EP 100: Jeremy Levine (Partner, Bessemer) Reflects on His Best and Worst Investments

30:23And then I realized quickly, like I wanted to, like I missed in computer science or in a lot of science, in an academic environment, you're doing an assignment or a project and you can get to like the right answer. And that appealed to me a lot. And with business and consulting, it's hard to know what the right answer is. It's hard to measure the quality of the answer. And so I really wanted to do investing and that ended up being my second job. And I thought about lots of different kinds of investing. the best job I could get happened to be in what we now call private equity, but back then was leveraged by investing.

30:57And it appealed to me because I like thinking about the, it's like a game and I like games a lot and investing or making money is a game that's very easy to measure the results of. And that was somehow satisfying to me. I mean, I like money. I have no problem with money, but like, I wasn't focused on making money per se. I was more focused on playing a game where it's very easy to measure the outcomes and keep score in some ways. But the domain at the time, there was no such thing as software or private equity or technology private equity. We invested in metal bending businesses, specialty chemical businesses.

31:34These are sort of old industrial businesses. And the domain just wasn't that interesting to me. And so I left and I was actually on my way to business school. And then I had this free summer in between my job and business school. And I took a job at a startup. and um and that was just like wildly eye-opening because my first two jobs were in these sort of elite ivory tower kind of companies like very small incredibly talented people who you know came from like the most selective um accomplished academic environments and so forth and um and now all of a sudden I was in a company where there was an entrepreneur who like figured out how to create three pennies out of two pennies.

32:12Um, and it was much more kind of, you know, bare knuckle brass tax tactics on like, how do we create something here? Um, and, uh, and it quickly became a bigger company with more people, not cause it was necessarily successful, but it was, it, it raised money successfully. 2000 or 1999, summer 1999 is when I started. Um, and, uh, and I had a really interesting skill set at the time because I understood computer science and the, and software, we were making software, but I had some business sense and, and understood kind of what investors did having had two years in consulting and two, you know, a whopping two years in investing.

32:50Um, but I realized really quickly, like, I did not like it. Um, and I did, I did it for a full two years, but like, there are all these people involved. And, um, and, and, you know, one person was like, you know, my, my kid is sick and someone else is like, I don't like this job anymore. What were my career prospects? And it was like, there's so much time spent on helping people deal with their problems. And that was not fun for me. I like being able to sit in front of a machine and tell the machine what to do and get the output. Like that was much more rewarding to me. And also when you work inside of a company, if you're really good at something, you work on a very specific problem and you can become really expert at it, but you're really, really focused and it's very easy to lose sight of the big picture and i'm much more of a big picture person um and so i wanted to go back and do something in investing again but having tasted software and technology i'm like i i need to be in this domain and so my fourth job was at bessemer doing venture capital you were going to go to stanford gsp and i never i never made it and by the way i i i yeah deferred and then i didn't defer i told them a week before i was supposed to you up for classes that i i would like to defer and they said you can't do that now and then they deferred you uh the next go around well they said to me but look in a year you'll be even more um experienced so just apply again and and i fell for it and says okay and then i applied again a year later and they're like no um and so in hindsight it was obvious but i was whatever 25 years old and i didn't realize that uh i was burning a bridge at the time but So what was the connection to Bessemer?

34:26How'd you actually get looped in? I just started, I mean, this was a tough period. This is May of 2001. I guess that's when I started. So it was probably February or March of 2001. It was not a pretty world. The economy had been contracting. The internet bubble had burst. The telecom business was still going well, but it was about to burst just a bunch of months later. And so I was looking for a job. And so I I must have sent emails to a hundred people in all various parts of the investment business. And I basically got three people to take me seriously. At the time, there was this hugely sharp distinction between a quote unquote pre-MBA and a post-MBA.

35:14And I would, had I gone to business school, I would have been graduating like right then. And so my comparison set were people who were post MBAs, but I was tagged by many of these firms and people as a pre MBA because I didn't actually have the degree, which is super frustrating because I was like, I'm just as experienced. In fact, I have more experience because I have, in fact, 50 % more work experience than they do. I was effectively six years out of college. But nonetheless, that was hugely limiting at the time. The industry was very structured and rigorous, like you fit into this bucket or that bucket.

35:44but the firm i worked at before business school offered me to come back um and i think they thought of it as it was a value buy because they could kind of get me on a free mba basis even though this is the lbo for me i didn't really want to do that but i needed a job i mean um and so uh and then there was a venture firm that um it no longer exists um that uh that offered me job in california what was the name um at the time it was called charter growth capital okay i think it ultimately became or it was the it it evolved into uh focus ventures okay yeah um and and they were more willing to accept the fact like maybe it would be a career as opposed to just a two-year job um i didn't really want to move to california had i wanted to move to california i probably would have gone to stanford that was part of why i didn't go to stanford too and then um And Bessemer historically, well, not historically, but in recent years at that point, had an office in Menlo Park and an office in Wellesley Hills outside of Boston and no investing office in New York.

36:48But a couple of years before, hired a former Bessemer-backed entrepreneur to start a New York office. That wasn't actually the design. The design was for him to move to Boston and join the Boston office. But he refused, and they sort of let him open up an office originally at his house in Mamaroneck, New York. and then eventually he opened up an office in Larchmont, New York. And as someone who had lived in Manhattan for my first six years out of college, I didn't know where Larchmont, New York was, except to take a Metro North train to get there. It's 45 minutes to an hour, probably. Yeah, about half an hour.

37:20It's a closed suburb, but nonetheless. Anyway, and that was like, I was offered a sort of a two-year dead-end job. I always wondered why Bessemer was in Larchmont for all that time. It's basically one entrepreneur just lived there and built around it. So his name is Bob Goodman. And Bob convinced this other partner, Rob Stavis, who had a very successful career as an arbitrage trader on Wall Street and had retired at something like the ripe old age of 39. And Bob and Rob knew each other. They both lived in and around Larchmont and Mimarinac. And Bob convinced Rob on a part-time basis to come look at venture deals.

37:57And they had run into each other as almost angel investors. and so Rob agreed on a part-time basis to start working at Bessemer and Bob's idea was if he can convince Rob to hire an associate who would be working full-time that'll like suck Rob in more because he'll have responsibility for this person so I was that person I was working for a part-time partner in Larchmont while living in in Manhattan that was my was there any conditional like hey we're doing this for two years or like you, I mean, how did they frame it to you? It was, it was, it was, it wasn't a hard definition, but every person who had done the job up until then did it for two years and then moved on.

38:37And so it was, and, and, and I've told the story to others, but my, you know, my, my dad's a doctor, my mom's a teacher. I'm now in my fourth job, six years after college. Like they did one job effectively for their entire careers. And, uh, and I was also making less money than I did in my second job after college. And it had been defined as two years, which means I was going to be onto my fifth job when I was eight years out of college. And they were both concerned, like, what is wrong with you? Little did they know you were just Gen Z before it was... Exactly. This is now in vogue again. You were there for a while.

39:12It's interesting. There's a lot of people, I guess, and part of this is timing, but a lot of the people I actually look up to and have learned from in some ways either by you know observing or by being being closer to all sort of started in a similar vintage of time and part of this maybe is just like my age versus their age or stuff but you did it near Jaguar battery was my mentor and he did it Rob Ward at Meritech has been a mentor to me he did I think Fenton started around the same time. My partner, Scott Rainey started around the same time. There's some like this post-internet bubble thing, which should have been the like valley.

39:51Obviously, it was a nice run up after that period, minus, you know, the little 08 pullback and then what we've experienced recently. But there is some survivorship that has come from that like vintage of people starting. I think survivorship is a good word for it. I think the other thing is that, I mean, this is only clear in hindsight, but one is if you're going to do something that tons of smart people are doing, it's going to be really competitive and it's hard to compete with really lots and lots of smart people. And so in 01, no one kind of wanted to do it. And so there's a lot less competition.

40:26So that was factor number one. And then factor number two is that the internet bubble was a special thing. And I've reflected on this a number of times before, but if you were in the venture business from 1996 through 2000, you made so much money in such a short period of time because of this unbelievable explosion that you then sat there in 2001 looking forward at what appeared to be bleak prospects. And the potential compensation was so dramatically smaller than what you'd already earned. A lot of the people who were actually good at it said, why am I doing this anymore? And so not only did you have very few people coming in because it didn't look so attractive, but you also had all this incredible talent basically saying, we're going to hang it up.

41:13And so it was this amazing time period where you could be of only average intelligence and be successful because the old timers who knew what they were doing were kind of leaving. And you didn't have this massive influx of new people. Whereas I compare that to, say, 2019, when nobody was retiring from venture capital and there was this incredible influx of competition. And it's just, you know, competition is the most destructive force in all of business, in any industry. And so go someplace where there isn't any and you're going to do much better. That's funny. I've reflected on this before, but my friends from 2013, 14, when I got into venture, all, for the most part, my associate friends at other firms are leading firms today, at least in part, like general partners at their firm.

42:04Brian Feinstein among them. And reflecting on it, it's actually not that I'm a good friend picker. We were all doing software in 2013, 2014. That helps. I think back on I was a liberal arts school major from a no-name boutique investment bank. I was just in the software industry and Battery needed someone to do software. And I was just so well-versed. And I could talk about all the metrics, all the analysis. I knew the history of the database wars in the 80s because that was a hack for me to sound smarter and more mature than I was. And so I'd be like, oh, I know. This is like PeopleSoft. And obviously that hostile takeover with Ellison and all.

42:47And they're like, how old is this person? It was like my little hack for it. And it just happened to be software. That was totally random. And it wasn't like I was software-resigning the world and I needed to be a part of it. It was like, that's what I got staffed on. And that's where I started, which is just like a funny serendipity of all this stuff. And so when people ask, I'm sure you experience the same thing, but people are like, can I pick your brain on my career prospects? I'm like, sure. Or how did you get to where you... And I'm like, yeah, let's talk about it. Don't take anything from it though.

43:17Everything I did, maybe there's some broad meta lesson of try to find something that's going to be more interesting tomorrow than it was today and get there before other people are. But there's no pattern matching from my specific experience that you can do. It's like there was the randomness and serendipity in that moment in time which is interesting i think that's i think that's true but also like you you um yeah like as i reflect like the the big decisions that drove success um in my own career were these big macro decisions like doing venture in 2001 or deciding to internet in 2004 2005 um which and by the way those decisions were serendipitous they weren't like i plotted out pros and cons and 16 options.

44:00And like, so, so in that sense, like I share your point of view. On the other hand, I feel like I did iterate through a bunch of careers while constantly looking for one that I think I would enjoy more. And I think you can't, and maybe I'm just telling myself this as a story to make myself feel better about my own decisions, but I think you can't underestimate how much actually liking what you do matters because most jobs are hard and and if you're going to be successful it's they're super competitive and they require intense effort and work and to maintain intense effort in something that you don't really like is really hard totally um even maintaining intense effort in something you do like is hard um but if you there's virtually no chance.

44:47And so I think that, that helps. That's what, when, uh, that is the one thing I think when people are like, what, what differentiates you, uh, or like, why were you able to succeed in the industry as you rose? And I, I always am a little flippant about like, oh, I was doing software investing at the right time. Right. But it was actually, I was a nerd for software and venture. And I, that it was kind of though, like I could, I could talk forever about history of venture firms and all this stuff. And like, I just, I don't know, I became weirdly obsessed with the industry. And the first time I went to Sand Hill Road, I was like, oh my God, this is what I've been reading about.

45:22Like, this is where it all happened. And it was, I was such a dork. I was 24 years old or 25 years old. And I didn't know what venture was as a 22 year old, right? I just kind of stumbled into it at 24, 25. And it was pre, you know, Andreessen Horowitz had just started, but it wasn't this big thing. And I just remember reading TechCrunch like a nerd. And so when our LPs will ask me at times about this, and they'll be like, how much time does this actually take? Does this take up? Or like, what is the ROI? Let's just talk about, you know. And it's a funny conversation to have because they're like, is this distracting from your day to day?

45:58And I can generally explain how like the two things sort of dovetail in a lot of ways. But the other point is like, I do this nights and weekends like 100%. I do this. you know this will be we'll sit here for a while and hang out and that'll be nice but like all the preparation and stuff that's stuff i just love doing anyway and so going back and listening to podcasts that you've done before reading old blog posts or whatever that is not something that you could force on someone like hey you need to like that that's like i would do this in my free time anyway i would do it for free i would do it if i didn't get paid to do it quite literally i don't get paid to do any of this like this actually isn't really a part of the job but if you if you really love it, then it's really exciting to get up and work every day around it.

