1 00:00:01,520 --> 00:00:04,480 Welcome to the Newcomer podcast. I'm Eric Newcomer. 2 00:00:04,680 --> 00:00:09,320 I had an awesome conversation with Bajol Somaya at Lightspeed 3 00:00:09,440 --> 00:00:12,680 Venture Partners talked about two huge topics in the world of 4 00:00:12,680 --> 00:00:17,640 venture capital India. Bajol spent many years investing 5 00:00:17,640 --> 00:00:21,440 for Lightspeed in India and for the ups and downs of the venture 6 00:00:21,440 --> 00:00:24,160 market. And then in the latter half hour 7 00:00:24,160 --> 00:00:28,740 of our conversation, we looked at how venture capital is 8 00:00:28,740 --> 00:00:32,060 becoming more like the private equity business, What happens to 9 00:00:32,060 --> 00:00:35,140 venture capital in a world of rising interest rates And how 10 00:00:35,140 --> 00:00:39,300 does he think about the future of a venture capital firm that 11 00:00:39,300 --> 00:00:44,340 has more than $7 billion in funds raised to invest? 12 00:00:44,820 --> 00:00:48,540 It's great conversation deep in the world of venture capital. 13 00:00:48,580 --> 00:00:51,340 Give it a list, Bejil. Welcome to the podcast. 14 00:00:51,340 --> 00:00:53,620 Thanks so much for coming on. Thanks, Eric. 15 00:00:53,620 --> 00:00:56,320 It's great to be on. There's a lot here. 16 00:00:56,320 --> 00:01:00,040 You've sort of taken the journey with Lightspeed and growing up 17 00:01:00,040 --> 00:01:04,040 with what's become a huge firm. I thought part of the episode, 18 00:01:04,040 --> 00:01:08,120 we just get to sort of look at what's going on outside the US, 19 00:01:08,120 --> 00:01:10,880 especially since you spent a bunch of time in India, spent 20 00:01:10,880 --> 00:01:13,840 some time thinking about Europe, and then get to the US but sort 21 00:01:13,840 --> 00:01:18,920 of trying to make sense of the global venture landscape. 22 00:01:19,160 --> 00:01:22,560 How did you get to Lightspeed India or get us to that moment 23 00:01:22,560 --> 00:01:25,520 in time sort of working with Lightspeed India? 24 00:01:26,200 --> 00:01:27,920 Yeah. And just before I do, you know, 25 00:01:27,960 --> 00:01:30,320 something felt jarring to me, which is that, you know, this 26 00:01:30,320 --> 00:01:33,680 idea of a huge firm and the reason it felt jarring to me is 27 00:01:33,680 --> 00:01:37,360 because we don't think of ourselves that way and I don't 28 00:01:37,360 --> 00:01:40,280 think we ever want to show up in the market in that way. 29 00:01:40,280 --> 00:01:43,760 I think there's such an art to our business and there's such a 30 00:01:43,760 --> 00:01:48,000 sort of relationship aspect to the business and a sense of just 31 00:01:48,000 --> 00:01:50,760 a very high degree of personalization and often being 32 00:01:50,760 --> 00:01:53,280 large can conflict with that. And that's actually, you know, 33 00:01:53,280 --> 00:01:56,090 I'm sure we'll talk about later what's the total fund size? 34 00:01:56,450 --> 00:01:59,770 So I lost set of funds that we raised early last year, Eric, 35 00:01:59,770 --> 00:02:03,650 were just under 7 billion. Yeah, across early and growth 36 00:02:03,650 --> 00:02:06,330 vehicles that we've raised over time and the growth vehicles are 37 00:02:06,330 --> 00:02:09,530 global vehicles, you know, but it's just sort of more one of 38 00:02:09,530 --> 00:02:13,370 the things we think about a lot, right, is how we continue to 39 00:02:13,370 --> 00:02:16,330 operate in a very nimble, agile way. 40 00:02:16,790 --> 00:02:18,430 Right. And that's while having what is 41 00:02:18,430 --> 00:02:20,350 objectively a huge amount of money, yes. 42 00:02:21,110 --> 00:02:22,070 That's fair. That's fair. 43 00:02:22,110 --> 00:02:23,430 But anyway, we'll come to that. I know. 44 00:02:23,590 --> 00:02:24,950 I know. I get it, you know. 45 00:02:25,070 --> 00:02:27,750 So like my journey has been really, you know, as a 46 00:02:27,870 --> 00:02:30,990 entrepreneur and operator, you know, and an investor or across 47 00:02:30,990 --> 00:02:35,030 sort of different parts of my career in the US and in India. 48 00:02:35,350 --> 00:02:39,350 I was in the US until I moved to India to start up Lightspeed 49 00:02:39,350 --> 00:02:42,430 business in 2008. And out of Business School, you 50 00:02:42,430 --> 00:02:44,910 know, was a participant in the.com craziness. 51 00:02:45,340 --> 00:02:48,500 As an early member of a startup during that time, and I think I 52 00:02:48,500 --> 00:02:51,460 still sort of have that, you know, etched into my memo was 53 00:02:51,460 --> 00:02:54,220 the startup. It's a company called edu.com 54 00:02:54,220 --> 00:02:57,220 that was creating a sort of a protected channel for brands to 55 00:02:57,220 --> 00:03:00,420 sell to students at differential pricing and so integrated with 56 00:03:00,420 --> 00:03:03,780 colleges to create a protected channel where brands could. 57 00:03:03,780 --> 00:03:06,260 And that was in the Bay Area. That was actually on the East 58 00:03:06,260 --> 00:03:09,940 Coast okbutduring.com. Yeah, yeah. 59 00:03:09,940 --> 00:03:11,820 And I was an early member of the team there. 60 00:03:12,670 --> 00:03:15,710 And that company was acquired, you know, really in an asset 61 00:03:15,710 --> 00:03:19,790 sale in early 2001 by a then public company called Student 62 00:03:19,790 --> 00:03:21,590 Advantage. And that's where I met the 63 00:03:21,590 --> 00:03:24,590 General Catalyst team because they were one of the, you know, 64 00:03:24,590 --> 00:03:26,270 early investors in that business. 65 00:03:26,270 --> 00:03:30,710 And after I served out my six months of the transition, Joel, 66 00:03:30,710 --> 00:03:33,590 over a General Catalyst, who I think understands entrepreneurs 67 00:03:33,590 --> 00:03:36,350 very well, called me and said, hey, you must be pretty fed up 68 00:03:36,350 --> 00:03:38,510 of doing that. Why don't you come over and join 69 00:03:38,510 --> 00:03:39,910 us. And this is just when General 70 00:03:39,910 --> 00:03:42,720 Catalyst was getting going. You know, as an institutional 71 00:03:42,720 --> 00:03:45,520 fund and yeah, I loved it because it was my first exposure 72 00:03:45,520 --> 00:03:48,720 to venture, but in a very entrepreneurial environment. 73 00:03:48,800 --> 00:03:52,000 And that continues again to shape a lot of, you know, how I 74 00:03:52,040 --> 00:03:55,160 practiced the Business Today and how we think about the business. 75 00:03:56,000 --> 00:04:00,520 And then in 2003, I just was so envious of all of these 76 00:04:00,520 --> 00:04:04,080 incredibly passionate founders building things and I stepped 77 00:04:04,080 --> 00:04:07,200 out and I started a company focused on local search and 78 00:04:07,200 --> 00:04:09,840 context specific search. This was before it was. 79 00:04:10,690 --> 00:04:13,890 You know, it was as widely known as it is today. 80 00:04:14,130 --> 00:04:17,089 And the idea being that, gosh, there's all of this information 81 00:04:17,089 --> 00:04:21,810 out there, but yet I just bought a home and I was rifling through 82 00:04:21,810 --> 00:04:25,650 the Yellow Pages and calling service providers who had bought 83 00:04:25,650 --> 00:04:28,610 the biggest ads. This is crazy, You know, that 84 00:04:28,610 --> 00:04:32,090 this cannot possibly be how I'm going to make a decision. 85 00:04:32,490 --> 00:04:35,250 And so that kind of led me to think about how do we bring 86 00:04:35,250 --> 00:04:38,370 technology to really understand the information that's out there 87 00:04:38,370 --> 00:04:41,640 in a context specific way. And started that company with 88 00:04:41,640 --> 00:04:45,680 actually the former CTO of edu.com who I got to know, and 89 00:04:45,680 --> 00:04:48,440 then subsequently someone that's become a dear friend of mine, 90 00:04:48,440 --> 00:04:52,000 Brad Gerstner at Altimeter. And Brad and I had cross pots 91 00:04:52,000 --> 00:04:53,840 originally. He was an ambassador or a 92 00:04:53,840 --> 00:04:54,800 cofounder. No. 93 00:04:54,800 --> 00:04:58,960 So he joined as a cofounder and yeah, And we first met, Yeah, 94 00:04:58,960 --> 00:05:01,740 when he was running. National Leisure Group which was 95 00:05:01,820 --> 00:05:04,940 a general catalyst funded business and so you know we got 96 00:05:04,940 --> 00:05:07,980 going and eventually we didn't raise any outside capital but 97 00:05:07,980 --> 00:05:10,780 ended up selling the business to a public company called March X 98 00:05:10,860 --> 00:05:13,380 at the time. And and that was kind of really 99 00:05:13,380 --> 00:05:16,140 when I thought about my life and career in a slightly different 100 00:05:16,140 --> 00:05:19,340 way And and I was really drawn to what was happening in India. 101 00:05:19,460 --> 00:05:21,780 You know, the country was going through a very significant 102 00:05:21,780 --> 00:05:25,420 period of economic growth, lot of innovation happening and I 103 00:05:25,420 --> 00:05:28,220 moved out there and actually for the first few years I was 104 00:05:28,220 --> 00:05:30,390 running a. You know what would typically be 105 00:05:30,390 --> 00:05:33,470 described as a more traditional growth equity business, you know 106 00:05:33,470 --> 00:05:37,270 a manufacturing business that you know here would be a GDP 107 00:05:37,270 --> 00:05:40,750 growth business, but there was growing at about 3035% a year, 108 00:05:41,190 --> 00:05:44,070 but was very myopic, very inward facing. 