Who Wins in the Next Decade of VC | Margin and Price Matter Less in a World of AI | Sameer Dholakia

Intelligence is going to be bigger as a market than oil. I've been in software for 31 years now, and the handful of other moments where I have felt magic? A trillion-dollar supercycle followed, every single time. And it doesn't happen very often.

$5.75B? That is how much Bessemer Venture Partners just raised. Well, I saw this and I thought, we've got to have Sameer on the show. Sameer is one of the leaders at Bessemer today. He led investments in Legora and Fireworks, and he's one of the best growth investors in the market today.

It's a spicy show. Sameer was patient, he put up with me, and hell did we have a discussion.

Not being a giant global platform, or an incredible specialist who can add differentiated value and be better at picking because you are a specialist. I think it's a hard world to make money. I absolutely believe capital is a moat.

Ready to go?

Sameer, last time that we did a show, I was about 12 years old. You put up with some very, very poor questions then. So I'm hoping that this will be an improvement. So thank you for joining me, dude.

Dude, I'm so fired up to see you. As I always say, longtime listener, now second-time caller. I'm fired up to be here, man. Thanks for having me.

So we were just chatting beforehand and we said, oh, USV and like $900 million, and you know, you guys just raised, you know, the size of the US Treasury, it would seem. I think it was $1.75B seed fund.

We'll get into that, dude.

Seed and early. I'll talk about that later. Go ahead.

Seed and early, and I think like five more in, you know, growth. And so we'll get into that. But you said, oh, well, for those that have seen it before, this is that time.

Man, when you're in one of these, I refer to it as like magic,right? Like I've been in software for 31 years now, and the handful of other moments where I have felt magic, a trillion-dollar supercycle followed, every single time.

And it doesn't happen very often. But like, I mean, you talk about lucky. I graduated college in 1995, back in the dark ages, but it was at the birth of the internet. And I was graduating in the heart of Silicon Valley, and it was magic.

You could just see how people could create content and share it with everybody on the planet. And you're like, this is magical. And oh my gosh, we could actually do commerce on this thing, and I don't have to go somewhere to go get something.

Like that was magical,right? And then later in my career, so VMware,right, created this layer of software that disintermediated the hardware from the OS and said, I can spin up virtual machines. I can put 10 of them on that one box.

And by the way, you want to see magic? I can move that running workload from over there on machine number two to machine number eight and shut the other one down on whenever I want, and it won't interrupt the workload.

Dude, that is magic. And I looked at that and I was like, holy cow. I didn't appreciate that the supercycle it would create was called cloud,right? Because there is no hyperscaler. There's no public cloud without the ability to do virtualization and motion VMs around, up and spin them up and spin them down, the elasticity of the cloud.

And so every time I felt magic, I was like, holy cow, this is cool. I got to go jump into that. And then this one, I remember I started, I was actually on my sabbatical. I wasn't, I was in between Twilio.

I thought I might be retiring, got bored. But anyways, I was doing some advisory work and this young guy, Dave Robin was there over at Jasper, said, hey, can you spend some time with me and what we're building here?

It's growing really fast. And I was like, yeah, I'd love to learn more about it. And he shows me a demo of Jasper that's this AI marketing app sitting on top of GPT-3,right? And this is like in the winter of 2021.

And I was like, magic. It's again, this is magic. And so, and sure enough, you know, like here we are now, five years later, and it's been magical. It's, you just see these transformational technologies. And this one is bigger than the last two combined, in my humble opinion.

Why do you say that?

The analogy I often try to draw is intelligence is going to be bigger as a market than oil, because oil powers all the machines. Intelligence powers all the humans, not some of the humans, all the humans. Consumers, prosumers, SMB, mid-market, enterprise, government, I don't care who you are or what you are doing, you need more intelligence.

And when you think about a market of that scale and scope, you understand this is magic and it's going to be really big.

So if we actually go through the stack then, you did Anthropic. Let's start at the heartbeat of intelligence that you mentioned there.

Yeah.

You did Anthropic. Can you talk to me about the rationale, the underwriting, what you saw, what you didn't see when you look back now?

I mean, yeah, I mean, the most important bit, I'm really proud that we did it in the Series D.

What price was that, dude?

I think it was $15B pre, $18B post.

Oh wow.

It was early. It was the round that Menlo led and Lightspeed and Bessemer joined. And this is, by the way, we were talking about my legendary partner, Byron Deater, thank God for him, because he and Matt Murphy go back a long ways.

And Matt called up his buddy Byron and said, hey, we're looking to build a syndicate here for this startup named Anthropic, and you should check it out. And Byron said, hey, Sameer, you want to come look at this thing with me?

And I was like, yeah, I'm all in on, as I said, on all the intelligence and the AI market. And I'll tell you, I think, you know, Byron and I grew up during the, our careers probably centered during those cloud days.

And so, you know, of course, we all pattern match. Like you just kind of, you use these mental frameworks. So for us, I'll say for myself, maybe I won't speak for Byron. When I looked at it, I looked at it as, look, I think this market is going to be a cloud redux was my analogy that in the cloud era, you had a handful of hyperscalers,right?

You have AWS and Azure and GCP. And the reason is because it's massively capital-intensive to build a cloud infrastructure. Well, it turns out that in the market we were looking at here, it was going to be the same thing.

It was massively compute-intensive and therefore capital-intensive. And so it was going to consolidate to a handful of players. But just like in the cloud era, we believe then, I still believe now, there would be hundreds of AI application of apps built on top of them.

Just like you had hundreds of SaaS apps, you would have hundreds of AI apps that were purpose-built for particular things. And so if you have that mental model, then you say, okay, great. If it's really capital-intensive, who are the people that have the balance sheet to actually go into the scaling laws that we're being talked about?

And it's a pretty short list of players who could actually afford it. And you went across them and you're like, okay, Microsoft, yep, they partnered with OpenAI. Google, yep, they partner, they're going to go build their own called Gemini.

And then you got to AWS. And AWS at the time had an internal model, I think it was called Nova, that was not particularly distinctive. I'll be generous. And they had just invested a very sizable amount of money into Anthropic.

And by the way, at the time, it was very non-obvious that, you know, Anthropic at the time was one of, I don't know, there were probably half a dozen or more other labs that were trying to also build intelligence.

Was it controversial in Bessemer?

Oh, Harry, you have no idea. That was, it was, according to Byron, he said it was the lowest voted deal in the history of the firm, of the time he had been there. But the fact that, but the fact that we were both, you know, there and had conviction.

And one of the things I love about Bessemer is it's an empowerment. Empowerment is one of the values of the place. And they're like, dude, that's where Alpha comes from. If you guys really believe, go do it.

What did you not see that you wish you had seen?

I wish I had the ability to convince us all to do a bigger check that round. I feel like we saw it, we knew it, but there were so many risks at that stage of the company. But we knew that the AWS relationship was pivotal, that it would provide both the compute for the training critically.

And that was like the, it was really important. And then distribution at that early stage. And I just wish, I wish we had written a bigger check. That's all. You know, that's all. I wish we knew then that we didn't know now.

When we look at concerns today, one concern is the cost of intelligence shifts to open source because it's simply too expensive in frontier models. And we see that in a lot of data that's being produced by Vercel and Giyamo, who publishes it.

And, you know, we're both big investors in Fireworks. And so we both believe in open models too. To what extent do open models not deprecate the business model for the majority of frontier providers?

Look, I'm a genius of And on this one versus the tyranny of the OR. It is And, not OR here. As I said, I come back to my comments about just the scale of the market for intelligence. We just can't get our heads around it.