46:42Um, which, uh, I I'm curious on the parts of the job that you actually enjoy most. And we were talking earlier about like the 99.99 or whatever, uh, the versus the board thing, as you sort of think about the different components of the job. And I guess we could throw in, um, uh, mentorship potentially. Um, and also, I don't know, uh, LP like presentation management, all that stuff. I'm not sure what other components you would think about it, networking and socialization. I get a feeling that's probably not the top of your list. Like, as you think about the parts of the job you find most fulfilling, is it the board work?

47:15Is it the mentorship? Is it deciding and coming up with the actual yes or no decision, like in the adrenaline feel? I don't know if you get, I get when making a decision at the end of the day. What part of that do you like most? Yeah, no, the decision making, I mean, I think it's important, but it's stress inducing And I lose sleep over it, oftentimes leading into a decision. Like I find myself waking up in the middle of it thinking about these things, in part because like when you make the decision, you're stuck with it for years. And people are like, oh, it's like marriage. And I'm like, actually, no, like marriage has legal recourse to get out of it.

47:48I'm sure my wife wouldn't love me here, like professing that. But there's like a pretty tried and true structure at which marriages dissolve. There's not really like venture capital partnerships, one as a firm, but then two board seats. it's not an easy thing to get rid of, right? So you're really tied in. I mean, I'm happily married for 19 years, and so I don't know divorce firsthand, but I've heard about really messy divorces, and I suspect trying to get out of an investment would be similarly messy. So maybe they're more similar than they are dissimilar. But for me, it's very clear. The thing that I just love, and it doesn't happen all that often, and so it's a bit, like now we all know, thanks to Facebook and these other social networks about dopamine and how it works on the brain, But for me, the dopamine hit comes when I'm in a meeting with an entrepreneur or company and they tell me something that I never heard or understood before.

48:41And sometimes they realize they're sharing an insight and sometimes they don't even necessarily realize what an insight it is. But I live for that. That is so fun, so exciting. And, you know, it's sort of trite in the venture business to talk about how you'll meet with 100 or 200 or 300 companies for every one that you invest in. And, in fact, I'm fond of telling some of the young folks who are trying to get jobs at Bessemer, like, if you think about that, that means if it's one out of 300, it means 299 out of 300 units of your time at work are spent doing something that's like taking out the garbage.

49:18That is not glamorous. We don't talk about that. We talk about all these wonderful companies that we get to be associated with. But the truth is, most of the time is spent with companies that aren't interesting. And then you have the awkward and unrewarding task of then telling them why you're not investing, which isn't fun either. but when you hear about some idea or some insight or some opportunity that someone can exploit in a positive way and and ideally also make the world more interesting or better that's just really neat and I don't think there's any job on the planet where you get to see the volume of those kind of things that you do in venture capital and so that gets me really excited and then of course once you hear it then you go into the stress mode about like well how am I going to convince this entrepreneur that i'm the right or we are the right group to work with and how do i now negotiate a deal and all these other stressful elements of it um but i think that that makes it worth worthwhile and then what's really neat about it is that you get while the feedback loops are long you do it's it's a little bit like um in high school or in college when you get an exam back with a grade um you get this feedback on whether your choices are good or not um and uh and what you thought was really insightful, you might find out six months to six years later actually wasn't insightful.

50:40It was just wrong. And that's not very fun. But sometimes you get this feedback and it's like, you're right. And the best moments are when you felt like it was an insight. Other people are like, what are you doing? That seems so stupid. And then a few years later, you're proven right. And that's like magical. Yeah, that is a, I've had a few, not not pinterest linkedin shopify types but i've i've had a few of those that were like uh i actually think probably most of my most successful investments if you call it that early in my career had been like a little they certainly weren't hot uh when they were when they were fundraising there was like this little unique insight that i felt like i maybe had or we had on the team that was a little different than everyone else.

51:29And when you're confident and there's a little arrogance that you've realized something that maybe other people haven't, it's a really good feeling. It's like, no, no, no, you'll see it. I'm pretty confident you'll see it. Now there's the insecurities that come when it doesn't happen and all the psychological inputs of it. But on the investing style point, I think you're one of the few early stage VCs I've said i've heard um talk about like price sensitivity and uh for the most part there's like this adage of like well they'll work or they won't and uh you know they'll be big companies or not but like price isn't going to be the determinant of success at mostly series a which is what i think of of you waking up every day thinking about um how do you think about price as a as a component of your decisioning yeah i i think this idea that price doesn't matter that it's binary is just wildly flawed and lazy thinking.

52:27I think it's just dead wrong. And the mat is undeniable. So if you have a fund and it's a fantastic venture fund and it returns, say, 5X, if you paid twice the price on all those deals, it would have returned 2.5X, which is not bad, but that's not a great performing fund. And so price has to matter. Now, if your only choice is to invest in a company that ultimately accretes value a hundredfold or is going to accrete value a hundredfold and you wanted to invest at a price where it would have accreted 200 fold, yes, it is a mistake with the benefit of hindsight to have said no when you only would have made a hundred times return, but you don't know in advance.

53:10If you did, it'd be a really easy job. Then you'd only invest in the good ones, not the bad ones, which nobody, no matter how good they are at this business, has been able to do. So I think the idea that valuation doesn't matter is fundamentally wrong. And that in order to convince yourself that's the case, you have to travel like a single path through history and think about a single decision. But that's just not the way the world works. Or that's not the way the venture world works where we make a bunch of decisions and an aggregate price absolutely matters. And so how you decide what is the right price to pay or what's too much, it's definitely art.

53:48And only, again, with the benefit of hindsight, can you evaluate whether you made a good decision or a bad decision? But I like to think about it as if I'm playing the game many dozens or hundreds of times and that you're going to get a range of outcomes on any given company or across any portfolio. And the math is a math. It absolutely matters. And so I think there have been a few instances in which I chose not to invest in a company and it ended up being really successful. and obviously I regret those. But I also, I take solace in the fact that I'll try to convince myself, actually, for the risk that you were being asked to take, you made the right decision, even though this one course through life that we took makes it look bad.

54:35And I have a bunch of those. Oh, yeah. It feels like we have the same psychological, you know, safety blankets or whatever on this stuff. And it's hard to know. It's like, no, no, I wasn't wrong. I was right in my thinking. the world just proved the distribution it was the bottom half of the distribution i actually knew it was you know 10 chance of 100x 90 chance of something less than that and it happened to be the 90 right but but look so my my favorite story of or example of this which i think also maybe uses this for like how hard this job is um so we had we had backed um this uh pair of entrepreneurs named mark and vanit um and they built this business called diapers.com and it was pretty Contrary at the time, it was 2007, no one in BC was doing e-commerce and they built a successful e-commerce company.

55:22And ultimately they had Amazon and Walmart in a bidding war and they sold it to Amazon and everybody did really well. And then they went and worked at Amazon for a while. So they really understood e-commerce even better from inside the belly of the beast. And then Mark approached me, this is Mark Lohr, and he approached me and he said, hey, I'm doing another company. this is a business called jet and um and i want to raise some money i was like great like i'll invest five million dollars we'll get like a normal venture taking he's like well i'm raising 50 million at 80 pre i was like well mark you don't have anything yet he's like yeah but it's a really good idea and so and mark had made us a lot of money and like i have a ton of respect for mark i had then i still do now um but i was trying to get my head around like 50 million dollars for at 80 pre for a company that doesn't even really exist yet.

56:14I said, well, tell me the idea. And he described the idea. And the idea was basically kind of like a Costco on the internet. And so we're not going to make any margin on any of the products we sell, but we're going to have an incredible selection, incredibly cheap prices, and we're going to charge a membership fee. And we're going to make all the profits on the membership fee, which is basically the Costco model um and uh And I didn't think it would work. um and uh and and i also said to him i'm like well mark you don't need 50 million dollars to figure that out you could build that and test that with five or seven million dollars um uh which i think mark acknowledged but he said i don't have to because i can get 50 million dollars and and basically he went around and raised all the money he came back he looked like i saved you a slug because you invested in my last company and and do you want to invest and i think it was maybe a 10 or$15 million piece in the round.

57:07And ultimately a combination of like price that he was asking, the amount of money he was raising before he had built anything. And the fact that I just didn't believe that idea had merit on the internet. I said, no. And, and it turns out that if you fast forward, like, I guess the headline is like, I was wildly wrong in that he sold the company to Walmart for$3 billion and we would have made a very handsome multiple of our money had we invested. So definitively, it was the wrong decision. On the other hand, the idea didn't work. He pivoted the idea to something else. It became Jet. He did try to make money on the transactions.

57:45People wouldn't, there wasn't much tolerance to pay a subscription or membership fee. And by the way, even Jet wasn't really working. And many years before, in the final days of the Amazon Walmart bidding war to buy diapers.com, we went back to Walmart and said, you need to beat a$500 million price or the answer is no. And Walmart at the time was advised by, I believe, JP Morgan as their banker. And they took the feedback and they basically said, we think you're bluffing and they wouldn't hit the price. And they were wrong. It wasn't a bluff. And we signed a voicemail messages on my office phone when that was a thing from the CEO of Walmart saying, like, please don't sell the company to Amazon.

58:36Like, we're serious. But it was too late. Like, we signed a binding no-shop with Amazon. So fast forward a bunch of years later, when Mark went to Walmart again, after last time they failed to buy his company and said, you need to pay$3 billion, it was like a seven-year setup. Because many years before, or whatever it was, five years set up, many years before, he went to them with a price and they said, that's a bluff and they refused to pay and they lost the deal. And so this time when he went to them with a price, and I don't, I wasn't inside one, I don't know what they're thinking, but my guess is like, wow, last time he told us the price, it seemed really high.

59:13We said no and we lost. So this time he came to us with a price. It seems really high, but we're just going to do it. And so it was like 19 things were lined up for this thing to work. And the fundamental business, I don't think it was working, but it was still a great outcome. And it's like, you can analyze the hell out of everything and be kind of right, but still be wrong. And by the way, it works in reverse too, where you can have all the reasons why you did invest, and it should have made sense. But some really bad string of luck went the other way. And so there's just so many random factors you have to be tolerant of.

59:45The Jet.com story is always a fascinating one. just to think about because all of those components of it were that it didn't like your investment thesis was actually right and your considerations were right. And yet you were very wrong because of all it took. They really wanted to hire Mark Lurie to run e-commerce and you know what he was doing and it worked out and I ordered wonder.com. I don't know if you've done it. You're you're on the west side of New York. You can probably do it as well. I ordered it last night for dinner. So now Mark is back at it again with ghost kitchens and all that stuff.

1:00:25So we'll see how that ends up going. But one of the ones that you did decide to do was LinkedIn. And that was a, I think, overpay by all the common definitions that existed in the venture capital industry at the time, so much so that the other investors zeroed out, which is generally for people that aren't familiar. You try to look somewhat to other people that are on the cap table that are going to the board meetings for some indication on their sentiment around the business. And it's usually not a great sign if they're saying, hey, we're going to put$0 into this round. That generally means they're on the inside they've seen all the board decks and they think you're crazy which is what happened in linkedin so i'm curious that that obviously worked out uh and it was expensive by all definition of venture capital how what was the mental framework or the model that got you there on that one well uh so so reed hoffman who was the founder he was the person i was dealing with he was still the ceo at the time and um and he he's very clever um and obviously very talented and we struck a deal.

1:01:40And so this is going to kind of get into the weenie venture math for a minute. But typically when you agree to an investment, you agree on a valuation and there's a pre-money valuation and a post-money valuation. And I was sensitive to how much ownership we were getting in the business and I didn't know how much money the Reeds existing investors would invest in the company. And so he happily steered me toward, let's just agree on what the post money valuation is going to be. Which is generally actually, I'll lean there more because I guess, again, this is nerdy venture math, but if you fix on the post, then your ownership is fixed in the business and then they can raise as much as they want.

1:02:23If they decide to raise$10 million or$100 million, your ownership is going to be the same in it. Now, generally people try to set some bounds of between 30 and 50 or whatever it is so at least you have a range for what it's going to come in at but oh well so so um so but as a result of that structure the more money that would get invested in the round meant the lower the valuation was going to go because the the pre-money plus the amount you invest equal to what was the actual post at the time it was two uh 250 posts 250 posts so 250 posts raising 50 you're giving up 20 of the company 250 posts raising 25 you're giving up 10 of the company in that situation Correct.

1:03:03But also, and so I think we invested$12.5 million in the round. So we were buying 5 % of the company. And so if no one else were to invest, the deal would have been 237.5 pre-250 posts. But if the insiders invested their pro rata, which was due to about half the round, it would have been a$25 million round, which would have meant it would have been a$225 million pre-money. So it would have been, whatever that is, a 5 % or 7 % drop in valuation if they invested. And by the way, from our perspective, from my perspective, I was going to own 5 % of the company. You'd much rather own 5 % of a company that has$25 million of fresh cash than 5 % of a company that has$12.5 million of fresh cash.