109 00:05:44,070 --> 00:05:46,270 And I thought there was so much more that we could do with that 110 00:05:46,270 --> 00:05:49,350 business and it was a wonderful way to learn that country and 111 00:05:49,350 --> 00:05:54,790 that market and actually learn a lot about how applying a US lens 112 00:05:54,790 --> 00:05:57,990 or a developed market lens is not only. 113 00:05:58,360 --> 00:06:01,160 The wrong answer, but can actually, you know, be 114 00:06:01,160 --> 00:06:04,040 problematic. And that was really valuable and 115 00:06:04,040 --> 00:06:07,080 ultimately sort of brought that to bear And in what we ended up 116 00:06:07,080 --> 00:06:11,800 building at Lightspeed, how long were you investing in India and 117 00:06:11,920 --> 00:06:17,160 how much was deployed? So look, I you know today Eric, 118 00:06:17,200 --> 00:06:20,480 we have now we think of the region as India, Southeast Asia 119 00:06:20,480 --> 00:06:24,280 because there's actually a lot of talent movement between those 120 00:06:24,280 --> 00:06:27,890 regions, founder movement. And companies from India, when 121 00:06:27,890 --> 00:06:30,010 they're thinking about getting out of India, often Southeast 122 00:06:30,010 --> 00:06:32,650 Asia is the next frontier. So I think about that region, 123 00:06:33,170 --> 00:06:37,090 you know, we have today 19 investment professionals in the 124 00:06:37,250 --> 00:06:40,730 and then an operating team or a platform team that supports our 125 00:06:40,730 --> 00:06:46,250 portfolio of about 10, So quite sizable across 4 offices, Delhi, 126 00:06:46,290 --> 00:06:51,370 Bangalore, Mumbai and Singapore. And you know, since we started 127 00:06:51,370 --> 00:06:54,570 investing in India, we've invested approximately 1 1/2 128 00:06:54,570 --> 00:06:57,190 billion dollars in the market. So it's, you know, it's 129 00:06:57,190 --> 00:07:01,430 meaningful, but kind of always I think timed to how the market 130 00:07:01,430 --> 00:07:05,590 was developing. So actually up until 2015, we 131 00:07:05,590 --> 00:07:08,670 continued to invest out of our global funds at a very measured 132 00:07:08,670 --> 00:07:10,710 pace. And you know, again, many of our 133 00:07:10,710 --> 00:07:13,910 peers had raised dedicated fund vehicles and there were a set of 134 00:07:13,910 --> 00:07:18,440 local homegrown funds as well. You know, we knew this was a 135 00:07:18,440 --> 00:07:21,200 market we wanted to be in, but we didn't think it warranted A 136 00:07:21,200 --> 00:07:25,160 dedicated strategy up until sort of I'd say in 1314. 137 00:07:25,160 --> 00:07:28,760 We began to see changes on the ground, founder quality, more 138 00:07:28,760 --> 00:07:32,440 risk capital and sort of really now the beginning of significant 139 00:07:32,560 --> 00:07:35,280 Internet adoption, right, which is really the trend line that 140 00:07:35,280 --> 00:07:38,640 we're investing behind. And so in 2015, we raised our 141 00:07:38,640 --> 00:07:42,800 first dedicated early stage fund for the market, but it was still 142 00:07:42,800 --> 00:07:45,600 a very. I think a very disciplined size 143 00:07:45,600 --> 00:07:50,640 at 135 million. You know, fund two was 175, fund 144 00:07:50,640 --> 00:07:55,760 three was 275 and the idea was really to keep the bar high, you 145 00:07:55,760 --> 00:07:59,280 know, to focus on the highest impact opportunities, you know 146 00:07:59,280 --> 00:08:02,080 and then over time as we've raised our growth funds if we do 147 00:08:02,080 --> 00:08:04,160 miss things at early, which obviously we do. 148 00:08:04,510 --> 00:08:07,550 Then we do have the ability now to hopefully still be able to 149 00:08:07,550 --> 00:08:09,710 partner with those entrepreneurs later in their journey. 150 00:08:09,750 --> 00:08:11,670 What were the key companies or like? 151 00:08:11,670 --> 00:08:13,830 What successful investments did you see? 152 00:08:14,070 --> 00:08:17,550 So early on an early investment in a company called Tudor Vista, 153 00:08:17,790 --> 00:08:20,190 which was essentially one of the first companies that was 154 00:08:20,190 --> 00:08:24,830 connecting in that case tutors in that market with students 155 00:08:24,830 --> 00:08:27,510 globally. So a very early incarceration of 156 00:08:27,510 --> 00:08:29,750 Ed tech. That company was acquired in a 157 00:08:29,750 --> 00:08:33,289 trade sale by Pearson. What was one of the early exits 158 00:08:33,289 --> 00:08:36,409 in the market And then an investment that I led in 2010 in 159 00:08:36,409 --> 00:08:39,770 a company called the Indian Energy Exchange, which was 160 00:08:39,770 --> 00:08:41,809 building an electronic market for power. 161 00:08:42,169 --> 00:08:45,050 You know, and this is an example actually of where, you know, 162 00:08:45,050 --> 00:08:47,410 when we talked about it in the partnership and the natural 163 00:08:47,410 --> 00:08:50,850 thing to do is to seek analogs, Where else has this been built? 164 00:08:51,250 --> 00:08:54,170 And the answer was nowhere. And then it can be very well. 165 00:08:54,170 --> 00:08:56,330 If there's no examples of success, we shouldn't do it. 166 00:08:56,330 --> 00:08:57,770 It obviously can't be successful. 167 00:08:58,270 --> 00:09:00,710 But we should have got into being very first principles 168 00:09:00,710 --> 00:09:04,830 about what's happening in the power market in India and why 169 00:09:04,830 --> 00:09:06,470 does something like this need to exist. 170 00:09:06,470 --> 00:09:09,150 And I won't bore you with the details, but there was a set of 171 00:09:09,150 --> 00:09:12,350 reasons why something like this needed to exist and it was a 172 00:09:12,350 --> 00:09:16,710 classic example of how we could think about getting venture type 173 00:09:16,710 --> 00:09:21,950 exposure to a sector like energy or power, right. 174 00:09:21,950 --> 00:09:24,310 That was going through a massive investment cycle. 175 00:09:24,750 --> 00:09:28,310 And so we Co led the company's Series A and actually the only 176 00:09:28,310 --> 00:09:31,670 round of external capital that they ended up raising in late 20 177 00:09:31,670 --> 00:09:35,990 and and that company we took public in 2017 and the local 178 00:09:35,990 --> 00:09:39,590 Stock Exchange and then over time fully exited over the 179 00:09:39,590 --> 00:09:42,510 subsequent few years. So that was one of our sort of 180 00:09:42,510 --> 00:09:44,910 early investments and it helps right when you go to a new 181 00:09:44,910 --> 00:09:49,910 market to to know that you can, you know, invest but also take 182 00:09:49,910 --> 00:09:52,590 money out and get a company public and see the full life 183 00:09:52,590 --> 00:09:55,360 cycle. Is this strategy generally like 184 00:09:55,600 --> 00:09:58,760 looking for companies that can be global players or do you 185 00:09:58,760 --> 00:10:03,800 invest in startups that could just sort of dominate the Indian 186 00:10:03,800 --> 00:10:06,040 tech market and would that be sort of large enough? 187 00:10:06,280 --> 00:10:09,720 It's all of the above, right? Typically on the consumer side 188 00:10:09,720 --> 00:10:13,840 and on some B to BI wouldn't say B to B software. 189 00:10:13,840 --> 00:10:16,720 I don't think the Indian market for software is large enough to 190 00:10:16,720 --> 00:10:21,130 support a high impact company. But those are those companies 191 00:10:21,130 --> 00:10:24,130 tend to get outside India. For example, we have a company 192 00:10:24,130 --> 00:10:26,490 called Innovasor which is focused on the healthcare 193 00:10:26,490 --> 00:10:30,450 segment in software that got outside India very early or 194 00:10:30,450 --> 00:10:34,890 Darwin Box and HR SAS you know that you know built in India now 195 00:10:34,890 --> 00:10:39,050 has gone to Southeast Asia. But in I would say in consumer 196 00:10:39,050 --> 00:10:41,370 that tends to be almost exclusively focused on the 197 00:10:41,370 --> 00:10:45,410 domestic economy and you know, B to B networks or B to B 198 00:10:45,410 --> 00:10:47,660 commerce. You know will typically be 199 00:10:47,660 --> 00:10:51,540 focused or B to B fintech. You know on the local economy 200 00:10:51,980 --> 00:10:58,100 what we're now seeing more recently as the founder universe 201 00:10:58,100 --> 00:11:00,620 has sort of become more confident I think bolder 202 00:11:00,620 --> 00:11:04,580 building better products is we're seeing more of them today. 203 00:11:04,580 --> 00:11:08,900 Start off with A we want to build for the world kind of you 204 00:11:08,900 --> 00:11:12,420 know mindset which is really energizing and one area that 205 00:11:12,420 --> 00:11:15,260 we're specifically seeing a lot of that and if invested behind 206 00:11:15,260 --> 00:11:17,860 is. Are sort of B to B marketplaces 207 00:11:17,860 --> 00:11:22,620 that are connecting supply in India and other markets with 208 00:11:22,740 --> 00:11:26,180 demand globally, you know, primarily starting out with the 209 00:11:26,180 --> 00:11:29,180 US and the idea being that you have, you know, with the 210 00:11:29,180 --> 00:11:32,340 disruption from COVID of supply chains, right. 211 00:11:32,420 --> 00:11:35,700 And then the geopolitical issues with China, there's a very 212 00:11:35,700 --> 00:11:39,140 strong movement towards China plus one sourcing, right? 213 00:11:39,220 --> 00:11:42,380 And a lot of the supply base is actually in the Southeast Asia 214 00:11:42,380 --> 00:11:45,820 region and India region, India, Vietnam, Thailand, so on. 215 00:11:46,200 --> 00:11:50,080 And so how do you now connect that supply right with buyers 216 00:11:50,080 --> 00:11:52,640 anywhere in the world? And so we're beginning to see 217 00:11:52,640 --> 00:11:56,240 ideas like that emerge and investing actively behind that. 218 00:11:56,240 --> 00:11:59,520 Again, it's one of the reasons that we're so excited about 219 00:11:59,520 --> 00:12:03,000 continuing to build a global firm because we see ideas like 220 00:12:03,000 --> 00:12:04,960 this. I feel like a lot of the like 221 00:12:05,320 --> 00:12:08,920 India's story that trickles back to Silicon Valley has been know 222 00:12:08,920 --> 00:12:13,120 the Flipkart Wars and like Amazon diving in and all the 223 00:12:13,120 --> 00:12:16,780 investment around that space. What was the impact of that 224 00:12:16,780 --> 00:12:21,060 enthusiasm on sort of the Indian like startup ecosystem and how 225 00:12:21,060 --> 00:12:23,900 did you guys sort of navigate? That, yeah, you know, I think 226 00:12:24,660 --> 00:12:27,620 the first, I mean this is sort of an observation now with 227 00:12:27,620 --> 00:12:30,420 hindsight across various different markets is the first 228 00:12:30,420 --> 00:12:34,700 generation of companies often tends to be copycats, right, for 229 00:12:34,700 --> 00:12:36,380 better or for worse. And that's okay. 230 00:12:36,500 --> 00:12:39,780 You know, we saw in India it would be the online travel 231 00:12:39,780 --> 00:12:44,500 agents in e-commerce, Flipkart, Amazon ride sharing and. 232 00:12:44,890 --> 00:12:47,690 Online booking for shows and movies and so on. 233 00:12:49,010 --> 00:12:51,170 There were the deal a day businesses at one point until 234 00:12:51,170 --> 00:12:54,050 folks realize that it is a different market that doesn't 235 00:12:54,050 --> 00:12:55,930 work there, right? And it's really interesting 236 00:12:55,930 --> 00:12:58,730 because I think investors are equally culpable, right? 237 00:12:58,730 --> 00:13:03,570 Investors will oh, that's an idea that's working in market X. 238 00:13:03,570 --> 00:13:08,650 So I will invest in market Y, except market Y may not support 239 00:13:08,730 --> 00:13:12,060 that particular idea. And then if founders sense that 240 00:13:12,060 --> 00:13:15,060 investors want to invest there, well, guess what, they'll start 241 00:13:15,060 --> 00:13:16,620 a company and they'll go raise money. 