Why revenue is an outdated metric | Term Sheet

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1:03That is not the world we're in. And I don't see us going back for a very long time. Hello, hello. Welcome to Term Sheet. I'm Allie Garfingal. And this is the podcast where we talk about the weird and wonderful world of private capital tech and startups.

1:21This week, my guest is Mira Clark. She is a partner at Redpoint, and she is someone who I've known since my earliest days at Termsheet, so I'm very excited to bring her to you. However, we first really have to talk about the news. Now, the biggest story of the last two weeks has been the software meltdown, where more than a trillion dollars in market value have been effectively wiped out in the public markets. Companies like Adobe and Salesforce and Workday have been all caught up in AI fears and how it will affect the enterprise SaaS playbook. Now, why does all of this matter? The first is that enterprise SaaS, while it may not be the sexiest industry in the world, has long been viewed as reliable.

1:59High margin businesses where if you followed the playbook, more or less, you could make a lot of money and build a giant, sometimes generational business. But what's happening right now with the rise of AI agents is the fear that actually what you had believed was possible with enterprise SaaS actually is just no longer true. Over the last week, I've talked to maybe more than 10 VCs about this. Not in any particular way, just in the sense of, hey, how's it going? How is the software meltdown making you feel? And the answer is, generally speaking, quite bad for a lot of them. I was talking to one who made the point that, you know, this isn't as bad as it is going to get.

2:31However, the basic assumptions on which a Salesforce or a Workday have been built actually are in flux right now. So when it comes to the software meltdown heard around the world, the most important thing to remember is that this is the beginning and the aftershocks are still to come. now on to our interview for this week this week's guest is amira clark a partner at redpoint but mira and i have actually known each other for about two years mira and i first connected when she was a principal and i was just starting out a term sheet she is somebody who i turn to when i'm looking for candor and she's somebody who i really ask a lot of questions to when i'm trying to understand where tastes and consumer tech might be headed recorded at brainstorm ai here's mira Welcome to Brainstorm AI San Francisco.

3:15Welcome to the Term Sheet Podcast. Mira Clark, hi. Hello. I cannot imagine a more fun way to start the week. Before you got here, my wonderful producer Lydia was showing me a billboard that said, welcome to AI country, population, everyone. You're like, you're smiling. You're not surprised. Surprises me actually zero for better or for worse, but I think for better. I was going to say, okay, why for better? Not to be someone that like pumps their own city. but San Francisco is so back and it feels so nice. I feel like we went through a lot of these weird years where founders would come out to fundraise and you would hear about this hypey New York, XYZ, male or female, and it was a we go to them because God forbid they actually get on a plane and come to us.

3:56And what we're seeing now is with any fundraise, whether the founders based in Israel, London, New York, you name it, they're all kind of coming through Silicon Valley and a lot of them are thinking about moving here. And that's, again, a pretty big shift, even relative to like 24 months ago or maybe 12 months ago. And so, yeah, it kind of feels nice. Now, what's your take on the AI bubble? Could not be more excited about it. You're excited. The AI part, yes. The bubble part, maybe not. I mean, I think next year, 2026, based on when we're recording this today, is going to be an interesting one.

4:28And it's going to be kind of uncomfortable, but I think it's going to be healthy. I was going to say, what makes you think it is going to be healthy and what makes you think it's going to be uncomfortable? Because it sounds like those two things actually coexist. Yeah, I think if I could like have a magic wand and make everyone one way, which is kind of boring in the world. But if I were going to do that, it would really be can we all be truth seeking and can we all get to like ground zero on what reality is versus living kind of on our own planets. Right now, we have a lot of companies candidly living on their own planet.

4:56It's let me tell you about my$50 million of pipeline and how that's different from your$60 million of pipeline. But everyone has everything, whether it's revenue growth, pipeline, pilot excitement, you name it. And from our seat, it's quite interesting, right? Because I'm saying, oh, so cool that you have a pilot with Pepsi. Four of your competitors who I've also met have the same pilot. And I really think 2026 is going to be the year that the rubber kind of hits the road in terms of transitioning from pilot to permanent placement, which is really when you actually see the durability of these businesses and whether they can actually run from like a multi-year perspective.

5:29You're getting at something really interesting right now because one of the things I sort of keep hearing is that everyone is waiting for a spending pullback. Yeah. Right. And of course, Pepsi right now, I'm sorry, we're picking on Pepsi, but all of these giant companies are spending a ton of money on AI doing all of these pilots. eventually they're not going to be doing for pilots, right? I mean, how will we know when that rubber started to hit the road? How will you know? Yeah, I mean, I think there's like two dynamics to consider, right? First and foremost is how much of demand is being pulled forward.

