lot of the advantages. What is one of the biggest disadvantages? Because people talk about focus, people have sector or geography specialisms or expertise. You sit across the whole Western world, every stage. What are the disadvantages to being one multi-stage global team? It's collaboration and information context sharing. There is an information transmission cost, essentially. it takes a lot of effort a lot of time to stay very aligned, very close to each other so we there are a few things that we've done it's been a 30 year journey to get there so we've put a lot of things in place to make it as seamless as possible culture is a really important one and so we have certain values winning as one team is probably the most important of those values values, which means, just to give an example, whenever we look at a new opportunity, we meet a new founder, we always have this concept of fielding the best team, which is based on the network, so who knows that person and their team and the investor around, which sector is this company operating in, and where is the team based, those are the three dimensions that we look at.

28:48Then we pick, okay, who are, for each of those three dimensions, who are the best people within index to, you know, spend time with the founder and try to build a relationship? Which means that for every single company, it's a different sub-team. There's no hard silo. Like, it's totally agile and nimble. And it can be someone from, you know, who is in London and someone who is in San Francisco and a fintech expert who is in New York. Like, it can be, every single one is unique, which is amazing in terms of founder experience. But obviously, you have to have maximum information sharing, trust between people, and make sure it always stays top of mind.

29:31Because this model only works if everyone is fully aligned, that there is no sharp elbow, that there is none of that. It's really everyone as one team in service of the founder and the opportunity. So you have to have that. And then you have to spend time together. So we spend a lot of time together multiple times a year. We go to San Francisco, New York, and London, everywhere. Those three places are equally important to us. You have to pick up the phone. You have to bypass the async communication channel. You have to pick up the phone and have this live conversation at every level. It doesn't matter the seniority or the location.

30:13You have to do it. And so it takes a toll. But that's the price. But when it works, it's just incredible. And the last thing I would say, I think AI is going to be a massive help for us. I think one of the challenges in the old world was that everyone was working very hard, building their own network, building their relationship, having all this information, all this knowledge. we all lived in silos, inside people's inbox, inside people's conversations and all that. With AI, suddenly you can have, you know, in an ideal world, we're not there yet, and there's obviously compliance questions and privacy questions.

30:50But imagine if something, you know, if everything was by default saved and recorded and searchable and visible to the, you know, the mother brain, then suddenly all those relationships, they would become, you know, much more easily accessible and you would have to spend a lot less time sharing that context proactively. Because when you're sharing, you don't exactly know, like 90 % of what you're sharing is not relevant to the other person. But this could reverse that, you know, the cost of sharing would be zero because it will happen. And people will only pick and get the information that they themselves precisely need at the moment.

31:26So you could expose much more of your knowledge and of your network and be much more selective and much more effective for a lot less of work. So I think the AI is going to make our model a lot, you know, even more powerful and effective.

31:41Martin Mignot:I want to talk about, linked to that, I've interviewed a lot of ex-Revolute founders. And they all share these really clear, similar cultural traits or personality traits. It's like high bias to action, execution orientated, very, very analytical. I've probably interviewed a dozen ex-Revolute founders. And that is really clear. what traits or I don't know cultural elements do you think link or unite index partners you know what is it about you know you and your fellow partners that you think you all have in common yeah well I think the the global mindset and approach is is you know is number one it's the clear one we all from look at our background it's really kind of all over the place we we've lived in many different places.

32:25We come from very different nationalities and origins and we've studied in very different places. So we have a lot of very different experiences that give us hopefully very different viewpoints. You know, like we're not, definitely not the Silicon Valley siloed. You know, we know one thing, one archetype type of firm. You know, it's much more, we have this global viewpoint, which I think is what unites us in some ways. Funnily enough, you know, That kind of diversity of viewpoints is what unites us in many ways. I think we are extremely competitive externally, but extremely collaborative internally.