242 00:13:16,700 --> 00:13:19,580 And so that's invariably the first set of companies. 243 00:13:19,660 --> 00:13:23,340 And then we started to see, and I EX was an example, another 244 00:13:23,340 --> 00:13:26,260 company that we've invested in and you know very early and has 245 00:13:26,260 --> 00:13:28,780 grown a significant scale is a company called Oyo, which is a 246 00:13:28,780 --> 00:13:32,980 virtual hospitality network. You start seeing founders build 247 00:13:32,980 --> 00:13:37,260 companies with a lot more nuance and understanding of how those 248 00:13:37,260 --> 00:13:39,580 models need to be adapted for the local market. 249 00:13:40,490 --> 00:13:44,290 And I would actually go so far as to say that in most 250 00:13:44,290 --> 00:13:47,450 businesses where there is sort of a real world component or 251 00:13:47,450 --> 00:13:51,930 linkage including ecommerce or ride sharing, the Indian 252 00:13:51,930 --> 00:13:56,330 startups have competed very strongly with what are the best 253 00:13:56,330 --> 00:13:59,010 companies out of the US. So whether it is Flipkart and 254 00:13:59,010 --> 00:14:04,570 Amazon or Ola and Uber or Makemytrip and Expedia. 255 00:14:05,130 --> 00:14:08,890 The Ornokri, which is the job site and early on Monster, 256 00:14:09,050 --> 00:14:14,370 actually what you see is that the Indian companies are winning 257 00:14:14,370 --> 00:14:17,650 or are certainly very strong competitors on the food side, 258 00:14:17,810 --> 00:14:21,970 Swiggy and Zamato, right. And so I think that's been very 259 00:14:22,050 --> 00:14:25,450 energizing for the startup ecosystem where the products 260 00:14:25,450 --> 00:14:30,370 tend to be more fully virtual and catering to, let's say the 261 00:14:30,370 --> 00:14:33,850 80 to 100 million English speaking population. 262 00:14:34,350 --> 00:14:38,590 Facebook, Twitter, LinkedIn, there it will typically be and 263 00:14:38,590 --> 00:14:41,470 is the global products that dominate because there isn't 264 00:14:41,470 --> 00:14:43,750 this real world nuance and component. 265 00:14:44,590 --> 00:14:47,430 Although once you get beyond that English speaking population 266 00:14:47,430 --> 00:14:49,990 again there's probably a need. And you know, we're investors in 267 00:14:49,990 --> 00:14:52,550 a company called Share Chat, which is a social network for 268 00:14:52,950 --> 00:14:54,950 actually none of the English speaking audience. 269 00:14:55,320 --> 00:14:58,320 You know and so I think then what you start seeing is these 270 00:14:58,320 --> 00:15:01,400 businesses that are being built actually that are very unique to 271 00:15:01,400 --> 00:15:04,480 the market and that's really exciting to us because those 272 00:15:04,480 --> 00:15:07,680 businesses will typically also have higher defensibility and 273 00:15:07,680 --> 00:15:11,840 stronger capital efficiency. And so today what is the level 274 00:15:11,840 --> 00:15:15,160 of enthusiasm for like India with the firm. 275 00:15:15,200 --> 00:15:18,080 So you just for context for listener when get into this, you 276 00:15:18,080 --> 00:15:22,250 know you come back eventually to the US to sort of focus on the 277 00:15:22,250 --> 00:15:25,530 firm and investments here, but yeah, you're still very involved 278 00:15:25,530 --> 00:15:27,330 in sort of the strategy. Absolutely. 279 00:15:28,130 --> 00:15:30,810 So what is the sort of approach at the moment or what's your 280 00:15:30,810 --> 00:15:34,010 sense of the market and how much capital you're putting behind 281 00:15:34,010 --> 00:15:35,290 it? I think this is true about 282 00:15:35,290 --> 00:15:38,610 technology. Investing in general, which is 283 00:15:38,890 --> 00:15:41,610 the long arc, is really a one way street right? 284 00:15:41,690 --> 00:15:43,490 This is something that is chatting with one of my 285 00:15:43,490 --> 00:15:46,570 colleagues about earlier In 2000, the digital economy in the 286 00:15:46,570 --> 00:15:49,730 US represented about 6% share of GDP. 287 00:15:50,280 --> 00:15:53,480 You know, today that's at 10.2% and obviously absolute GDP has 288 00:15:53,480 --> 00:15:54,760 grown. This is in the US, right. 289 00:15:54,760 --> 00:15:57,520 So there's just significant growth and it will be no 290 00:15:57,520 --> 00:16:00,080 different in the other markets that we invest behind. 291 00:16:00,080 --> 00:16:04,200 And so you know in India when we think about just overall GDP 292 00:16:04,200 --> 00:16:07,720 growth, population growth, but adoption of the Internet and 293 00:16:07,720 --> 00:16:12,360 digital technologies, it is a one way St. and so kind of over 294 00:16:12,360 --> 00:16:15,640 the right horizon. You know, I think that our level 295 00:16:15,640 --> 00:16:20,690 of excitement remains very high. Although not rose colored for 296 00:16:20,690 --> 00:16:23,130 lots of reasons that we can talk about right and it sort of 297 00:16:23,130 --> 00:16:25,730 reflects why we've paced the way that we have. 298 00:16:26,210 --> 00:16:28,970 That said you know I think anytime you over index on a 299 00:16:28,970 --> 00:16:33,610 point in time and that could have been 2022 or 2021 in 300 00:16:33,610 --> 00:16:38,450 technology you know or 2022 in global technology you know or a 301 00:16:38,450 --> 00:16:41,530 point in time like you know 2223 in India. 302 00:16:42,330 --> 00:16:44,170 You know clearly activity is lower. 303 00:16:44,450 --> 00:16:46,530 I would argue that's really healthy. 304 00:16:46,610 --> 00:16:50,640 You know, 2021. We know was out of control 305 00:16:50,640 --> 00:16:55,840 everywhere, but in shallow markets, Eric, out of control is 306 00:16:55,840 --> 00:16:59,720 even more damaging, right, because the asset price 307 00:16:59,720 --> 00:17:03,600 inflation is even more significant in shallow markets, 308 00:17:03,600 --> 00:17:05,520 right. And sort of the movements are 309 00:17:05,520 --> 00:17:08,920 more jarring. And so I think it's healthy, 310 00:17:08,920 --> 00:17:13,599 it's necessary, it's painful, But again, if I draw from my 311 00:17:13,599 --> 00:17:17,160 experienceinthe.com, boom, you know, in the US and then the 312 00:17:17,160 --> 00:17:19,910 subsequent. You know, bust in 2001, I 313 00:17:19,910 --> 00:17:21,030 remember looking at these numbers. 314 00:17:21,030 --> 00:17:26,190 So the peak of US venture capital in 2000 was about 180 315 00:17:26,190 --> 00:17:30,310 billion. In 2002 that number was 20 316 00:17:30,310 --> 00:17:33,070 billion. Brutal, brutal, right. 317 00:17:33,230 --> 00:17:36,190 And I remember it because it was like, Oh my gosh, I mean this is 318 00:17:36,190 --> 00:17:40,470 when I was at GC kind of early and it's like, do we need to 319 00:17:40,470 --> 00:17:45,750 exist, You know, it just wasn't clear what was investable and 320 00:17:45,750 --> 00:17:49,360 what was going to come next and. You know, and what we know today 321 00:17:49,360 --> 00:17:53,240 is during those periods of capital scarcity, you know, true 322 00:17:53,240 --> 00:17:56,800 innovation happened and true builders were still drawn to 323 00:17:56,800 --> 00:17:59,080 solving problems using technology. 324 00:17:59,600 --> 00:18:02,400 But in that moment in time, I remember it was entirely 325 00:18:02,400 --> 00:18:06,880 possible to think that nothing was happening, right. 326 00:18:06,880 --> 00:18:09,800 And so again, I tend to sort of want to be able to see what's 327 00:18:09,800 --> 00:18:13,240 happening today clearly so that I can be and we can be 328 00:18:13,240 --> 00:18:16,260 intellectually honest. But I think equally importantly, 329 00:18:16,260 --> 00:18:19,580 to be able to pull up and say okay, what is the trend line 330 00:18:19,580 --> 00:18:21,620 here? You know, what's happening? 331 00:18:21,620 --> 00:18:23,980 Where is that going? And to consistently question 332 00:18:23,980 --> 00:18:26,460 whether there's a challenge to that thesis, whether it's 333 00:18:26,460 --> 00:18:29,780 technology more broadly or the development of India's digital 334 00:18:29,780 --> 00:18:33,420 economy and SE Asia's digital economy, do you have a dedicated 335 00:18:33,420 --> 00:18:36,300 amount of capital? On the early stage side, we just 336 00:18:36,300 --> 00:18:39,420 raised Lightspeed India for that, we started investing out 337 00:18:39,420 --> 00:18:42,060 of early this year, which is a $500 million vehicle. 338 00:18:42,600 --> 00:18:45,600 And that reflects our view of how the opportunity has 339 00:18:45,600 --> 00:18:49,600 continued to grow, but we still want to be measured, right. 340 00:18:49,640 --> 00:18:52,920 And then on on the growth side, there's no allocation. 341 00:18:52,920 --> 00:18:55,680 You know, we tend to focus on the best opportunities. 342 00:18:55,680 --> 00:18:58,280 And so, yeah, if you think about the dedicated pool, it's that 343 00:18:58,280 --> 00:19:01,400 500 million, you're probably more of a scholar of this than I 344 00:19:01,400 --> 00:19:03,720 am. But you know US venture has sort 345 00:19:03,720 --> 00:19:08,040 of a history of diving into regions and then sort of pulling 346 00:19:08,040 --> 00:19:12,110 back with you know like Europe like a benchmark I think used to 347 00:19:12,110 --> 00:19:14,790 have a presence in Europe and you know they're all sort you 348 00:19:14,790 --> 00:19:19,110 know in and out like China, India have sort of been hot and 349 00:19:19,110 --> 00:19:21,110 then not. And I totally hear what you're 350 00:19:21,110 --> 00:19:24,150 saying about overtime like technology continues to eat more 351 00:19:24,150 --> 00:19:27,150 markets but then you you need like or at least the traditional 352 00:19:27,150 --> 00:19:31,670 venture ecosystem depends on follow on rounds and other firms 353 00:19:31,670 --> 00:19:36,110 playing and you know obviously you and me but to put it out for 354 00:19:36,110 --> 00:19:38,830 the listener like at this moment in time, you know Sequoia has 355 00:19:38,830 --> 00:19:43,560 just sort of spun off its China and India fund sort of moving 356 00:19:43,560 --> 00:19:48,680 away from a global firm like focusing on those regions. 