Index Ventures Partner, Martin Mignot: Figma, Scale, Wiz: Inside Index’s Decacorn Factory

Beware of gross margin in the early days. That's a mistake we've made a couple of times. You know, you have a lot of businesses that in the early days have really bad gross margin. All the LLM providers were very clear examples of that. I think if that's the only thing that's holding you up in most cases, I would totally ignore it. We never lose a deal or pass on the deal because of price in the early stage.

So, we've been around for 30 years. We invested 11.5 billion. We've returned close to 30 and we still have 20 plus in holdings. Most of that is concentrated in eight, nine companies. We invested in probably 300, close to 400 companies over the years.

>> Ready to go. [Music]

>> Martin, it's been 8 years since our last show. We last did it on Skype. A lot's changed, man. You still look just as young, but thank you so much for joining me, dude.

Thanks for having me, >> dude.

I want to start with a statement that you said before and you said it actually in a Calfman fellow's um event. You said, "Venture is about playing the right game," and I loved this statement and I wanted to turn it back on you and say, what is the right game then for you?

>> I think the way I put it, uh, for this particular statement was, um, you know, very much, uh, playing the long game. You know, it was very much playing the long game. um, the fact that if you are to get into this industry and this job, you've got to commit for, you know, 10, 15 years at least and, um, and focus on not on the, uh, outside reward and not on the external, uh, you know, just progressing as a career, um, but very much more on the internal and and doing it for the right reasons, which is investing in great companies, supporting great founders. That was what I really meant by that.

I think in the last cycle, we added a wave of tourist VCs who like the events, who like the idea of being a VC. Do you agree that we have this wave of tourist VCs and has it cleared?

I don't know if I would say tourist VC, but I would say it's, uh, the asset class has has institutionalized. You know, it's become, uh, you know, funds have become larger. There's, there's more people in in in general by and large. And so, you bring people who, uh, may sometimes want to want to have a career, choose it as a career more than as a calling. And I think, you know, me personally, I think us at Index see this job as a calling.

Doug Leone said on the show that we've moved from a, uh, high margin boutique community to a low margin commoditized industry. Do you agree with that statement?

>> Not entirely. No. Um, I, I know there is a, there is a, a meme which is the industry is going to is diverging into two camps. You either, e either have the the mega funds, the asset gatherers, or you have the tiny boutique shops. And and I don't truly believe in that. I think there is, there's a third way and, you know, Index is in that third way where you need enough scale to help support the founders and we think always from the founder's point of view, what is, how can we best serve them? And you need a, I think, a minimum size to really help them to kind of invest across stages, support them from inception to to IPO. You need a minimum size, but I also don't think you, you need a [ __ ] size to really support them. I think this push towards larger asset gathering is very, is very good for for for VCs who do it. You know, it can make a lot of sense financially. It can make a lot of sense for them. I'm not sure it makes so much sense for the entrepreneurs themselves. So, I do believe there is, um, there's a third way.

>> What do you think that minimum size is then?

>> Exactly where we are.

>> How big are the latest funds?

>> Uh, we have $300 million, uh, seed fund, uh, 800 million venture fund, and one half billion growth fund. That's the latest.

>> And that is the minimum for what you need?

Perfect. I, I wouldn't say that's that's the minimum. I, we see it as the right size to both support entrepreneurs with the right amount of capital and then, you know, have enough to pay for the infrastructure that we have.

So my mind has changed on this. I thought that the mega AUM gatherers would see denigration of returns and actually bluntly just fee accumulators and actually now when you see the expansion of outcome sizes and more trillion dollar companies than ever and a very few number of people being able to write a billion dollar check, I think actually they will do incredibly well investing in your OpenAIs at 300 million and your Anthropic at 60 billion and see venture-like returns at scale in a way that I really changed my mind on. Do you think I'm wrong to have changed my mind in that way?

No, >> I think I'm not sure you're going to have venture-like returns at 300 billion. I think you can have amazing returns. You know, can you have 70x, 5x? Yeah. Yeah. No, absolutely. No, I think the math, I think the max, the math makes sense.

>> Do you need dedicated, uh, funds to do that or can you do it in more in a more ad hoc way?

You know, I think that's that's a question. But, um, I think that's that is on the later stage set of things. Obviously, we, you know, on the on the early stage, uh, you know, you know, either seed or early venture or early growth, I I don't think you need, you know, those those mega assets and I think they distract you and they tend to to pull you towards the later stage and, you know, if if you have so much capital to deploy, obviously you will tend to focus more on the later stage on the very big checks. And I think if you want to help and support at the earlier stage, you, you know, it can be an impediment.

>> For the AUM gatherers, is seed simply an entry ticket to the real product, which is moving 100 to 500 million at the seed?

>> That is not our model. So I don't want to comment on their strategy.

>> That is such a copout. I mean, I, I totally think it is. I think I would admit it if I was them as well. I always, I, I walk around London with my mother and I always say the same thing, which is like, I have to give analogies. I'm like, you know, when you went clubbing and you have to pay the entry fee at the door, that's like seed for the AUM galleries and the table is the C and the D.

>> This is not how we see see it at all. You know, we, uh, every check is high conviction. We don't make as many as as a result, but, you know, we, we have high conviction checks and we work closely with these founders even at the seed stage. It's the same as if you were a Series A. Our goal is very simple, you know, we want to be as early as possible, be become the largest shareholder and become the the most valued and most reference investors in those companies.

I chatted to Danny before the show and he said that Martin didn't always have this perspective on where funds would win and this kind of third path being the middle and being your path today.

>> What did you believe and what caused you to change your mind?

What I've changed my mind on is if you start from the founder and and if you really think through, uh, how can you best help them, you know, what is the most, you know, the most helpful way that you can interact with them at the early stage, especially, how does that help them that you have 10 different products? You know, that you do LBO, you do credit. How is that helpful to an early stage founder? It's not. And so if you really think from that first principle of, okay, what are the resources you need to be really helpful in those early stage packages, and again, in in the service for us of building, uh, both the biggest ownership and the best reference from those founders, it's not this super large scale multi-product. It's a, you know, you need enough again to support them, but you also need to be small enough to kind of keep that interpersonal relationship and that close support where they know they can call 10 people at Index and, you know, get help on anything that that that may happen to them. And you don't necessarily have that in such a personal and trusted way in a much larger company where people move around a lot more. A lot of our people have been around for 10 years plus, you know, even in our strategies team. And that creates a a level of trust and and competency that it's really hard to replicate in much larger on on much larger organizations.