I mean, you think about this, Harry, when we invested, I think like my bullish Bull case was that we could get to, you know, some massive valuation. And I'll just say that I missed the mark on how big of a business could be created at the frontier by factors.

And so when you're in a market that big, predicting with any precision the mix between closed tokens and open tokens is irrelevant. You're just, it's going to be big. You're in,right? Do you understand what I'm saying? Like when it's that large of a market, the ratio is actually not a concern.

And I really do believe that there are all those different use cases from consumers up through enterprise and government, and they're all going to want intelligence of different types and different flavors. And that is why we're investors in both on Anthropic and in Fireworks and the closed tokens and the open tokens.

We'll have exposure as a fund and as a firm to both, but I think both are going to be huge.

Do you think US enterprises are willing to use open source Chinese models?

I think that there are, once that Chinese model is hosted by Fireworks, it's no longer a Chinese model first.

Do you think they see it like that? Me and you both know that to be true, but when you speak to CIOs, they go, I don't want it. If the provenance is China, I don't want it. And you're like, it's downloaded code on your local drives.

I still don't want it.

Yeah. No, listen, I've talked to some CIOs who share that opinion for sure. There's no question that is out there. And by the way, I do think that we should have a great open weight model that is US-based.

And I think that would be awesome. I think there's a big hole in the model in that market.

Is that invested in Mistral?

That's, it can be. For sure it can be. Yeah.

But if you look at like a thinking, you know, if you look at the thinking machines at a $40B price today, is there a $500B open model US to be built, or is just open a much harder business model to monetize and therefore it won't be that large?

Oh no, I believe it absolutely can build a big business. Whether it's at that particular scale, I don't know, but you can build a very large business and get venture returns. If you are the leading provider of an open source solution, I mean, you just look at history across, you know, all these other categories, whether you're going from Red Hat to, you know, fill in the blank in the database market.

I mean, you can build, you can build a very, you can find ways to monetize it for sure. And, you know, most enterprises don't want to be responsible for the open source. They're going to want some provider with theright talent behind it.

All the reasons that open source businesses have been great businesses for decades now.

Totally get that. Can I ask you, if you were to present a bear case for frontier models, what would it be?

Do I think there's a bear case for the frontier labs? I really don't, because I believe that at the frontier, intelligence solving problems that we're here too for unsolvable, or solving them at a pace that was here too for unimaginable.

I just think there's no shortage. Humans have so many problems to solve, Harry. We got a lot of problems in this world. We have a lot of them. And we're nowhere, it's not like we're at the 90, we're on the 99th percentile of problems solved and we're just trying to get to the last one.

We have a lot of problems to go solve. And that's what these things will help us solve.

The majority of people on the pod come on and say, we'll see 99% of token traffic flow through open models, but we'll see 99% of dollars flow through closed models. Do you think that's apt or do you think that's kind of a bullshit throwaway comment?

I think that ratio is wrong. I really do. I don't think that's quite the mix, but to my previous comment, I don't think we have to get the mix precise. I think everybody just has to understand that

you just have to look at the size of the TAM.

$15B, it seems now ridiculously cheap. How could you? That's amazing. $15B at the time was freaking wild. I got brought OpenAI, yeah, I got brought OpenAI at $30B. And to my stupidity, I said, oh my God, if this is a $100B, I like just 3x it, not including dilution.

Oh my God. The small-mindedness that I had was just unbelievable. I think it's important to have that.

Harry, you're not on my mind, man. It is exactly, I went through the exact same thing. And the reason we ended up with this thing.

How did you get over it?

It was because in the intervening time,right? So you remember that OpenAI opportunity that I also passed on. I had the exact same thought pattern that you did. And that wasright after the ChatGPT moment,right? So whatever that was, December, you know, the conversation was in December.

And then in that intervening time, that little OpenAI went from $40M to the time that we then looked at that first round of Anthropic, OpenAI had gone from like $40M to about, I want to say, I'd have to go back and look at the numbers.

You could fact-check me, but it was something well north of a billion, billion and a half, maybe approximating two. And clearly we got it wrong. And that is one of the both, I think one of the most humbling things about this job is that you will get them wrong.

And sometimes you'll get them wrong on really, really important decisions. And you have the opportunity to fix it. You have the, it's not a once-in-a-lifetime opportunity. You could go back and fix it. And that was when Anthropic came along.

The imagination was stretched to your point. Like we were, our imaginations were capped at a certain, even if it got to $100B. And now obviously, you know, you could see the growth potential of how big this market could be because of what OpenAI had done in calendar 23.

In a world of $2 trillion rises, do you care about price anymore? Is LP focus on price misplaced?

Entry price always matters. Every venture capitalist has taught me that. By the way, I mean, you know me, I'm four and a half years into this second career of mine. So I'm still learning. I appreciate that it is a craft like every other.

And so I don't pretend to have all the answers by any stretch, but I know how important entry price is. And I will say that what matters most is whether or not you believe it can grow at scale and compounded for a very long time and still make you a venture return.

And so I'm just very focused on the looking out the, as they always say, the windshield as opposed to the rearview mirror. And if I look at some of my, the investments of which I'm most proud, they were at current ARR multiples that would make most venture capitalists throw up.

I mean, and they were difficult conversations in our firm IC,right? In the investment committee. I mean, I think like when we invested in a bridge, they were at $5M of ARR and, you know, we were paying whatever it was, $700, $800M valuation.

When we invested in Anthropic in that $15B round, I think they were at $100M, you know, like 150 times current ARR. Legora, you know, $20M of ARR when we invested and led that $1.8B round. That's insane. And if you're only looking at present and backwards, you'll say, Sameer, do you not understand math?

Like 100 times, that's what you're paying to get in. But if your view, as was mine in each of those instances, was that, yeah, but on an NTM basis, and that's what I care about, I'm looking at what do I think in the next 12 months this thing can be?

And do I feel like this is a reasonable multiple in the next 12 months?

So you look at end of year next year, again, this is me trying to learn. You look at end of year next year, and then you look at gross profit on that.

Not even end of year, not end of year next year, I'll go NTM, next 12 months. And yeah, depending on the business, next 12 months only, because, you know, depending on where you are in the year, that could be more like 18 or 24 months.

And I won't pay that far forward because it's really hard to see that far forward in any business. And I've been an operator, I've been a CEO, I know how hard it is to predict that far into the future when you're scaling at these rates.

But next 12 months, you should be able to get your arms around, at least get closer.

What is exciting enough in that respect then? When you look at NTM, what is green versus red?

You know, I think, you know, depending on the business, it'll vary, but, you know, something that's in the 10 to 15 times NTM, I don't think is crazy. Especially if there are these businesses that are growing at rates that have never been seen in the history of business, and I've certainly never seen in my career of 31 years.

I don't feel like paying 10 to 15 times NTM is all that crazy because they're going to blow through. And I look at, you know, Legora, we invested at $1.8B leading that round, and that seemed insane at the time, you know, but the company just went, you know, 20 to 200.

I think we're in that together. I know you know Max well, you know, they're on fire, and I feel pretty good about that $1.8B.

We're going to get to Legora, and I completely get that. Does your feeling good about that $1.8B change depending on customer makeup, quality of revenue, run rate versus enterprise revenue? We see some quirky ways to calculate revenue today.

Does that change?

For sure. Quality of revenue matters deeply. You know, I perform an old school. I've been in enterprise B2B software since 1995. So that is my bias. I prefer the gross dollar retention rates, the net dollar retention rates of highly sticky customers for whom your thing is super strategic, and they're going to keep expanding.

So I would pay a much lower multiple for like a prosumer business or a consumer business. You know, churn can kill you.