357 00:19:48,720 --> 00:19:50,960 Yeah. So I guess where are we in this 358 00:19:50,960 --> 00:19:54,120 sort of venture mood in India right now? 359 00:19:54,120 --> 00:19:58,320 Or do you see sort of other investors sort of as dedicated 360 00:19:58,320 --> 00:20:02,280 at this move? Yeah, I can't comment on Sequoia 361 00:20:02,280 --> 00:20:05,640 and I'm not Privy to, you know, sort of the thinking behind 362 00:20:05,640 --> 00:20:08,400 their decisions, but I can sort of comment on how we think about 363 00:20:08,400 --> 00:20:10,520 this. It's really hard to build a 364 00:20:10,520 --> 00:20:15,560 global firm, you know, and it's really hard to attract the right 365 00:20:15,560 --> 00:20:20,880 kind of talent to inculcate again that shared vocabulary and 366 00:20:20,880 --> 00:20:23,680 sense of of mission and values and culture. 367 00:20:23,680 --> 00:20:27,200 And do you see what I see and trust which is so foundational 368 00:20:27,200 --> 00:20:31,600 to our business, It's difficult and I think that's one of the 369 00:20:31,600 --> 00:20:35,040 main reasons I would suspect that firms that have gone 370 00:20:35,040 --> 00:20:38,120 internationally, you know, may subsequently have sort of 371 00:20:38,120 --> 00:20:41,580 retrenched and anytime something is, is really difficult, really 372 00:20:41,580 --> 00:20:43,620 hard. Naturally the right question to 373 00:20:43,620 --> 00:20:47,020 ask yourself is it worth it? You know, and I think that's a 374 00:20:47,020 --> 00:20:51,060 very personal question. In many cases, it's personal at 375 00:20:51,060 --> 00:20:54,780 the individual level, right. Because for a firm to go to 376 00:20:54,780 --> 00:20:59,380 another market does require, you know, someone that has political 377 00:20:59,380 --> 00:21:02,140 capital within the firm at that point in time to put their hand 378 00:21:02,140 --> 00:21:05,460 up and say, I'm going to invest my time and energy, you know, to 379 00:21:05,460 --> 00:21:08,300 do this right. And so that individual will ask 380 00:21:08,300 --> 00:21:10,900 them whether it's worth it, will ask themselves whether it's 381 00:21:10,900 --> 00:21:12,780 worth it. The firm will ask themselves 382 00:21:12,780 --> 00:21:16,620 whether it's worth it. And you know, that argument can 383 00:21:16,620 --> 00:21:20,860 be made well if within a 30 minute drive from Sand Hill Rd. 384 00:21:20,860 --> 00:21:25,340 as was the case not so long ago. If I can, you know, find a set 385 00:21:25,340 --> 00:21:28,940 of companies that are great, why do I need to go beyond that? 386 00:21:29,060 --> 00:21:30,740 Right. And I would argue then that that 387 00:21:30,740 --> 00:21:34,980 thinking would apply to why go to New York, why go to LA, 388 00:21:35,540 --> 00:21:37,060 right. Why go to Europe? 389 00:21:37,060 --> 00:21:40,540 Why go to Lat Am? I mean, why go beyond 30 minutes 390 00:21:40,540 --> 00:21:42,900 of Sandhill Road? And that's what Venture used to 391 00:21:42,900 --> 00:21:45,060 be. Why go to Boston, right? 392 00:21:45,300 --> 00:21:47,540 There was this long period where, you know, it was like 393 00:21:47,940 --> 00:21:52,020 totally cool to just say like, we love San Francisco, Silicon 394 00:21:52,020 --> 00:21:54,860 Valley, like startups and everything else is sort of like 395 00:21:54,940 --> 00:21:57,140 a distraction. And that was something you would 396 00:21:57,140 --> 00:21:59,420 hear pretty regularly, I think, the pandemic. 397 00:22:00,330 --> 00:22:02,450 Blew a lot of that up. You know, all of a sudden people 398 00:22:02,450 --> 00:22:06,370 were excited about Europe. It was easier to do deals 399 00:22:06,410 --> 00:22:08,250 abroad. I mean, obviously there have 400 00:22:08,250 --> 00:22:11,130 been other moments where people were, but I think the pandemic 401 00:22:11,130 --> 00:22:14,730 in particular was like there was a brief period where it was like 402 00:22:14,730 --> 00:22:17,330 everything's global. Everybody can invest everywhere. 403 00:22:17,330 --> 00:22:20,130 Like there's an arbitrage. Like people started, you know, 404 00:22:20,130 --> 00:22:24,250 sending partners out to Europe and now like, I mean. 405 00:22:24,880 --> 00:22:28,320 Some of the, you know, Hoppin is sort of more challenged UI path 406 00:22:28,320 --> 00:22:31,680 didn't sustain like some of the actual companies that were 407 00:22:31,680 --> 00:22:34,480 fueling the narrative didn't sort of live up. 408 00:22:34,920 --> 00:22:37,320 And then at the same time now we're seeing that so much 409 00:22:37,320 --> 00:22:44,040 adventure is in AI and AI is really centralized, you know, in 410 00:22:44,040 --> 00:22:45,760 Silicon Valley and San Francisco. 411 00:22:45,760 --> 00:22:47,760 I don't, yeah. So what do you make of? 412 00:22:47,760 --> 00:22:52,310 Sort of the return to, sort of? Silicon Valley exceptionalism in 413 00:22:52,350 --> 00:22:53,990 in sort of the adventure world at the moment. 414 00:22:53,990 --> 00:22:57,070 Yeah, I don't think there's a right or a wrong answer right. 415 00:22:57,070 --> 00:23:00,430 I think different firms, different people, different 416 00:23:00,430 --> 00:23:04,310 personalities, different strategies, different ambitions, 417 00:23:04,350 --> 00:23:08,390 different levels of hunger and kind of fire to go build 418 00:23:08,390 --> 00:23:10,830 something. Remember again, part of what you 419 00:23:10,830 --> 00:23:14,630 need to even consider in a sense, you know going and doing 420 00:23:14,630 --> 00:23:17,070 something and building something larger and expanding the 421 00:23:17,070 --> 00:23:19,730 cannabis is the same way with a founder, right? 422 00:23:19,730 --> 00:23:22,170 They'll be founders who will build a company that they want 423 00:23:22,170 --> 00:23:26,410 to own 100% of and they're fine if that company grows 15% of a 424 00:23:26,410 --> 00:23:28,330 year and throws off a certain amount of cash. 425 00:23:28,530 --> 00:23:31,890 And then there are some founders who want to change the world and 426 00:23:31,890 --> 00:23:34,810 we're not judging, you know one is better than the other. 427 00:23:34,810 --> 00:23:37,930 We know that for venture Capital One is more of the type that we 428 00:23:37,930 --> 00:23:40,810 would back than the other. And so I think it's the same in 429 00:23:40,810 --> 00:23:44,610 venture which is it's a function of what the firms and the 430 00:23:44,610 --> 00:23:47,420 individuals aspiration is, right. 431 00:23:47,460 --> 00:23:50,060 And if you don't have people that are willing to say, geez, I 432 00:23:50,060 --> 00:23:53,340 have a burning desire to go do this because I see this 433 00:23:53,340 --> 00:23:57,580 opportunity, well then you know that will be as big a part of 434 00:23:57,580 --> 00:24:01,980 the discussion as where a I is or where the opportunity is. 435 00:24:01,980 --> 00:24:04,580 You know what I would tell you is the way we think about it, 436 00:24:04,580 --> 00:24:07,940 Lightspeed is what are we optimizing for, right, because 437 00:24:07,940 --> 00:24:10,260 we've got to have that clarity and that then drives our 438 00:24:10,260 --> 00:24:13,380 decisions. So it's three things. 439 00:24:13,460 --> 00:24:17,320 We want to see access and compete for the very best 440 00:24:17,320 --> 00:24:21,080 opportunities wherever they are, because to generate the best 441 00:24:21,080 --> 00:24:24,640 returns, we think we need to be in the best companies. 442 00:24:25,200 --> 00:24:27,600 And if a significant proportion of those companies are now 443 00:24:27,600 --> 00:24:33,920 outside the US or outside Silicon Valley, then we need to 444 00:24:33,920 --> 00:24:36,120 be able to see them in order to perform right. 445 00:24:36,120 --> 00:24:38,520 Again, part of this is also a choice about scale. 446 00:24:38,760 --> 00:24:41,080 Sure. If you raise $200 million, you 447 00:24:41,080 --> 00:24:44,020 don't need to, but it's also because of learning. 448 00:24:44,020 --> 00:24:46,860 I mean, a lot of what we bring to our companies is because of 449 00:24:46,860 --> 00:24:49,820 the journeys that we've been on, you know, and the different 450 00:24:49,820 --> 00:24:53,140 models that we've seen and how our conceptual models get 451 00:24:53,140 --> 00:24:55,460 challenged because you've seen something somewhere else. 452 00:24:55,460 --> 00:24:58,900 I would argue that actually, you know, markets like India where 453 00:24:58,900 --> 00:25:02,540 there's UPI and Latdam where there's pigs are a little bit, 454 00:25:02,700 --> 00:25:05,900 you know, showing us what the future of fintech could be, you 455 00:25:05,900 --> 00:25:09,860 know, with these very low cost or 0 cost payment rails, right. 456 00:25:09,860 --> 00:25:13,380 I think, you know, we saw virtual goods models and kind 457 00:25:13,380 --> 00:25:16,460 of, you know, monetization models that came out of China, 458 00:25:16,860 --> 00:25:20,060 right, that innovated around kind of how social media 459 00:25:20,060 --> 00:25:22,380 companies could monetize and generate revenue. 460 00:25:22,380 --> 00:25:25,220 So for the learning and the experience, we think that's 461 00:25:25,220 --> 00:25:27,140 important. So we want to see access and 462 00:25:27,140 --> 00:25:29,220 compete for the very best opportunities wherever they are. 463 00:25:30,100 --> 00:25:34,060 The second thing is we want to serve founders and companies in 464 00:25:34,060 --> 00:25:37,930 the most impactful way, right, in a way that moves the needle 465 00:25:37,930 --> 00:25:39,650 for them. So that's sort of another design 466 00:25:39,650 --> 00:25:42,330 principle. And the third is that we want to 467 00:25:42,330 --> 00:25:46,010 attract the best talent to Lightspeed and enable them to do 468 00:25:46,010 --> 00:25:48,730 their best work. Those are the three things we 469 00:25:48,730 --> 00:25:52,090 want to do. Now for any other firm, those 470 00:25:52,090 --> 00:25:55,810 things may be different and that's okay, but this is what 471 00:25:55,810 --> 00:25:59,050 we're building towards. And then the question becomes, 472 00:25:59,050 --> 00:26:02,090 you know, well, do you get distracted, right? 473 00:26:02,170 --> 00:26:07,490 And I think in my mind, anytime I'm presented with this idea of 474 00:26:07,490 --> 00:26:10,490 a trade off, you can either do X or Y. 475 00:26:11,850 --> 00:26:15,130 The first thing at least I want to do is I want to challenge 476 00:26:15,130 --> 00:26:17,170 that trade off. I don't want to just accept it, 477 00:26:17,330 --> 00:26:20,970 right, because then we go deeper and understanding why there is a 478 00:26:20,970 --> 00:26:23,610 trade off. Is there a trade off, you know, 479 00:26:23,610 --> 00:26:26,530 we say to companies, well either you grow fast or you have 480 00:26:27,410 --> 00:26:29,490 compelling unit economics really. 