Bucky Moore Joins $30 Billion AUM Mega Fund Lightspeed

0:00Bucky Moore, welcome to Sorcery. Thanks for having me. It's great to be here in the studio. The studio of studios. Well, you're a very popular name right now, making a huge jersey swap in Silicon Valley. First, I'm so excited to get into this. And congratulations on your new role as partner at$30 billion AUM Lightspeed. Thank you. Super excited about this next chapter. Could you share more about the process? Absolutely. Look, I think any time you start thinking about making a change in this job, it's not easy. There's obviously a lot of things that you have to undo, a lot of stakeholders that you have to respect and be very mindful of.

0:40And I think in the end, the opportunity here at Lightspeed just felt so unique at this point in time, both in terms of my ability to come and really help them double down on their commitment to early stage venture, specifically on the enterprise side, which has always been my focus and is actually the core DNA of the firm itself when they got started. And also, I just think we're in this really unique point in time where funds that have this global reach and this ability and ambition to go and partner with these, this new class of company that I think is just like nothing we've seen before. These companies that could be worth trillions of dollars someday, the SpaceX's, the Anduril's, the OpenAI's, the Anthropix, these companies are like nothing we've seen before.

1:19And I think with that, there is this unique point in time where funds like Lightspeed that have an ambition to really partner with those companies all the way, have this ability to go and partner with them in a way that not only allows them to support the ambition of these really large companies, given how capital intensive they are, but also in doing so generate truly outsized returns. So I think the biggest question for you right now is why did you decide to join Lightspeed versus raise your own fund? so I spent a lot of time thinking about this and I think the first thing that you have to ask yourself when you go through a process like this is like really what gets you out of bed in the morning and for me what I've realized is two things one is I I really am focused on just working with the best entrepreneurs and I want to be in a position where I can serve their needs be a great partner to them and and frankly grow with them and try to help them tap into their ambitions that is what I love doing and I really think that having the capacity to do that is just a lot easier at a larger platform.

2:19So that's one thing. And then I think the other thing is I really like playing with a team. And I think that venture can be a team sport. I think it can also be a very individualistic sport. And I think ultimately when I thought about starting my own fund, the question was like, well, who would I do it with? And what I realized was figuring out who that person would be would be minimum a six-month process. The fundraising process thereafter would take nine to 12 months. And then I'm looking at the clock and I'm realizing, wait, do I really want to be out of the industry, out of the market for a year and a half to two years in what I believe will be some of the most promising vintages of our time, that I think was just too hard for me to pass up in the end.

2:54And so here at Lightspeed, I get to play with the team. I get to really focus on my love for doing early stage venture, working with founders as early as possible. And I get to have and work on a platform that allows me to be what I think is like the right partner to those founders that have that really ambitious vision. Hitting the ground running. And thank you for coming here and doing this interview right in the middle of onboarding. That's a lot. Of course. Well, I know this might be more of a personal question, but I'm really curious, structurally and economically, how do you swap funds? I know that there's a lot of extensive work that goes behind that, whether it's board positions, carry, do you get your carry bought out?

3:35How does this all work? So on the board positions, first and foremost, as personal a relationship as I have with each founder I work with, I have to remind myself that I was representing Kleiner Perkins on the board of all these companies that I served on. And I think with that, now that I've moved over to Lightspeed, there's this obvious question as to, like, who should do that on behalf of Kleiner Perkins. And so typically what you see in a situation like this is that those board seats do get transitioned. And my partners have been very thoughtful and very supportive of that transition and making sure that the founders that I work with are in good hands.

4:05So I'm really grateful for that. And so that's how that works. But, you know, that's a very complicated process and an uncomfortable one, of course, because these are not just people I work with, but they're lifelong friends, these founders. So that was, frankly, a very emotional experience for me and a difficult one for that reason. But I'm really, really grateful for how my partners at Kleiner Perkins helped me through that. So that's on the board seats. And then with respect to the carry, you can think of carry similar to the way a startup employee vests equity. So they're given an equity grant.