What about margins? You look at someone like a Legora who we both love, their margins are good.

Then enterprise software margins.

Look, I think margins, so this is where, you know, again, having done this for a while, like it depends on your lens. Am I worried about their gross margins in the next 12 months? I am not. I have got a hold period of five to seven years at a growth stage check.

And so when I think of it over the next five years, what do I think that's going to grow into and why? You have to be really thoughtful on if the gross profit picture doesn't look pretty and you're envisioning some like, you know, fun with math in a spreadsheet that all of a sudden it's going to be magically hit 60 or 70% in five years, you sure as hell better defend that.

You better know why you think that that is possible. But in a lot of businesses, economies of scale really matters. Share and position really matters. And, you know, I can remember most of the businesses I invested in, gross margins at the time we invested in this AI world were meaningfully lower than they are at scale today.

I mean, meaningfully lower. And so like factors improvement inside of 12 to 24 months.

When we look at, say, Legora of the world, okay, I'm an investor. I always hold my hands up. I'm a big fan. You did it at $1.8B. Okay. The legal market is $300B in the US. If we assume a 20% take for software and that is $60B, and we assume that it's split up between a couple of different players, including your Harvey of the world, you can get to like a $5 to $10B, maybe in revenue.

Is that how you thought about it? And how do you get to a 10, 20X when you enter at $2B on a company like Legora? Help me.

Well, I mean, that math, not terribly off. I would just say we included the whole world because you and I both know Max and he has global ambitions. And when you add in the rest of the world, by the way, you don't grow the TAM a little bit.

You add another 60%. You know, the US market is only 40% of it. But yeah, I think that math is not way off. I do believe you can get after the labor spend that is the services dollars, I'll say, that go into the legal market.

It is, you know, the cliché that everybody keeps talking about Jevons paradox. I do believe there's a lot of legal needs that don't get served today because the prices are too high. So I just think there's this market, when you just have the way we thought about it, very simplistically, I'll say is there's about a trillion dollars of legal services spend in the world.

And when you're just thinking about this, that size of the TAM, I just, I believe that they don't have to take any meaningful share of that to go build a massive business. And by the way, if they build a $5 to $10B revenue business, that thing is going to be worth, you know, you put any multiple on that that is reasonable and you're going to make a very good return.

Totally will. The thing that's interesting when you look at all markets today is the competitiveness has changed. When you were building, you know, SendGrid, you know, no offense, there weren't that many competitors. There were several, but not the depth that we have today.

And when we look at like a Legora and a Harvey, I'm going to be unpopular. I think both will do very well. When we look at a Fireworks, I think base 10 and modal will do well too. I think Fireworks will win, which is why my money is there.

Has the competitiveness changed in your mind? And does that shape how you think about investing and market outcomes?

I actually don't believe that the competitive breadth has changed. What's changed is the capital intensity behind the competition. And therefore, it leads to this competitive intensity,right? Like if you looked at the war chest, the amounts of money that take a Legora and Harvey have both raised, that leads to a competitive intensity that absolutely is different than what I dealt with in my era.

Is capital a moat today? Is that the differentiator?

By the way, I absolutely believe capital is a moat. I have always said that markets pick winners and then it becomes a self-fulfilling prophecy,right? Like in our day, you know, SendGrid and Twilio were the API building blocks to plug into your application to go send communications.

And then once developers had decided that, it was game over. We had won. Like you were the default, that you became the market winner. And that does happen. And we see it in these markets. If we take that one as an example, there are lots of legal tech companies, lots of AI legal providers.

But if you asked anybody at a big law firm, who are the major legal AI companies, they would name those too. And so I do believe that the capital creates both the ability to scale at an extraordinary pace and it also creates and therefore a brand for those businesses, talent then ends up flocking.

And then you just get this reinforced flywheel and they win more customers and then that just, you know, the virtuous cycle continues.

Do you believe in kingmaking? I do. To your point that capital is a moat. If capital is a moat, excessive amounts in short amounts of time give inherent advantages. Do you agree with kingmaking like I do or not?

Yes and no, Harry. Yes, because I believe everything you said, which is the capital is a moat and it is a signal to the market. And having built software companies for a very long time, your product has to be exceptional.

Your company leadership has to be exceptional. I would say, you know, in math speak, it's necessary, but not sufficient. It is a necessary condition for you to win the market that you have the biggest war chest, that you have the most capital.

I really do believe that you are in that kind of a game. And it's because the compute is so scarce and therefore the compute is so expensive that if you don't have that, you just can't play. So yes, I agree with you at the first part of your statement, but it is not sufficient.

You have to then deliver an amazing product that your customers rave about, love about, tell their friends about if you want to be the king. Otherwise, you have no chance.

So I agree with you completely there. And I also agree with what you said earlier, which is like, you know, the 10 to 12X and the growth rates now are very different to what they were. When you look at what you're seeing today, growth rate wise, is the Triple-Triple-Double-Double that SASTA and me and Jason always talked about, is that wrong?

Is that not enough anymore?

It is not enough to attract capital from venture capitalists who have opportunities to put them into these hyper-growth companies that are growing much, much, much faster. And, you know, all of us as venture capital funds, you know, your capital as big as these funds are, we just raised $5.75B, it's still scarce capital.

There are deals to be done at crazy hyper-growth rates. Now, all that said, I do still believe in finding companies that are doing the T2, D3 because the entry prices on those in this environment can be dramatically different, very different multiple.

And you can still make a great venture return on those. I just think thatright now.

Do you buy that? Do you remember the, I call it the Excel deal. Do you remember the Excel growth deals? Like the 1Passwords, the Qualtrics, where they found these kind of amazing assets in less obvious locations that were maybe more capital efficient.

They then juice them up with some growth capital, and then it turns into an even better business. Do you believe those will exist in the next gen or actually not? You have to have that capital to get to the scale.

I think that over time, we'll see a bunch of application companies that can look like what you just described. I just don't think that that's where the venture dollars are going to flow in the near term. When you have opportunities to invest in things that are 10Xing at scale and your opportunity is something that's doubling, of course you're going to go to the 10Xing.

That's just like an intelligence test.

We call it cake or death. You ever seen Eddie Izzard? He goes cake or death and you go, cake, please.

Cake?

Wow. What a surprise. I wasn't expecting that.

What a tough question. But all that said, like, do I think we can make money investing in companies that are T2, D3? Absolutely. You can. And so then it comes a little bit of a mixed question. Like how much do you want to have in one versus the other?

You know.

So you mentioned the $5.75B.

It's quite a lot, to be honest. Let's just start with the $1.75B seed and early. Seed and early.

Yeah. Seed and early.

Do you need a billion dollars to do seed today? We just saw literally earlier today, USV announced their $900M funds. Do you need a billion to do seed?

Seeing the prices that I'm seeing, the valuations we are seeing for the early stage deals coming in for my teammates on the early stage side. If you just think about the number of shots on goal you need to have to find the winner, I don't know how, I don't know how you would have a small seed fund and be successful.

I don't.

What are you seeing in that pricing and ownership level?

Well, I think, you know, depending on the business, if it is a capital compute intensive business, and a lot of these AI businesses are that,right? So it also depends a little bit on where you want to play. Where in the stack do you want to play?

How capital intensive of a business do you want to invest in? If you're like, hey, I don't need to invest in, I don't know, something that requires hardware or robotics, or I don't want to invest in something that's like training a model for compute, or, you know, maybe there are places where you don't need that capital intensity.

But I just think in this era of intelligence and AI, I just, I think a lot of them do. And so if you assume that that's the case, man, you're going to be paying, the math just won't math for the entrepreneur or you if you're not paying what, you know, in my day, look, I've been doing this for, you know, I've been in software 31 years.