481 00:26:30,450 --> 00:26:34,110 Is that really the choice, You know to build value you have to 482 00:26:34,110 --> 00:26:37,950 do both and the best companies will figure out a way to do both 483 00:26:38,390 --> 00:26:41,750 and some will not. And so for us, I think it is, 484 00:26:42,230 --> 00:26:46,270 you know, it is well, how do we, our enterprise team is we think 485 00:26:46,270 --> 00:26:50,630 one of the best in the business. Well, they are deeply focused on 486 00:26:50,630 --> 00:26:54,270 enterprise, right. They're not getting distracted 487 00:26:54,270 --> 00:26:57,870 by necessarily what the India team is doing, but then 488 00:26:57,870 --> 00:27:00,830 organizationally, how do you create points of intersection so 489 00:27:00,830 --> 00:27:04,870 that we're exchanging ideas, right, and experiences. 490 00:27:05,110 --> 00:27:09,310 So to me that comes to firm design and being very mindful of 491 00:27:09,310 --> 00:27:12,550 the risks and obviously we're still building this, but you 492 00:27:12,550 --> 00:27:13,950 know we. People, is it right now 493 00:27:14,270 --> 00:27:16,750 globally? Yeah, Total headcount will be 494 00:27:16,750 --> 00:27:21,510 north of 200 and I think we have about 70 investors you know 495 00:27:21,510 --> 00:27:28,010 globally across the US, Israel, Europe, India, Southeast Asia, 496 00:27:28,090 --> 00:27:29,890 you know in the China is an affiliate. 497 00:27:29,890 --> 00:27:32,970 So in a sense separate business and so that would be the size 498 00:27:32,970 --> 00:27:36,210 and we've been at it since I think Israel was a first in the 499 00:27:36,210 --> 00:27:39,450 national market in the early 2000s. 500 00:27:39,450 --> 00:27:42,250 So this isn't a new thing for us. 501 00:27:42,250 --> 00:27:43,970 It's not something we've done quickly. 502 00:27:44,410 --> 00:27:46,650 You know, we've not tried to do things overnight. 503 00:27:47,050 --> 00:27:50,370 Are you still gung ho about the China affiliate? 504 00:27:50,690 --> 00:27:54,070 I mean, the tensions there have. You know become more 505 00:27:54,070 --> 00:27:56,430 complicated. Yes, certainly and we have to be 506 00:27:56,430 --> 00:27:58,830 you know mindful of that. I think you know it is a in a 507 00:27:58,830 --> 00:28:02,510 sense of benefit that is an independent entity and I think 508 00:28:02,510 --> 00:28:05,630 sort of their investment strategy primarily centers right 509 00:28:05,630 --> 00:28:09,510 now around sustainability, climate and the EV ecosystem. 510 00:28:09,750 --> 00:28:11,110 And so there's some learning there. 511 00:28:11,390 --> 00:28:14,790 But you know, I would say that it's a good relationship that we 512 00:28:14,790 --> 00:28:18,470 have and you know we are very sensitive to kind of everything 513 00:28:18,470 --> 00:28:21,540 that's happening globally. And you know it'll be something 514 00:28:21,540 --> 00:28:24,140 that we continue to think about what the right answer is. 515 00:28:24,140 --> 00:28:29,020 But you know, as of now it is run separately, but you know 516 00:28:29,020 --> 00:28:31,540 they're friends of ours, just like you know any other firm 517 00:28:31,540 --> 00:28:33,140 would be. And you can collaborate and 518 00:28:33,140 --> 00:28:35,700 share notes you know and learnings about things. 519 00:28:35,700 --> 00:28:38,620 But you know in essence it is a separate business. 520 00:28:39,060 --> 00:28:41,580 Just before I totally move off India and start talking about 521 00:28:41,580 --> 00:28:44,900 like firm construction all that. What do you think are the most 522 00:28:44,900 --> 00:28:48,300 promising areas in terms of India like startup investments 523 00:28:48,300 --> 00:28:52,140 right now or where are you guys deploying sort of the most money 524 00:28:52,140 --> 00:28:55,820 or what sort of the promise? So you know one area that I 525 00:28:55,820 --> 00:28:58,700 mentioned earlier is a lot of these cross-border businesses 526 00:28:58,700 --> 00:29:02,780 beyond software, so cross-border marketplaces, cross-border 527 00:29:02,780 --> 00:29:04,860 payments and in payment infrastructure. 528 00:29:05,260 --> 00:29:09,540 And so if if five years ago, if we talked about what businesses 529 00:29:09,540 --> 00:29:12,020 were getting outside of India, those were primarily SAS 530 00:29:12,020 --> 00:29:14,460 companies. You know, today I would say 531 00:29:14,500 --> 00:29:17,580 there's a lot more in these other categories and I think 532 00:29:17,580 --> 00:29:20,620 that's a very compelling theme. The other is we're beginning to 533 00:29:20,620 --> 00:29:24,660 see a fair amount of activity around the EV ecosystem there 534 00:29:24,700 --> 00:29:27,060 and we've made an initial set of investments. 535 00:29:27,300 --> 00:29:30,260 Like manufacturers or no. Again, we'll think about a 536 00:29:30,260 --> 00:29:33,860 little bit like our India Energy exchange, you know, kind of lens 537 00:29:33,860 --> 00:29:37,820 which is gosh, there's this very compelling trend line, but you 538 00:29:37,820 --> 00:29:42,860 know the bulk of it is not really a venture play, right. 539 00:29:43,170 --> 00:29:45,970 But how do we think about getting venture like exposure. 540 00:29:46,210 --> 00:29:49,010 And so for example, we've invested in a company called 541 00:29:49,010 --> 00:29:52,850 Exponent Energy which is building fast charging batteries 542 00:29:52,850 --> 00:29:56,290 and intellectual property and then a fast charging network in 543 00:29:56,290 --> 00:29:58,690 a sense that's tied to their batteries. 544 00:29:59,050 --> 00:30:03,650 And so think about Intel inside, you know the Exponent battery is 545 00:30:03,650 --> 00:30:07,450 now being adopted by OE M's you know so that their customers 546 00:30:07,450 --> 00:30:09,410 don't have to think. This is primarily in commercial 547 00:30:09,410 --> 00:30:12,890 applications where downtime can be very expensive. 548 00:30:13,250 --> 00:30:17,090 And so you know OEMs are adopting their batteries with an 549 00:30:17,090 --> 00:30:19,650 Exponent battery inside makes it more marketable. 550 00:30:19,930 --> 00:30:23,170 You know those batteries then work at the Exponent franchised 551 00:30:23,210 --> 00:30:25,410 fast charging network. So that's an example, it's 552 00:30:25,410 --> 00:30:28,850 really an IP business you know within the you know the network 553 00:30:28,850 --> 00:30:32,210 being franchised. So that would be an example of 554 00:30:32,210 --> 00:30:36,490 the venture play on that sector. We are looking at financial 555 00:30:36,490 --> 00:30:39,610 technology in particular in Southeast Asia. 556 00:30:40,000 --> 00:30:43,080 We've invested fairly actively in India there as well. 557 00:30:43,080 --> 00:30:45,800 But you know there's a lot to be built in Southeast Asia and 558 00:30:45,800 --> 00:30:49,520 that's an example of you know, kind of global themes, right. 559 00:30:49,520 --> 00:30:53,960 The CFO suite or you know, these financial products for small 560 00:30:53,960 --> 00:30:56,800 businesses, right, with different insertion points. 561 00:30:56,800 --> 00:30:59,200 It could be a credit insertion point or a banking insertion 562 00:30:59,200 --> 00:31:00,920 point. That's an area that we've 563 00:31:00,920 --> 00:31:04,440 invested across geographies in the US and Europe and India and 564 00:31:04,440 --> 00:31:07,160 in Southeast Asia. And wealth management, digital 565 00:31:07,160 --> 00:31:10,210 wealth management is an area that we're looking at too. 566 00:31:10,210 --> 00:31:12,770 What do you think is sort of the biggest strength of the Indian 567 00:31:12,770 --> 00:31:15,010 market right now, the opportunity and the biggest sort 568 00:31:15,010 --> 00:31:19,890 of like blocker or like barrier to making sort of investments at 569 00:31:19,890 --> 00:31:20,890 the moment? It's really interesting 570 00:31:20,890 --> 00:31:25,010 question. I think the biggest strength is 571 00:31:25,010 --> 00:31:27,490 the raw material for our business which is the founders. 572 00:31:28,090 --> 00:31:29,490 You know, it's really interesting. 573 00:31:29,490 --> 00:31:31,490 When we started investing in India, I would have 574 00:31:31,490 --> 00:31:38,130 characterized the typical Indian founder as a somewhat defensive, 575 00:31:38,660 --> 00:31:44,220 risk averse control oriented founder archetype, right, which 576 00:31:44,220 --> 00:31:45,700 is not great for venture capital. 577 00:31:45,940 --> 00:31:49,980 And I would characterize today, you know, the founder archetype 578 00:31:49,980 --> 00:31:53,060 is no different than what we would talk about here, which is, 579 00:31:53,460 --> 00:31:57,460 you know, wanting to change the world really can lean into not 580 00:31:57,460 --> 00:32:01,060 everyone but leans into risk and they've sort of seen this first 581 00:32:01,060 --> 00:32:03,860 wave of venture scale companies get built, right. 582 00:32:03,860 --> 00:32:07,780 And so there's a repeat flywheel and founders really are and 583 00:32:07,780 --> 00:32:10,420 talent is the raw material of our business, right. 584 00:32:10,620 --> 00:32:14,460 And so you know, for me that's the most exciting change instead 585 00:32:14,460 --> 00:32:17,380 of the, if you will, the superpower of the market. 586 00:32:17,380 --> 00:32:20,220 And I will say the work ethic. I mean you've got to realize 587 00:32:20,220 --> 00:32:23,420 that many of these folks or almost all of these folks are 588 00:32:23,420 --> 00:32:26,260 from Indian middle class families. 589 00:32:26,260 --> 00:32:29,540 Now when I say Indian middle class, I do not mean US middle 590 00:32:29,780 --> 00:32:33,500 class, right. I mean, you know, families with 591 00:32:33,500 --> 00:32:38,660 income levels of of $3000 to $15,000, like they're from those 592 00:32:38,660 --> 00:32:42,500 families, insanely driven, you know, and what they've had to 593 00:32:42,500 --> 00:32:46,420 accomplish to get to this point. You know, is it self evidence of 594 00:32:46,420 --> 00:32:50,500 really what's under the hood and the work ethic, you know, the 595 00:32:50,500 --> 00:32:54,780 intensity, the hunger, it's sort of you know, like gives me 596 00:32:54,780 --> 00:32:57,740 whatever, you know, shivers up my spine because there is this 597 00:32:57,740 --> 00:33:01,140 sense of this is their moment, right. 