4:33That equity grant vests over some time period, over multiple years. You can think of venture carry as similar. And so the reason for that, of course, is that when there is a transition like this, it's fairly objective as to like how much you vested and therefore how much you walk away with. And so that process was very clean. And, you know, again, I I'm just really grateful to all my former partners at Kleiner Perkins for how how supportive they were of this move for me and how how helpful they were in making it smooth. Wow, that's that's really nice. With 30 billion dollars in AUM, you've joined a mega fund.

5:08Megafunds are getting a lot of heat right now. They're raising larger and larger funds. We have names like A16Z, General Catalyst, Thrive, Sequoia. And they're exiting the traditional VC world into a new category that includes PE, credit, fund-to-funds, secondaries. How do you and how does Lightspeed think about this new environment? So I think the first thing that comes to mind is like I just think the scope of the technology investing industry is getting much, much broader. And it really kind of goes in lockstep with the way that these companies are being built and the resulting opportunity set that investors see out there.

5:49And I think what you're seeing with this group of funds that are choosing to go this route is that they believe, having been very close to these entrepreneurs, very close to the industry, that there are some pockets of the market that are just underserved. And I think their ambition lies in wanting to go and fill those pockets of the market with new products, new strategies, maybe larger versions of the same product. And so I think it's just a really exciting time in the industry right now because there's a lot of experiments being run, right? And I think with respect to Lightspeed, the opportunity we see just comes back to what I said about this new shape of company that we haven't seen before in this industry.

6:20These companies are going after much more ambitious opportunities. These companies tend to be much more capital intensive. and they also tend to get much, much bigger when they're successful. And I think if you kind of layer that in the backdrop of all this, it's clear that these companies are going to have a funding requirement that we just haven't seen before. And I think Lightspeed's ambition is to step in and really be a great partner to those companies because we think they can not only become really big but drive outsized returns for our investors. If you could share a little bit more on the structure of early stage to growth stage for Lightspeed, that would be really helpful.

6:52Yeah, so Lightspeed has teams that sort of focus on different domains, different geographies, different stages, but we all work very closely together. It's an extremely collaborative place. And so while my mandate is to focus very much on early stage enterprise, for example, I'll spend time with my partners on the growth side if there's a company that they're interested in that they would value my opinion or my involvement in. So very collaborative in spite of that dispersion and those different strategies that we run. And what we believe is that there's a ton of synergies between these different strategies.

7:22So an example would be you often meet companies at the early stages that you end up not investing in, that you may want to invest in at the growth stages. Having that relationship and having that longitudinal perspective on these companies can be really, really helpful in terms of picking and sometimes winning as well. So that's one example. Another example would be, you know, sometimes you see things play out in geographies where you've seen it play out in the U.S. before. And so having that base in the U.S. and helping our partners in Europe or in India or some of these other places where we operate, Israel is another place, that can be very synergistic as well.

7:52And so we want to make sure that we have dedicated practitioners on each of these strategies. But again, it's a very team-oriented approach and for good reason. Going back to the macro perspective of these megafunds, they're almost forming it into multi-asset managers. is it realistic to say that VCs can continue to grow them themselves? Like that's a really domain expertise level of investing when you're getting into credit, when you're getting into secondaries and all these different areas that are not just taking up calls, getting coffees with founders, that sort of thing, making opportunistic follow-on checks.

8:33What's your perspective on how operationally these funds can expand with quality? So I think that what this comes back to for me is that I think the needs of high growth technology companies are very unique and different from other companies. And so when you talk about an asset class like credit, for example, I think what's more important is like, how do you do credit well for a private technology company? And I think what you're seeing with these funds, Lightspeed included, is that they have this view that their core expertise is serving the needs of these companies, matching their ambition and supporting them in pursuing their vision to the fullest.

9:07And I think that to the extent these new products get introduced to the industry, it's going to be because they see an unfair advantage in their ability to deliver on that because they have this unique insight into what these companies really need and how to serve them. So the biggest fear and argument right now is that it's incredibly hard to return one of these funds. Carta actually just put out a report. I covered it in Sorcery that LPs are committing less to the category. About 50 percent are not going to be allocating to venture anymore. More recently on Jack Altman's podcast, Josh Koppelman of First Round came up with the venture arrogance score, stating that it's going to be incredibly hard to continuously return a$7 billion fund.