Like a seed check in the day was like $3 to $5M on a $20 to $40M valuation. Like, you know, it was a dramatically different time. And it just doesn't get it done now. That I don't, I don't have the specific numbers, but I know that it's factors higher.

That I know. That I know. It's way more. And when you're factors higher off of that, you know, you really got to hope that you're a great picker. And this is where I get into my one of my other kind of worldviews, if you will.

I'm just a humble business guy, Harry. And I think about the venture industry like any other industry. And so to me, when I was evaluating coming in and starting it as a second career, I looked at the venture capital asset class and I said, this looks nothing like what I grew up with in the mid-late '90s, where everything was hardware, software in Silicon Valley and principally early stage.

And now it is global, every sector you could imagine and everything from a pre-seed check through up into IPO where you're investing hundreds of millions of dollars. Every one of the vectors that I just mentioned of location, stage, and sector are dramatically different and broader.

It's just the professionalization of this asset class. And so if you think of it in that context, you're like, okay, well, in most industries, when they professionalize and they get to scale, you either have to be on this end of the spectrum, which is a giant global platform that consolidates a whole bunch over here, or you need to be an extreme specialist over here that is doing, fill in the blank, you know, I'm doing AI deals in San Francisco, early stage,right?

You got to optimize specialty on all three dimensions. You could be one of those two. And if you're in between, good luck. I think that's a rough place to be. I really do. And it's the reason that Bessemer is going, you know, we have, I think Bessemer is a big global platform.

But man, I tell you, like not being a giant global platform or an incredible specialist who can add differentiated value and be better at picking because you are a specialist, I think it's a really hard job. I think it's a hard world to make money.

So what happens to the billion-dollar funds?

I don't know, but I'm glad I'm not at one of them. I'll tell you that. I think you have to be on either end. I really do. I really do. And look, you can, I mean, I'm sure there's a path to success for everybody.

Good luck. I just, I'm just giving you my outside in unvarnished view just as a business guy looking at an industry. You know, I'm just analyzing it clinically. And I'm telling you, that's what I've seen in the history of business is when markets get big, they consolidate and they have special.

I mean, you take like automotive, it doesn't matter what industry you pick, there will be, you know, your big three in the US or, you know, the Toyota Hondas in Japan. Like you get a handful of giant players on one end and then you can be like, I am a Porsche or a Ferrari or a specialty player on the other side of the spectrum.

But being in the middle is a tough place to be, I think.

It is. I think it's a very tough place to be. Can I ask you, when you look at the two different vehicles today, I had Vanke from Manlo on the show, mutual friend of ours, and he.

Yeah, love Vankey.

Yeah, he got some stick for saying that early stage and seed investments were option bets and you build a portfolio of option bets. Yeah, it's hard not to have seen that. I think we're at about 5M views. But he's by definitionright.

If you have the majority of your dollars at late stage, by nature of doing early stage, unless you said, I'm deliberately not going to invest in anything that I do early, which would be utterly moronic and irrational, it by nature has to be an option.

Yeah. Yeah. Look, I think having been on both sides of the operator and venture thing, I think what people were taking umbrage with was the notion that maybe, maybe this is what they were, I don't know, was that the, I'm an entrepreneur of a small thing.

I don't want to just be an option. I know Vanke well. I know him personally. He's a great dude. They're a great firm. That is not what he meant. But what he meant intellectually is 100% correct,right? It is an option.

And if it works, then I'm going to put more capital behind it. I mean, anybody in venture capital, I believe that listened to that or thought through that, understands that to be a truism. And I think there may have been a little bit of flack on the, maybe on the human entrepreneurs that are doing the hard work of trying to build these things.

And I don't want to just be an option. But I actually, I would challenge those entrepreneurs, having been one myself, and I would say, no, man, like understand that your business, you have to earn theright to keep scaling, to earn theright to the next round, to get more capital, to keep building towards your dream.

That is the game. And if you don't think that is true, you're not understanding the game.

Can you help me on the side? I totally agree. When you have the 1.75, does that have reserves baked in or is the idea that you have no reserves there and then you double down from the 4B, which is growth?

Both. We absolutely have reserves baked in to the 1.75, but we don't want to just be like doing pro rata checks. Like in the companies that we believe are taken off, we want to back up the truck as we've done.

Like we just announced a round with Elise AI where, you know, we're going to be investing nearly $200M that we just announced. And so like when we see the winners that we think are in big markets are going to build great companies, like we're like, yep, let's go.

What does that look like then that into play? And do you worry about the signaling risk of like Sameer jumping all over one company and not another company?

No, I don't. I don't. I just, at the end of the day, I believe the truth will set you free. Just like if the signaling risk is they haven't backed up at the rock of my company yet, the signaling there is simply, yeah, the business hasn't yet demonstrated that it is going to be going like this.

That's okay. I led one of those. It takes a while. It's hard to build businesses, man. Like I don't worry about the optics on stuff like that because I've been in the seat and I think the entrepreneurs and the CEOs, they know the business they have, they know what they're working on, they know what they have to do to take it to the next level.

And, you know, if they're not yet at the next level, I don't think they're, most CEO entrepreneurs aren't going to want to try to pretend that they're not.

So you have $4B then in growth going to your segment of the market. How does that look? When you look at the portfolio there, how concentrated is that? What does the check size look like? What does the reserves look like?

I'm just fascinated how you construct a $4B portfolio.

Yeah. It's incredible because the numbers are obviously kind of, are staggering. They're large. But I don't think that the fundamentals are perhaps not all that crazily different in that we still want to have concentrated bets. And so what that means is a concentrated bet means, shoot, we may write, you know, $200 to $400M into a given opportunity, into a given company if we have that much conviction.

And it'll probably be over a couple different rounds, couple few rounds, but you're still looking for a relative concentration, you know, of whatever it is.

What percent of the fund would you be happy to go up to for a single company?

Up to 10, if on a 5 to 10% is sort of what I think our average check size will be. And for late stage growth, to be clear, for our late growth funds, early growth is a little bit different, but late growth, 5 to 10% feels fine.

And I'll just tell you, our last growth fund, our Century 2, I think we had 20% into one name. The name was Anthropic. I feel pretty good about it. So we will flex it up if we believe it is a generational company.

You have an early growth and a late growth?

We do. Yeah. Yeah, yeah.

Oh, fucking hell. Fucking hell.

What the fuck?

Oh, fucking hell.

Early growth is very different than late growth. It's so different. Why? Okay, tell me, tell me, tell me. Go ahead.

They're both growth.

No, no, no, no, no.

Why don't we do a mid growth? Why don't we do an early growth, a mid growth, a not so late growth, a late growth, a pre-IPO growth?

I will concede, Harry, that there is an arbitrary distinction cutoff line somewhere, but I will tell you qualitatively, there is a big difference between investing in a company that is in there in the 20 to 40 million of revenue range or is between, you know, call it, I don't know, half a billion to a billion dollar valuation versus I'm coming into a Fireworks at 15 billion.

That's a, I mean, you're talking about a very different stage of company. You know, what you know about the business is different. The risk profile is different. The check size is going to be different. All the things are going to be different.

I get all of that, but I think what matters is your multiple on invested cash. And actually, I think if you look at, say, a Fireworks, I think the upside is just freaking enormous.

Enormous. Yeah, sure.

And I adore Legora, but by nature, I think the upside is just less because it's a vertical market. It's not intelligence for the world. I mean, I think Matt is going to agree with that. It is law. And even if it's tax and compliance as well, it is still relatively verticalized.