598 00:33:01,140 --> 00:33:03,940 And then obviously the rapid digitization of this country and 599 00:33:03,940 --> 00:33:07,220 the government's commitment to that, you know, rides along with 600 00:33:07,220 --> 00:33:10,460 the development of talent. You know what are maybe some of 601 00:33:10,460 --> 00:33:14,180 the biggest challenges. I think it is the time it takes 602 00:33:14,180 --> 00:33:19,180 to build these companies and the just the challenges in the 603 00:33:19,180 --> 00:33:21,060 economics and and these are related. 604 00:33:21,060 --> 00:33:25,020 So here's a really interesting thing, which is because GDP per 605 00:33:25,020 --> 00:33:28,460 capita is so much lower in a market like India than in the 606 00:33:28,460 --> 00:33:34,710 West, to build a billion dollar revenue or scale company in 607 00:33:34,710 --> 00:33:40,030 India means that operationally you are building an 8 to $10 608 00:33:40,030 --> 00:33:44,230 billion scale company in the US, right? 609 00:33:44,230 --> 00:33:47,350 Because the terms of like people you touch, right, whatever in 610 00:33:47,350 --> 00:33:49,270 terms of the volume of transactions, the number of 611 00:33:49,270 --> 00:33:52,590 people you acquire touch, the number of shipments, the supply 612 00:33:52,590 --> 00:33:56,110 chain scale, just think about that, right. 613 00:33:56,270 --> 00:34:02,320 So the complexity of that, you know it's really high and what 614 00:34:02,320 --> 00:34:06,120 it means is it will take longer and we can't force it beyond a 615 00:34:06,120 --> 00:34:08,800 certain point. Capital forcing capital into 616 00:34:08,800 --> 00:34:11,960 these companies is not necessarily the answer and I 617 00:34:11,960 --> 00:34:13,840 think we've learned that time and again. 618 00:34:14,280 --> 00:34:17,199 So that's one. And then because you know 619 00:34:17,199 --> 00:34:21,880 typically GDP per capita is lower, that translates into a 620 00:34:21,880 --> 00:34:24,320 smaller absolute profit pool, right. 621 00:34:24,360 --> 00:34:28,790 And so you know in terms of the unit economics, it can be tough 622 00:34:28,989 --> 00:34:32,989 and so profitability actually takes longer for many of these 623 00:34:32,989 --> 00:34:36,469 companies especially if you're trying to scale and build 624 00:34:36,469 --> 00:34:38,949 leadership. So I think those are important 625 00:34:38,949 --> 00:34:42,110 challenges that we have to be mindful of as we're company 626 00:34:42,110 --> 00:34:43,389 building. And then as it relates to 627 00:34:43,389 --> 00:34:48,750 investing, look liquidity, this is not a market that is as 628 00:34:48,750 --> 00:34:53,239 developed as the US or China. And so you know we've been very 629 00:34:53,239 --> 00:34:56,120 mindful of this. We've distributed you know, over 630 00:34:56,120 --> 00:34:59,360 a billion dollars of liquidity from the market, you know, but 631 00:34:59,400 --> 00:35:02,400 it's tough to come by. You have to be very switched on 632 00:35:02,400 --> 00:35:04,640 to it. And so I'd say as a venture 633 00:35:04,640 --> 00:35:07,080 investor, you know that's another challenge that we think 634 00:35:07,080 --> 00:35:10,480 a lot about. As a global firm, how much do 635 00:35:10,480 --> 00:35:15,520 you force sort of consistent multiples or you know, you're 636 00:35:15,520 --> 00:35:17,720 just sort of saying the challenge like if you looked at 637 00:35:18,120 --> 00:35:21,120 sort of users, you might think one thing if you tried to model 638 00:35:21,120 --> 00:35:23,490 out, you know. Profitability or whatever, you 639 00:35:23,490 --> 00:35:27,210 would come to a different assessment, but how much is 640 00:35:27,210 --> 00:35:32,130 there an effort to say, oh, we want not think about like, oh, 641 00:35:32,130 --> 00:35:34,450 what this sort of game on the field is in any particular 642 00:35:34,450 --> 00:35:35,810 market. We want to think about what a 643 00:35:35,810 --> 00:35:39,650 company is worth on some global metric or do you end up having 644 00:35:39,650 --> 00:35:44,930 to look at it region by region? So substitute region for sector, 645 00:35:44,930 --> 00:35:46,770 Eric. OK, right. 646 00:35:46,770 --> 00:35:53,020 Would we apply consistent multiples to AI companies? 647 00:35:53,700 --> 00:35:56,500 Mature enterprise software spaces? 648 00:35:56,860 --> 00:35:59,900 Ecommerce, Social media? Right. 649 00:35:59,940 --> 00:36:02,060 The answer is no. You can make some argument that 650 00:36:02,060 --> 00:36:04,860 on a fundamental level, like their ability to eventually 651 00:36:04,860 --> 00:36:07,500 produce cash flow, they should root out. 652 00:36:07,820 --> 00:36:10,940 But I understand sort of in the early stage that becomes like 653 00:36:10,940 --> 00:36:13,900 very difficult and so you have to, yeah, it's sort of I think 654 00:36:13,980 --> 00:36:17,540 there always is nuance. Now should we be aware of that? 655 00:36:17,540 --> 00:36:19,460 Yes. If we see a significant 656 00:36:19,460 --> 00:36:22,920 difference in multiple, should we question why? 657 00:36:22,960 --> 00:36:24,760 Yes. Should we understand why? 658 00:36:24,800 --> 00:36:26,920 Yes. You know, should we apply our 659 00:36:26,920 --> 00:36:29,080 own judgment? Absolutely right. 660 00:36:29,480 --> 00:36:33,560 But you know, one of the things you'll notice is that scaled 661 00:36:33,560 --> 00:36:36,600 companies that become market leaders and have high quality 662 00:36:36,600 --> 00:36:41,360 teams with strong governance in India trade at significant 663 00:36:41,360 --> 00:36:44,840 premiums to their peers almost anywhere in the world. 664 00:36:45,200 --> 00:36:46,320 Interesting. All right. 665 00:36:46,320 --> 00:36:50,470 Now early on, we as a global firm, we just couldn't reconcile 666 00:36:50,470 --> 00:36:51,590 that. We're like, no, it seems too 667 00:36:51,590 --> 00:36:56,070 expensive, seems too expensive. Well, 15 years in, it hasn't 668 00:36:56,070 --> 00:36:58,830 changed, Okay. So then you sort of say why? 669 00:36:59,550 --> 00:37:05,030 Well, there's several reasons. One is that those companies are 670 00:37:05,030 --> 00:37:10,190 so difficult to replicate because of the friction required 671 00:37:10,230 --> 00:37:15,730 to build them and the time that it takes, right, that there's a 672 00:37:15,730 --> 00:37:19,530 certain kind of gravity that those businesses have and 673 00:37:19,530 --> 00:37:22,730 there's a scarcity of those kinds of businesses, right? 674 00:37:22,770 --> 00:37:26,330 And so now when you think about capital allocators in the world 675 00:37:26,650 --> 00:37:29,410 that want to have exposure to those kinds of companies, 676 00:37:29,810 --> 00:37:34,210 there's a limited set, right? And so this is what I mean by we 677 00:37:34,210 --> 00:37:36,930 don't just want to accept it and we'll never just say, well, it's 678 00:37:36,930 --> 00:37:40,090 sort of like in 2021 when we were investing, we weren't 679 00:37:40,090 --> 00:37:44,920 assuming 2021 multiples on exit. You're still questioning it. 680 00:37:44,920 --> 00:37:46,840 You're saying what are normalized multiples. 681 00:37:46,840 --> 00:37:49,800 And OK, let's be eyes wide open that we may be overpaying on the 682 00:37:49,800 --> 00:37:53,160 way in, but let's not think this is normal, right? 683 00:37:53,200 --> 00:37:54,520 Right. Part of what you're saying is 684 00:37:54,560 --> 00:37:57,400 the multiples that are rational to pay to win the deal and the 685 00:37:57,400 --> 00:38:01,480 multiples that you're sort of giving it to assess sort of the 686 00:38:01,480 --> 00:38:04,320 payoff in the long term and you sort of need both. 687 00:38:04,360 --> 00:38:06,360 That's right. And as a result there is a lot 688 00:38:06,360 --> 00:38:09,640 of companies that we will pass on because ultimately it doesn't 689 00:38:09,640 --> 00:38:12,440 make sense you know based on the entry multiple. 690 00:38:12,920 --> 00:38:15,760 But my point was more that, yeah, I think each market, each 691 00:38:15,760 --> 00:38:19,360 sector you know has its own dynamics, right. 692 00:38:19,480 --> 00:38:23,080 Life sciences different, Fintech different, you know enterprise 693 00:38:23,080 --> 00:38:25,320 software different and the same for geographies. 694 00:38:25,360 --> 00:38:28,800 And it's actually that thinking for us Eric that every time sort 695 00:38:28,800 --> 00:38:31,680 of these questions, it's often like we think of geos as these 696 00:38:31,960 --> 00:38:34,160 you can think of, oh geez, it's very different things. 697 00:38:34,160 --> 00:38:38,120 But literally if you if you start substituting sector for 698 00:38:38,120 --> 00:38:43,270 Geo, right, because as venture firms we've had to reinvent 699 00:38:43,270 --> 00:38:46,990 ourselves, we've had to go to new sectors, we've had to 700 00:38:46,990 --> 00:38:52,070 understand new opportunities and often they look different and 701 00:38:52,070 --> 00:38:56,110 we've got to challenge ourselves and adapt our mental models and 702 00:38:56,110 --> 00:38:58,270 then either embrace or reject that's OK. 703 00:38:58,670 --> 00:39:00,590 But we can't say well it's different. 704 00:39:00,590 --> 00:39:04,470 So let's not, you know, at least that's how we think about it. 705 00:39:04,750 --> 00:39:08,470 What motivated you to come back to the US and what is sort of 706 00:39:08,790 --> 00:39:12,830 your focus at the moment? Lightspeed is a special place 707 00:39:12,830 --> 00:39:16,990 and the ability to play a bigger role at the firm is really 708 00:39:16,990 --> 00:39:18,910 exciting. I mean, you know, I think we're 709 00:39:18,910 --> 00:39:22,150 all very lucky to be doing what we do, you know, but to have the 710 00:39:22,150 --> 00:39:24,870 opportunity to kind of continue to help build on the growth of 711 00:39:24,870 --> 00:39:27,910 the firm, you know, the platform that is built so far by the 712 00:39:27,910 --> 00:39:31,190 founders and the team, that's hugely energizing. 713 00:39:31,310 --> 00:39:34,710 And as you're probably hearing, I think there's a lot of kind of 714 00:39:34,710 --> 00:39:37,830 learnings and observations from, you know, my journey and our 715 00:39:37,830 --> 00:39:43,110 firm's journey outside of the US that are abstracted away from 716 00:39:43,190 --> 00:39:46,150 India or a geography. They're really just about 717 00:39:46,150 --> 00:39:49,230 learnings. Having invested, you know and to 718 00:39:49,230 --> 00:39:52,830 think about how do we now bring some of those learnings to the 719 00:39:52,830 --> 00:39:55,670 firm and along with the learnings of everyone else here 720 00:39:56,150 --> 00:39:59,630 and to now build the next phase, you know, in a sense of the firm 721 00:39:59,630 --> 00:40:02,550 and the firm has grown a lot incredible talent. 