>> It's hard when I, I love you, but like, dude, team turnover has been high. Like there's a lot of team turnover. Like I, I surely it's not that, like you don't have much consistency in the Index team, do you? You've got shard, you >> yeah, and and, uh, if you look at the principal rank, you know, we have a lot of people who've been around for a long time. If you look at the strategist rank, we have a lot of people who've been here for a long time. So, there has been turnover in the industry, you know, at large.

>> Interesting question. Do you think consistency of team correlates to venture returns?

I was chatting with, you know, with Ili at Quantum Light and he about it the other day, and and they said the number one factor that they that they noticed was a good predictor of future returns was whether a partner was on the on the Midas list. A part, an early stage investor in the company was on the Midas list, which kind of tends to show that there is a persistence of returns in terms of proven investors.

>> Do you buy the Midas list?

Again, you're like, "Jesus, Harry, I, you're, I thought this was an easy interview." But like, I look at the Midas list and none of the people on there did the deals that they said they did. I'm like, "Guys, come on."

>> Two things. One is I, I didn't investigate, I think, as much as as you did. But my view on the Midas list is it's a really good list for who was a great investor 10 years ago. And so, that's that's kind of how I would I would describe it because if you look at a lot of these companies, they were deals that were made, you know, 10 years ago. uh, and so I think it's really accurate to show you, you know, who made great investments 10 years ago. Is it very accurate to see who is a great investor today or in the future? You know, again, I think there is some persistence of returns and there's a lot of studies that have shown that, but it's not definitely. There are a lot of great investors today who are not yet on the list, but will be in the future that, you know, should be on it.

>> Yeah. No, I, I totally get you. I'm going to leave some names out. Some I look at and I'm like, really? That's interesting. We have different memories on that one.

Um, you've mentioned about service and help a lot. Keith Boy said on the show before, "The best founders don't need your help as an investor." Do you think the best founders need your help?

Don't necessarily need your help. The best founders I've seen are very good at reaching out to investors and people around them on very specific topics. When these people, it's leveraging the right people at the right time, being very specific about that versus going to, you know, I think that's a little bit the, a lot of the approach that we see in the market is like, it's a one-stop shop for everything. I don't think the best founders use use their investor or their or their, you know, supporters that way.

>> Okay, so when we think about like bluntly new deals, yeah, there's two types of founders. There's ones that come to an industry fresh and with the joys of naivety and open eyes, and then there's ones that come to it as an industry insider. How do you think about which founder type you prefer and lessons from them?

I don't prefer any of those types. The way I think about it is slightly different. You know, the, what I love in founders is unique insight, and that unique insight can come, so the unique insight can come from two places: one, experience and knowledge of of an industry. The other one is just sheer intelligence and and ability to break down complex problems into very simple ones. And, you know, if you think about, uh, all the best founders that I, you know, I've worked with and that, you know, you have worked with, I think that they tend to have this one similarity, which is they can come up with a, a very simple insight, something that sounds very simple, but actually incredibly deep and profound and defensible, and they typically come at it, um, from first principle thinking. I mean, I think first principle thinking gets thrown out a lot, but the very best founders, they have that. And so if you take, you know, Nikat reboot, you know, as an example of that, a lot of his decisions and a lot of his core insights were just linked to that first principle thinking. So he thought about, okay, FX for example, FX for large corridors where you have a lot of volume of of transfer, cost nothing, so it should be given, you know, given up for free, you know, to the market. And then once you have that, that's a really good hook, and then you and build something else. And so, and and if you think about most of the, the great companies, they have one simple insight, but that is very deeply original. And to me, that's that's the core of what I look for in founders. Is I want to sit there and then they will teach me something that they have come up with, either thanks to their experience and but more, you know, usually from that that deep thinking that they've done and where they've solved this problem. Look at, you know, Will at Deliveroo, for example, his insight was very much, the product is the delivery, which sounds obvious, but it's not the digital experience. It's the, it's the speed and quality of the, the delivery. And if it has to come below 20 minutes, that's the, if you can get that consistently, that is the product. Everything else is a, is a distraction. That's the core product, and that's what we should entirely focus on.

It's funny, I had Misha, the founder of Fiverr, on the show recently and he said a fascinating thing, which is like, the most important thing that's changed is time to copy. How long it takes for someone else to copy your product. When you see a dramatically reduced time to copy, does the value of unique insight go down? You could have a great idea, but I see it and bluntly with tools that we have available, I can copy it super fast and I'm better at branding and marketing than you, so I'm going to crush you. Does the value of unique insight go down?

>> I think it, it goes down without great execution that comes with it. I think that on its own is not enough. I still think it gives you, uh, it gives you an advantage, but then I agree. I think it's all about execution.

Can I ask, when you think about like market timing risk? It's something where I've got burnt before. How willing are you to take market timing risk? When you think about unique insights?

>> What, what do you mean by market timing?

>> Hey, I believe this. I don't know how long it's going to take for the market to see what I believe versus, hey, I have a product that's super [ __ ] great right now and it's going to fly off the shelf. You know that, that's a very common way of of making mistakes and and and.

>> So you could look at like Cowboy and say like, hey, actually in a world today, everyone appreciates the importance of like innovation on transportation, uh, the benefits of cycling in cities.

>> Well, it would be very different five or six years ago.

>> So I think look, market timing is a real thing, you know, you, you can be right, but it can be that again, if you look at food delivery, it's interesting. People tried to do delivery five or six. There was a French company, I forgot the name, that was it was doing delivery. But what they didn't have was they didn't have smartphone penetration. So they had to call people, they had to call drivers to tell them where to go and where to deliver. And and obviously that didn't scale and and, you know, there was no efficiency and they would take 50 minutes. It would be very expensive. And so you needed to have not only the invention of the smartphone, but you need to have everyone, including drivers, having smartphones for the something like the Lute. So, you know, clearly here, it's a true, you know, the, the concept was there, but the technology just didn't follow. I think in the case of of of Cowboy and micro mobility in general, I think the timing was was absolutely correct. The challenge here in this industry is that it's, um, if you are selling the hardware, it's a, you know, it's mostly a hardware product, and hardware is is really hard if you don't sell software on top because, you know, you rely on on a very complex supply chain that has been which has suffered a lot over the past years, obviously. Um, it's a volume game. You need to have distribution. You need to have relationships. So, so it re, you need to raise a lot of money to build all of those assets, and the return on that capital is not as good as on pure software businesses. If you're selling a service, so, you know, Lime and Bird and those, then I think you can have large scale, but it is so operationally complex, and you're also competing with a lot of subsidized transportation. So you are charging full price for a service that is, you know, offered at a discount by a lot of, you know, municipal services and and you're fighting against a lot of regulation, a lot of, you know, a lot of challenges. I still think that some companies will do well actually in that space. I think Lime is is doing well. I think Doordash is doing pretty well. So I think they will they will be okay at the end, but it's clearly, you know, it's been a really, really difficult space.