1:03:43So I was heavily motivated to see the insiders invest as much as they possibly could. And so I had phone calls with both of them, essentially laying out my case. Who was it, Greylock and? It was Greylock and Sequoia. and uh and i was laying out my case all but begging them to like please invest because it was just going to make my deal that i had agreed to with reed better um and they both came back at zero which i suspect reed knew was going to happen ahead of time which is why he agreed to fix the post money and so he was a step ahead of me of course in the end like that was a 250 million dollar valuation the company that was in 2006 the company went public and then microsoft bought it for 20 something billion dollars so effective like 100x and so 20 something i think it's like 27 or it's like high 20s it's not like uh we're rounding down yes and there was there was some delusion there was another round later and then there was an ipo round but it would have been something on the order i think it would have been a good investment it was they should have participated uh but but i'll tell you like so the and had i i was blissfully ignorant of what the insiders were going to do so it's probably helpful because i didn't have to get up the courage and then once I found out they weren't going to invest, I was kind of committed.

1:04:51I mean, I could have backed out, but it would have been awkward. But I learned a lesson. And the lesson I learned was that sometimes, interestingly, when you're an insider, you know less about a company than when you're an outsider. Because when you're an insider, you tend to get lazy. And you tend to absorb all the information that you're given by the management team in the form of board decks and other content discussions. And you don't really do any independent diligence anymore because you feel like you're getting all the information from the source. You don't need to. And you're committed oftentimes.

1:05:22Like, hey, I'm in it. And so I can go do a bunch of external diligence calls, which you probably should do before a new round is coming together in general. I would recommend it. But like your ownership isn't going to change that much in that next round if you participate three or five or whatever it could have been for them. Although, I mean, that is true. Although, you know, they each could have invested, what are five or$10 million for 100X? I think they would have done the work. But I think the point is that when you're outside, you feel like you have to do more work. And oftentimes that more work leads you to insider information that you don't necessarily have when you're on the inside.

1:05:58And so you can actually understand a company better if you're diligent and on the inside. That's the best situation. But if you're, lazy is maybe too harsh of a word, but if you're content to just get what you get from management compared to someone who isn't getting unfiltered access to management, but they're getting something from management. Like I was engaged with Reid and his team to understand what they had to say, but I also did all my outside homework. You can actually have a sharper perspective. And so I think that has stuck with me. That was in 2006, so it was a long time ago. And so both because now when I see investors approach a company that I've already invested in, and they do all this outside-in homework and talk to tons of customers or partners or so forth, um i often want to get access to their information i ask for it every time and it's it's always helpful one to know how they position like oh interesting so they do that you know that's that's uh or or oh they use bain clearly or mckenzie based on this font formula depending on the firm but uh but uh yeah it's it's always informative to go through and do that i actually give you guys a lot of credit i mean this is again we're nerding out of venture stuff but i remember when I was at Battery, we invested in Service Titan.

1:07:09And one of the rounds, you guys zeroed out. And it was like, nope, market did the math, doesn't work. Next round came in and did like super, super parata or like maybe tried to co-lead or something. It was like, actually, we redid the work. We thought about it with layering on payments or whatever it was. Our conclusion is the exact opposite. And we're willing to pay 2x the price nine months later or something for it. So I actually like this honesty of thinking and iterating on it. I've seen it manifest its announcement or sounds, whatever. I don't know what it's actually going to be worth, but it's hopefully a lot.

1:07:43Yeah, it seems like a lot. It seems like eight, 10 plus billion dollars, I think, is probably a pretty reasonable estimate for it. So I give you guys credit for like that, that thoughtfulness and perspective around stuff. What what is the commonality of deals that you actually get excited about then? Like, what what are the things? I mean, that insight point we talked about earlier. And so obviously it seems like that's probably one of the things that moves the needle. But like, I mean, honestly, it's all over the map and maybe even getting back to the, my, my, my Mark Lohr story from before, like I am, um, you know, some people, um, call it like the, do you bet on the jockey?

1:08:18Do you bet on the horse? If you've heard that metaphor before, um, and, and I am like very clearly a horse better, not a jockey better. Had I been a jockey better, I would have bet on Mark again. I would have done really well. And so maybe, maybe it's smarter to be a jockey better. um but um but i love thinking about businesses business models industry industry dynamics how something will evolve um and uh and oftentimes the the insider the the spark that i'll hear about that gets me excited about a business is one that i can anticipate how that will lead to a you know a permanent or at least nothing's permanent in this world but a semi-permanent advantage and like i love thinking that through and um and my general view is a a mediocre builder with a phenomenal idea or insight is much more likely to do well than a phenomenal builder with a really mediocre insight.

1:09:12Of course, that's wrong when the phenomenal builder realizes the idea is mediocre and then shifts to something else and does something fantastic. But I think that's actually really rare and much harder to do. And that I I would rather get lucky, not because the great entrepreneur pivots to a better idea. I'd rather get lucky because the entrepreneur who I had a hard time assessing, who has a great idea, turns out to be a phenomenal entrepreneur. And so in almost all the investments that have worked out really well for me, that happened. And that at the time, the entrepreneur, I mean, obviously they're smart and hardworking and so forth, but it's really hard to know when someone who's running a 15 person company, whether they're actually going to be good at running a 15 ,000 person company.

1:09:59There's only one way to test that, which is to see them get there. But when that happens, it's really magical. Yeah, there is this element of it. I think once upon a time, I was probably 100-0 on product market versus team. I was just like, hey, there's the saying when a great team meets a good market or a bad market, like the bad market wins or something, right? and I also think that's probably a component of stage investing for me. I mean, you have some interesting examples and I think about Toby Lukey, who you've been fortunate enough to work with for a long time at Shopify or Jeremy Stoppelman at Yelp or some of these iconic names that people look up to now.

1:10:43But Shopify went public at what valuation? Like$800 million or$1.2 billion? Yeah, about a billion. Maybe between one and two. One and two. And like Toby started it as like, I forget the backstory, but it was like a snowboarding, like offshoot thing. So he could sell snowboards or, and I, I, he's a, he's a very understated guy in general with like a quiet intensity. But the, the Toby Lukey of today was not the perception people had of Toby Lukey when you originally invested or Jeremy Sopelman today. The perception wasn't what they have today. there's kind of this like um yeah i guess it's hindsight bias on entrepreneurs and what they ultimately come to i'm curious how you watching those people develop into what uh they they have become both as people but then also perception i guess how much of it is there the same people that they were then and it's just they happen to succeed and so people treat them and differently with much more canonical reverence versus they've they've evolved in a meaningful way I think a little a little bit of both I mean they're um well on them first you know they're a lot you know money and power change people um and so when you're a founder of a 15 person or 50 person startup you probably don't have much money or power and when all of a sudden that company is thousands of people worth billions or 100 billion dollars you have a lot of money and a lot of power.

1:12:13I'm a lot frontier internally as a general partner than I was in his associate. It's amazing. Everyone loves my jokes. It's like way better. Yeah. But and so I think you for both Jeremy and Toby, what's remarkable is despite enormous success, like they've stayed true to a few really important things. Like they're both really self-aware and they both understand their strengths and their weaknesses. They as a result, they end up spending their time and their focus on the things that they're really good at and enjoy and find other people who are really talented in the places or the areas that they either don't want to do or aren't very good at doing.

1:12:46Whereas other people who are more likely corrupted by power and success think they're just good at everything. And then they start spending their time in areas that they're not very good at and in many cases don't even like to do. And that's sort of the beginning of the end. They're much more likely to flame out or decide it's not for them or just start to face failure because when you do something that you're not good at and don't like to do, you're much more likely to fail. And so there's a thread in both of them that's clearly the same, But at the same time, like, you know, I was joking with Toby.

1:13:14I'm, he's, I mean, he's, he's a German immigrant to Canada. But I think of him as Canadian because he spent most of his adult life in Canada. And, and, you know, there's, there's this, like, Americans are a little bit more harsh and, and, and aggressive and Canadians are a little bit more nice. and so in many ways that you know there's sort of this sort of uh it's not real because i think actually both are great companies and both can win but there's sort of the shopify and e-commerce and amazon and e-commerce and amazon is known as this cutthroat company and shopify is known as this much nicer company and so i was as toby's business crew i was trying to get him to think about how he could take advantage of some of the heft of shopify and shopify as a distribution channel and so i I encouraged him to read this book called Cable Cowboys.

1:14:06Great book. So it's the John Malone story. And the metaphor is that John Malone owned a cable company and all these TV channels, cable networks, wanted to have distribution on his wire to people's homes. And so in order to get access to the homes and have him carry these networks, he insisted on owning a piece of the cable networks. And so he ended up building this other business, which owned, you know, 10, 15, 20, 25 % stakes in all these cable networks, which he got for free, essentially, you know, in exchange for letting these cable companies have access to the households that he had wired.

1:14:42And the metaphor for Shopify is you have all these merchants now who use your software and all these other software companies want to sell their software to the same merchants. And so, and Shopify has this app store. And so my argument was, instead of just letting everybody have access to all your merchants, maybe you should be getting equity stakes in some of these companies. And I was trying to say, like, that's probably not for you, Toby or Shopify, but at least understand how someone else in a similar position capitalized on it to make his business even better. And so Toby read the book and he got back and was like, I didn't really like the book very much, but I met him.

1:15:20I'm like, what do you mean you met him? He's like, yeah, I just, I called John Malone and, you know, I met him for lunch. I'm like, that's not fair. Like, I read the book. I'm like, that's kind of cool. You read the book and you're like, you go talk to the guy? Like, you know, that, and so that is not something that Toby in 2010 could have done, but Toby in 2020, like, no problem. That's impressive. Yeah, Malone, also, if you want to know why we suffer through the Dolan fandom or Dolan ownership of the Knicks, you get a flavor of that in Cable Cowboys with Dolan's father and building out all his stuff.

1:15:51Yeah, that's interesting with power and reverence and money and all of that. There's definitely that level of influence. I've actually found one of the interesting – it's an ancillary sort of derivative thing, but there's this adage of backing repeat entrepreneurs or concept of it. And there's elements of it that are – it's really great. And I've been fortunate enough to work with some before. when they've been really successful and they have like other options of not grinding on a startup uh it's pretty attractive just to if you could go be the uh whatever go go on the beach or be an independent board member or whatever i i think about brett taylor now as like he's on shopify's board he's chairman of open ai he was former ceo of uh salesforce co-ceo of salesforce and he's doing another company and like another company is such a grind and i i think brett's a very special individual from everything i've been able to tell and so i don't mean to speak of him individually but i'm like gosh if i could just go hang out and go to shopify's board meetings and then go to open ai's board meetings and be like the ceo of like one of the biggest software companies in the world like all that seems pretty versus hooking up the wi-fi in like the office building or like figuring out where the you know what our hr benefits policies are going to be or like recruiting the incremental engineer to come on board.

1:17:14It's an interesting thing of once you've had success, there's a ton of elements of it. Once you've had it, you get tons of advantages. And I think maybe the AI world, because of the capital intensity in some ways is going to be different. Your ability to raise money is something of a strategic advantage and a big component of your ability to drive outcomes. I don't know. But I think about that example of like, if you have alternative paths of doing things? Do you really want to do a startup versus Toby's alternative path was probably to keep grinding on this to make it work or go back to the snowboard store or something?

1:17:49Yeah, he's talked about it a lot. He didn't really like working for other people. And so if you don't like working for other people, and I don't think he has a college degree. So if you're not college educated and don't like working for other people, what else can you do besides their company? I'm committed at that point to use, I guess, a poker term there. Hey, this is Logan interjecting here for a second. For about three minutes, we lost some of Jeremy's audio. So we've done our best to recover it. But you're about to hear three minutes of recovered audio that doesn't sound nearly as clean as the rest of the episode from Jeremy.

1:18:22If it bothers you, feel free to skip ahead. If not, power through. It's only three minutes. And it's good content that you'll hear regardless. us. I heard you say you've had three good ideas ever in investing. I'm curious what those are. I think I can maybe guess. I assume they mean the broad themes by which you've picked to make investments, but I'm curious what the three good ideas are. So we tend to focus at Vesmer on roadmaps, and a roadmap is like a collection hypothesis that suggests there'll be opportunities for little companies to become big companies because of some new technology or demographic shift or, or, or some, some catalyst.

1:19:01And, and so the first, and if you pick the roadmap, right, you, there's a lot of leeway in picking mediocre companies and still being successful. If you get the roadmap wrong, it doesn't really matter what company you pick. It's not going to work. At least that's our, that's our theory. I think it's right. I mean, it's honestly, Eric Vistria used an analogy on this of like the best boat in the world or best sailboat in the world doesn't move without wind. It's like, If you're in a bad market, but a little dinghy can fly if it's really blowing outside. And so I think that's an interesting analogy.