And so I think your multiple on invested cash is what you should be looking at, which I would argue would be the same, actually.

I would agree. I agree with you that many of the opportunities that we are investing in, because we are only trying to invest in the very best in both of those stages of early growth and late growth, I do believe that on both sides of those, you can find 10 and 20X companies.

We want nothing less than a five. And that's a really high bar in growth.

What did you do from your early growth that's not in your late growth that you were not putting in your late growth?

Ooh, that's a good question. I'm really excited about one of my, another vertical AI company called Field Guide that is in, it's AI for auditors,right? So we've done AI for doctors with a bridge and AI for lawyers with EvenUp and Legora and Field Guide is AI for auditors.

And I did that one early. They were, I think they were sub 10 million of ARR at the time we invested, probably about a little under a $200M entry price. And they are just ripping. They're growing really fast.

I'm really excited for them and proud of them. And we haven't yet been able to back up the truck. Their inflection has been extraordinary. I think like a lot of companies post this January, February magical time when the models took a leap forward, all of a sudden their solution became wildly more compelling and the uptake is showing it.

I'm going to push you, but is that really a generational company? Like, no offense.

Yes.

Yeah, it's fascinating. But no, no, but like Fireworks is, I think Cognition or Factory could be.

Sure.

And again, I mean, it was zero disrespect to Field Guide. It can be a phenomenal, a 10, 20 billion business, but to be in the late growth, as Excel calls it, like the leaders fund for Excel, is this really the generational?

Well, it depends on your view of where you would define generational. If generational now is you got to get to a $100B market cap, then yeah, I agree with you. It's probably not that. And some of those others certainly can be, but I think it's an extraordinary business.

And that's one I wish I had backed up the truck on more.

And if the price isright, then to the point that we said earlier, the multiple on invested cash can actually be the same. So I totally get you there. That's fantastic. Do you have separate teams for early to late growth?

No. Same group. We've got four great GPs, you know, amazing team of VPs and associates that are going after this thing. We've been working on it. Man, I'll tell you, Harry, I am so fired up about our growth team and the practice we have built over the last few years.

I'd put our growth portfolio up against any growth team in the world. I really do. I think we're going to have one of the best portfolios in all of growth, in all of venture capital.

I spoke to many people on your team beforehand and they said the real focus you have on culture. And I thought, oh gosh, how boring.

Come on, man. It's the most important topic.

Oh, for every CEO is like, I want to talk about culture. And then you speak to, you know, that team and it's different. And you're, you know, it's just like every marketing team is like, talk about culture, talk about culture.

I did hear something though that I would like to ask. Talia told me to ask you about teammates and friends beat colleagues and coworkers every day and twice on Sunday.

And twice on Sunday. That'sright, man. I have used that line repeatedly for a decade now. And I just believe.

Well, how does that impact how you build a venture firm today then?

Well, look, first of all, I'll explain the genesis of the line and then I'll talk about why I think it's so important even in firm building as much as it was. It came from when I was leading and serving at SendGrid.

And I have just always believed like building businesses, the hardest thing to do is to align masses of humans, so many people to work in a coordinated and orchestrated way towards a singular goal. That is really effing hard to do, man.

And every CEO listening is like, yep, they hear that. They know that. That is the hard bit. And I have found it was a strategic competitive advantage. If your team, if your humans actually liked each other, if they actually cared about each other and they thought of each other as teammates and not colleagues, teammates, and the reason, Harry, is that teammates work harder for each other.

They're not working for themselves. They're working for their teammates and they're working for their team. And you never want to effing let down your teammates.

Okay, I get you and I obviously agree. You can't disagree, but then how do I, teach me, how do I then put that into practice to turn coworkers and colleagues into teammates? What can be done?

I'm going to start with the very, the most important basics. You have to be aligned on culture and values. Like how we do our work has to be super clear and everybody aligns up to it. There's no changing of the standard.

You can't have the asshole that's a great performer that doesn't abide by the rules if you say, or whatever it is, whatever your culture and values are, you have to get everybody working in the same way. You got to protect that.

And everybody has to be empowered on the team to be like, nope, I'm going to call that out if you are deviating from our culture and values.

So culture and values, I think good value is something that could be argued for or against. What is the culture?

Disagree. No, the value isolated from the organization, sure, anybody could agree or disagree, but you have to have a set of them that you're like, this is our way. This is the, you know, this was the SendGrid way of doing things.

We had our four H's: happy, hungry, humble, and honest. Four H's. Happy, hungry, humble, honest. And those were our four. And everything we did had to reinforce those four. If you deviated and so.

You can't argue that you shouldn't be happy. You shouldn't be hungry. We want unhappy, unambitious liars.

No.

What?

I'll push back. I'll push back. Here's the example. I always said that, and I loved SendGrid, our culture. I thought it was amazing. I think our teammates, if you could go track down any gritter out there and say, hey, did you enjoy working at SendGrid?

Was it a special team? I know to my bone that a hundred out of a hundred of them will say yes, it was. But the reason for that though is like take the humble H. But it would have been seventh hell as a place to work for a certain group of humans,right?

Like our humble H was we not I. It was about, you know, we would ask people in interviews, you know, Harry, tell me about a professional accomplishment of which you are most proud. And then we would sit back and do a pronoun count.

How often does Harry say we? How often does Harry say I? I want the people that say we. Now that was just, that was our value. That was SendGrid's value. That doesn't mean it's theright value. To your point, you could argue either side of that.

I don't care. But for our company, our team, the way we work together is this way. And if you're not that way, that's fine. It's a big labor market. Go find another place to work. That's great. No harm, no foul.

But man, like it matters that the people you bring in want to work together in a certain way. And that's how you build a team and not colleagues and coworkers. And by the way, so that's number one. But number two, I think it gets to number two.

Number two, which is also equally important to get teammates and not just colleagues, is you go spend time together, not doing work. I know this sounds so crazy. Like when I was leading SendGrid, we took, we flew the entire company every January down to Mexico for an annual kickoff.

The whole effing company, not like a sales team, you know, president's club. I mean, the whole company. And we'd lock them in a room for a day and we would get lined up on, here's the vision, here's the mission, this is why we're doing what we're doing, here are the goals for the year, blah, blah, blah.

Like we, and then they would have the whole second day was go find somebody from another office and go kayaking together, go mountain biking together, go sit by the pool and have a drink together. I don't care what you do, just do it together.

Because, and the reason this matters, Harry, is that for all the CEOs listening out there, they will understand what I say this. Shit goes wrong when you're building businesses. It's hard. And when you have a group of colleagues and coworkers, you know what they do first when shit goes wrong?

They either go like this, and for those listening, I'm pointing my fingers as if you're pointing at each other,right? It's blame placing. Sales isn't responding to the leads fast enough. Marketing isn't generating enough pipe for me,right? When things aren't going well, they point fingers or worse, they just head for the doors.

Because they're just like, well, I'll go to the next company. Because I'm just a colleague. This is just a job. But a teammate, teammates and friends in hard moments when you're building a business, and believe me, there are many, those, that group of people in a team are going to come together.

They don't start pointing fingers. They come together and they go across and be like, Harry, dude, I spent time with you mountain biking or kayaking or sitting by the pool having a beverage. You're a good dude. We got to figure this out for our team.

That's how you solve problems. And when times are hard, and I'm just telling you, man, teammates and friends will beat colleagues and coworkers every day and twice on Sunday.

No, I totally get that. I completely agree with that headline. I think I'm very trained and strongly believed in the values being differentiated and arguable. So like we believe that hard work, like hardest of work leads to better results.

I don't buy the rest days.

Amen.