33:05I think we work as one team, right? So we all share the same economics. We all have the same interest in every company being successful. And so there is none of, you know, this is my deal, this is your deal. That just doesn't happen, right? So this is just not how we operate. And so I think those things are critical. And then the third one is it's all about the people, like this idea of the founder relationship, like showing up as you are and building those really deep personal relationships that go beyond just the transactional, just the data, but really kind of getting to know people their entirety, what really drives them and what really motivates them and what really makes them tick and what is their worldview, what is their world model, beyond just what they're doing right now and the tactical.

34:05I think that's the other dimensions that we will share.

34:09Martin Mignot:And I want to touch on Revolut more broadly. Yeah. It's one of, if not the greatest investment probably in your portfolio. You invested as a, I guess, relatively junior in your career. you were a principal at the time. I'm curious if, and actually at the time it was probably quite contrarian. It probably wasn't, I don't know the exact economics, it probably wasn't really hot in the way that lots of companies are today. I wonder if there's something in there about you being a sort of young, fairly new to VC. And so my question is, if that deal came across your desk today, as a much more experienced, mature VC, do you think there's a chance that you would not have done it?

34:46I hope not. I hope not. I ask myself the question a lot, and I think that's such a brilliant question and such an important one. One of our values is to keep a beginner's mindset and forgetting both your successes and your failures, which is tricky because obviously all your career is built on pattern recognition. But at the same time, you need to know there are moments where you need to throw all of that away and and just be naive and optimistic and and go for it and i think you know i actually posted something about it uh last week i was i was i remember i was watching a few months ago this barry dealer interview uh i think it was invest like the best and where he was sharing how he got his start and the way he got his start was he was new in this studio and they had this project of creating some new TV format that everyone thought would be an absolute disaster.

35:46And so no one senior wanted anything to do with it. So no one would touch it. So he played it on his desk and he was like 23 or 24, had zero experience with anything. And he ended up leading this project. And he was like, of course I'm going to do it because I've got nothing else to do. I've got nothing to do. No one knows me. I've got no track record and other things, I'm going to do it. And obviously, he did a really good job, but he became incredibly successful. And that was what really kind of took off and started his career. And so I think that's one of the main advantages that young investors have, is that they have nothing to lose.

36:21And so my recommendation to them would be to take maximum risk and go for the known consensus, the contrarian, the difficult. And investments can be contrarian for all sorts of ways. The founder may be not the type that people like. The business model may not be fully there. And they could be also, they could be very competitive as a market. But finding those things that are hard and where both your senior partners and also the other senior partners that just won't touch it because it's just not, you know, it is too risky for their career or they just have too much scar tissue, I think is really critical.

37:02And as a senior investor, I think this question, I always have that in the back of my mind, which is, am I being too cautious? Am I going for... And now, whenever I invest in something that feels too good, I double-check myself. Like, okay, there's something there. It's too good. If it's too good, then it should be massively competitive and priced, you know, so the price should be really uncomfortable. But if nothing feels uncomfortable, then there is something that you know and if everyone votes totally in favor and everything is perfect i'm like okay there is a catch somewhere like you know it's it's i'm playing

37:38Martin Mignot:it too safe it's one of the one of the things i love about vc is that you can never be too contrarian even if you think you found a great pattern there's always going to be someone else who doesn't fit that pattern that you've still got to back for other reasons and i think that's that's what i i don't think is so interesting about it there's never there's always reasons to invest if they don't fit your thesis or your pattern. Going back to Revolut, I know that Index invested at the Seed, the Series A, but it wasn't until the B that Index led. Why did it take until the Series B to lead the round?

38:08I mean, there are just some round dynamics. We're not the only investors on the planet, so that's one reason. and then I think the other one is that in investing there are always kind of two lines right, one is your level of conviction and then is your level of confidence about your conviction and those move over time and they can move up, they can move down and so and sometimes you need the confidence line to grow to a certain point because you may have a lot of confidence or a lot of conviction but based on the limited data points. And every day that passes, you kind of get to know the person, the company, the situation better.