1:19:33Yeah. I'm going to start co-opting it as my own. Not enough people listen to all the episodes. I can just be like, yeah, I had this great idea, Jeremy. This is what I call it. But that is what you got about it. You hear a great idea from somebody and then you refine it. That's actually one of the jokes I'll tell entrepreneurs is I'm like, I started my career. I had no good ideas. and I said something stupid and I got corrected on it. And then I had one. And so then I would go around and saying one. And now I'm up to about 20. And so that means four board meetings a year. You've got me for five years if I say one every board meeting.

1:20:06And then I either need to add more or I'm going to be out. We're going to start back over again with the same 20. And so when I say something, I'll call like an entrepreneur I work up with. I'm like, this is one of my 20. I promise you, this is a good thing. This is not an opinion. This is really advice you should take. And so one of the 20 things, maybe I'll add to it after this episode. I like that. But when I think about the process of building and developing a roadmap, that is what it is. You create an idea, and then you go to people who are expert in that domain, and you share the idea with them.

1:20:41And if they agree with it wildly, then you know you're on to something. If they don't, they'll tell you where they think you're wrong, and then you incorporate that into your idea. and keep doing that over and over again with more people until you have real confidence that the idea has merit or maybe there's nothing there. So that is very much the discovery process that we tend to go through. But back to your question, like what are the ideas? The first one was that you could build a business on the internet where all the content was created by the users. And that's obvious now at the time. No one had really done it.

1:21:11And a few people were trying. And there was huge questions like, well, content's created by the users. like how are you going to make any money off of that because you need the users to create the content so you can't charge them and if it's user generated content it's sort of low quality and so you can't have ads next to that and like how is it going to work um and it just turns out that that idea was dead right but in 2004 2005 and 2006 very few people shared that and these were consumer companies and so um i benefited we benefited enormously both because the idea was right led to Yelp and LinkedIn and Fandom and actually a little bit later, Pinterest.

1:21:45But no one else is doing it. In fact, everyone else is still responding to the dot-bomb implosion of all these dot-bomb consumer companies. And therefore, they didn't want to touch any of this stuff. And so my favorite example is Jerry Sofferman. He was a member of the PayPal mafia, which is a huge thing today. Even then in 2004, 2005, people knew about the PayPal mafia. And he was the, I think he ran engineering. He had a pretty senior role there despite being a very young person. And so he had access to every venture capitalist in Silicon Valley. And I think he went up and down Sand Hill Road and he mostly got funny looks from folks.

1:22:25And then some random 20 something who was living at the time in either Boston or New York, that was me, called him out of the blue or emailed him and said, like, I think you have an interesting business. He's like, well, no one else does. Like, who are you? And so being one of few people who like an idea is infinitely more valuable than being one of many people like an idea. And then by the end of 2006, lots of other people were noticing the success of some of these companies. And all of a sudden there's tons of venture capital pouring into this little category. And that's more or less when I said, I'm done.

1:23:01I stopped. But then the companies in which I already invested had this massive benefit from lots of cheap capital who came in after us. And so like, it's another way of winning, if you will, or another advantage you get. So that was the first idea. The second idea that, and that turned out pretty well. The second idea that worked out pretty well was then by 2007, I actually took a little bit of a left turn before I got onto it, but I got really interested in advertising on the internet. And I looked at lots of online ad companies and ultimately couldn't get comfortable that there was durable value.

1:23:35And there was a lot of sketchiness in the online ad networks and online ad world at that time. But I noticed the customers of the online ad networks were these e-commerce businesses. And I started looking at the e-commerce businesses and many of them had no venture capital. And this light bulb went off and it's like, well, if you're spending money on ads and you never raise venture capital, you must be making money because how else are you coming up with a budget to spend the money on the ads in the first place? And so we started talking to a bunch of these companies and realizing like, hey, maybe this is a thing.

1:24:10And the only true pure play e-commerce company that we ended up investing in was diapers.com, but it was a successful investment. But it also gave us enough insight into e-commerce that when Shopify came along, which is a software company, not an e-commerce company per se, it was easier to understand it. And so that second idea, it didn't lead to a lot of investments, but it was a very profitable idea. Yeah, it worked out. And then the third idea was driven by one of our analysts, now one of my partners, Brian, who you know. And as an analyst, he found this company called MindBody. And MindBody was a software company selling software to yoga studios.

1:24:50And it was a pretty small company, but it was trucking along with modest growth. It had been around for almost 10 years, actually, at the time. And most venture capitalists said, that's too small. If there are 50 ,000 yoga studios in America, and you sell$100 subscription per month to each one that's a five million dollar a month 60 million dollar revenue business like why bother that's not even venture worthy um and the two insights that rick solmeyer the ceo had which we benefited from greatly um and we believed in her one like yoga studios are very close to Pilates studios or very close to fitness or gyms or, and actually you can get as far away as hair salons with almost the same software.

1:25:41And so it turns out the market was quite a bit bigger than yoga. And then the second thing, which has had a profound impact on the software industry, which I think Rick might've been the first software entrepreneur to do is he started to layer in payments. And when you do payment processing, instead of just charging the hundred dollar a month subscription you can make a multiple of that in terms of your cut of the credit card processing fees and uh and i think he fundamentally changed the credit card processing business um and so that idea of vertical sass plus credit card processing came from that investment and um and we would share internally updates on like how much great progress mindbody was making um mindbody did payments before shopify did shopify's business i think at this point the majority of the business is actually from payment processing.

1:26:28And I think that insight came in part because we saw what was happening at MindBody and we're saying to the Shopify team, like, you can do this too. And by the way, it is like an improved experience for your merchant customers if they don't have to go figure out payment processing. And I think since then we've made 50 investments in software companies. Certainly benefited from that as well. There's a number of others. Toast. Toast, yeah. Procore. I mean, it goes on and on. So anyway, so. it, it, it, it's essentially, and I wouldn't say they were my ideas. I, I, I helped to capitalize on them or help push them.

1:27:04But, um, but I think it's another example of venture as a slow motion business. I've been doing it now for 23 years. And if you have three ideas that are really great in 23 years, that means it's like every six or seven years. Um, and that requires enormous patience because when you don't have a compelling idea that's somewhat differentiated, your chance of generating great returns, I think, is much, much lower. And so half the battle is just being patient and reading and exploring and waiting around long enough for the next great idea to come. And you don't feel compelled to act to be productive in the meantime, which is likely to lead to a bunch of very mediocre investments.

1:27:41The mistakes you've made or that you reflect on, not the jet.com type mistakes, but the the blind spots that maybe you had early in your career, uh, or the blind spots that maybe you even still have today. Are there things that, um, you've either course corrected on, uh, in particular, like as a, as frameworks or insights or ways you approach investments or things that, you know, you need to augment yourself with a partnership that can benefit you, uh, to, to be able to do the job as well as you do? Yeah, it's, I think, yes, for sure. I think for me, the most obvious or stark one is that I got used to doing venture the only way I could do it in the first bunch of years of my career.

1:28:35And the only way I could do it in the first bunch of my years of my career, having had no like shining success in my previous careers or in my venture career, was to go find entrepreneurs and companies that would take capital from me either because no one else wanted to give them any or because they wanted to work with somebody who was really hungry, really on top of the details, willing to kind of work, but wasn't going to have any sage advice for them because I had never been part of building anything significant before. And so that led me to have to be more deeply contrarian or just like go further off the beaten path out of necessity.

1:29:18And I also realized, or I internalized maybe subconsciously this idea that something that is quote unquote hot is just a giant waste of time because there'll be 19 other investors all over it. My chance of being the most attractive investing partner for those entrepreneurs was extremely low, if not, you know, zero. And if you do show up and quote unquote win, you've had to outbid and pay the highest price, which can often turn a really great investment opportunity into a lousy one or a mediocre one. And so I just, I kind of programmed myself like, and in fact, I laugh because we talked earlier about like, you know, the sort of style differences between different people.

1:30:02And, you know, I have an ego. It's not a, I think I keep it in check. I have, you know, some sense of, of competitiveness, but I have some colleagues who are like incredibly competitive. And when they see something that other people want to do, it, you can see it in their face, the competitive juices get going and they just want to run toward it and win. They want to win the deal. And my reaction is like, this is going to suck. this is a beauty contest. I hate entering beauty contests. I'm not that beautiful. I don't want to do this. And it's just so interesting to see such a dramatically, literally a diametrically opposite natural response from two people in the same business, even in the same firm, reacting to it.

1:30:43And so that said, I've, you know, fast forward now, that was, you know, 15 years ago, 20 years ago. Now, having been associated with some companies that have been successful um um i have a shot maybe not a great shot but a shot at competing for more competitive things um even though my initial reaction is like i don't want to do that i want to go someplace where like no one else is hanging out um and uh and i have some colleagues who get very frustrated by that because their view is like hey you're one of the people around here who's like been successful like you need to help us win those opportunities and uh whereas my my gut reaction is like i don't want to play that game don't want to spend the time it's funny my My biggest competitive juice is to see the opportunity because there's a finite number of deals that most of the things are pre-qualified in some way by the time I'll do series B and C.

1:31:32And so there's some point of clearance that they've gotten just a level of materiality, either because of prior fundraising or the amount of revenue they get to, even if it's bootstrapped or whatever, whatever the right consideration is. And I feel the competitiveness just to make sure we evaluate it. And it is, there's a handful of firms internally that, and it's not even firms, it's like people that if they do an investment that we didn't just get a clear look at. It's totally, I don't feel the need to win it necessarily, but I want a really informed opinion on why we didn't decide to do it.

1:32:09And so our team, if they hear about a deal getting done, they're like, they know to call, like not put it over Slack or they'll call me. And it's like someone in my family died. They're like, you're going to need to be sitting down for this. like uh they yeah they they got one by us and i that's where i will like because at the end of the day we need the at-bats especially at the you know whatever the early growth whatever we define ourselves as stage and so it's just being there and we don't need to win i'm fine we'll lose our fair there's a lot of good firms out there but it's like being there it's funny because so i and maybe this is just a a mental model of self-preservation but you know there's a lot of talk about FOMO, the fear of missing out and that, you know, you're clearly missing out if you don't see it.

1:32:56And I've convinced myself that I have, I have, I have Jomo, like the joy of me. Like I, I love to know I didn't spend and waste a lot of time on something that I almost certainly wasn't going to do. And it's almost like a point of pride. I think that's, that's probably a little bit disingenuous and I'm, I'm, I'm saving myself from the, having to acknowledge that like I wasn't invited to the dance at all let alone you know got to dance with the most attractive mate um but uh but also there's something to it like you can spend a lot of time chasing things um with very little to show for it and it's super frustrating yes it's very frustrating and like listen if you uh there there are a number of great firms that are going all out at all times on specific investments and so your hit rate you need to opt into the right races if you want to run the race.

1:33:47And I found myself increasingly just like if the resonance isn't there with the entrepreneur or XYZ, one of the things I'll talk to our team about internally is like, why would they pick to work with us? What is the insight we have? What is the track record of success we've had? What is the relationships we have? Is there some reason? Because there's so many good firms out there. Once upon a time, we could come up with the 10 firms that otherwise would be doing the investment. Now there's hundreds. And so it's like, if we can't explain why it's us in some very clear, articulate way, then we're the suckers at the poker table, whatever the right analogy is.

1:34:23It's like, there better be some reason that it's uniquely us, because there's infinite amounts of capital that's out there. One of the things I think is interesting, or I'd love to talk about, we've touched on different points of it along the way, but Bessemer, you've been there your whole venture career, 23 years now. As a firm, it's been around for a while. 110 years. What was the evolution through Carnegie or whatever? The US Steel? No, what was it? It was Carnegie, if you want to say it correctly. Carnegie Steel. Do they teach you that when you come in as an associate? No, I think I learned that the hard way.

1:35:05That's the appropriate way to say it. I think I was telling entrepreneur about it and they're like, that's not how you say the name. Like, oh, thank you for directing me. I appreciate that. Especially Bessemer. Exactly. No, but so Carnegie, Phipps and Frick were three Scottish immigrants or their families were all Scottish immigrant families to the US. And Carnegie started Carnegie Steel and Phipps and Frick were like his number two and number three employer executive. And they, JP Morgan, bought all the steel companies. He created the first monopoly, which is US Steel. And he bought Carnegie Steel for cash and was basically like a leverage buyout.