Like, I don't buy rest days. In the gym, you train a different body part. You do cardio, not weights. Phelps won because he. No, but a lot of people don't agree with that. I'm chastised for it in Europe.

I'm the spawn of Satan.

Well, I think.

Like seriously, dude, like it's not popular. Like I will get booed on stage by labor conferences.

No kidding. Well, listen, I'll tell you this, man. I couldn't agree with you more. I think, you know, I'm the son of two immigrants. Work ethic is everything. That hungry H. Like my line was always, I want to work with people who are going to run through effing walls to be successful, who will not relent.

Like we quote the Eminem song, like, you know, success is, you know, what is it? It's, "Success is my only mother effing option. Failure is not." Like that is, I want people like that to work with.

Yeah. Number two for us, feelings are expensive in investment committees. Samuel, if me and you are in an investment committee, I want to say you're an idiot for thinking that we should pay that price for X company. And why is that?

I don't want to have to tread around it. Like Sameer, thank you for bringing this. I appreciate the time you spent with the entrepreneur, but I think we should consider, I'm sorry, we're both big enough.

So, yeah, sure. I mean, you know, and again, so that like that can be your, that can be great for your team and culture and people that are going to opt into that are going to be awesome together and they're going to appreciate the directness.

I would say, you know, the intellectual honesty in the IC is actually what matters most.

My point is actually, it's great that you can debate because I'm notright. It's just our way. But what I don't understand is the values like Zoom, which is like, I think happiness. No one's advocating for unhappiness.

Yeah, yeah, yeah. No, I hear that. I hear that. I'll just say on the happiness one, by the way, at SendGrid, our happiness, I did find when I, at SendGrid, I had to write down what do we mean by each of these, each of these four H's?

And the happy for me was, of course you want employees to be happy, but that's not what I meant by the happy H at SendGrid was, I want people who are going to see the world and our business as half full.

The glass is half full, not half empty. And there are just people who are going to be negative, man, who are going to be, who are going to be like, you know, Eeyore and Winnie the Pooh are just going to be downers.

I'm like, no, man, I want people who are optimists, who are fired up to go tackle problems. And that's what I meant by happy, not like I'm, you know, joyful. That's great too. I hope you're joyful, but I want you to be a positively disposed person who when things go bad or are hard, you're not going to go negative and bring the team down with you.

Totally agree with that. Can I ask, if we go back to venture, we're seeing some of the most incredible value accumulation from these businesses. We've mentioned Legora, we've mentioned Fireworks. I think you're in Foul as well.

Yeah.

How do you think about when's theright time to sell? And with IPOs being continuously pushed, maybe there's many more stripes. How do you think about liquidity events?

No, look, I joke about being new to the business, four and a half years into venture, but I do know that DPI matters. Not that new. I know that liquidity matters, DPI matters. Our LPs are not in the business of handing us the money for perpetuity.

So we got to get it back to them in multiples. And I get that. Right now, I think because we're still so early in this AI wave, it's not a principal concern, but I would say, because I think these businesses are going to keep compounding and keep compounding at scale.

But I do think that we should look for opportunities just practically, just being, you know,

prudent, risk-aware business people. You should take some chips off the table along the journey to make sure that you're getting some DPI and locking in gains for your LPs and your funds. You should. It's crazy not to.

Do you find that you're, this is a backhanded compliment, do you find that you're able to, given the brand of Bessemer is often a very premium brand in a round?

Yeah. Yeah. No, I appreciate that. And I do think we have a great, a great brand. I think it's, I think that when you're, when we're looking for a little bit of liquidity to, you know, to take some chips off the table and bring DPI back, it tends to be at very late stages of the journey.

And most people see it for what it is, which is, yeah, they've got an enormous position here. They're going to make lots and lots of money and the whole thing is going to continue to compound. But to take a little bit off the table to get back to LPs, I just find people are more matter-of-fact about that now.

And this is back to the whole professionalization of the asset class. What used to feel like a personal decision and like, do you not believe in me anymore? Do you don't believe in my business anymore? People are, I just think that at the scale of the businesses that we're building, the size of the checks that we are now writing, at the valuations that we're writing them, I think people get it.

I think, I do. I think CEOs are very, I've been on the other side. Like they're sophisticated business people. They understand. They understand the math.

I totally agree with you there. And I think people oscillate too much on the, oh, they'd be so upset if you sold it. I think founders are actually very rational and smart about it.

Super rational. Look, I mean, you tell me, what percentage of the founders that you're working with that get to crazy late stage don't take any in secondary themselves as the rounds of financing go through? Most of mine are.

And they're doing theright thing for their families,right? And I tell them too. I'm like, shoot, you should probably sell a little bit here, bud, to make sure that you're financially secure for your family. And I think that's great.

No problem.

I think it makes better founders. I completely agree with you. You think with a much longer time.

Yeah. And then they're willing to swing for the fences,right?

Yeah.

Yeah.

Completely agree with you. Can I ask, do you think we see the number of IPOs drastically reduce as Stripe shows that public markets can be harder than private markets if done well? How do you think about that?

I will say only a few comments here. One, I believe that it is a permanent structural shift that companies will stay private longer. The asset class of private venture capital is just that much bigger. There are that many more dollars in the market and that many more firms, that many, it's just, so that will, they will stay private longer.

And I think that is a given. And I think you'll see crossovers that are spending more time here. I think LPs are allocating more to the asset class because they get that. They can't reap the rewards of this generational boom if they're waiting for them in the public markets.

Most of that run-up will have already happened in the private markets. So I absolutely believe that is true. I also believe that we will see an unlock in the IPO markets next year, later next year, and in 2028.

I think a lot of companies will go public. And I just think we've had this, you know, the window has been shut for so long.

Can I ask you, why will that unlock happen? What will cause it?

I believe, you know, I'm an economist by training, man. And so supply and demand is a thing. It's just a thing. And so what's going to happen, in my humble opinion, is you'll see a bunch of great businesses go public that will have a lot of success in the market, but there will be an obvious appetite from investors in the public markets to get pure play AI exposure.

And they don't want it from just a few companies. They're going to want it in dozens or hundreds of companies that are pure play AI exposed. And I just think the supply and demand, the demand will be so incredible that they will be willing to pay prices.

And then supply and demand works, prices move. And I think we'll see a lot of companies that the window will be open, a lot of people will come out. I'll say one last point on the IPO thing, which is having done it myself, I believe it makes for a better company.

Deeply believe. Like you run a tighter ship when you are a public company. I always used to say at SendGrid, I was, I said, we need to be IPO-worthy. Before, when we were building up to our IPO, I was like, we got to be IPO-worthy.

And what does that mean? I mean, it is a high bar to be, to withstand the scrutiny of the public eye. That is hard to like quarter in, quarter out, predictably deliver on what you say you will do is hard, but you build a really rigorous and operationally disciplined machine.

And I hope a lot of companies will take advantage of that. I do.

Do you still buy that? And what I mean by that is like, you know, when you look at a lot of Canva release set numbers and when they release their numbers or the great numbers, you can have similar kind of reactions.

Like the expectations have just shifted and these companies have those expectations anyway. And I would argue that actually Stripe is able to do a lot of things because of their private nature that Adyen is not able to do, which make them structurally advantaged.

I think you are forced, you are enabled to be better because you're private rather than the discipline.

Yeah. Look, I hear that. I think there's pros and cons to anything. I think you'reright. You do, you have latitude to make, you know, like big product investments. You can go, you know, deep in the red for periods of time.

If you think you need a shift, I got to take a big hit, whatever. Like, but on the flip side, there are things that you can do as a public company. Like I have a currency, I can go do M&A.