Dude, I had the CEO of Lime on, uh, and he said that at one point they had a 33% break rate every month. One in three break like every month, like destroyed. I mean, a hard [ __ ] business. We mentioned Cowboy. It's it's a hard deal being direct. How do you prevent hard deals or losses impacting future decision-making? So many deals, I've met so many great fintech investors who never did Stripe because they're like, "I thought it would be commoditized. I thought it was a race to the bottom." They let the past dictate the future. How do you not do that?

>> Yeah, that's that's probably the hardest, uh, the hardest one. And actually, you know, it's funny. It doesn't only, it's only the the the bad investments or the mediocre. So, any investment gives you some form of bias. Uh, you know, if it's a great investment, then everything else may look, you know, not so great in comparison. And, you know, I, I've suffered certainly from that, you know, on the fintech side, for example, where, you know, I was lucky enough to be early in Revolut, and then I looked at a lot of other fintech investments were like, well, Revolut can do this, so does it better, you know, so, so I think it goes, it goes both ways.

>> And you've missed out because of that?

>> Yeah, exactly. And I think.

>> What did you miss out on because you thought Revolut was great?

>> We could have invested in any, you know, in a lot of other neo banks. Um, you know, you think, I mean, N26 would be a really good example of that, a lot of, you know, remittance and certain corridors, and so there's a lot of.

>> The nicest way. Do you actually regret? I, I didn't mean this horribly or to single out any players. I'm not a dick journalist, but it's just like, I just think so much that value accrues to the number one in most markets and like, I get it, but you're in the number one. Who gives a [ __ ]? I didn't mean it that bluntly, but it's like so demonstrably different in terms of value accrual.

>> Yeah. Yeah. I mean, that that's that's our, you know, that's absolutely our position. There are still some really good companies that we could have invested in, I would say. So, going back to your original question, this idea of keeping a beginner's mindset is, you know, is absolutely essential for, uh, for any investor. It's, and it's really hard to do. I mean, you know, I, I'll, the example we always use at Index is is Spotify. And to your point, it wasn't because of a bad investment. It was because of a mediocre investment, which is different. Wow. We had just invested in Last.fm, which was a, you know, a totally reasonable outcome, but it was, we saw how the sausage gets made in that industry and the power of the labels, and we're like, gosh, this is impossible to make money. And we really loved Daniel and we saw that the product was phenomenal and there was some early traction, but we had this bias of, oh, the music industry is so hard, you know, it's never going to happen. And that's why we passed multiple times. And when we wanted to come back, it was it was too late. And so, I think my.

>> It was not too late. I'm, Yeah, exactly.

>> I love Danny. I love Danny and I love Daniel and Daniel wanted Danny every freaking round.

>> Exactly.

>> But, you know, so, so I think the learning here is when you have, again, it goes back to the founder, when you have, and we knew because, you know, Daniel was working at at one of our companies. So we, we knew the guy was was incredible. And, um, and so when you have such a unique founder that again does have a unique insight about about their industry and has the ability to execute on it, and also in this case, you see real signs of execution, don't overthink it. I think that's a, that's a problem that we have, and I'm chatting with a lot of VCs who say, you know, it's kind of pretty widespread in the industry, like you think, you, you know, you want to be very smart, you want to be very diligent, you want to, and so there's a tendency to overthink. And, you know, when something has a fantastic founder and has real movement, then sometimes you just need, even if it's an industry like, oh my god, I've been burnt in the past, I think, don't overthink it.

>> I'm early stage, like seed A. If I have a world-class founder, I don't give a [ __ ] what they're doing.

>> Like, genuinely do not know. I, there's this like brilliant, um, curve. I don't know if you've seen it, where you start your career and you think it's all about team. You then go three, five years in where you're like, "Oh, I'm smart. I should analyze markets." And then 10 years in, you're like, "Just team again."

>> Yeah. I remember I think Matt talked about that meme at some point. And I'm getting there too. I'm, I'm back on the on the other side of the curve.

>> Okay. You have team, you have traction, you have market. One through three most important. I mean, team, team, team, and team. I would say that's that's that's, you know, I'm back to that as as the number one. But, you know, I would say, you know, I, I probably used to think, you know, market, team, and traction. Now I'm kind of put the other around, so kind of team, traction, and market.

Given revenue scalings being so unparalleled today for so many companies, does revenue mean less? Does traction mean less? Given 0 to 10 million, there are kind of commoditized now, as as Orland tried. That sounds. Does it mean less?

>> I don't think it means less. Um, I, you know, as you know, finding product market fit is the hardest thing in in any business, and and tons of founders walk around in the desert for years without ever finding it. So I think we shouldn't minimize or trivialize, you know, finding real traction and having real revenue traction. I think this is this is remarkable and it should be celebrated. Obviously, if you are talking about AI auditing, the quality of that revenue is critical. Um, and so that's what people, you know, that's what we spend a lot of our time doing is, you know, is that is that revenue long-lasting? Is is it sticky? And and sometimes obviously if you have the more cohorts you have, the more you can see the numbers. If you don't have that, then it's going to be, you know, talking to customers and also really trying to understand their use case. If it's is it something that's more like project-based and you they want to use it once and then, you know, they will switch to something else potentially, or is something that especially if it's inserted inside their workflow, you know, Cursor is a good example, you know, we've made a, a bunch of those type of investments, then in all likelihood, even if the number doesn't show it yet, in all likelihood, the stickiness of that product is going to be a lot higher.

Totally agree with you there. Can I ask you, we said about kind of keeping that pure mindset, partnerships can help in terms of preventing mistakes on, oh, I've done it before and it's lost, which is a very dangerous heuristic, obviously. When you think about decision-making internally, how does decision-making look on net new deals and how does that differ on size of check?