722 00:40:02,940 --> 00:40:05,500 And so, yeah, just the opportunity to to do more. 723 00:40:05,580 --> 00:40:08,580 How much time are you sort of internally focused versus trying 724 00:40:08,580 --> 00:40:10,900 to do deals? Yeah, I mean if sort of 725 00:40:10,900 --> 00:40:13,940 internally focused is I'll exclude from that let's say kind 726 00:40:13,940 --> 00:40:17,820 of you know serving on investment committees, right, 727 00:40:17,820 --> 00:40:20,860 where obviously that's part of the investment business probably 728 00:40:20,860 --> 00:40:23,460 say it's, you know it's 25 to 30%. 729 00:40:23,460 --> 00:40:27,100 So it's still mostly doing the deals, yeah, you know, serving 730 00:40:27,100 --> 00:40:29,780 on deal teams and partnering with other investors. 731 00:40:30,380 --> 00:40:32,940 But it's yeah, I'd say it's still predominantly, you know, 732 00:40:32,940 --> 00:40:35,860 we are in the investment business and it predominantly is 733 00:40:35,860 --> 00:40:40,540 still investing. But you know 25 to 30% really on 734 00:40:40,540 --> 00:40:45,220 thinking about our business, our firm, our strategy, our people, 735 00:40:45,340 --> 00:40:48,980 our systems, you know and what it takes to operate a firm of 736 00:40:48,980 --> 00:40:50,940 this scale. But we've got to be more 737 00:40:50,940 --> 00:40:52,820 deliberate about it. It won't just happen. 738 00:40:53,700 --> 00:40:56,260 So you know, I think there's been this question percolating 739 00:40:56,260 --> 00:40:58,300 now for a couple years, which is like. 740 00:40:58,970 --> 00:41:01,850 Is venture capital going to follow some of the lessons of 741 00:41:01,850 --> 00:41:05,410 like private equity, You know, it's going to become a more sort 742 00:41:05,410 --> 00:41:09,090 of grown up asset class like maybe a venture capital firm 743 00:41:09,090 --> 00:41:12,810 will like go public someday. They will get much larger. 744 00:41:13,170 --> 00:41:15,650 You know, they're a lot, you know, you could organize 745 00:41:15,650 --> 00:41:18,610 differently there. You know, the way the firms sort 746 00:41:18,610 --> 00:41:21,050 of survive generational transition could change. 747 00:41:21,050 --> 00:41:24,610 Like what do you think is sort of appropriate to take from 748 00:41:24,650 --> 00:41:26,850 private equity and what do you think? 749 00:41:27,260 --> 00:41:29,220 You know, venture capital is just like so different. 750 00:41:29,220 --> 00:41:31,540 It's not the right comparison. One of the things that I'm 751 00:41:31,540 --> 00:41:34,860 thinking about, so one is that, look, you know what you just 752 00:41:34,860 --> 00:41:38,620 said has happened, right? So just look at the data, which 753 00:41:38,620 --> 00:41:46,580 is 2022 venture capital, a UM was roughly 2/3 of total global 754 00:41:46,900 --> 00:41:50,540 private market a UMA decade ago. Just think about that, just 755 00:41:50,540 --> 00:41:53,740 venture capital, a UM in 2022, right. 756 00:41:54,550 --> 00:41:57,510 And by total global private market, a UM, infrastructure 757 00:41:57,510 --> 00:42:01,150 growth, all of that stuff, equity and credit, right. 758 00:42:01,670 --> 00:42:04,230 So that's happened. I don't think, you know, I like 759 00:42:04,430 --> 00:42:07,350 why are we debating it? It's happened now. 760 00:42:08,030 --> 00:42:10,590 Will it shrink 80%? We should debate that. 761 00:42:10,910 --> 00:42:15,350 We don't think it will, but that happened 2000 to 2002, right. 762 00:42:15,350 --> 00:42:19,750 So there's precedent for that. I think technology, and this is 763 00:42:19,750 --> 00:42:24,840 the second point I'd make, the technology in terms of its 764 00:42:24,840 --> 00:42:29,520 importance and emergence as a sector, if you will, in the 765 00:42:29,520 --> 00:42:34,520 mainstream economy has changed relative to 2000. 766 00:42:35,240 --> 00:42:37,520 And that was a sort of share of GDPI mentioned. 767 00:42:38,320 --> 00:42:41,320 It's not this little cottage industry anymore, right. 768 00:42:41,320 --> 00:42:44,800 And so then this brings me to something we talk about here. 769 00:42:44,800 --> 00:42:49,680 Is venture capital the right way to think about our business, 770 00:42:50,320 --> 00:42:53,100 right. So when our business started, 771 00:42:53,220 --> 00:42:57,420 venture capital was synonymous with technology investing, 772 00:42:57,780 --> 00:43:00,780 right, because that was the innovation economy. 773 00:43:00,780 --> 00:43:03,260 There was very small number of these companies. 774 00:43:03,700 --> 00:43:07,020 You know the balance sheets are all intellectual property and 775 00:43:07,020 --> 00:43:10,660 people, so they couldn't raise capital from anywhere else. 776 00:43:10,660 --> 00:43:13,620 And so this type of capital called venture capital, risk 777 00:43:13,620 --> 00:43:17,620 capital emerged to serve that part of the economy, right. 778 00:43:18,220 --> 00:43:22,580 But today that part of the economy is changed radically. 779 00:43:23,380 --> 00:43:27,580 And so then we think about, well, if we're serving our 780 00:43:27,580 --> 00:43:33,420 customers, which are technology companies, should that not be 781 00:43:33,420 --> 00:43:36,580 the lens through which we think about our business and what is 782 00:43:36,580 --> 00:43:38,340 the business? The same way we would want our 783 00:43:38,340 --> 00:43:40,980 founders to be thinking about how their industries are 784 00:43:40,980 --> 00:43:43,820 changing, how their customers are changing and how they can 785 00:43:43,820 --> 00:43:46,780 keep serving those customers better than anyone else can. 786 00:43:47,600 --> 00:43:51,920 How can we keep serving our founders and our customers 787 00:43:52,160 --> 00:43:56,000 better than anyone else can? And I think that if you just 788 00:43:56,040 --> 00:44:00,960 assume that it's only venture capital, well, that's a fine 789 00:44:00,960 --> 00:44:04,960 business, right? But I don't know this is sort 790 00:44:04,960 --> 00:44:05,360 of. Just. 791 00:44:05,560 --> 00:44:08,400 Yeah. No, this is this is more a 792 00:44:08,400 --> 00:44:12,960 technology investor than sort of venture capital or I mean we saw 793 00:44:13,600 --> 00:44:15,720 you know general Catalyst your Old Firm is. 794 00:44:16,310 --> 00:44:20,150 Trying to figure out as third of their own type of debt for fund. 795 00:44:20,390 --> 00:44:24,390 I mean I think there's a lot of talk of you know bigger firms 796 00:44:24,390 --> 00:44:29,150 going out and raising and saying we don't need to invest to you 797 00:44:29,150 --> 00:44:33,990 know a seed fund level returns. We need to prove that we can 798 00:44:34,390 --> 00:44:38,270 consistently outperform, you know the stock market. 799 00:44:38,270 --> 00:44:42,230 And if we can do that, it'll make sense for large investors 800 00:44:42,230 --> 00:44:44,630 to come to us and we're doing a sort of. 801 00:44:45,120 --> 00:44:48,080 Big enough fund size, is that the way you think about it or 802 00:44:48,080 --> 00:44:50,720 what do you mean by saying not venture capital, It's about 803 00:44:51,160 --> 00:44:54,640 different types of investments in different virtual profiles. 804 00:44:54,720 --> 00:44:57,040 So I want to be clear, this is not about, well, let's just 805 00:44:57,040 --> 00:45:00,240 scale to scale. It's working back from what are 806 00:45:00,240 --> 00:45:03,600 the needs of the companies and founders that we serve and 807 00:45:03,600 --> 00:45:07,440 recognizing that the core for Lightspeed still is an early 808 00:45:07,440 --> 00:45:12,830 entry point, right. So, so we invest early even 2/3 809 00:45:12,830 --> 00:45:15,710 of our capital, of the growth capital that we've raised 810 00:45:15,710 --> 00:45:19,390 historically has gone into companies that we were earlier 811 00:45:19,390 --> 00:45:22,750 investors in, right. And so that is, it's back to 812 00:45:22,990 --> 00:45:25,950 that serves those companies and those founders, right. 813 00:45:26,110 --> 00:45:29,310 And then a third is, gosh, you know, unfortunately, we do miss, 814 00:45:29,310 --> 00:45:32,110 you know, companies early. But if we can catch them at the 815 00:45:32,110 --> 00:45:34,830 Series B or the Series C, there's still, you know, the 816 00:45:34,830 --> 00:45:37,350 prices have gotten bigger than they used to be and we still, 817 00:45:37,350 --> 00:45:38,910 you know, want to be a part of those journeys. 818 00:45:39,310 --> 00:45:43,510 So it really is just coming back to none of this means moving 819 00:45:43,510 --> 00:45:47,030 away from early, I would argue. In fact, in our last fun cycle, 820 00:45:47,030 --> 00:45:52,710 Eric, we doubled our commitment to seed through B, right. 821 00:45:52,990 --> 00:45:56,910 And we've increased our early stage investment team and we're 822 00:45:56,910 --> 00:46:00,190 doing more there because we think the opportunity has grown. 823 00:46:00,710 --> 00:46:04,910 But it's just to say well over time, what do those founders 824 00:46:04,910 --> 00:46:08,530 need and those companies need and that's where even as we 825 00:46:08,530 --> 00:46:11,290 think about our platform teams, it's not, you know, we haven't 826 00:46:11,290 --> 00:46:14,250 built an army. We're being very surgical about 827 00:46:14,490 --> 00:46:17,130 what are we hearing from our customers, what is most needle 828 00:46:17,130 --> 00:46:20,250 moving to them. And so it's defining back from 829 00:46:20,250 --> 00:46:22,010 that. And when we do that, I would 830 00:46:22,010 --> 00:46:25,530 just suggest that if you just apply a venture capital lens, 831 00:46:25,530 --> 00:46:29,850 then arguably you will operate the same type of firm that you 832 00:46:29,850 --> 00:46:33,490 would have 20 years ago. But in an industry that is 833 00:46:33,490 --> 00:46:37,170 unrecognizable from 20 years ago now you can do that. 834 00:46:37,170 --> 00:46:41,450 I'm not suggesting you can't. But what we think about is the 835 00:46:41,450 --> 00:46:44,130 industry has shifted, our customers have shifted. 836 00:46:44,370 --> 00:46:47,490 What is it that they want today and how can we provide that? 837 00:46:47,690 --> 00:46:50,850 And then let's not label it like yes, a part of that is venture 838 00:46:50,850 --> 00:46:55,690 capital, but why do we provide talent, capability, You know, 839 00:46:55,690 --> 00:46:58,330 why do we use data and have a, why do we have a data science 840 00:46:58,330 --> 00:47:01,810 group at our firm, You know, why would we build an in house 841 00:47:01,810 --> 00:47:05,050 corporate development group? Well, it's it's because we've 842 00:47:05,050 --> 00:47:08,690 got to think about what's the right business to build in 2023 843 00:47:09,050 --> 00:47:11,010 and looking forward to the next decade. 