I can, there's lots of, there are pros and cons on both sides.

I get you, but Stripe doing an M&A for OpenRoot of $8 billion. I mean, they wanted to buy obviously PayPal for $55 billion. Like you have that now. You have liquidity for employees and investors. I'm just wondering actually, are we seeing really the winnowing of that IPO attractiveness?

Yeah. Maybe. Maybe. I don't know. I just, when I talk to our companies that we're invested in, I think a lot of people are still talking about, yeah, they still, it is, and by the way, in certain markets, it's still a, it's, you know, it's a badge of credibility,right?

Like those companies, their customers care. They're like, okay, these guys are legit, they're real, they're at scale, they're public. Like the, you know.

Ironically, for things like, for things like Aura, I think it also totally makes sense. A consumer brand, one where retail wants to be part of it.

Sure.

Do you think retail should be a much larger part of the LP base of venture funds? If we have so much more gains now in private markets, do you think retail should play a larger part in the LP base of venture?

Harry, I think it's hard to argue in terms of the, you know, what we would call kind of the democratization of access to that. I think it's hard to argue against. I do.

What do you, because I want to argue against it.

I could argue against it. Sorry, I'm going to really, I'm going to, because I do, you honestly, Bessemer is a very overfunded product. There's so many people that want access to it. If you just had a random people's fund, I don't know if it would beat out the hospitals and pension funds.

And so then you have adverse selection and then retail just goes into shit funds would be an argument. By the way, retail should only go into, back to our earlier part of the conversation, either giant global platforms with brand and leverage and power or super, super specialized folks and you know, you're taking risk.

And, you know, and that's, and if that doesn't feel comfortable for the retail investor, they shouldn't play because it is a high risk game. And, you know, there's a lot of argument in this day, especially when the public markets have been ripping like they are.

If you're a retail investor, just put it in the public market and, you know, don't take the liquidity hit and just let it compound in the public markets. But, but yeah, obviously I believe when I look at our portfolio of companies, I'm like, these things are going to continue to grow and compound and deliver gains that are not accessible in the public markets.

And so that's where I would go.

Can you paint, one of my favorite companies, period is Fireworks. I think Lynn is generational. Can you paint the bull case for how this is a $250 billion business?

Look, I think, and by the way, I couldn't agree more. Lynn is extraordinary. And so is George Hu, that just joined her team as president.

On the first call with me, I get on, I've never met him before. Okay. First call, Lynn gives me to him and this is before, it's like to determine whether I'll be able to invest. I go, George, I've heard so much from Mark and I'm trying to be charming.

He goes, yeah, yeah, cool. So tell me, how are you going to increase the value of this business?

That is my man. That is my man, George. He's going to getright to it.

No talk about the weather. Sure, George, let's go straight into it.

Sorry, I interrupted.

You were saying about yourself, George.

We worked together at Twilio. He was deeply involved in the diligence to, when we were doing the Twilio SendGrid acquisition, we were in the same exec leadership team room with Jeff Lawson, who's extraordinary and a bunch of great people.

And, you know, we're in that, in those trenches together for 18 months. And I'll just tell you, I've been in doing this for 31 years. He is absolutely one of the very best software executives in the industry, period, full stop.

And so when you pair, he's brilliant. So first off, George, he's an exceptional thinker. He's super strategic. He's very analytical. He has been doing this for decades and he knows how to run, he knows how to build a play, build a go-to-market engine.

Harry, like very few people in technology in the market today know how to build. And so when his joining Lynn and Fireworks, I'll just say preceded our investment by about a month or two because George joined and I'm like, dude, these guys are going to crush because you have the brilliance of Lynn, strategic thinker, deep technologist, unbelievable technical team for Meta.

And now George building the go-to-market engine. I mean, that is the pitchright there. You asked me for the bull case. You take those two together at the top of that company leading, they're going to build an enormous business.

So I'll leave it there. I will say though, in terms of the TAM and the market and what they're doing, I think their general pitch of enterprises are not going to want to rent intelligence from somebody else. They're going to want to own their own.

I just think it's like the simplest and really compelling tagline for any enterprise CIO buyer. And personally, I think there'll be a healthy amount of both. But man, they're going to, it's hard to imagine a business saying, yeah, no, I don't want to own any of my intelligence.

Every business is going to want to own some of their intelligence for sure.

Do you buy the sovereign model argument?

I do. We're invested in two. We're invested in Sarvam in India and we are invested in, or investing in Mistralright now.

And so you think that, hey, countries and kind of geopolitical regions will, for obvious geopolitical concerns, need to have access to their own. Is that it? And to what extent then do we just go down the stack of we need our own energy providing, we need our own.

Yeah, yeah, yeah. I'll say in certain markets and for certain use cases,right? So like, and they're different. Like in India, I think, you know, one of the things that makes India such a ripe opportunity for intelligence local to their market is the Indic languages.

There's so many different languages and training the models for their, on their own content. And so, and that's multimodal. It's voice, it's text, it's all the things. There's a very particular argument there. And not to mention, of course, they have some of the best technologists in it at scale in India who can work on the problem.

In the case of a Mistral, look, at the end of the day, like, you know, if you're in trying to determine my, whatever, my military strategy for fill in the blank, there's certain use cases where if it's a government use case or a regulated industry or whatever, that having it be a sovereign model is probably going to feel more comfortable to that buyer.

And again, when you got a market as big as intelligence, it doesn't have to be all the buyers. Some of the buyers decide that they want to use that sovereign model for some of the use cases in some of the industries, and you're going to build a very large business.

When you're writing a check, how does the upside requirement change depending on the vehicle that it's in? And so for us, it's, I'll put it very simply, you know, from the early fund, we need to see a fund returner, which means a 50X.

And from a growth fund for us, we need to see a 10X. Doesn't need to be a fund, but a 10. How does that upside requirement change for you? And look.

What you said actually is very consistent with how we think about it also. Like that to get to, you know, we want 5X plus funds,right? Like that's just really hard to do at any stage. But the math only work, you can only get to that if at the later stage, you're putting big dollars behind businesses, some of which may be lower than that, but some of which are going to be way higher than that.

And in the early stage, man, you know, you know, by definition, your hit rate is going to be so much lower because they are earlier stage. There's just less developed businesses. You're going to need some 50Xs to account for and pull up all the ones that don't work out.

Obviously, it's de-risk when you get to the growth stage a lot more. And so the upper bound doesn't need to be quite that high. You don't need 50Xs in growth, although some of ours, I think, may approach that.

But it's, but that's not, that's not the same bar in terms of the MOIC. I think the blended gets to the same place.

Do you think you can still do a 5X given the fund sizes being as large as they are?

100%. No hesitation. 100%. Especially in this era, because of what is happening in the worldright now. I mean, you see build, when you see businesses scaling at the rates we are scaling them, Harry, the value creation. And so it's not a hypothetical anymore.

I sounded like a crazy person three years ago when I would say this stuff, but now I don't, now everybody just looks at me like, oh yeah, that's true. I can think of 10 examples. And so like there's no debating that we're seeing value creation in this era, unlike anything we have ever seen.

And so absolutely, I believe we can generate those kinds of returns.

You can only invest in one of those funds, early, early growth or late growth. Which one do you invest in?

If I could only, if I can only pick one, yeah, I mean, me personally, obviously I'm focused on the growth stage and I really do like the opportunities.

But I actually think we'll do better there. I think outcome scenarios are bigger than they've been in a long time, which means the upside and the multiple invested cash is much bigger. Like I think we both did Fireworks at like a 15 price.

I think there's a 20X in that for us.

Yeah.

Fantastic.