38:55And so you get the full movie instead of a picture. One of my former partners always used to say that. You want the movie, not just the still picture. And so with Revolut, what we had going for us, and also that's where this multi-stage model with the same team comes really handy. I worked with Nick for a very long time, from seed we had these monthly catch-ups and I would really see him operate. And Nick is the best European founder by quite some margin in my opinion. I think he's totally generational and even on a global scale. But in the early days, he wasn't who he is today. So I think I also took time for him to really develop and grow and be able to really explain his philosophy and how he built companies.

39:42Now it's very clear. it wasn't you know so clear and you know at the time you kind of build that over time and so as we got to work closer together my conviction was always really really high and my confidence just kept on going up you know and it's one of those where the more if all the data points you get make you more and more excited and more like that's where you start okay you invest you invest and then you invest a lot and then you know and then hopefully you kind of keep on doubling down and that's where having the ability to be the first check and the last check you know we're still looking at potentially investing more.

40:13We could. We could totally do it. Nothing would prevent us from doing that. But with just one person that can follow that relationship all across the life cycle of the company is a massive asset.

40:24Martin Mignot:I think the most powerful example is probably Wiz. You know, like the double down, triple down, quadruple down, end up being on the largest show. But you know, here, I think it's a really good example. And the difference is that Wiz, we had invested in Asaf and the team's previous company. Yeah, yeah, interesting. So we had all those data points from years of investing with them. Like we were, you know, Shardul was on the board of Adalong, the previous company, had known them for years, had worked closely, had seen them operate in all different sorts of environments. So he had, so from day one, he had that level of conviction and that level of confidence.

40:59He had those two things. And he kept that because every single data point he would get on the people he had, you know, he knew everything about them. And so he had no more data points. We had more data points on the performance of the company. And every time that would come positive and positive and more and more positive. And his level of conviction just kept on both. So the confidence side was always at the top. And the conviction was very high. But even, you know, so at every round, he was pounding the table to invest more. And every single round.

41:30Martin Mignot:Yeah, again, one of the really interesting parts about the model of index is that you can just keep going more and more. You mentioned it being like the best, you know, the final boss of European tech. Yeah. What should other European founders be learning from him? I think one is obviously the born global. He's lived that mindset from day one. You know, he's really exemplified that, expanding at a crazy scale. In a very tough industry. Highly regulated. Against all conventional wisdom at the time. And I think that's why he's dominated the new bank, you know, industry in a way that other people in the new banking industry know that others have struggled.

42:08Martin Mignot:What other bit of or like characteristic or trait from Nick should European founders be taking away? I mean, there should be a hard-wired business case about Revolut and about him because I think he's way above that caliber. First of all, I think anyone should, any new founder should study him and the company very closely because there are so many lessons from his journey and what he's done. The caveat and the disclaimer is that he is a very unique individual, right? So you should study, but you may not want to, someone may not want to replicate it because I think what's the first trait about Nick is he's such an original thinker and his originality comes from his intelligence and his very structured analytical mind.

43:06So he will take any problem and he will try to solve it by himself, sometimes with help from experts in a given field, and he will break it down to a smaller piece. And through that process, he will come up with really original solutions. So that's where his originality comes from. It comes from a very powerful and very systematic analytical approach to problem solving. But that may not be, you know, some folks may have originality from other things. And they may bring from being able to connect different fields. And you may have different techniques to get there. But that originality is what I think makes him so powerful, but also quite hard to replicate in many ways.

43:49So I think that was a really important one. The other one is obviously the scale of the ambition. And like from day one, he was like, I'm going to build a bigger company than JP Morgan. I'm going to build something much bigger than JP Morgan. And, you know, there's so many anecdotes. But like early on, I remember I was introducing him to a very successful fintech founders to potentially be an advisor or maybe join the board. And that company was worth a couple of billion dollars. And at the time, Revolut was worth a couple of hundred, you know, if that, maybe even earlier than that. So it was very much in the early days.