We have a, a different size of quorum depending on the size of the check. So, who needs to be there? There are always folks from each office. So, it's very important, you know, because we work as as one team across offices, and then we, we vote, we vote, uh, one to 10. You can't vote five and six. So, you have to be, you know, four against, and then it's kind of a, so it's a qualified majority, essentially. So if if the average is above six, you know, the deal is the deal is approved. Um, and so that, that mechanism, you know, is the same. And then there's also, uh, some latitude if you, if you have, you know, very high conviction on a deal, um, at the early stage, I think we have a bias for, you know, to action. And again, going back to having a beginner's mindset, the person who spends a lot more time with a certain team is obviously better placed to make a judgment call on that team. And so there is, you know, there's kind of a collective trust into the partner's judgment.

>> But if you want to write a $5 million check on the spot, you can?

Not exactly on the spot, but but you can definitely, you know, make the deal happen.

>> What was the most controversial deal that got through?

>> Um, I'd say, you know, Revolut was pretty controversial actually, of all the deals. Uh, yeah, it's, it's funny. It's, it sounds, you know, in retrospect, it sounds bizarre, but it, it may end up being one of the most successful or maybe the most successful, but it was definitely one of the most controversial. The reason for that was that it was quite a fewfold. The the first one is, um, it was a very European product, you know, and I think the product made a lot of sense for the European audience, didn't make as much sense in the US context where FX frankly is not a big topic. So I think there was that was one element where, you know, I think US-based folks were, you know, less familiar with the product and, you know, didn't resonate as well. The other issue we had is it was especially in the early stages, it was a kind of, you know, negative gross margin business. I mean, they were basically giving away FX but weren't charging for anything else. So you had a little bit of interchange, but not that much, and so you had a very low gross margin business, and obviously that wasn't that attractive. And, you know, and the more they scaled, and they scaled very fast, all organic and word of mouth, the more, you know, they were burning capital. So, so it wasn't an obvious one. And I think, you know, Nick at the time wasn't a natural, um, you know, kind of storyteller and and fundraiser. And so, so I think for all those reasons, it wasn't, it wasn't, you know, it wasn't an obvious, an obvious deal, which by the way, I think that's that's one of the learnings is you, gross margin, like beware of gross margin, uh, in the early, in the early days, and I think that's a mistake we've made a couple of times, and I think Snowflake was a similar story.

>> What do you mean by that?

>> Well, it means that, you know, you have a lot of businesses that in the early days have have really bad gross margins, very low gross margins. So, you know, uh, Revolut, >> Deliveroo was an example, all the LLM providers were, you know, very clear examples of that, and and I think a lot of the LLM, um, you know, all a lot of the AI apps have similar characteristics. But I think if that's the only thing that's holding you up in most cases, I would totally ignore it because the reality is, you know, when you're getting started, you know, optimizing for your for high growth margin is the last thing you should be doing. You're entirely focused on on growth and building the product. But in most cases, you know, especially in pure software businesses, you can, you will find ways to optimize your growth margins and the cost, whether it's the underlying cost of technology you're using is going down. I mean, you know, the the AI apps is is a good example of that where the the, you know, the cost of the price per token keeps on going down, or you can just optimize your infrastructure a lot better when you have a lot more volume, and that's what happened with with Revolut.

It's so funny how you say statements a year ago and you look back now and you're like, what, what was I saying? And the speed of the industry transition is so significant when we look at like cost of tokens where it was 18 months ago, it's like 99% cheaper. And there was even a conversation. So if you judge your, you know, if you made your judgment based on gross margin at that time on the price of token at the time, you would have missed on, you know, really on great companies and great investments.

Honestly, that was my take on Revolut's gross margin, which is like, what it is today is not what it will be in the future.

So I totally agree with you there. European stack rank was what I wrote down here, which is like, if I was in the Europe team, I would honestly be a little bit perturbed by the dual structure of having US people on my decision-making because I'm stack-ranked against the growth of Silicon Valley companies. I'm never going to get a deal done. I'm not saying they're worse, but they grow slower. The execution speeds are often slower. Like I, I just think it's like if you stack-rank them, it makes it harder for European teams to get deals done.

>> It may, it's not really what we see. You know, we, we consistently invest about half in Europe and half in the US. And we have a global one global bar. And I think that's the way we see the world. And we don't, we're not fighting for local, uh, uh, maximum. We're, we're fighting for a global maximum. You know, we want to be in the very best businesses globally and be the, you know, the reference investors in those.

Is there a culture challenge in presentation? And what I mean by that is like Americans are brilliant at marketing and storytelling. And I mean that nicely, not badly, but respectfully to your fellow countrymen, French people, you know, I'll meet them and I'm like, you know, they're like, "Yeah, we're doing 50 million in ARR." And I'm like, "Wow, that's amazing. It's okay."

>> And I'm like, "If this was American, it'd be great." And so my question is, is there a culture chasm that doesn't carry with European founders to your American partners?

>> Yes, I think the answer, the answer is yes, by and large. So we know, you know, we, you know, if there's one team that is aware of those differences, it, I would say, it's, it's Index. And so, um, we are very well aware of it and we take into account when when we vote on deals, and that's also why we leave a lot of latitude, especially in the, when you have data, it, it's different because obviously, you know, data can can speak, you know, can can speak for itself. But I think when, uh, at the earlier stage, to your point, the presentation matters a lot more. And that's where leaving more latitude to the partner or the investor who is closer to the founder and spends more time with them, you know, is is super important because, yeah, I mean, we've had that in the past for sure.

Peter Fanton said on the show that price is a mental trap. Interesting statement. Yeah.

>> How do you think about your own price sensitivity today?

>> Yeah, I think he's is absolutely right. You shouldn't lose, you shouldn't lose a deal on price, especially, I think it's especially true in the early stage. Um, and and so we never, you know, we never pass and we never lose a deal or or pass on a deal because of price in the early stage. I think that is absolutely correct. I think it can be a little bit, you know, where does it stop though? I mean.

>> Is that a price that's too high? Like, I, I will ask, like, are we being paid for the risk that we're taking?