I agree. 100%. And so when you can get early venture return MOICs on late stage de-risk companies, man, I'm with you. That is a great spot. I will say that, you know, we have a world-class early stage franchise that's been doing pre-seed, seed, early, you know, Series A's for a very, very long time.

If you can buy 10 and 20% ownership early for small checks, man, that's fantastic too. I would love, I would, you know, we're going to continue to keep doing that all day long, but it's definitely, and that's why I love our model as a giant platform,right?

Because we're the synergy of that practice with our early growth practice, with our late practice, like it is really, really something.

I want to do a quick fire where I pepper you with questions and you give me your ideas. Okay. Okay. Who's the best picker in all of Bessemer? The picker.

I think we got a bunch. I think Byron, Jeremy, Adam Fischer in Israel, and David Kalan out here has been doing it for three decades. But if I had to pick one, I will say Byron Dieter, mostly because when we were going public, the morning of the IPO, we're in the New York Stock Exchange, we brought out every SendGridder who had been at the company for more than four or five years.

So we had this room full of SendGrid employees. Then president of the New York Stock Exchange comes out to welcome and greet us before the bell ringing ceremony. And he says, you know, I just want to welcome all of you SendGrid employees that are here.

You should be so proud. SendGrid management, so great to have you all. Esteemed board members, thanks for coming and being part of this special moment. Byron, great to see you again. And he just pauses. He's like, Byron, how many times have I seen you here in the last, this is, by the way, mind you, this is a decade ago.

And Byron sheepishly, because he's a very humble guy, says, you know, and I can't remember the number at the time he flashed up, like I don't know, like six. And, you know, we just laughed like, you know, that he had been there for like multiple of these IPOs in the recent time.

And then I was sittingright in front of Byron and I just started to count in my head and I could come up with more than the six. I'm like, no, no, you've done more than six. And I turned back and I was like, no, it's more than that.

And he said, six here. NASDAQ was another, another big number. He has had so many from early stage all the way through IPO. I mean, it's hard not to say Byron Dieter. Guy's amazing.

Okay. Byron is the picker. Who is the winner? And what I mean by that is when you're like, oh, Sequoia around this, founders around this, best benchmark, who is the one person who closes founders better than anyone else?

Oh, that's a good one too. So can I revise my answer then? Knowing both of those two, I would go with David Kalan as the picker because he finds stuff that everybody thinks is crazy, like Rocket Lab that then becomes, you know, an enormous business and nobody knows what he's doing.

You know, and then, but when it comes to closing, Byron Dieter every time for sure. 100%. That guy is, he is a force of nature. He's charming, he's funny, he's smart as all get out. His experience is ridiculous.

He knows how to have a good time. He'll host people, whether it's at a 49ers football game or up skiing at his house in Montana. I mean, the guy is, he's an amazing, amazing closer.

What company is Bessemer not in that universally the firm rules and wishes it was in?

Oh, so many. I would say Stripe. I mean, think about like we were the developer API venture capital firm. We were, you know, led the seed and I think in B and Twilio, led the Series B in SendGrid.

We had Auth0 that David Kalan led. I mean, we were the developer API company and we weren't in Stripe. That hurts. That's probably, I'll use that one.

You can add one person to the venture partnership that is not there currently. It's a dream ad. It's not like a realist, but who would that be?

If I could convince Ravi Matre to come join us, I would love Ravi over here. He's from Lightspeed. Ravi is an incredible deep thinker, goes deep on the technology and the markets. You know, you look at some of the investments that he has led and made, not the least of which was a billion dollar check into Anthropic in the $60 billion round.

That guy's, he's just, he's really good and he's willing, he's not just really good, but he's willing to take these giant risks that seem almost borderline insane. And I have deep mad respect for both.

Billion dollar check. That is some serious bulls.

You're just like.

The finance director like typing those zeros must just be like, wow.

Wow.

That's a lot of numbers.

What have you changed your mind on in the last 12 months?

In the last 12, I would say just my deep appreciation for how big the open token economy is going to be. I just didn't see it 12 months ago. I didn't appreciate it. It's a big part of the reason we're investing as much as we are behind Fall and Fireworks, both Fall on the Gen Media side, on the infrastructure side there.

And they're going up and down the stack. They're an amazing, amazing business, amazing team. And Fireworks, obviously we talked a lot about those two. I just didn't appreciate how big that market was going to be 12 months ago.

Final one for you. What are you most genuinely excited about moving forwards?

I'll say two. One is, I'm wildly fired up about all things robotics and embodied AI. Like we invested nearly $200 million into Waymo. And I just think that, you know, autonomy and what that changes and how that changes the way we work and live, I think is awesome.

Is that humanoids or is that not humanoids?

I think it can be, can be. And certainly an area that we've been looking at. And I think we're probably in the equivalent in embodied robotics in that sense. I think we're probably at circa 2021 relative to the generative AI era.

So I think we've got a couple few years to go, but it's on one of these curves, man. It's going to go, it's happening fast. So I think we will get there faster than most people think. And it's an area of deep interest.

Are you in any of the robotic data companies? We saw Maker just get done by Sequoia yesterday. You've got MicroAGI in Europe. Are you in them and how do you see the data market for robotics?

We are not yet that I know of or that I can think of offhand, but I know that we have spent a lot of time around robotics. And so I'm sure there's my early stage partners listening going, Sameer, come on, man.

We met with like 20 of these. We're going to make this pick. I don't actually know offhand, but I know that that, I think there's a lot of excitement in the firm around that area. I'm personally looking at the autonomy, you know, we did Waymo, but now you're like, okay, what about autonomy in construction?

What about autonomy in mining? What about autonomy in agriculture? You know, there's tons of areas.

This is a good quick find. You do Waymo at 115 and Uber has a market cap of 120, 125.

Yeah.

Why am I a moron?

Because you're looking at the ride-hailing market as the only market. That's not the only market, Harry. Think I have a 16-year-old son that I just bought a car for. If that thing, if I could have bought that car with an option to have a Waymo driver on it and pay them a subscription every single month for that car, on that car, or any car that we bought as a family, it'd be a default purchase.

Of course, I would do it. Just like Tesla and Elon's got it for his FSD on his cars. I think Waymo has the opportunity to do that for every other OEM on the planet. Are they doing that today?

It's not their near-term focus. They're focused on ride-hailing. They're crushing it. They're rolling out both nationally and globally to every city. And they're going to build an enormous business on that side. They're going to unlock use cases in ride-hailing that didn't exist before for folks like your mom or for my teenage daughter coming back from, you know, whatever.

Like there's so many more things. That will be a very big business. But when you take that same technology and capability and apply it to personal car ownership and then apply it to trucking and then apply it to logistics, Waymo's going to be an extraordinary, I think a trillion dollar business.

Easy.

Okay. Good. One is that. What was the second one?

It kind of follows your lead, which is therapeutics using AI to, as they say, drug the undruggable, like to figure out cures is by far the greatest, I think, potential and impact that we'll see out of this technology.

And I believe, I mean, you're just seeing the pace of things. We're going to automate, you know, the wet labs are going to become automatable and you put an AI brain that can see and reason over mass sums of data sets and in ways that a single human simply can't.

And I think we're going to have a pace of discovery in biology and therapeutics and drug development over the next decade that we have, that I really do believe what Dario says on that in Machines of Love and Grace.

I think we're going to see in the next decade what would have taken us half a century. I really believe that.

Dude, I think you've been so patient with me today. I mean, you have been, I mean, you're like, I came for a nice chat, dude. And then you're just like.

I mean, I love this. Harry, you always do this. You're so freaking entertaining and you're smart and you ask great questions. So.