5:58You know, we saw in 2025, every legal company was in market, every hospital system or health system was in market for the same solution, which means we're seeing these explosions of revenue for a lot of hypey hot, honestly, very good companies. The question is, do you still have 100 % of the market in market buying in 26 and 27 and 28? Probably not. When these folks have first gone out to buy, I think there is a little bit of trepidation with not wanting to make the wrong decision. And so, yeah, they have kind of punted the decision part of that, which is let me kind of get all the flavors on my plate.

6:33And then at the end, I will decide what I'm actually going to order. And so that's what I think we're really going to see next year is we will move from these four pilots, again, to the one permanent placement. And that's where you will kind of see, I think, probably a pretty meaningful separation of who is here to stay versus who will ultimately fade out. I think the fading out, honestly, not so bad for some of these founders. I think we're going to see a lot of really attractive acquisitions, acquihires, whether I'm buying your revenue, your tech, your employees. We're hearing from a lot of like the largest players in this ecosystem, let's say, you know, the 50 billion, 100 billion dollar private companies who can still remain nameless, but maybe with those with those taglines.

7:13Only 100 billion these days. But a lot of those are telling us that they want to lean hard on M &A. And that's something I think we're going to be watching a ton, particularly as, you know, VCs, journalists and particularly LPs are talking a lot about liquidity. What do you think the M &A landscape will look like in terms of acquihires, AI startups in 2026? Yeah. Again, I think all these folks want to lean in harder on that front. I think we've seen one of the benefits of the Trump administration, candidly, being a little bit softer regulatory environment when it comes to acquisitions. I think the belief right now is you've got three years to kind of push some things through before that potentially gets reset again.

7:50So you might as well go ham while the window is open. And so I think we will continue to see a lot there. The IPO market, it sounds like, really could be quite active next year. I know bankers, there are different phases of business, which is busy, busy, extra busy, and very, very, very extra busy. And, you know, they seem to be moving up that spectrum. And so, yeah, I think a lot of investors are, you know, anxious about picking the right winners next year, but also feeling a ton of excitement. When you sort of think about the role that the largest players play in this landscape, from the Googles to the open AIs, right?

8:24Where do you think that race is at? Who do you think's in the lead and kind of the main cohort in particular? Yeah, honestly, it's hard to say. The reason I say that is, you know, we can all say, you know, Google's most recent release is objectively quite impressive. It's hard to know what an open AI or what have you has kind of in the coffer or what's to come one month from now, one quarter from now. It feels like it's one of those races where people are continually jumping ahead. I think out of all of them, if I could be a shareholder in one, which I feel a little bit bad saying, Anthropic is the one right now, just relative to valuation, I'm super intrigued by.

9:02And I feel like a lot of the smartest founders, like smartest investors are just kind of watching with like, what are those folks doing? In part because they are digging when everyone else is agging. They're kind of like making a name for themselves, whether it's on the trust and safety side or just some of the areas where they are excelling. I think they also, if you look at the employee bases of these companies, there's kind of like the missionary mercenary tradeoff that everyone always talks about. But while a lot of these companies are competing on money, I think Anthropic is really competing on purpose.

9:31And if you look back at the past. Well, and then you're playing a different game, right? If you are good at that game, it is the easiest game to win. That's really why. I think when you compete on purpose and you are so clear and authentic in your purpose, someone else can't come in and top you by 10 percent. purpose is not something that you spin up overnight and go out and announce to the market. It's something that takes, you know, months, if not years to compound. And that's what they've been investing in from day one. I think we're seeing this kind of beyond the mega players, even at the, you know,$1 billion,$10 billion valuation scale companies, some similarities of where talent is accruing to and where talent is really staying.

10:09And if you think that for all these companies that, you know, at least the skeptics among us say have minimal moat, their moat is really their people if you think everything else is changing. And so, yeah, I think that's one of the reasons I'm so bullish on Anthropic is just the durability there. Well, and one of the things you said is relative to valuation, because there are some truly wild valuations in this marketplace. How do you think about valuation right now? What in a valuation makes you say, ooh, red flag? What makes me say red flag in evaluation is really how it sets up for the next round.

10:44I think even with some of these outlandish rounds, you're raising a seed at 200, you're raising a Series A at 500. If you are going to be a$100 billion company, that's fine. I'm not actually that concerned about it. My question is, all these companies are running a marathon. It's can you get to the finish line? But can you also get to the next water station? And as I think about that next water station for these businesses, if you are so over your skis on valuation or I worry about your ability to kind of clear that hurdle because your revenue durability is not sticky and I worry about you, you know, turning over 50 percent of that as you lose pilots overnight.

11:19That's when we start to get into scarier territory to me. Now, you said something to me last year that I think about all the time. I'm so curious as to what this was. You're like, oh gosh, what was it? You said it's still the Wild West out there. And it still is. Okay, so I was going to say, well, because what you're talking about sounds a little more mature, but it still sounds like people are stomping into saloons. Yeah. I mean, I think it's interesting, right? Because I think there are pockets of buyers that are maturing. You think about CodeGen as a category, and we're still seeing, you know, various players spin up.