9:52I'm just really curious what your perspective is on that and where you see the math mathing out. Yeah, so I think Josh's concern is well taken, and I have a ton of respect for him as an investor and what he's built at First Round. But I think the difference in perspective that he holds, which is a completely valid one, I don't mean to undermine that at all, that I think that this group of funds that are going this route carry comes back to this outcomes question, which is, do you believe that OpenAI, Anthropic, SpaceX are foreshadowing of what's to come? This new cohort of companies that are going after such deep and thorny problems that if they succeed, the value that they create in aggregate for society will allow them to build businesses that are just like nothing we've seen before.

10:35And I think if you start to ask yourself, like, what does it take to believe that OpenAI could be worth a trillion dollars? Or what does it take for SpaceX to be a multi-trillion dollar business? It's actually not that hard to connect the dots into those need-to-believes as to what that would be, right? I mean, these companies are compounding it over 100 % year-over-year in the billions of run rate. We have never seen that before, right? If you look at, like, the software companies that are considered truly blue-chip, like the Salesforce's, the ServiceNow's, I mean, they're not even close to 100 % year-over-year growth in spite of their multi-billion-dollar run rate.

11:06So these are very unique beasts. And I think that if you start to believe that these companies are going to continue compounding that way, because, for example, delivering intelligence to the world or delivering universal connectivity to the world or space travel to the world are just such unique value propositions where they can capture tremendous value and build big businesses, I just think it has to kind of reset some of your assumptions around what the venture industry will produce in that sense. And so I think if you take a historic looking view the way Josh has in articulating his point, like it's a completely rational conclusion to arrive at.

11:36But I think if you start to look forward and you say, hey, like, are these companies foreshadowing of what's to come, as I keep saying, in the sense that we're going to be starting to see an opportunity set that looks like multi-trillion dollar companies. I think that's where you start to kind of understand the perspective that these larger platforms hold and why they're going this route. We've seen time and time again that companies are staying private longer. They have the ability to. It's attractive. they don't need to go public. How is this affecting the ventures class of receiving any sort of return on it?

12:06Yeah, so it's for sure a double-edged sword, right? Like on one end, you have the challenge of how your early stage investments get liquidity, right? That's a big problem for many funds. And what you're starting to see because companies are staying private longer is things like secondary and other alternative ways of generating liquidity for your investors are becoming more and more popular. So that's like one tension. But on the other end, What you start to see coming back to this group of companies that I keep mentioning staying private longer is that there is this new opportunity to, as an investor, try to participate in supporting them in that effort and capturing some of the value creation that happens while they're still private companies that would otherwise have gone to the public markets.

12:43And so I think, again, that double-edged sword point is really just on one end you have the challenge of how you get liquid with your early stage investments, and that is a real problem. On the other hand, you have this entirely new opportunity set on the late stage side to continue bridging these companies forward so that they don't have to go public, as you said. And in doing so, you're able to capture a lot of the value that they're creating as an investor. And that's super compelling to LPs as well. And where are they getting that capital? Is this more global pools of capital? Yes. I think traditionally what you've seen is the venture asset class has been dominated largely by nonprofit and university endowments.

13:16And they're wonderful, long-term oriented LPs, and they're still very active in the venture space. However, this new opportunity set that we keep talking about, I think it's starting to bring a much more diverse set of LPs into the industry. And so we're talking about sovereign wealth funds and let's just say a little more international set of actors that I think is becoming more and more commonplace. And I think the reason for this is, one, technology is so ubiquitous and so impossible to ignore for any large pool of capital that they want to increase their allocation to it. That's one. And then two, the size of these platforms that are being built now, to some extent, outstrips what the university endowment and nonprofit LP pool can really support.

13:57And so, again, the industry is evolving, and it's evolving in lockstep with the way the companies are evolving. And I actually think that's a tale as old as time. How do you think about multiples on these funds, returns? So look, I think any investment you make at the growth stages, like you really do want to believe that you can generate multiples on your investment. And so when you look at investment like OpenAI at$30 billion or Anthropic at$60 billion, you know, I can tell you these are opportunities that I personally believe have the upside to generate multiples versus, say, IRR. And I think that's, again, what sort of speaks to why this opportunity in this point in time is so unique, is these are opportunities where you can invest$500 to$1 billion in one of these companies.