>> That's not really how we think, to be honest. Um, you know, this kind of risk-reward profile, you know, you don't know, right? Because you don't really have a good sense for the size of the reward. And I think in general, by and large, we've been, you know, the industry has even kind of, you know, underestimated the size of the outcome. And you mentioned the the scale of the revenue growth, the scale of the of the market caps of these businesses, we didn't think that that would be the case, you know, even, you know, 10 years ago. And so, so you know, at the early stage, if you had known at the time that the outcomes could be so large, well, then maybe, you know, it was a very fair reward for the risk you were taking. So, so I think in the early stage, it's, um, I think I think he's absolutely right. The only question is how far does it extend, you know, in valuation, you know, when you're at, you know, you mentioned, you know, P at 200 billion, like, is that, you know, is there, was, is the one trillion still, you know, a mental trap or is, I don't know. So there must be some moment where you get into a slightly different realm and where, you know, the the the the distribution of outcomes becomes narrower and the likelihood of you, so you have a better understanding of where the company will, you know, the closer you get to IPO, the closer you should have a sense for what is the valuation. And so you have a better sense for that risk-reward profile that you, that you are mentioning. In the early stage, this is so far out, you don't really know. So I think again, if you go back to the first principle of, if you have this extraordinary founder and there's real traction, then, you know, don't overthink it.

>> Have you done deals though at high prices that in hindsight they were too high priced and it negatively impacted the company?

>> Oh, For sure. Definitely.

>> And so there is a too high price?

>> Yeah. There is, um, there's a price, there is the amount raised, and there is the maturity of the business. Well, we've all seen these companies that, you know, raise tons of capital at a very high price before they had proper, you know, product market fit, or they they thought they had it, but a lot of it was subsidized by investments. And then when they stopped investing because they realized, well, you know, it's not, you know, the customers they were acquiring are not profitable, so we need to stop it, it doesn't really make sense, then they realized having all this money and all this team, you know, they had to spend, especially in Europe where it takes a long time, they had to spend a year or two reducing the set of the team, going back to the basics, and so trying to find product market fit after you've grown so much and had so much capital and at such a high valuation makes it really, really tricky. That is that is dangerous.

I find that the fault of investors, well, like A is so competitive that, you know, I mean, someone on our team joked yesterday said, how soon after doing the seed is it okay to preempt the A? Like, is the next day okay? Because it's so competitive at A. I have to stuff you with cash as soon as possible. And like, [ __ ] it, I'll take the risk on you getting PMF because if you have it, it's too late.

Yeah, we, we've, you know, we've done it in in some occasions, you know, again, when we found, you know, extraordinary founder, um, with, you know, either, uh, revenue traction or open source traction, we've done that in a couple of open source companies, then it can totally make sense and you can really, you know, you can get amazing rewards for that.

When you think about ownership, how do you think about ownership internally? Is it kind of the age-old 15%? Has times changed around ownership percentages?

>> I mean, the times have changed for sure. You know, I started 15 years ago, and uh, we were, you know, all aiming for 20%. Was kind of the minimum bar. Um, this is, you know, you can still, we still have some 20% ownership, but it is obviously getting getting a lot harder. Um, I think if you can get the, for us, the goal is to get double-digit ownership at exit. That is the, you know, that is typically where we, if we look at the the performance of the fund, most of our returns have been generated by companies where we own close to or more than double-digit ownership at exit. Um, and so I think that that should be the, that's what we're trying to aim for.

>> Do you have more elasticity on ownership because you're able to do multi-stage investing?

Yeah, in the earlier stage, for sure. I mean, I think for us, especially at seed stage, you know, our approach to seed is is much more collaborative. You know, the idea is we don't want to compete with with people like you and and and, you know, other other seed funds and angels. You know, we want to bring them along. We want to work together and, you know, we, it's conviction investing and we're going to, uh, you know, pull our weight and be super involved, but this is not the stage where we want to maximize ownership and, you know, so we're not going to have, uh, you know, sharp elbows at that at that stage. Later on, you know, especially at, you know, at Series A and B, that's where we really want to, you know, because of the time we're going to spend helping these companies and and, uh, you know, spend time on the board and be, you know, hopefully the reference investor. So, that's where, you know, we need a minimum ownership.

I make bombastic statements and then ask for opinions on them. I think Series A is the worst place to be investing today. Obviously, we do Series A, so not like promoting ourselves. It's a very truthful exposure. It's like, hey, the price inflection point is so high, often 3 to 5x, and the company progression is often less than 2x. It's a tough space to play. How do you feel about Series A being a bad space to be in right now?

We don't really think about it that way, you know, I think in the early stage, whether, you know, and first of all, the label on stage is, you know, is as good as as as you want to make it, you know, you know, is it seed, is it Series A, is it pre-seed? I think there is, I think there is kind of, there's a pre-product market fit business, there is a post-product market fit business, and then there is a scale business. And I think, so you have, you know, you have those kind of three. For me, there are kind of three stages, and we have, you know, our funds, seed, venture, and growth, that kind of represent those three stages, but, you know, they're not really, really a label. And then for us, at the early stage, we don't, you know, the goal again, the goal for us is to be double-digit owner, reference shareholder as early as possible. And so we don't try to think, okay, is it now a good time? Is now a bad time? Great companies are created at any time, you know, in the cycle. And so if you can get in early enough and have enough ownership, we don't overthink, oh, is it Series A? Is it Series C? How much do we own? But again, I think having, you know, being a multi-stage fund helps with that with that flexibility.

>> Do you have investments in any of the LLM providers?

>> We do.

>> Which one?

>> Uh, we're in Cohere and in, uh, and we have a seed investment in Mistral.

>> Okay, got it. Do you think about dilution sensitivity down the road? You, we mentioned delivery, that's kind of V1 of dilution sensitivity, if you want. And LLM is, I guess, the latest version where like, there's a fundamental question of like, is it actually a good venture product because the dilutive nature of the business is so high?

>> Well, we'll, we'll see at the end of the, we'll see at the end of the journey. I think it's, um, as a, the pure venture multiple will likely be lower than some of the other categories in the past. I think that is, that is clear. The difference is that the size of the outcome and the speed, very importantly, the speed at which the size is going to get reached means that you can have, especially if you can deploy a lot of capital, you will still be able to generate a lot of absolute returns. So, I mean, I think this, in terms of performance, will still be very high. In terms of pure multiple on early stage investments, it may be maybe slightly lower because of dilution.

>> Do you worry about the distribution of value in the LLM market when you think about, you know, the two terabytes, obviously being OpenAI and Anthropic, and what we said earlier about the importance of being number one, how much value accrual actually goes to the long tail with other providers? I really question. Do you worry about that?