11:54Like, where was Cursor when we were talking last year? I know. It was a completely different universe in CodeGen. And even Cognition, like, you go down the list of all these players. And so I think if you consider these the early adopters or white collar buyer base, they are a little bit more mature or a little bit more aware in kind of what their AI transformation story looks like. On the flip side, if you look at the mass market of the majority of the economy, whether these are family-owned businesses, private equity-owned businesses, companies doing a billion dollars in revenue or a hundred million dollars in EBITDA, but that are not based in the Bay Area or New York, they are, I would say, much earlier on that journey where they are now aware that I must change or I will transform my business or be rendered obsolete with AI.

12:39but they are, you know, looking left, looking right. Do you have answers? Do I have answers? Figuring out what comes next. And so I think as I sort of think about 2026 and, you know, the early innings of which very much, the early foundations rather, of which were late in 2025, that to me is the exciting next frontier that, yeah, it's still pretty wild, still pretty up for grabs. The frontier is still the word we're using here. When the bubble bursts, what is one thing you are sure will still be there? OpenAI is going to be here for a very long time. OpenAI is still here at the end. Anthropic, too.

13:13I think, you know, many of these folks. Are they just too big to fail at this point? Dangerous turn of phrase, of course. I kind of love the turn of phrase, though. We love things a little controversial, as you know. At this point, I do think they are too big to fail. I want to turn just talking about you a little bit. Yes. Because you and I have actually talked a lot about your career. You were promoted to partner. How does your background as a banker inform what you do now and how you look at these markets? And why did you jump to venture? Yeah. As I think about coming from banking, I think there's three components of it that are important.

13:47First and foremost, which could never be more true than in today's environment, which is that we are in a sales business and you must always remain aware of your customer. I think, you know, over time or over certain periods of time, it's easy for investors to get lazy and say, company, come to me and you can beg for my money. that is not the world we're in. And I don't see us going back for a very long time. These processes are ruthless. The best deals are highly competitive. And so being thoughtful, being creative, being very customer focused in that sales process is very important. And is the customer the founder?

14:18The customer is the founder. The LPs are customers, but the founder through and through is really who we are prioritizing. Number two, which I think is in some ways equally as important, is this understanding of what greatness is. I think to the how do you value these companies, is I can tell you it's certainly not revenue because all the revenue looks amazing and it's up and to the right and gets bigger and bigger every year and they're going 10 to 100 over the next 12 months and that's just the story they all tell. But in banking, I think you actually understand what greatness looks like. And these businesses, as we said, are really people and it is who are the people that you hire?

14:52What does your leadership team look like? And how does that lay the foundation for the talent pool you're able to build over time? As you look at these companies that you are taking public, the people are pretty freaking impressive. And so I think understanding like, what does the chief product officer of a public company look like? What does a CEO look like when they're going public if they were, you know, a founder on day one and understanding, hey, this 23 year old founder sitting in front of me today, can I actually see them mapping to that? Or do you actually see that kind of potential slope or do you not?

15:21And so I think that understanding of greatness is also incredibly important. What is one thing about what greatness looks like that you think about all the time? It is a seemingly irrational but incredibly long-term focus pursuit of excellence. Greatness is I'm working on a Friday at 11 p.m. because I want to be. It's I'm waking up at 5 a.m. on Saturday with this idea in my head that I can't let go of. I'm not doing this because it's a cool thing to do in San Francisco or because my friends are founders or for the sexiness of it. It's like this like deep inward sense of purpose. I think that's what we see in the greatest founders.

15:57They are the more and more they work, the more and more energized they become, which, again, I would not necessarily call it natural or rational for for your everyday human on the street. So absolute irrationality. Yeah. Yeah. And we see it and we celebrate it. And like I think it makes for exceptional humans, whether they are a founder or pursuing something else that takes, you know, insane focus. I want to say Olympians are that much different. But, yeah, I think that's something we definitely see as a unifying theme. We sometimes jokingly talk about founders that come in and it's this person is so normal.

16:29Like, do we think they can actually take it the entire way? And I hate, you know, I don't know if my husband would call me normal. I think I'm like kind of sort of normal. But I hate to disparage the normals of the world. But yeah, I don't know if they are necessarily what we're looking for. We've talked a lot about what it takes to succeed. Yeah. In VC, just between you and I. Yes. What do you think most people who want to get into venture capital get wrong? They ask before they give. The number one thing you can do to help yourself in venture is to give everything you have to the people around you.