1:35:40And Carnegie got$400 million in 1907, which is a lot of money today. But in 1907, it's like an ungodly sum of money. And I think Phipps got$50 million. And he gave a bunch of it to each of his four children. And he put a bunch of it in what is effectively a trust. And he was really forward thinking. And he did a couple of things. One is he started investing that capital himself in other what he called high-risk, high-growth opportunities. And he was really good at it. And he invested in International Paper and Ingersoll Rand and W.R. Grace. These were all startups in the early 1900s. And then he hired non-family members, outsiders, to both invest the money and to serve as like a board of directors for this family investment company.

1:36:30and his theory was that if we keep this money together, even though eventually I'll have many descendants and today he has hundreds of descendants, we keep it together, as an investment group, we'll have the advantage of scale to be able to access things that if we split the money into all the individual descendants, they would have much smaller bits and they wouldn't have the same scale and that has served them extremely well and so they've, as a family, have generated returns that are on par with any of these top university endowments who are generally viewed to be the most sophisticated and successful institutional investors.

1:37:03And it's now been going on for 100 plus years. So was that Bessemer Trust? So that was actually Bessemer Securities, which still exists. And by the way, I should mention, Bessemer was a fourth Scottish guy. He invented the Bessemer process, which if you were in the US, exactly, you learned that was a way of making steel in high volumes very cost effectively. So he didn't name it after himself, which... Well, poor Bessemer died before anyone could actually build what he designed on paper. And then Carnegie, Phipps, and Frick built it and they got rich. But anyway, so he - So as an homage to - Exactly.

1:37:36Effectively, the true entrepreneur, the inventor, Phipps named his family entities Bessemer. And there are quite a few of them today. So initially, it was Bessemer Securities, which still exists. You can think of that as a family office. And then Bessemer Trust is sort of like a competitor to Goldman Sachs Private Wealth Group or Citibank, Private Bank. And it's essentially a private bank. And that's owned by Bessemer Securities, actually. And then Bessemer Venture Partners was the high-risk, high-growth department of Bessemer Securities. And eventually over the decades, I think around the 70s or 80s, when the focus shifted from manufacturing technologies to information technology, the then employees of the high risk, high growth department sort of spun out to have a separately named group called Bessemer Venture Partners.

1:38:29But all the money still came from the one LP, which is the Phipps family or Bessemer Securities. But they did a really smart thing, which is they said, hey, as long as we're investing in these companies, you, the employees of Bessemer Venture Partners, you also need to invest your money in the companies because we can't read all your memos and understand and second guess all your decisions. So we'll just say yes, as long as you're putting up a bunch of money each time. Principal agent problem. And they solved it really simply, which is like make the agent into a principal and then you have to worry about it.

1:39:01And so that has continued on more or less to this day. And while we've grown quite a bit and we have other limited partners as well, they continue to be our largest. It's a super close relationship. And we continue to invest a lot of our own money in all the investments, which is not only good for the FIPS found, but everybody else that keeps us well aligned. So the decision to 15, 16 years ago, you guys went to outside capital beyond that. Was that just a scale consideration and diversification of the LP base? It was a little bit scale. Actually, it was really prompted by our desire to start investing in India.

1:39:37And so we started investing in India in probably 2003. And it's kind of a random story, but we had lots of our portfolio companies starting to ask us about how they can access what at the time was a much lower cost technical labor force in India. And many of our startups are pretty small companies and they viewed us as a bigger institution, though by headcount, we're really not. And they asked us for help. Can we help them understand how to tap this source of labor in India? We also explored China at the same time. And we ended up investing in a whole bunch of companies in India from probably 2003 to 2007.

1:40:16and we wanted to do more and more of it. And at some point in our discussions with RLP, they said, look, we love what you're doing, but you're going to start to stretch our family's willingness to extend our balance sheet, particularly to one emerging economy country. And so if you want to keep doing this and keep scaling it up, and it wasn't a huge scale, then maybe you should bring on outside investors. So they kind of pushed us a little bit to do it. And we did. And so our first fund with non-BVP employees and non-FIPs entities was in 2007. And at the time, we ended up essentially raising what was a fund focused on India, but those new LPs rightly said to us, look, we don't want to just invest in your India stuff, we want to invest in all your stuff.

1:41:14So we ended up with two funds, one that was mostly India-focused, that we get a little bit of the stuff we did outside of India, and the other, which was mostly outside of India, that we get a little bit of the India exposure. And that's how we started. And then eventually we merged the two, and we eliminated that complexity. and then because no good decision isn't revisited at least 50 times more recently we actually said you know what instead of us allocating the capital to india versus the rest of the world we'll let our lps decide and and so we actually split it back out again and now there's a an india fund and a non-india fund i was just some lps uh last week the week before but i guess you guys had a nice event there recently we did over there i don't know did you go i wasn't there but I heard about it.

1:42:00I saw all the pictures in the video. It seemed like it was good. It's actually really, you know, we've been investing in India since 2003. The first eight or nine years, we did things in India that were very different from what we've done outside of India. In particular, we were investing in, we could almost think of it as companies that you could imagine investing in in America in 1950. And we thought to some extent the Indian economy in 2003 or 2005 was kind of like where the US economy was in 1950. And this was like a brokerage firm. power plants, much more basic industry, if you will. And the truth is we weren't that good at it.

1:42:37And by 2010, we kind of realized it. And coincidentally, the Indian tech economy had matured to the point where like, actually we can do in India, the same things we're doing outside of India. And so we really changed it. And we've been in some really nice companies in india that we're quite proud of particularly in consumer internet and now increasingly in software but the indian venture market hasn't been nearly as rich with exits as the u.s venture market and so it's been trying and we've been super patient and i think this event we had was almost a little bit of a celebration because it felt like the patience had paid off and and we we sold the stake of one of our india companies at a really successful gain we had another one that went public.

1:43:25And so it was a little bit of like, thank goodness we all collectively had the patience to do it. And the team in India was patient with us. And it worked. And it's hard to maintain a small partnership across 14 time zones. And so it has not been easy. 14 time zones. Jeez. And you guys have 22, 23 partners? Is that right? We do. Two of whom are in India. And the rest are spread amongst Israel, London, and various parts of the u.s how do you think about like obviously there's the geo component of it which uh the china tensions i think we've seen a bunch of implications for different venture firms and trying to figure out how to unwind or disentangle some of the stuff as geopolitical um climate has has uh has kind of ratcheted up there but um you guys have um have changed or evolved and added things even outside of geo right uh now you have a dedicated growth fund as well with people leading that um talked to brian for a long time about uh because battery has had success in buy outs in there in that model and he would always pepper me with questions about like well so how do you think about this how do you think about that and all that which now actually has its own battery uh basmer forge is that right so its own fund dedicated to it and so how do you think about the commonalities and through lines, I guess, that exist between Bessemer, the entity, and then these discrete strategies that maybe underpin it.

1:44:56Geo, I get, especially if you're doing tech-related stuff, but stages and strategies. So it's, thanks for the question, it's actually supernatural and it evolved in a very organic way. And that is, we would, And so we started off with a single fund that was focused on venture capital. And over time, we realized like, hey, when you invest early in a company and that company grows and starts to be successful, oftentimes that company will want more capital to get much higher prices. And it's fundamentally a different assessment of risk and return. And we would do that once in a while out of our fund.

1:45:34And we realize that actually having people who think just about that risk return tradeoff as a specialty might be better than all of us sometimes thinking about early and sometimes thinking about late. Though we do that too. And I think there's some element of being a general athlete or general investor that matters. And the sheer market knowledge that exists between the Series A company doing well and the Series D company. You have better information symmetry if you have people looking at later stage stuff. And actually, technically, we don't have a growth fund per se. We call it BVP Century.

1:46:06And it's meant to write much bigger checks most of the time in companies that we've already invested in. And in any event, we'll never invest, never say never, but typically speaking, when we invest from our BVP Century fund, we're also investing from our, quote unquote, original venture fund at the same time. And so you could think of it almost as an overage fund rather than a growth fund. And we had a bunch of companies that we loved and some outside investor was coming in and offering to invest$50,$100 million in those companies. And we said to ourselves after a while, like, why are we waiting for someone else to write these really great checks in our great companies?

1:46:47We should do it ourselves. then that kind of led to the century fund and and and so it started off as when you back an entrepreneur what are all the ways in which you can service him or her with capital sometimes it's early sometimes middle sometimes it's late let's make sure we can do that and we do that relatively efficiently so that's how we ended up with century and then the bvp forge which is essentially a software bio fund it came from the same thinking which is that we talk to lots of entrepreneurs every day. And oftentimes we might talk to an entrepreneur who has, let's say, a$500 ,000 revenue software company, for example.

1:47:24And it's interesting, but it's not quite ready for a venture investment. It's not really a fit. And so we agree to keep in touch. And we might talk to that company again a year later or two years later or three years later. And next thing you know, a bunch of time has passed. And now it's a$10 million revenue software company, and it's growing at 20 % a year. And it's not likely to ever grow at 80 % a year. And so it's just not really a venture investment anymore. However, those are entrepreneurs too. They may not be a prototypical Silicon Valley entrepreneur that's building something that's trying to compound at really rapid rates, but oftentimes it has other really interesting attributes like it's really capital efficient.

1:48:02They haven't burned much cash. And they might at that point want liquidity and they might say, you know, I'd love to find a partner who can help me take it from 10 to 25 million of revenue over the next five or 10 years. And I'd love to sell half the company because I've been working really hard at this for a long time. And, uh, and I'd like to diversify a little bit. And so, uh, if you think about it, like, uh, uh, like a funnel process, we were sort of dropping those leads on the floor and just saying, Hey, that's not for us. And, uh, and I can think of one example at which, uh, my former employer actually bought one of those businesses that was like not a venture business uh and it's been a i think a really nice outcome it just required a different pricing and capitalization and structure around what was thought to be a venture business and actually it was like you know more of a mid-growth kind of software buyout yeah there's so there's lots of great kinds there's lots of software companies with very different profiles and so and and we've been very active in software so that was the idea We wanted to have something to offer to those entrepreneurs.

1:49:04And we actually did an analysis and we're not investing$500 million the way that a Silver Lake or a TPG might. These are generally companies that might be$10 or$20 or$30 million in revenue. And we might be writing a$50 or$70 or a$90 million check. and we did an analysis of all the other i'll call it middle market software buyout firms many of whom have names that you wouldn't recognize they're not household names the way silver lake is or the way sequoia is but nonetheless they've generated really nice returns and we did an analysis and we looked at every company they had done a software buyout with over like a 15 year period.

1:49:52And it turns out that we at Bessemer had talked to half of those companies on average three or four years before they did a buyout. And we're like, wow, that's crazy. We have access to these entrepreneurs and we're kind of telling them to go away because they no longer fit our profile. That's silly. And particularly because we already have the relationship. and so and you know so we we launched it was it was originally brian feinstein's initiative and but we we knew it was you had to have a different mindset a different team and so there's a lot of collaboration but it's a totally separate team our bvp forge team we sit in the same offices i i happen to be based here in new york and there's a bunch of people on the forge team in new york there's a bunch in california um and uh and there's quite a bit of collaboration and Sometimes it's not clear at the first instance whether an entrepreneur and his or her company is actually a fit for a venture round or a forge partnership.

1:50:49And we have ways of working that out. But I'd say we launched the initiative at this point. It's probably three years ago. And they've made, I think, their first three or four investments. And it seems great so far. It's like another clever. It's a great asset class. Hey, guys. This is Rashad. I work with Logan on the show, and I wanted to take a quick break to tell you about Redpoint's other podcast, Unsupervised Learning. Unsupervised Learning is our AI podcast where we interview guests from companies like Perplexity, OpenAI, Adobe, and many others about the topical things that are happening in the very, very rapidly developing landscape of AI.

1:51:27So if you're interested in going deeper, check out the link in this description for our YouTube channel, but also wherever you get your podcasts. So back to the show. The commonalities, the information symmetry that exists across different stages and sectors, I think is super advantageous. And it's a really good financial product for limited partners, I'm sure, as you guys ran the analysis and all of that. There's, I guess, as you become a bigger firm with different strategies and all of that, there's all complications, I think, that I'm sure you guys have thought about in it. But it's an interesting, yeah, it's certainly an interesting product.

1:52:13I guess one of the things I wanted to talk about was retaining talent and developing talent. I think you all have done a great job of developing talent from a homegrown basis, yourself included. But I think all the senior most leaders I kind of think about at the firm have mostly grown up within Bessemer. Two thirds, one third. Two thirds, one third. Okay. So a fair number have grown up within Bessemer. and then also there's a number of people that have been successful outside of Bessemer's four walls after they have been trained by Bessemer and it's interesting in hearing you talk about it I feel that there could be a point of that like that that could be a sensitive pain point of like oh these people have gone on to other firms and had successes but I don't sense that from you you're actually proud the firm seems to be very proud of seeding the industry with other talented people, I guess.