>> Yeah, of course. Of course I worry about that. Um, I.

>> Like, does Europe need an LLM provider?

>> Yeah, I think it does. I think it does. Um.

>> Can you paint that case for me? I'm not asking as a journalist. I'm asking like as a student. Why?

>> Yeah. Well, I think the the notion of sovereignty and tech sovereignty is is a real notion. I think it's important. You have to recognize that there's a big part of the economy that has to think that way, where you know, you have geopolitical realities that matter. And so if you are a government entity, if you are a quasi-government company, you may want and or even have to use, you know, local providers eventually, you know, at some point. So I do think there is a large part of the market that needs and wants local, uh, providers, especially, you know, assuming that they are close to the frontier or at the frontier. And so, so I.

I think there is a real market case for that. There's also a lot of, I think, um, um, you know, localization and customization that can and and need to happen. And so I think there's going to be a great enterprise market for for those those providers. So, yeah, I think there is a market. You know, is it going to be smaller than OpenAI? Yes, for sure. Fair, I didn't disagree with you. Do you think we need government intervention in AI? I, I, I spoke to Danny, obviously Paul. He said he was the only one said this actually. He said, you should ask him about China. Do you think we need government intervention in AI, pushing you to use one model over another, shutting off access to certain providers? I do believe that having, you know, government entities or quasi-government entities support local innovation is in that, in that critical field, is is important. I, I think the way to do it is not necessarily to, um, I think they should be customers. I think they should buy those products and and and and they should, you know, they should help them as as customers rather than, you know, as investors necessarily. Do you think TikTok should be allowed though, for example? I think it should be allowed, but there should be a bigger conversation about social networks and about the openness of algorithms, which don't only apply to to TikTok, but, you know, applies to X, applies to Facebook. I think those algorithms should be, um, should be public, should be able to be audited by, you know, by anyone, but also include independent, uh, uh, auditors. I think that's, you know, they have they are not regular companies. I think they they are utilities, they are critical infrastructure for the economy and for political systems, and as such, I think they require, uh, a level of of a treatment that is different from, you know, any random, uh, random startup.

When we look at the different players today, we're seeing this kind of real concentration of value, almost like never before. You mentioned like OpenAI are going to be bigger, but your OpenAIs, your Anthropic, your Cohere, and there's probably, you know, five to ten in this kind of ilk. The concentration of value within startups seems to be more prevalent or dominant than ever before. Do you worry about this concentration of value and bluntly the platform play that comes from that, meaning it is just much more concentrated and makes it more difficult for us investing in smaller players?

I don't think it's that different from before, really.

Yeah. You know, if, if I look at Index, you, I was, I was looking at the numbers, you know, I think we've, we've invested, so we've been around for 30 years. We've invested, I think, $11.5 billion. We've returned, I think, about close to 30, and we still have, you know, 20 plus in, you know, in in holdings. Most of that is basically concentrated in eight, nine companies. Uh, and we've invested in probably 300, close to 400 companies over the years. So, you know, it's like, so the concentration of returns in a small number of names. I mean, we've experienced it ourselves at at, you know, at our level, and so I don't think it's that different than than it was before. I mean, I don't, I don't see anything that that indicates it's going to be that different. And that's why making sure you are in those category leaders early enough to have, you know, big enough ownership and also, you know, earning the reference from the founder being the reference investor is the most powerful. It's the only thing that really matters.

What did you miss at the early stage that you were like, "Oh, [ __ ] it. We just have to be in this." And then came in later?

That was just before I started, but we did that with Zenesk, for example, where, you know, we passed on on the seed, on the early, especially, um, you know, if you look at the memo and the valuation at the time, it's, it's quite funny in retrospect. I don't remember exactly where it was, but very different from where it is today, as you can imagine. Uh, and we came in later at the, you know, with our growth fund.

Do you worry for your companies about the concentration of talent? You know, we are in a war for talent state like we've never seen before. And the compensation packages truly are like we've never ever seen before.

I speak to so many of my companies and like, [ __ ] sake, car, when we're competing against Meta and OpenAI, like, what do you expect? Do you worry about that for your companies?

Yeah. For for for sure. I mean, you know, you you you have to worry. I mean, having said that, a big part of the compensation for these early-stage companies is around options, uh, and is around ESOP. And I think that's where, you know, that's the only way for startups to really compete with these large established players, whether it's OpenAI or whether it's, you know, even Google and Microsoft and and and the, you know, the established, uh, publicly listed large tech companies. So I think with that, you know, if you can tell a good enough story about this future value creation, there is no amount of package that can compete with that.

Talking of kind of European founders competing. Um, I, I obviously posted about the importance of working seven days a week in an increased intensity world where we are competing against China and the US and that being the new normal. Um, you, you know, I think very rightly, uh, said the same. Um, and then I got all the blowback and you avoided it all. Um, my question to you is, why do you think that we are in a new world of work intensity and that a new caliber of work is required to build a $10 billion business?

Again, I, I'm not sure it's changed so much. If you look at the, the most incredible companies in the past, you know, you look at Revolut, you look at Delivery Hero, like all of these companies, the amount of work that these founders and these early teams put in was was tremendous. I mean, it was seven days a week, you know, it was nights and weekends. I mean, that's what it was. And, um, and so, so I think that's what it takes when you're going into those, those hyper-growth mode and you have, you know, and you go for the venture-backed route, that is, you know, that is part of the journey. That is, you know, in many ways, what you're saying for, you need to have two things: one is, you need to make a lot of experimentation and iteration, and so that typically means, you know, the longer you work, the more things you can try. And then you need to have a very high growth curve and and be able to learn very quickly from those experimentations. I think the main change to me is how open people are, and I think it's good because then there is no mismatch of expectation. You, you're not joining a company and [ __ ] you know, they're working so hard, this is, I can't do this, this is not for me. Then at least there's there's real alignment between, you know, what you're saying and what you're doing. And I think that's that's actually positive.

When you think about the word liquidity, what are your biggest lessons on when's the right time to sell? You know, you talked about, um, market timing, and we don't try to time the market at entry, and we don't try to time it at exit either. Um, we have, we're not public market investors. We tend to have a very standard liquidity program when a company goes public, where we sell, you know, every quarter over three years in a very, you know, recurring, regular, preset way. In many ways, we obviously have, you know, we have an, we set up an exit committee with a, where you have, um, four people on, including the partner who led the deal and another partner who didn't lead the deal and is not as close. So we always have kind of healthy debates and we kind of, we can adjust at the margin, but by and large, our view is, don't try to be too smart. And then so, you know, it's always the same, then when things go really well and you've sold to a, oh, [ __ ], you know, but then you also have the, you know, the opposite where if you hadn't done that very systematic approach, you would, you know, you wouldn't have realized a lot of liquidity. So, all in all.