844 00:47:11,010 --> 00:47:12,250 But would you look at like rather than? 845 00:47:12,530 --> 00:47:17,050 Buying out or I guess it poses so many questions about If it's 846 00:47:17,050 --> 00:47:20,810 not just VC, what are the other things that you would seriously 847 00:47:21,650 --> 00:47:24,290 sort of consider? Yeah, it does. 848 00:47:24,290 --> 00:47:28,050 And I think the key is really to have a true north, right and to 849 00:47:28,050 --> 00:47:31,560 you know anything that we do sort of be leveraging our 850 00:47:31,560 --> 00:47:34,280 capability and we think we're good at okay. 851 00:47:34,560 --> 00:47:36,800 So you know it's interesting you ask about buyouts. 852 00:47:36,800 --> 00:47:41,160 Well, I think there's going to be a way of a venture recaps 853 00:47:41,160 --> 00:47:43,560 that are going to be coming, right. 854 00:47:43,600 --> 00:47:45,480 Those are companies we understand. 855 00:47:45,800 --> 00:47:48,880 Those are domains that we understand, right. 856 00:47:48,920 --> 00:47:51,280 But there's going to be a slightly different kind of 857 00:47:51,280 --> 00:47:54,480 mindset, right, to the work that's going to need to be done 858 00:47:54,480 --> 00:47:56,840 there. Should we be thinking about 859 00:47:56,840 --> 00:47:59,610 that? I think we should, right? 860 00:47:59,650 --> 00:48:02,730 But are we gonna go and next year, are we gonna start doing, 861 00:48:03,130 --> 00:48:07,370 you know, buyouts control deals in IT services companies? 862 00:48:07,370 --> 00:48:09,410 No. There are people that that do 863 00:48:09,410 --> 00:48:11,370 that far better than we ever will. 864 00:48:11,570 --> 00:48:13,530 It's not what we're good at. It's not who we are. 865 00:48:13,650 --> 00:48:17,370 You are thinking about products around sort of the downturn of 866 00:48:17,370 --> 00:48:20,810 unicorns and that what's it, I mean that's like convertible 867 00:48:20,810 --> 00:48:23,650 debt type deals or well not necessarily. 868 00:48:23,650 --> 00:48:26,850 I mean again I think there are structured finance specialists 869 00:48:26,850 --> 00:48:29,500 that we'll do that better than we can. 870 00:48:29,820 --> 00:48:33,620 I mean playing straight, you know converts are fine, but you 871 00:48:33,620 --> 00:48:36,380 know as you get into more structured products there are 872 00:48:36,380 --> 00:48:38,220 folks that it's a different skill set. 873 00:48:38,380 --> 00:48:42,100 You know, we'll still come at it from understanding the domain, 874 00:48:42,820 --> 00:48:47,260 understanding the trend lines at depth, the technical shifts, the 875 00:48:47,260 --> 00:48:49,860 founders, the people, the products. 876 00:48:50,420 --> 00:48:53,300 That's still going to be at the heart of any investing that we 877 00:48:53,300 --> 00:48:57,150 do as opposed to is this more of a, did you make your money 878 00:48:57,150 --> 00:49:01,310 because you've figured out a structure that gives you a 879 00:49:01,310 --> 00:49:05,950 kicker in the event of X, right? Like, that's not what we're 880 00:49:05,950 --> 00:49:08,110 really good at. And so we'll leave that to the 881 00:49:08,110 --> 00:49:11,750 experts to do that. You've sort of alluded, well, 882 00:49:11,750 --> 00:49:14,430 first of all you're not gonna, you haven't announced something 883 00:49:14,430 --> 00:49:17,710 so you're not telling me specifically what you're exactly 884 00:49:17,710 --> 00:49:19,670 you have in mind in terms of the new structure, right? 885 00:49:19,670 --> 00:49:21,270 I just wanna make sure I'm not missing. 886 00:49:21,560 --> 00:49:24,440 Oh no, I'm riffing with you. But you have, is there a 887 00:49:24,440 --> 00:49:26,560 particular like fund or something that you're raising? 888 00:49:26,560 --> 00:49:28,840 No, there's nothing. I mean we our most recent set of 889 00:49:28,840 --> 00:49:32,440 funds are what they are, which is kind of early through, you 890 00:49:32,440 --> 00:49:35,480 know, through late stage. No, I'm riffing with you about 891 00:49:35,840 --> 00:49:39,160 really under this sort of, hey, I think we are a firm that looks 892 00:49:39,160 --> 00:49:41,640 to embrace where the opportunity is going. 893 00:49:42,140 --> 00:49:45,660 And so we think about that and we work back from our customers 894 00:49:45,660 --> 00:49:48,220 and the opportunity. But yeah, this, no, there's 895 00:49:48,220 --> 00:49:50,180 nothing there's. Not one that I have to like go 896 00:49:50,180 --> 00:49:52,100 figure out after this call. No, no, no, no, no. 897 00:49:52,100 --> 00:49:54,580 Philosophical like we're open to yes. 898 00:49:54,620 --> 00:49:58,980 You've sort of talked about how large the retrenchment was 899 00:49:58,980 --> 00:50:01,620 after.com that sort of framed the beginning of the 900 00:50:01,620 --> 00:50:03,980 conversation. You know, to put it another way, 901 00:50:03,980 --> 00:50:07,060 just interest rates have gone up significantly. 902 00:50:07,060 --> 00:50:10,180 You know, we were in a 0 interest rate environment and 903 00:50:10,180 --> 00:50:13,190 now? We're not and nobody knows for 904 00:50:13,190 --> 00:50:16,910 sure what that means for the venture capital asset class. 905 00:50:16,910 --> 00:50:19,830 Like I'm asking you to compare venture capital to private 906 00:50:19,830 --> 00:50:21,750 equity. But like nobody, private equity 907 00:50:21,750 --> 00:50:24,510 is not loved right now because of the interest rate problem. 908 00:50:24,550 --> 00:50:26,550 Yeah. So to put it directly to you, I 909 00:50:26,550 --> 00:50:29,590 mean how do you think venture capital changes in this world of 910 00:50:29,590 --> 00:50:34,270 like you know higher interest rates and can it sustain if 911 00:50:34,270 --> 00:50:36,990 interest rates go up. So, so you know the reason I 912 00:50:36,990 --> 00:50:42,520 would I'd separate this from again in 2000 is that part of 913 00:50:42,520 --> 00:50:45,320 the challenge with the inventory of the set companies that were 914 00:50:45,320 --> 00:50:48,640 built during that boom was a lot of them simply didn't work 915 00:50:49,440 --> 00:50:51,200 right. So the retrenchment was that 916 00:50:51,200 --> 00:50:54,760 there was just a bunch of stuff that was upside down okay. 917 00:50:55,200 --> 00:51:00,280 I think you know today there's certainly some of those, but the 918 00:51:00,280 --> 00:51:04,040 vast majority is there a real companies there arguably they 919 00:51:04,040 --> 00:51:06,840 can't sustain the rates of growth they were operating at if 920 00:51:06,840 --> 00:51:10,580 they have to drive more free cash flow And the change in the 921 00:51:10,580 --> 00:51:13,260 interest rate environment will impact what those companies are 922 00:51:13,260 --> 00:51:17,940 worth, right, as opposed to you know just they're going to go 923 00:51:17,940 --> 00:51:21,580 away, right. And so I think that the set of 924 00:51:21,580 --> 00:51:24,940 companies that obviously you know will have to go through 925 00:51:24,940 --> 00:51:28,020 those value adjustments, those valuation adjustments that will 926 00:51:28,020 --> 00:51:29,860 happen, that has started to happen. 927 00:51:29,860 --> 00:51:31,940 More will happen through the rest of this year and likely 928 00:51:31,940 --> 00:51:34,260 2024 is more of those companies come to market. 929 00:51:35,620 --> 00:51:41,090 As it relates to going forward, you know the opportunity to buy 930 00:51:43,090 --> 00:51:50,330 10 to 25% of companies that are potentially disruptive to very 931 00:51:50,330 --> 00:51:53,810 large markets and over time we'll build companies worth 932 00:51:53,810 --> 00:51:59,130 billions of dollars remains as true now as it did five years 933 00:51:59,130 --> 00:52:03,010 ago as it did 10 years ago and certainly more true than 20 934 00:52:03,010 --> 00:52:07,120 years ago, more true, right. And so then the question is 935 00:52:07,120 --> 00:52:11,800 really about you know, entry discipline on the way in and 936 00:52:12,000 --> 00:52:14,560 doing the building and all the things that we have to do. 937 00:52:14,880 --> 00:52:18,040 You know, arguably you have again a more educated season 938 00:52:18,040 --> 00:52:21,840 talent base, technology is a broader part of the economy. 939 00:52:21,840 --> 00:52:27,040 So I would say that we remain optimistic, you know about the 940 00:52:27,040 --> 00:52:30,360 opportunities for venture capital and it's sort of why I 941 00:52:30,360 --> 00:52:32,160 would say it's different than 2000. 942 00:52:32,570 --> 00:52:35,690 That is not to say that the adjustment will not be painful 943 00:52:36,130 --> 00:52:39,010 for the companies that you know that were funded in a different 944 00:52:39,010 --> 00:52:44,010 environment and in a sense tuned their businesses right, far more 945 00:52:44,010 --> 00:52:47,370 tilted towards growth and the capital efficiency was not great 946 00:52:47,370 --> 00:52:50,330 as a result. And that will need to happen and 947 00:52:50,330 --> 00:52:51,850 that will be a painful adjustment. 948 00:52:53,130 --> 00:52:54,850 Great. Thank you so much for coming on 949 00:52:54,850 --> 00:52:55,890 the show. This was a lot of fun. 950 00:52:56,010 --> 00:52:57,370 Thank you, Eric. Yeah, I enjoyed it too. 951 00:52:57,370 --> 00:52:59,530 Time Flu. That's our episode. 952 00:52:59,570 --> 00:53:02,090 I'm Eric Newcomer. Thanks so much for listening. 953 00:53:02,730 --> 00:53:06,810 Thank you to Bejol Somaya Lightspeed for coming on. 954 00:53:07,210 --> 00:53:10,050 Shout out to Tommy Herron, our Audio Editor, Riley Catsella, my 955 00:53:10,050 --> 00:53:13,810 Chief of staff, anyone, our intern who's been booking a 956 00:53:13,810 --> 00:53:18,250 bunch of guests helping with the podcast and young Chomsky for 957 00:53:18,250 --> 00:53:20,930 the wonderful theme music. Please like comments, subscribe 958 00:53:21,290 --> 00:53:25,330 on YouTube, register, review on Apple Podcasts and of course, 959 00:53:25,810 --> 00:53:29,450 subscribe to the sub stack newcomer.co. 960 00:53:29,690 --> 00:53:31,010 See you next week. Goodbye. 961 00:53:31,130 --> 00:53:32,330 Goodbye. Goodbye. 962 00:53:32,450 --> 00:53:33,690 Goodbye. Goodbye. 963 00:53:33,810 --> 00:53:34,970 Goodbye. Goodbye. 964 00:53:35,130 --> 00:53:36,290 Goodbye. Goodbye.