1:53:10Maybe focusing on those two things separately, but maybe do the latter point first. Training the industry. A lot of your IP might walk out the door. How do you think about that and the point of pride versus the point of consternation? I mean, first I'll say that this dates back a long time. And so TA Associates, which itself is like a 30 or 40 old firm. It essentially spun out in some respect from Bessemer Venture Partners. Oh, I didn't know. That's funny. Same for Advent International. They were both like venture firms too, once upon a time. And if you go read old venture history books, back to me being a venture nerd, like they were very, you know, growth capital as defined by venture, not growth equity and private equity, which they've gotten into.

1:53:58Yeah, as they got bigger, they shifted more toward private equity. But they came from - It's a much more scalable business, that private equity. Indeed it is. But yeah, they came at investors. So it's not new. And I think our general view is it's a small industry. And having lots of friends in the industry, particularly when you have a close working relationship, is to your advantage. And so, yeah, it may be a little bit painful when someone really talented has your whole playbook and is now playing for a different team. But at the same time, most venture capital deals end up with multiple investors over time.

1:54:37And so I think if you have more friends than fewer, it probably will work out to your advantage. I also think that we found over the years that many of our best investments in each fund have come from someone who's newer to the industry, not necessarily someone who's been doing it for a really long time. And so I think it's a huge strategic advantage, competitive advantage asset to be attractive to new people who want to be in the industry, whether that's people like our fresh out of college analyst class, and we typically hire three or four really young folks every year, or whether it's folks like Adam Fisher when he joined us from other venture capital firm, or Ellie Robinson when he joined us, or Samir Dalakia who started in venture capital after having been a career operator.

1:55:30So if you have a really attractive platform that really talented people want to join, you're much more likely to then also discover the next great venture investment. And so in order to have a platform that lots of really talented people want to join as investors, you have to have either a clear path for them to build a career in your firm or a clear path for them to use your form as a springboard to go somewhere else. And ideally both. and so I think you're you know you're only as good as your last deal as a individual and as a firm but the chance of your last deal being really compelling goes up substantially if lots of really great people want to work there and and so I kind of view it as the minute that you aren't attractive for the most talented people who want to enter the business because you've either stopped hiring them or you've stopped helping them grow it's the beginning of the end and a venture firm probably has like a 10-year tail towards death where it isn't still bringing on new talents and and um and having kind of young or new people with fresh ideas and you can kind of milk it for a while but eventually it runs apart and there are examples of venture firms who are at the top of the game who are not anymore because they they sort of suffer from this phase we've seen a fair number in the last five years of that.

1:56:53And I think we're going to see a bunch more in the next five. In Kill Bill, there's the five-point exploding heart technique or something, which is you're dead, but you don't know it. And it's only until you start walking or something, you take some steps that you realize that you're actually dead. I think about that with some venture firms. On the retaining talent side of the house, I guess you guys have a nice systemized program, it feels like for people ramping up within the organization. So how does that work? Like at what point do people start leading their own investments? What guardrails are in place?

1:57:27What autonomy is given? Yeah, so it's relatively structured, but also... but also varies based on the market and the environment and what's happening within the firm and so forth. So as I like to say to any young person thinking about joining BASMR or frankly, any firm in the venture industry, if you're not willing to accept the fact that luck is going to play a major factor in your career, don't do it. And so, because a lot of people are like, well, I want to know what the rules are. And I want to know that it's sort of like a fair set of rules. And I'm like, it isn't fair. And it's not, it's not that it's unfair by design.

1:58:07It's just like luck happens. And so for some people it could happen in two years and some people can happen in 15 years. and like you might be even the fifth the 15 year slow burner might be even more talented than the person who got there in two years but uh that's just the way the the cookie crumbles or the ball bounces or whatever metaphor you want to use um so we tried to create as much of a even playing field and fair set of circumstances as we can but in a really heady period in a massively expanding market, like from 2014 to 2017, it was easier to demonstrate talent and judgment than it has been in 2023 when the pace of new investments was much slower and the market's not expanding.

1:58:50It might even be contracting. And so even if you made some great decisions, it's hard for that to show up in the numbers. So you got to accept that. And we think a lot about that because we want it to be, we want everyone to feel like they have a fair shot, even if they have to accept that the timelines might vary dramatically um like mileage may vary or something like that as the advertisements go on these electric cars but we basically have a program where you you can enter as an analyst or enter as an associate analysts are typically at a right out of college or maybe a year or two out of college um and analysts work all in new york in a sort of a central pool if you will and they end up joining teams on an ad hoc basis with other more senior professionals all over the world.

1:59:30And then associates are, for the most part, one-on-one mentees with partners. Our analyst program is a two-year structured program. Most analysts go on to do something else. Some stay at Bessemer and become associates. And then the associate program is apprenticeship or more natural mentorship. And the idea is you learn by watching and by doing. And over time, you do less watching and more doing. But at the beginning, you're doing more watching and less doing. And we have a sort of like a hierarchical organizational structure, which is mostly meant to just confer more authority and judgment as you grow.

2:00:07But eventually you become a general partner. And that in our mind is like where there's like a bright red line. And until you're a partner, you're supporting somebody else's decisions. And then once you're a partner, it's your neck on the line. And we talk a lot about that. We think venture capital is a team sport more the way tennis or swimming is a team sport and less the way basketball is a team sport. And so in tennis or swimming, you as an individual are earning a certain score or track record or point or ribbon. Whereas on a basketball team, everyone's the same. And like some people may score more points and others may get more rebounds, but the team either wins or loses together.

2:00:55Whereas in swimming, you could win your race and your team can still lose. And you care about your teammates and you want them to win. But in some instances, you're even swimming against your own teammates. And we think we're a little closer to a swim team than a basketball team. And that we keep track of how everybody does individually. And we actually It's hard enough that you've got to wait four or five or six or seven years to get feedback. If at the end of six or seven years, you don't even know if it was your decision or someone else's decision, then you're waiting like 20 years before you get the feedback.

2:01:24So at a practical level, how that works, is that the voting decision on like a one to 10 basis that I've heard you talk about? Or is that something different? No, it's different. It's different. So when we make an investment, we literally write down who made it. And is that a single name? So let's say it's a$10 million investment. It's really simple when it's one partner, and then their name is written in the book, so to speak. But it needs to be a partner that's named to get written down? Only a general part of that. Yeah, got it. If it's two people, they can split it, but they have to decide at the time what this split is.

2:02:01And so if it's$10 million, I might be like, I'm responsible for eight, and you're responsible for two, and that's written down. And this rolls up into a budget that the fund is then a derivative of? Is that roughly? Sort of. It's more that we use tools like a budget, and it's a loosely held budget. It's not like you need to go make this much. You need to go invest this many dollars. We don't do that. It's more like you really can't invest more than this many dollars over the next year or two or three without seeking special permission. And we use that to guide people. And that's particularly important when you're early in doing it, because you're like trying to figure out, well, how much do I invest here?

2:02:45And then it also it's guardrails. And so among our group of partners, there are some people who are like like I was in 2004. Like I had zero track record and no one knew, including me, if I was going to be any good at it. And so it doesn't make sense for that new, I'll call unproven partner to have as much access to capital as someone who's generated billions in gains. And so we use the budget to sort of slow some people down and speed other people up. In some instances, we're trying to slow down somebody who's really proven because we know they're just too busy. And someone who's unproven, but you can start to see the promise, we'll use it as a tool to sort of push them to kind of take advantage of the insight they have and go a little faster.

2:03:25um but uh but but yeah i think i think the budgeting is not such a critical part of the the equation i think the really critical part is the idea that we're recording who's making which decision um because it allows us there's there's a challenge that happens in many venture capital firms which is that there are senior people and the junior people and when something goes really well um all of a sudden no one can remember who did it i'm sorry when someone goes poorly no one can remember who did it when something goes well like amazingly a senior person gets super involved and like tries to take credit for it even though they might have had very little to do with it early on it's actually amazing how uh memories memories are like a fascinating thing and uh i've been in many rooms where i've had one version of events and like remembered it crystal clearly i think especially when you're coming up in your career you're much more attuned to like the nuances and then have someone look me in the straight face and be like this is how it played out.

2:04:22I'm like, I swear it wasn't. And so I actually started to codify at a personal level, like my thoughts into a PDF, just so it serves as a canonical, because you have the deal memos, and I understand you guys do particularly honest deal memos. And as much as you're framing, as much as I want to believe I, in any memo, I put my name behind, it's like the most honest version of events, it's still going to be five pages or something. And I won't have allocated the appropriate number of words to just the one sentence version of the way I feel about it. It's like, I wrote this long, loquacious thing about this or that, and here's the different risks and probability weighting them and all that.

2:05:06But it's kind of a structure. And I go back to your i had heard that you hate memo templates which is an interesting thing because i uh i feel like i can almost write in one sentence what i think at a time and then pdf it and be like all right well that i can't go back and change the pdf it is what it is at this point but uh i'm interested on uh your investment memo framework i guess or why you hate the templatized version of investment memos. Yeah, well, so I think people, when you're filling out a template, you're not thinking, you're doing busy work. And if you're given a template, suddenly the task at hand is to complete the template.

2:05:48And what I think you want, the mentality you want to embrace when you're trying to make an investment decision is like, what decision do I want to make and what is the most important thing. And if your template is standard, it will always accentuate the same things for every company. But for some companies, the most important thing is the technology. And for other companies, the most important thing is the market dynamic. And for other companies, the most... And so the problem with the template is it weights all these things the same way for every investment. But what you want to do is you want to say, what actually matters here?

2:06:22and what is the story that I'm telling myself and my colleagues where I need to believe for this to be a great investment. And so if you start with a blank piece of paper, the likelihood that you're going to write the right story is much higher than if you're filling out a template. And so that said, like I know when we go to write these things, we almost always grab a recent investment memo off the shelf that we think is doing, for a company that we think is doing reasonably well and we open that up and we just start rewriting in those same sections because it's like a structure for our thinking.

2:06:59I think that's okay, but maybe it's not okay for the opening. And so like the way I typically approach it is, I'm like, all right, the opening has to be, you know, the summary, which is typically between a half of a page and a page or maybe a page and a half long. Like you got to start with nothing there. um you can't take an old memo and say like such and such is a software company based in akron ohio cross it out you know kalamazoo michigan and you know has x million of revenue um because that's not the story that's just regurgitating facts you do kind of need a uh there there's some element of like lingua franca within an organization especially if you guys are going to do voting as well which is an interesting concept of i guess all the partners weigh in right on a scale of one to ten if they think about the potential investment and so if i only give you uh you know six sentences of my stream of consciousness thought of it i'm sure everyone would look at me and be like i need more info like this is not enough information for me to give you a vote i guess it's fine on the decisioning side in some ways if i own the decision and i'm sure you guys have checks and balances that there actually needs to be a certain amount of information dissemination that exists internally.

2:08:11But yeah, it probably makes it hard to vote if there isn't some materiality to the memo and some amount of data you're sharing with your partners. But also I'll say, I think when you hear a vote, when someone hears a vote, they think you're trying to win the vote or you're trying to get it approved. And I think in a lot of investment firms, that is what the vote is for, is it getting approved? And actually, technically speaking, if the votes you get in our partnership are so bad, it's possible that it could trigger the thing that actually causes the investment proposal to get rejected. Is it still five and a half?

2:08:48Is that the... So yeah, we vote on a scale of one to 10 and the average has to be five and a half in order for it to be approved. But in 23 years, I can only remember one time that a vote actually didn't get approved. Was it a bad investment? Yes, it was not Google. Yeah, yeah, yeah. So now we make lots of other mistakes. Sure. But the purpose of that isn't, I mean, is it to codify where people sat in their thought process at the time for historical, like, you know, the annals? That's secondary. So that's, that's valuable for on a secondary basis. And on that theme, it like, it keeps you honest and it forces us to have some recording of, of, of what you thought.

2:09:31So when you look back, you can't remember loving something. I'm like, wait a minute, I voted it at six. Maybe I didn't love it so much. So it keeps you honest. The primary purpose, though, is that as the lead partner on a given investment, what I want is I want as much help from my partners in making the decision because I am held primarily to account for that decision, good or bad. I get the credit if it goes well, and I get the blame if it goes poorly. And when I accept and embrace that idea, if you have an idea as one of my partners that might help me make a better decision, I want to hear that.

2:10:06And so the primary purpose of the vote is like, I'm asking you for feedback. Like I'm telling you, this is something I want to do. Here are the pros, cons, risks, whatever that I articulate in a memo and or orally. And now I'm asking you to tell me what you think. And so some people are really good at, in real time, sharing a thought or an insight about a memo they read or a presentation they just saw, which is really helpful to me in making the decision. Other people aren't that good at telling me what they really think. So by forcing them to distill their opinion into a number, I get some information.