14:41And if your underwriting plays out, potentially turn that into$3,$5,$10, maybe even$20 billion if these companies turn out to be multi-trillion dollar companies. And so, again, there's a lot of dilution. The capital intensity comes with that dilution, and that's worth noting. But I think that really does speak to the unique point in time you're in and the thesis for how these later stage vehicles that these global platforms have could pan out very, very successfully for investors. You know, Visa used to be about multi-billion dollar outcomes. And now we're just going right to multi-trillion dollar outcomes.

15:12I'm along for the ride, right? It's an exciting time. And, I mean, candidly, I think we all wake up every day just feeling we should just feel gratitude that we get to be in the primes of our career during this time where we have these mega trends like AI, like robotics, like space and even defense playing out before our eyes in such full force. And, you know, again, I think being in the arena while this is happening, it's just like it's a really, really fortunate position to be in for all of us. Yeah, got to be in the arena. So there are counter arguments to these fund sizes and the incentives to raise bigger and bigger funds.

15:47A lot of that has to do with management fees. We had a hot take on this post by Josh Kopelman. Shout out to Hunter Walk. Big fan. Hunter Walk says, this is wrong. Wrong math. Should be about the fees the GP collects while storytelling to keep the dream alive before the results are conclusive. Are we stuck in a bubble of fees? Like, how do you see that argument? I think it just comes back to this belief that I carry that these companies that we're seeing are, they're alien beings. Like, we've never seen anything like this before. And these companies are growing at rates and at levels of scale that we've never seen before.

16:24And all that together, to me, just leaves me in this position where it's just hard for me to see how investing in those companies right now will not lead to really compelling results for investors. and I think that's where you could see just tremendous gains, right? And I think ignoring that viewpoint sort of downplays the reality that I see, which is that these companies are like nothing we've seen before and going to be multiple orders of magnitude more valuable than those truly blue-chip venture outcomes of the past 5 to 10 years. For your role specifically, why do you think it's important to stay true to the early stage side of this?

17:02So look, we can talk about these global platforms and how they're playing later and later stage and all that. But none of this matters if you don't have a compelling brand that I believe can only be forged at the earliest stages. So typically when a founder is thinking about raising an absurd sum of money and having a fund like one of these platforms lead that, they're asking themselves, okay, do I feel like I want to hitch my company to this firm, to this firm's brand? And what they want is they want a firm that has an entrepreneurial spirit to it, that is known for company building, that is known for helping early stage companies bring new ideas to light.

17:38That really is what I find founders really look for, even at the later stages. And I just don't think that you can really carry that identity unless you are truly competitive and active at the early stages. So that's one point. I think the other point is that there's still, I mean, we can talk about how the industry is changing, but there is so much opportunity to back these companies at the early stages. And to downplay that, no matter how large you are, is just, to me, totally unmoored from reality. And three, I would say the perspective and the empathy that you have to maintain when working with entrepreneurs, it's just really hard to maintain that empathy unless you're really understanding what it's like from beginning to end in their journey.

18:16And the only way that you can really understand what it's like in the beginning is if you're partnering with them then. And so I think that that spirit you have to have as a venture firm is really only maintained by staying close to these companies at the early stages and being active in that area. What does it take to win a lead position in one of these competitive companies? Yeah, so this is an interesting one in the sense that there's, I feel like there's this like set of memes going around around how like these, the way that founders choose is, you know, whoever takes them for a ride in their helicopter or brings them to the Warriors game to the floor seat tickets or, you know, takes them to that Michelin star meal.

18:49And, you know, these parlor tricks, they happen for sure. I've seen them out there and it's fun. And I think there are some founders that respond favorably to that. But in the end, what I see, and this kind of comes back to why I really believe that picking is actually the most important part of the like see, pick, win, work kind of mantra in venture, is the people that win these really competitive rounds, the partner that ends up being the one of choice for the founders. It's the one who's been putting the legwork in for well over a year, developing deep insights on the business, developing a deep relationship with the founding team, and ultimately being someone that they just want to have in their life.