44:24and he met with the person and he liked that person a lot but he was like, you know, I don't think I'm going to continue. I was like, okay, why is that? Like, it's too small, you know? What he's built is just too small. It's just not relevant for us. I'm like, what do you mean? It's like 10 times your size, right? Like, yeah, but that's today but like, that's not what we want to build. We want to go, I want to meet with people who've built 100 billion dollar companies and more. Like, that's, so, and that was pretty much seed stage or maybe early series there, right? So, So he had both that vision and the confidence.

44:57He was totally clear that that's what he was building for. And so if you don't have that, I think it's hard to get there. He really had that from the beginning. And then the third thing is the intensity. I think it is the intensity and the sacrifices and the number of hours. He talks about it. He still does work incredibly hard, and he sacrifices a lot of things. He talks about work-life balance where you have to be imbalanced. If you want to build something so large and so meaningful, there are going to be trade-offs. It's painful. You have a family. You have your kids. It is painful. It's a painful process.

45:42But you always saw growth is pain. You have to kind of grow through that to grow as an individual, as a leader. and then you'll be rewarded. And then you'll have more balance and other benefits once you get on the other side. But that journey is not going to be pleasant.

45:58Martin Mignot:Yeah, interesting. And, you know, it's now, you know, rumors of nearly a$100 billion company and still private. And I wanted to get your view on the venture model and market more broadly as we're seeing companies get bigger and bigger, raising bigger and bigger rounds at higher valuations, you know, OpenAI at$800 billion, just raised$100 billion. then is the VC model, or like, I guess my first question is, is that still VC at that point, when they're raising 100 billion rounds at an 800 billion valuation? Should we still call that VC? Or is that term no longer relevant for companies of that size?

46:31Yeah, I think it's a slightly different asset class. I think that is fair to say. We don't really play in that world. I mean, we try to be, you know, the earliest, the largest, just the most referenced shareholder in the company. So that's not where we spend our time.

46:50Martin Mignot:And even companies that big, you talked about buying more of Revolut at some point potentially, right? That's still a huge company. You'll be putting in a lot of money to meaningfully get more shares in the company. Even playing at that size, is the 2 in 20 model still relevant? The performance is there. you know and I think that's where where things come from which is that there are very few companies that even if you get in at 200 billion or even if maybe even at a trillion it's probably going to be harder but you know certainly at a couple hundred billion where you can still generate a 5x in five years fairly comfortably even you know that is possible that is more than possible that is I wouldn't say you know like necessarily likely but there's a high enough chance of that happening.

47:41It does look like a really good investment with kind of growth. It wouldn't be like a venture fund for a growth fund. That's pretty much, you know, that's what we told our LPU would do. And so if we can do it, whether it's on Revolut or something else, you know, it doesn't really, I don't think it matters so much. But I think what's new now and what is possible now is that you can have a few companies that become really truly global and platform scale. and when that happens the size of those outcomes is just a lot larger than what anyone would have predicted before and so that's why the VC model has morphed into that but again we're talking and I think that's where all the attention and a lot of the money is going but realistically there are only by definition there are only a handful of platform companies if every company is a platform company that doesn't mean anything right very few companies can have the kind of growth trajectory that an anthropic or revolution or OpenAI have.

48:37I mean, this is really rarefied earth and that's what will drive a lot of the outcomes for the venture industry. But there's also a lot of fantastic companies at a smaller scale that are going to generate amazing returns for us.

48:53Martin Mignot:Well, we're out of time. I want to finish on one last question. You now live in New York. You've been living for a number of years. What's the number one thing that you miss about Europe? Trains. Trains. Working trains, fast trains. you know I was in Paris this morning and you know being able to kind of wake up in the morning get in the Eurostar spend the whole day here being back at home with my family in the evening it's I don't think European you joke you know you laughed about it because to you it's normal well it's not you can't do that in the US and I find that absolutely it is ridiculous it is totally ridiculous and so yeah If the US could fix their high-speed train system, it would be the best country on earth.

49:37Martin Mignot:Well, thank you so much for your time. Thank you for having us. It's been great. Thanks a lot. I appreciate it.