2:10:42And like, if they say they're voting a 10 out of 10, I'm like, it's really clear. Like they could have stood up, jumped up on the table and told me, this is amazing, I love it, I love it. Or they can just say I vote a 10. And other people who might be a little reticent, particularly if I'm a younger partner voting on a more senior partner's investment, it might be hard for me to tell them like, I think that market sucks. I think that entrepreneur is a crook or what, like those would be hard things for me to doubt, but I can vote a six in a spreadsheet and I can communicate something very clearly.

2:11:10And then it's, the onus is on the sponsoring partner to look at those votes and to say like, Hey, I saw you voted a six, like, tell me more. Is there qualitative information that goes along with it? Like in the doc? It's just only oral. Just the number. Just the number. Just the number. Yeah. And there's no waiting on, like everyone has the same. Same vote. Yeah. Got it. Interesting. And so it serves as a check and balance of where the sentiment of the organization is and how it's been presented. Have you found it to be broadly indicative of success that the things that tend to trend higher are the, or is it some variance barbell that like, the people that love the stuff and hate the stuff tend to be the best investments?

2:11:59the um no so the many of the best investments actually had very weak votes it's not a good and and i'll give you an example on a reason why i think um if well the simple fact is if everyone inside vesmer as a partner loves something and is voting it an eight or nine tens are quite rare that probably means that if all the partners at redpoint or battery or sequoia benchmark we're looking at they'd also be voting eight or nines there's no there's no contrarian element to it Everyone loves it. And if that's the case, it means almost certainly it was hotly competitive. And if we're the ones who win it, we almost certainly had to pay a pretty aggressive price.

2:12:37And it's hard for the best deals to be the ones that you had to really stretch for. Sometimes it works out, but it's hard. Whereas if a bunch of partners internal to Bessemer have a real concern about something, that means that other firms, a bunch of partners probably had a real concern, which might have dissuaded someone from bringing it into that partnership in the first place as a deal that they should pursue or an investment they should pursue. And so almost by definition, it's less competitive. And my favorite example is Skype. And so when Rob Stavis proposed that we invest in Skype, he said that he had to sign an NDA in which he promised not to tell anybody where he met with the founders because they were essentially on the lam from the record industry in the United States because they had also built Kaza.

2:13:24And so people were like, what? like we're investing in fugitives like this is a little old but uh skype was the original zoom and uh basically and uh and kazah was uh people are probably more familiar with napster but uh it was sort of the original file sharing or it was a more peer-to-peer centric thing around that couldn't be shut down yeah it was kind of kind of like a more distributed napster napster on the blockchain if you will uh yeah because back in the day uh so they were they were uh successful in this entity, but it was, you know, dubiously legal, I would say, at least in the U.S. Yeah, I think eventually they had judgments entered into them, entered against them in U.S.

2:14:04court because they were facilitating the pirating of music. I don't remember the details. But they took their technology and some of the peer-to-peer elements of it became Skype. Exactly. And by the way, and so that investment, which got a bunch of six and seven, I even got a five vote. I don't remember the details. I think that generated like 150 times return in 18 months. And so, yeah, it's, it's, so it's not, we appreciate that it's not a means of deciding what to do. There are fail-safes. If everyone hates something and is voting in a two, like it will actually get rejected, but that doesn't really happen.

2:14:38Mostly it's a, it is a language to communicate in a highly quantitative way, what you think of something so that your partner who's making the decision really on behalf of everybody knows who to follow up with and, and, you know, where the concerns really exist so that he or she can hopefully make a better decision. How'd you guys land on one to 10? It was there before I arrived. So I'm not sure. One of the things that we've, uh, uh, at different points in time, and we debated the voting structure and we don't really have one right now, uh, at least our early stage team does, our growth team doesn't uh but like doing one to four because it forces you to get off the middle and you know like a six versus a four versus seven versus an eight and all that but i all these things are more artisanal than they are uh you know scientific i would say and and and yeah we we've experimented with with some of these things too and we have we have we have a different system where everybody in the in the partnership can vote not just the partners vote which is also more just a way of conveying information um but the truth is it's when you force someone into something that's so binary um you're taking away from them the ability to articulate that like it actually isn't binary like in real life it's hard like and so it's a lot of times you're not sure and if you deny someone the opportunity to tell you that they're not sure you're you're losing something you're forcing them into something that isn't what they really think yeah um and so there are pros and cons of all these yeah interesting one of the refrains i've heard about the from from um i mean i i think people have been saying this probably for a decade, is that venture is going to go the way of the private equity industry or the investment banking industry or whatever the right analogy is.

2:16:13A lot of industries end up in this mode where there's some form of aggregation and asset accumulation in the private equity case that sort of barbells out the industry where you end up with boutiques on one side. And they can be big and successful boutiques, but boutiques nonetheless. And then on the other end, you end up with maybe asset managers or big conglomerates or whatever it is. It was a particular refrain in 2021. I think people felt like it was an inevitability we were on. I hear it a little less now, but I'm curious your take having been a student of this industry and lived it for a while.

2:16:48So I actually I think it's probably right. But but what is it exactly? And so I think in the private equity industry, there are a handful of firms that are gigantic. Blackstone, Carlyle, TPG, Apollo. But there are hundreds, maybe thousands of private equity firms. And so, yeah, there's somewhat of a concentration of assets, but actually, I'm not even sure on a percentage basis if it's actually all that concentrated. They may be on average 100 times larger than some of the smaller ones. And there's probably a normal distribution within private equity of firm size, I would guess. Yeah, for sure.

2:17:25Versus venture. I think when people are talking about it, they seem to be referring to a hollowing out of the middle, I think. Maybe not. Fair enough. Well, so I don't think there will be hollowing out of the middle. I actually don't. I think there will be some firms that build more institutional company-like existences, just like some large private equity folks have done. And I think there will be lots of firms that maintain much smaller partnership-like instances. I think my guess is, and I've never looked at the data, it's probably hard to come by, but there's probably not a lot of correlation in private equity between the size of asset base and returns.

2:18:09and like what investors really want is a combination of the two. If you're an LP, you want to have amazing returns with scale. So someone who can generate 50X my money, but I can only write a$20 ,000 check doesn't do me very good. And, you know, writing a$500 million check in a firm that generates a modest return isn't great either. And so there is like a sweet middle. And my guess is in private equity, there's still a pretty good diversity of where the returns come from. I think the venture industry is much smaller. and I think brand probably matters a bunch more in part because in a private equity transaction, it's a purely I win, you lose.

2:18:47You have no ongoing relationship or very little of an ongoing relationship once you've sold your company, whereas in the venture business, you're selling a small minority and so you really care. Yeah, it's the person moving into your, as a roommate versus the person buying your house. You care a little less about the home buyer than you do the opposite. Yeah, there is this element of like all logos look the same on a website, right? And so you get a lot of brand benefit from just the number. You get to hide all investments, click here, and that's below. But then you get to show your good ones up top.

2:19:19And you get a lot more PR and known entity and all that stuff at scale. But there's kind of this other part of it, which I think you guys have done well and you've articulated. is like people ultimately, successful people for the most part, don't love being employees. They like being owners. They like being leaders of stuff. And yeah, different people like management or whatever, that stuff of it. But there is that element as well that I've been reflecting on more and more is like the path to the partnership, the lead. If the person, if the firm's named after the person or there's a ceo on top or whatever it is um you know one person will secede them uh but like a lot of other people won't and some people might be comfortable with that and they get to do their business and deal with it as as maybe but i'm curious how you think about that and if that maybe more talented people will stay in sort of smaller you know organizations because of that fact i i think it's huge um i mean there's probably some element of self-selection also.

2:20:32The person who goes to work at a venture firm that's got one or two people's name on it is just different from the kind of person who goes to a venture firm where the people who are, quote unquote, in charge either didn't start or don't have their name on it. It's a different proposition. It's fundamentally a different proposition. I think in our case, none of us at Bessemer want to work for anybody else. That is very, very true at the same time i'll tell you it's interesting um not wanting to work for someone else is different than wanting to make all the decisions um our our structure as we talked about already is like very clear from an investment perspective the decisions are highly distributed among the partners um and and the the people aren't yet partners are apprentices with the hope of one day crossing that judgment threshold where they too are bestowed with the the privilege and responsibility and scariness of having to make decisions and write checks also.

2:21:30So the investment decisions are very clear. It doesn't funnel up into a small number of people or a group of owners or a CEO or anything like that. For non-investment decisions, it's more concentrated and it's essentially, there are partners who have proven track records and results and there are partners who have not. And as you prove more, you get more responsibility and authority on the non-investing part of our business. But what's interesting is that some people, most people who become career investors, they don't want to be a CEO or a manager. They want to invest. Nor have they been trained at those parts of the job.

2:22:11Actually, in some ways, maybe even the opposite. Because they've been so doggedly pursuing opportunities, they probably maybe haven't been a great mentor to people internally, or maybe they haven't thought about firm operations or investor relations or whatever it is that exists outside it. So it might even be the inverse of. Absolutely. I think that's probably right. But at the same time, if you yield all the decision making in the non-investment areas, it can feel like you're working for somebody else. And so we tried to create this magic of once you've proven yourself as an investor, you have the ability and authority to weigh into anything you want but we have really talented professionals who are great at these different functions and you know we have a 200 person organization so you have to have a an hr function and we have lots of funds and financials like you have to have a finance function with a cfo and and so on and so forth we have lots of complicated legal issues that we do we have a general counsel and a legal function um and so for the most part the people who are successful and thrive at Bessemer have the ability, if they want to, to get involved in Wayne and all these other non-investing activities, but they don't because they never wanted to.

2:23:33And so I think the magic balance is making someone feel like and actually have the ability on certain things and at certain times, but also give them the confidence like, it's going okay. You don't need to do this. You can just focus on investing, which is where most people want to focus. And it's really hard to get that right. It's really hard to get it right. And there's a few things. I forget if this is before we started recording or in this conversation, but websites and office spaces, outside of people, they're the only things that are in the investments you make, which we've talked about and all firms sort of litigate investments first and foremost, hopefully people as a derivative of investments as well.

2:24:20And then there's these two other things that are very reflective of who you are. And it's websites and office spaces I found are like the third rail topics that it's just, it's a funny one because it's hard to get a group of people to agree on anything. And I found that everyone thinks they can have, they like deserve to have an opinion about it, right? It's like everyone is qualified because they've been in an office and they've seen a website before. And it's such a weird reflection of your culture and what you stand for and, you know, what people go into every day. And so it's, those are the ones that I found are hard.

2:24:56I'm curious. I mean, as you guys think about that, is there, does that get just litigated among the, the inner group those specifically, but I mean, more meta, like we don't need to actually go into office spaces, but more meta those considerations. Yeah. I, so, so those are really good examples because like everyone deals them but it's a it's a much longer list and i'll just off the top of my head it's like do you hold your annual meeting for your lps at the new york public library which we did or at a casino which one of our competitors do like that says very different things about you and your image and who you are as a firm um do you do you create like a clear and defined promotion path or do you not you break the rules are titles very important uh and like you give a bunch of everybody's a partner or nobody's a partner yeah do you are you do you give people different carry amounts based on you know their their trajectory and how badly you want to keep them or do you keep everything standardized yeah so so so it's hard that there's just there's tons of those things and and getting getting to consensus is not easy and uh and you can spend a lot of time you know um when the um when the when the when the little girls club of menlo park wants to sponsor you for their basketball team like do you do you write the five thousand dollar check or not like the the number of ridiculously small things that you can litigate as a partnership um or in general like what you know are we are we using our firm resources to do philanthropy or do we keep philanthropy entirely out of the firm and the firm is a business and you do a person like It goes on and on and on.

2:26:29Do you have a podcast that you sit down with ostensibly competitive firms? Or do you not have a podcast? There's a lot of these. Yeah. But look, I mean, I think some people are more interested and passionate about certain topics. There's the inner circle group and these things sort of can get litigated and decided within – you guys have brand considerations and culture considerations. And so you sort of stick to – In the long run, it becomes like you have to trust each other's judgments, not just on investing, but in other areas. Because not having a CEO sounds great until these decisions, like there's not a clear mechanism by which to make them, right?

2:27:07Yeah. And actually, you know, we have a few secret weapons. One of them has the name Sandy. She's our COO. I got it. And if there's ever, the closest thing we have to a CEO is Sandy, but an interesting way to describe her role is she's responsible for everything other than investing. And with an investment firm, I'd argue that the investing is the most important thing, but it doesn't function, doesn't work unless everything else is taken care of and taken care of well. And because to the extent that all these other things that we've been randomly highlighting aren't being done well, the investors start to get concerned and agitated and distracted to go spend their time on those things.