19:26right and uh having in their wanting to have someone in your life is not just about like being smart it's not just about being nice it's about like really having that deep connection with the founders both in terms of understanding their vision understanding who they are as people and therefore like how to support them both in their vision and how they can develop into the founders that that company will need to be successful and i just see this time and time again it's the person that did that work there's plenty of strong brands out there everybody has a different view of who's the best and who's the second best and so on but the common thread that I see in these really competitive processes is that one person put in the work to develop that deep, deep relationship at one of those firms.

20:01And that is the one that they tend to choose. Can we go deeper into that? Can we share one of your examples maybe? Yeah, let's see. What would be a fun example? Yeah, there's a recent investment that I made before leaving Kleiner Perkins that, of course, I'm really excited about. And it hasn't been announced yet, so I can't name the name of the company. But I think it does speak to this, which is this company is building in, let's call it an AI app. And it was in a space where it had much competition. And given the competition was all fairly early in its journey, in the beginning, it was really hard to figure out who was the right team to back and who was the right product and so on.

20:36And so we had a chance to partner with this team much, much earlier than we did at a much, much lower valuation. And we were a bit hamstrung by the fear of picking the wrong company because we had a lot of conviction in this space. And so we ended up spending a bunch of time trying to figure out who that company was and who those people were. In the end, it looped back to this company and this team. And I think what happened was we unearthed that perspective sooner than the market did, so to speak. And we were able to spend a lot of time with this founding team, getting to know them, spending time with them as human beings, articulating our view on why we think they're better positioned to win in the market and what they need to do to capitalize on that than the competition, and spend a lot of time also just kind of hanging out.

21:20And they eventually decided to raise in spite of us trying to preempt. They were they were very careful to not let us do that because they wanted to run a good process. But when they did run the good process, the rest of the field kind of, you know, chase the heat. And we were just there. We were there just we know them deeply. They felt like we really understood them. They felt like our team was was really rallied around helping them in the ways that they needed. And, you know, it's never an easy choice, but it went our way. And I think it went our way because of that time that we put in, which came down to picking that company maybe earlier than our competitors did and putting that work in.

21:51Yeah, relationships, trust, putting in the work. Business is personal, and I think anyone who denies that is probably at a disadvantage. You have a little bit of a hot take on this, though. Why do you believe picking is ironically more important than winning as a lead investor? So I think coming back to what I said, I think it takes to win in these very competitive processes. The limiting factor is really who do you choose to do that work with, right? You cannot do it with 20 different companies at once. And so there is this element of taste and picking that goes into that that I think you actually have to take very, very seriously.

22:28So one part of that is like, okay, what are the few best ideas I have right now? Who are those really, really promising founders that I believe deeply in and think have tremendous potential that I'm gonna go and spend that time with? It doesn't always work, right? You don't always build a great relationship. Sometimes you bounce off each other. And I think having the self-awareness to also say, hey, maybe we don't vibe the way I'd hope we did and that's okay. I'm gonna go move on to another idea is another part of picking. The other part of it, though, is sometimes you meet another company, and that company turns out to be extraordinary for reasons you didn't expect.

22:58And I think having the flexibility and the open-mindedness to then kind of reprioritize that and really pick that one to spend time with is a really difficult thing to do because of the sunk cost fallacy that goes into all the time you spent with others. But I think you have to kind of accept that the world is a super dynamic place, and our job as venture investors is to partner with the best founders. And so picking who you do that legwork with really comes down to how well positioned you are on the right companies when those processes come. And the best founders want to run a process. They want a market price for their business.

23:27And they're also humble about the fact that they don't know until they know who the right person is. And so a lot of the time you put that work in and then they do run that process, but hopefully in their heart, they know you're the person that they really want to work with. And that's just been my experience. What kind of advice would you have for founders that are running through these really fast processes with multiple funds? So I think Parker Conrad, founder of Rippling, said it best, which is that there's often this concept of like, oh yeah, choosing an investor is like getting married. And he disagreed with that, I think, in a very directionally accurate way, which is to say, it's actually a lot more like picking a general contractor.