What did you sell too early and you're most ostentatious about?

I mean, you know, we were a very large investor in, uh, in Robinhood. Um, and we sold, you know, uh, we sold quite a bit at a lower price than where it is today. You know, we still have a large stake, but, um, you know, there's always, there's always going to be contra examples. Um, and so, yeah, I think that's one of that's the clear one, given the, you talked about their their recent, uh, price price action.

Do you think it is the right strategy to do that, to sell in these quarterly increments when they go public, given, given all the information that you have? Are you not in a place of asymmetric information where you are better placed? And I actually look at like a Shopify of the world.

Where [ __ ] you would have lost 98% of the value.

Yeah, um, again, you know, they're all, you know, they're all contra examples for sure. When we ran the analysis and we did run the analysis, obviously we didn't, you know, come up with it, you know, randomly. It, you know, it came out that was the decision we, [ __ ], it works. And obviously, you know, it's hard to do the counterfactual because, you know, you can never sell only at the top. I mean, that, you know, I wish we could, but that that's just not going to happen. So, um, but if we, if we looked at, if we had taken different schedules, we would have been worse off. And so we felt that overall, if you look across a basket of portfolio, and again, it's a portfolio approach. So you may be wrong on one or two, but if you take a portfolio approach and you do it for long enough and consistently enough, then we, you know, we realize that that was that was the best outcome.

Does the extension of private markets change that perspective? You know, when you look at say Revolut of the world now, I think it's like $75 billion in private markets, whatever it is. Um, but it's just an example.

Yeah.

The extension means that actually secondaries are so much more real. You have the chance to sell much earlier and actually that public profile is delayed a lot longer.

Do you engage in proactive selling in secondary markets?

We, we may, again, you know, we may over time, um, in certain situations, you know, like Revolut, we've been in for for 10 years, so that you're kind of getting to the end of of a fund cycle. So, um, yeah, we're not entirely, I think by and large, you sell secondary in Revolut.

We, we didn't share that, but we're definitely not opposed to it in general. I think in by and large, we tend to hold, um, pretty much everything until IPO. So we.

Do you think that will change?

It may. You know, we don't have any, we don't have any taboo. I think, um, we may have funds that are just, you know, at the end of their life life cycle, and we want to realize some level of liquidity. I don't think we'll ever sell a lot. You know, we, and again, it goes back to my first point about the returns being so concentrated in a, in a small number of names. When you're fortunate enough to be a big owner in one of those names, you want to, you know, I think you want to ride it to, to, you know, for as long as as you can, and and also, you know, get the best price discovery is on the public market, and so you want to get access to that that price discovery. And and so, yeah, I think by, you know, by and large, we will, we will keep until until IPO and and after.

When we think about like ownership accumulation across rounds, the thing that I find hard is Figma is a great example of an incredible business that wasn't maybe obvious for quite a few years actually. It took a while for Dylan to actually come out with any product.

And it just wasn't as it wasn't up into the right from day one, let's put it that way. Okay.

Well, it was nowhere for many years because he was just building the product.

Okay. So, there we go. But my point being, I do not believe your winners are instantly obvious.

Which means that I think you will often misallocate your reserves and your ownership concentration desires. Do you agree?

Yes. I think it's, uh, it's, it's, it's inevitable. Yes.

So we are not able to accurately predict our winners.

No, definitely not.

So then we should just do the same.

It's funny, you know, like Figma is a, is a, is a, is a great example of that. I mean, you picked a really good one where, you know, Dylan, I always tell this anecdote where he would, you, we have this co-retreat every year, and he would come on, and he would keep on coming back, you know, year one, year two, year three, year four, and it would still not launch. So like, why are we still inviting him? Like, what, what, you know? And Danny, you know, to, you know, to his absolute credit, was always so, the level of, you know, we always talk about conviction in this business. Danny's level of conviction behind Dylan at Figma is unparalleled. I don't think there are many examples in the business of of an investor that has had that level of conviction for so long. We're talking years. Was like, no, I really believe in, you know, I think this this founder is really special. I think the product, the, the fact that actually he's not launching, that he's wants to build all those, you know, the right feature for the good reasons, not that he doesn't want to launch, that he can't launch, is that he knows that he needs to have that minimum level of of feature set to be competitive and for it to work. And and then he was, you know, was always a massive supporter, even in that long period where there was just, you know, not even a product out there.

With respect, then why let Greylock lead the A?

Well, I mean, it's the same with with every, with every, uh, um, with every company. Like, you don't invest in every single round on every single one of your companies. So I don't think it's any different. But we invested in, you know, every round.

Is there one way you really backed up the truck where with the benefit of hindsight, you go, "Wow, I got a bit ahead of my skis there"?

No, we, we never felt that way. No, because, you know, as soon as the product was launched, the traction was was undeniable.

Across the whole portfolio? Oh, you mean? Okay. I thought you meant about Figma.

Oh, no. Figma. [ __ ] Okay. Yeah. No, no. Across the portfolio. Um, yeah, of course. Yeah, we, we, we've made that, we've made that mistake before. But again, you know, anything, it evens itself out. That you wish you had seen. You don't need to say the company, but.

I think there were times, um, there, there, and I think especially in, you know, high valuation, kind of frothy times, you have moments where you doubt yourself, where you run your analysis, your own analysis, and you come up with a, a valuation and the potential for the business, and then someone comes on and says, "Well, I'm going to pay 2x the price, and I'm going to put, you know, 2x the money that we thought we would put." And sometimes, and with an incredibly high level of conviction and speed, and you're like, [ __ ], like, did I, you know, do they know something I don't? Like, did I, did I miss something? Or also, you know, I think we have a, there is a tendency where the, sometimes you talk about, you know, asymmetry of information, but it goes both ways, where sometimes you're so close to a business, you really see how the sausage gets made, and you can, you can end up being more negative or more focused on the negative than the positive. And so, you know, having external validation of people who are new to the business, just look at the data, look at the team, and say, "It's worth X," and that X is 2x what you think it's worth. So, you know, sometimes you may think, "Well, maybe I'm being too negative because I see some things, but actually, if I were a new investor, I may be willing to pay 2x the price." And so there are some moments where say, "Well, let's do a pro rata, you know, and and be part of it because maybe we're missing something." It's clearly, it's, it's a different trajectory. And and sometimes that was the wrong call.