2:27:48And that's when the whole thing falls apart. And so there has to be high levels of trust in both directions. And by the way, over time, even in the 20 years since I've been at Bessemer, it's evolved dramatically where at the beginning, what I'll call the infrastructure of the firm was really thin. and now we've taken entirely different approaches. Like we want the best people in the world in these functions. Like we harp on our portfolio companies to, you know, don't get a mediocre CFO, get an amazing CFO. Do as I say. Yeah. And finally, we have an amazing CFO and get like, you know, when a company gets to 100 people and it doesn't have a head of HR, as a venture capitalist or a board member, like what is going on here?

2:28:26Like you need someone to have a head of HR. We were almost 200 people before we had a head of HR. And so we're finally growing up as a company taking some of the medicine that we have been prescribing to our portfolio companies. And it makes an incredible difference when you have really talented professionals in charge of functions and passionate about those functions, not investors who are doing it part-time on the side because someone has to do it. It makes it work. 5 % of their time, that's like the 10th thing on their list. Yeah. So in preparation for this, I went back and listened to a bunch of different stuff you've talked about on different podcasts and all that.

2:28:58And one of the things I heard was in the early days, it seemed like you enjoyed the IC element of the job. And by the time you did a great episode with Kent and Brian on A Best Like the Best, we were talking about Bessemer and some of the stuff we hit here, but some other stuff as well. And it seemed like you were talking about Sarah Tavel, who's now a partner at Benchmark. um and a nice note she publicly posted a blog post as saying that um how much it meant to you to be or meant to her to be mentored by you and all the kind things you did along the way and so i guess my question for you is uh did i did i catch maybe a change in this and you've you've learned to enjoy mentorship and maybe management of people more or is it the mentorship part you've always liked in the management part you maybe like less so or so so i have two thoughts on this topic um uh one is in the a lot of people ask like why do like what motivates you to still do this job like once you've done something successfully and um and and you know you've made a bunch of money like i you know you don't need to work to make a paycheck anymore like why do you do it and um and there's two reasons and eventually i'll come back to your question directly first is because just because you had success during a period of time or with one insight doesn't mean you're actually any good it might mean you're just purely lucky but if you can have success two times you're much more likely to actually be good than if you had success one time and you can have success three times then you're way more likely than if you had one time or even two times and my theory thing by the way when people talk about like oh venture is a slugging percentage game and like how far the ball goes out of the park is well you know um the people that uh hit make contact with the ball generally hit home runs as well.

2:30:47There's some element of consistently doing it is an element of being good at it as well. But I also, I'm a bit of a student of the investing industry overall. And I think a lot of people who are revered from the outside as great investors actually only had one amazing insight in their career. It typically happens early in their career. They generate supernormal returns and then they spend the rest of their career reverting to the mean. and they thought they were good and the investors thought they were good, but actually they had one good idea. The internet, then clean tech. Exactly. And so to me, it's a huge challenge to say, like, can you do it again?

2:31:25That motivates me. And then the second is that the job changes. It fundamentally changes once you've had a little bit of success because your whole persona changes instead of being a bit of an upstart yourself and having to look off the beaten path and barely being involved in the advice giving business. all of a sudden people come to you all the time for advice and you can look in the mainstream and like all these things change. And one of the changes that's been incredibly rewarding for me is like I went from the only challenge was, can I find interesting companies that turn out to be successful and invest in them?

2:31:57And that was it. It was a really simple, and by the way, if it had been any more complicated than that, I almost certainly would have gotten tripped up and confused, but I could say really focused on just that. In the second half of my career at Bessemer, I've continued to try to do that, but also teach other people how to do it and actually teaching someone else how they can be successful, which will overlap with what I do, but also be very distinct is a totally different challenge. And it's really intellectually interesting to me. And so that has been a huge motivator, which I didn't have in the very beginning of my career.

2:32:31I only got it as I started to work with or apprentice other investors on the sort of individual contributor versus manager thing, I think that's like a little bit of misdirection. So what I mean by that is that Sarah Tavel, who's the first person I really worked with, and Rafi Syed, who's now a partner at Bow Capital, and Talia Goldberg, who's now a partner at Bessemer, and Jenny Gao, who's actually decided to go work for Joe Biden, or Talia Goldberg. These are all, sorry, Alexander Sukin, who I'm now working with. These are people who are so talented, they don't need any management they're just wildly self-directed and so i it's still largely an individual contributor game it's just like we're doing it as two peas in a pod i'm not and like everything i see as it relates to a potential investment they also see and now i have like a partner who i'm talking to and i want to hear his or her ideas just as much as i want to form my own ideas and so it still feels like an individual contributor game it's just two people playing together as opposed to when i go to them the whole partnership now like i have all this information that they don't have and i'm trying to convey it to them like that's not true with alex who i work with on a day-to-day basis she knows everything i know and we're talking about all the details and so that's a different kind of collaboration so that part um is wildly rewarding and when you find someone who thinks about things differently and bring something to bear you're like excited to see what they think and test your own reaction to a given situation.

2:34:05And so that, I still think of it as an individual game. It's like an individual game played by two people together, not a firm of five or 10 or 25 or 30 people. The self-starterness of it is the only, I mean, if you can't look at a blank calendar and figure out what to do with it, this job is going to be very hard. And most people can't. Like that's actually a very unnatural thing to create work for yourself and just go out and be like, I'm going to just do things with very ambiguous long feedback cycles and no validation if I'm making progress. And so having someone, I guess it's a good point.

2:34:41The management of self-starters is actually far less than you think. In terms of pulling things out of, I assume Sarah was very different stylistically in the early days of how she operated than you did and Talia or whoever of the examples you've given. Are there things that you try to pull out that are unique to them? Like, are you helping them on being themselves and how to layer that on top of winning investment opportunities and all that stuff and sort of pulling that out? Or is it more focused on the decisioning process and like helping them refine their mental models? And then I guess if, as we talk about the latter, how do you not form fit your own frameworks and thoughts on them and sort of let them have the independence?

2:35:35Yeah. So, so, um, that's a really good, it's a really good question because they are very distinct activities. One is, can you, can you demonstrate to someone how you approach a problem and how you try to pick it apart and and help them build the skill and the confidence that they can do the same using some of the same techniques and maybe using some of their own intuition um but ultimately like reaching good judgment i think um you can take a different path to get there but good judgment is good judgment um there's a totally distinct part of the job which is what is your persona going to be how do you build a relationship with the entrepreneur the company how do you become a desired partner.

2:36:15And that's totally separate. And that's much more, you have to customize it to yourself and your person. And maybe there's a third part about it, about the job, which is like, how do I go find companies in the first place? And I think that can also be highly individualized to your taste and your style and what interests you. So I think as I try to self-assess my own ability to be a mentor, I think I'm pretty good at demonstrating and helping someone build confidence in their judgments because that's kind of the maybe it's the hardest most important part but it's the easiest thing because it's the same for everybody and what i'm frankly still learning is like how do you teach someone else how to be the best version of themselves yeah um and uh and that requires honestly a little bit more independence closer to parenting in some ways or whatever like you want to pull out the the the best qualities of of the person you're working with rather than impart the knowledge that you have to them and it's it's an interesting distinction where i remember um watching people um like like uh rob ward of maritak and neera jaggerall who i i've referenced um and like the style they would bring to board meetings and they just had such gravitas and like they spoke and everyone listened and i was like god i can't do like no one's gonna listen you know i can't copy that i i that's not what i have and then i uh went into my first meeting with Eric Vichri from Benchmark and he was just like all hell and spitfire and like a ton of energy and uh like knew the ins and outs of the business really well and was super passionate I was like okay so I can copy that like that is someone I can look up to stylistically and port over some of those things and so it's interesting you do need to find your own style and throw your own pitches or whatever on that point yeah and and part of our sort of working in pairs thing is great up until a point but then at some point you have to you have to separate and you can come back and collaborate and talk about what you did and what you saw and what you thought but if you don't separate you're sort of stuck um and if if you're the junior person you're stuck in the shadow of the more senior person who's just naturally going to get more attention from an entrepreneur but when you're on your own and that more experienced person isn't in the room you have a much better chance to be yourself yes and so then it becomes like how how quickly do you separate and then once you start separating how much do you do independently versus come back together again.

2:38:32And honestly, I'm still learning. I joke. It was like, when I started out, it's, it's kind of like being a standup comedian and going to an open mic and you, you bomb and you're like, not doing that one again. And then you're like, you get up there and you test out some more material and you're like, okay, well now I have a few good bits I can go to and working with an entrepreneur. I can do this, I can do that. And then you're just building your library up of, of stuff that you, you know, can resonate or the pitches you'll throw or whatever it is with a, with an entrepreneur, which is, yeah, it takes, it just takes practice.

2:39:04It takes reps. And, um, I, I guess I, this might be a boring one and we can cut it if, uh, if so, but, uh, I assume you're not the AI is like a big meta trend and you've lived through internet, mobile cloud and all of that. Um, are you spending it's so frothy right now? I assume based on everything you said, you're probably not spending a ton of time singularly focused on it. although I know some of your companies are in and around that world. Yeah, I'm trying to figure it out. I mean, I'm spending a fair amount of time on it, and it's injecting its way into most of the companies that I'm meeting as prospective partnerships and almost every one of the companies in which we've invested.

2:39:51But I formed a point of view at some point, or maybe put it this way, the consumer internet emerged in 1996. I didn't really start investing in it until 2004. And that was a-okay. It was plenty early on. And so I suspect the compression of time will be significant in AI land relative to the emergence of these large language models and generative AI and when it may be too late to be investing. But at the same time, it's just really hard to have confidence in exactly how this is going to evolve. And if you don't have a really good framework, then you're destined to make a lot of mistakes. I think as a firm, we're comfortable knowing we're going to make a bunch of mistakes.

2:40:32But if you didn't invest in internet in 96, 97, 98, you missed Amazon, you missed eBay. But Google didn't come along until 1999. And so I think you want to be there, but you also have to appreciate we're all going to be so much smarter about where the value is and what's going to be commoditized. I think it was Eric on your podcast who said something to the effect of LLMs are like the fastest appreciating asset in human history. That's a great line, which I will use. Thank you, Eric. You don't even need to credit them, by the way. He probably stole it from someone else who he didn't credit them.

2:41:07But if not, he can send an email about that. I guess last one is a personal gripe. Why don't your companies announce that they do rounds? It's really hard for downstream investors to track portfolio companies when you're discouraging them from announcing fundraising. So I've had this debate with many founders and basically... It's the founders. It's not later stage investors that are annoyed with you. It's founders that want the publicity. No, no, no. So I say it's the founder's choice. And so I give them the pros and cons. So the pro of announcing is it feels good to your ego. Your mom can call you about it and say, like, I have read about you in Bobo by magazine or Bobo online post.

2:41:53And you start to get enormous amounts of inbound attention from other investors, all which feels good. And talent potentially or customer or whatever. I mean, there's some element of validation that comes with that. Yes. So I tell myself. And so, but so those three things, the ones I mentioned, not the one you mentioned, I think are actually more negative than positive. And the one that I actually believe is really valuable is his talents. You start to get interest from, from talent that you might always have a hard time getting to. So the cons are that you're revealing to the entire world that you had enough of an insight that you convince someone with money to give it to you, which motivates every other entrepreneur to at least say for a moment, if they're even remotely interested in your domain, let me go take a closer look at that to see if there's something there that I should be doing or I should be copying.

2:42:45And the likelihood of you having funded competitors goes up by like 10x. And so in my mind, the downsides dramatically outweigh the upsides in part because you can get most of the benefit on the talent side from selectively telling people at the right moment that you did this financing. It doesn't help your top of funnel talent acquisition, but most companies at the early stages aren't, they don't need massive tops of funnel anyway. And so, but that becomes the tension. And so most of the companies that I've been involved with, when they announce it, they They announce it because they want access to better top of funnel and recruiting.

2:43:19And that's the primary reason. Or at least that's how they justify it. And then they get some of those ego benefits as well. But in my mind, the longer you can hold off because you don't need that juicing of the talent funnel, the better off you are because you've gotten to build more before other people know what you're doing. Well, any of the companies you're on the board of, if they listen to this, hopefully they will. And I will adhere to your rule of no funding announcement so long as they come to me. I'm going to have a harder time going to them without knowing what they are. But so long as they come to me, I will continue the principle of no funding announcements.

2:43:55But thank you for doing this. Thanks for having me. It's been a pleasure. This is fun. Thank you for listening to this discussion with Jeremy Levine, General Partner at Bessemer. If you liked this episode, we'd really appreciate if you shared with anyone else that you think might find it interesting. We're always looking to grow our subscribers. So also if you could subscribe on whatever platform you're listening to it on, we'd really appreciate it. We look forward to seeing you next week on the next episode of The Logan Bartlett Show. Have a good weekend.