17:03And you are strategic to a certain extent, which is maybe ruthless, maybe not. And evaluating who you are giving to, how you extend your finite resources. But it really is, how can I add value to this person so they give me the intro? How can I add value to this founder so they let me invest in their business? but it's all about giving and giving things that people need, but may or may not know that they need and kind of continuing to deliver value to them so that at a time when they have one cookie and they can give it to one of five investors, you're the investor that they turn to. I think a lot of young people come in with this mindset of, hey, I want to break in, help me, help me, help me, give me a list of what to do, which, you know, if I'm giving you my time and I don't know you because you've reached out on LinkedIn, it's hard.

17:47Like I only have so much, you know, so many hours in a day to come up with your career plan and check in with you every quarter on how it's going. I think the people that do it best think creatively about how can they add value to you, whether it's introducing you to their friends in their freshman dorm, because they're currently a junior at Stanford, who are going to be killer engineers that you could place into your companies or them sharing insights that you may not have access to. I think regardless of your age, regardless of where you are in the world, you definitely have something to give.

18:14It's just kind of understanding what that is. And I think the young people I find myself gravitating to the most, they're very intentional about that. When you sort of think about the kind of people who want to get into venture and the number of people who want to get into venture, I was going to say - Dizzying, dizzying. Yeah, I was going to say, because you implied that you get a lot of LinkedIn messages about this. At the same time, there are more venture capitalists than there ever have been. But I don't know if I'm confident that will continue to be true over the next five years, 10 years.

18:45How do you sort of see the sort of volume of VCs in the system? Like all these people who are interested in it, like realistically, are there jobs for them? It's interesting. I would say for the best one, there most certainly are. You look at folks who come into this industry and I like hesitate to pick on Leigh Marie because it makes me sound I'm like, I'm talking about her as she's junior. And Lee Marie is like one of those people you look at. And you're like, you will definitively be on the Midas list. It might be next year. It might be in five years, but you will be there one day. She has not been in venture for 10 years, just factually speaking.

19:19And that is OK. But she came in as someone and just went whoop. And not a single person ever doubted at any step of the progression that she was going to get there. And so I think as you see folks like that come in, there will always be a home for them. And they might come in as a senior associate. They might come in as a general partner at a firm. But they will continue to grow and compound in terms of their brand, their network, their skills, what have you. I do think to your point of this ecosystem is just so, you know, we're packed in like sardines trying to find a home for ourselves. I think that never before has the importance of individuals' reputations been so important.

19:57I think historically it's been much easier to say, hey, I work at Redpoint. That's cool. You see the email address. Please respond. And, you know, there is certainly power to these platforms in terms of the additional services they have, the additional perspectives around the table. But I do think if you are choosing someone to be on your board and to be in the trenches with you for the next 10 years, you're not just choosing them because of their email address. There's a lot more to it than that at this point. Do you remember the first company of yours that I ever covered? VoiceMe. It was VoiceMe.

20:26Would you like to tell our audience what VoiceMe is? Voice.me is a consumer app focused on the worlds of manga and anime. They started as a platform where you could come consume content and have now unsurprisingly expanded into an AI business, as they all do. The natural progression. The natural progression. Crypto AI, consumer AI, any business AI. But that really enables anyone to be a creator, anyone to be in the author of, you know, their own magical universe and invite folks in to chat with their characters, read their stories, what have you. But that was the one. And I'm so happy you remembered because also you have construction management tools.

21:03You have AI avatars. One of the things I think is a differentiator in this upcoming era is taste. This is something that's kind of been widely discussed and I'm incentivized to believe that's true. But I think you have interesting taste. How would you describe the kinds of deals you're looking for? Yeah. It is easy to brand oneself as I look at construction tech. I look at fintech. I look at the sector. For me, for better or for worse, it's simply not the case. My taste is much more oriented around people than anything else. And as I look ahead to next year, there's things I'm excited about, but more than anything else, there's humans I'm just tracking.

21:42And I'm like, I want to work with you regardless of what you're doing. As I look at my past four deals, let's say as an example, you start to see really similar themes emerging in terms of the founder's persona. They're young and hungry. They have a chip on their shoulder, but they've seen greatness before. And they have a technical counterpart. I think there is a specific founder persona or DNA. There's probably a couple of them that you're really seeing emerge as successful in this new AI era. And I think whether it is a 22-year-old or a 30-year-old, the unifying theme around a lot of them is velocity.

22:16I think we are living in an era that meaningfully rewards velocity. And I don't really anticipate that changing. Now, we've also talked here implicitly about how revenue at this point is fairy dust. Yes. What are you relying on in terms of metrics as you're looking at these founders, looking at these businesses? I really view revenue as not an entirely unhelpful, but a little bit of a lagging indicator or a vanity metric. As I sort of think about going a layer deeper of what underpins durable revenue, it really is engagement, usage, customer love. And so metrics I care a lot about is what is the ROI of this platform?