Do you do outcome scenario plans? I mean, the biggest mistakes in venture are when we like underestimate the size of our winners, which is so common. Um, do you do outcome scenario plans, and is it worthwhile as an activity?

We don't waste cycles going incredibly detailed into those. Um, yeah, we, we, we do. I think we focus more on, you know, sensitivity analysis. So we focus on, what are the few levers that really matter for this business, and where do we think they're going to go? But, you know, it's, it's, it's again, we focus much more on the founder, the founder dynamic, the talent that they bring to the team, much more than, uh, than doing number crunching.

We've mentioned Revolut quite a few times.

I, I do have to ask about just the story. I don't actually know the story. How did you first meet Nick? Can you just take me to this, like, who, Shishi, why did you meet him? Just tell me the story.

It was a while back. I think it was, it was, it was more than 10, it was 10 years ago now. So, uh, I, I think I, I saw them pitch at Seedcamp, at the, you know, one of the demo days. I, you know, I think that's one interesting thing is typically when you have exceptional companies, one of the indicators is that you will have multiple touch points about that company over a very short amount of time. So, you will, I will see them at Seedcamp, but someone will, you know, I will see an ad, or I will download the app, and someone will mention it to me, a friend, and then another. So, in general, you, you have three or four touch points. And and for me, that's a big signal. Oh, there's something happening here. If I hear a lot about something in a very short amount of time, like they've, they've called, you know, they, in the side guys, they they've really hit a nerve. I think that's what happened with Revolut, where I saw them at Seedcamp, but somebody else mentioned them to me, and I was using the app, and one of my partners had, you know, so I, it was a multiple, uh, um, it was a, it was a multiple signals, but I think the, the Seedcamp one was the, was the first one.

And so then you ping Nick and also a meeting.

Yeah, I think I, uh, I don't exactly remember how how I got introduced. I think I may just have gone to him after after the pitch. Um, and also, I think we were also, uh, we had been introduced through another source. Um, I think one of my partners also been introduced. Again, I think typically there are multiple touch points when some of these companies. Um, but I, the, the reasons why I had a lot of conviction was, I came in with a prepared mind, meaning that I had been looking at the space for a little while. I had looked at a company in the US called Simple. Um, you probably weren't born then, but, uh, you know, it was the first real neo-bank.

It sold to BBVA.

Yeah, exactly. Yeah, dude. There you go.

I'm a student. Don't underestimate. I know.

Um, but yeah, so, so, you know, Simple had been around, and, you know, again, interestingly, going back to beginner's mindset, a lot of people who had backed Simple were like, "Well, this is, it doesn't work, like it can't work. Look at this, you know, you get bored, best case scenario, you get bought by an incumbent, and, you know, it will never work because people don't, and the main reasons was people don't want to switch bank accounts, it's a pain, like, why would you switch bank accounts? You know, it's like, oh, it's going to be on you on mobile, but well, my bank has a mobile app, why do I care?" And so I had met, you know, I looked at Simple, uh, I had met Monzo as well, actually, and and I, I was looking for a trigger, like, what would convince people to switch bank accounts, which is such a pain. And what I really loved with Revolut was a simple trigger with FX. And like, you don't, you, they didn't sell people, "Oh, you're going to switch bank accounts." They sold, "Oh, you're traveling to Portugal for a stag weekend. You know, you're going to get fleeced by your bank. Why don't you get a Revolut card?" And and I thought that was such a clever, uh, insertion point. And then from that point, Nick's view was from the beginning was that he wanted to be the global money app, offer every product. But the insertion point was, I thought, was really effective. And that's how they managed to grow so, so quickly and and organically for the longest time, because they had this very clear value proposition that was a lot easier than saying, "Oh, you need to sign up with a new bank," which no one wants to do.

I remember chatting to Antoine LeNell there, and he was like, you know, we, we won in many respects because we, we offer snacks to start. So don't try and convince you for the main meal. Just have a little snack and come back for some more and more, and then suddenly you want the main meal.

Yeah.

Totally agree with you there. Okay. And so you saw that. Do you think Revolut won in large part because of the lack of banking license that allowed them to move so much quicker?

It's, you know, if you ask Nick, I think he will say the he will say the opposite, which is if you were to do it again, he would probably go for banking license earlier. No.

Yeah.

No, seriously.

Yeah. Um, I think it would, you know, I mean, I heard it said that, uh, a couple of times because, and you see it today, it's a lot easier to get a banking license when you have, before you have scale, than than after you have scaled.

But he would have been prohibited from most of his product expansions.

Yeah. So, exactly. I think that we don't know the, we don't know the counterfactual. So, it, it may have been the case. Um, look, I think the reality, I think, I think they, they had the right strategy. I mean, you know, it's hard to argue with the, I mean, if you look at the outcome and you compare with all of the other players in the space, they, they clearly had the best strategy based, based on, based on the outcome. Um, but it is true that it's harder to get a banking license later when you have a, when you have a very large scale. I think what was really interesting with Revolut though, and which I think is more, more important than the banking license, is the, is the global approach to, to the, um, to the business. And and I think again, that's something that was very contrarian at the time, and and again, came from his first principle thinking. The conventional wisdom at the time was, banking is, uh, is highly local, massive regulation you have, and so you have to go very deep in one market, and once you've won that market, then maybe you'll expand into a second market or third market. But that was the conventional wisdom at the time. And his view was the opposite was like, look, banking is a digital service, meaning a single, uh, unified platform, you know, certain amount of code can deliver the exact same experience across every market in the world. There is no different product required in Indonesia versus in Poland or in Estonia, and the same app can do it all. The regulation, you know, the compliance, the front end, which products you can offer to whom, and so all of that varies. But the underlying principles of storing money, lending money, uh, transferring money, all of that, this is just a software and a data play, which is the same. So you can have a single piece of code that works across the globe. So that was his vision. And so from the get-go, he started multi- multi-country, as well as multi-product, but he really started multi-country. One of the decisive factors in Revolut's success is the ability to passport across across the European Union and, you know, having a license in Lithuania that you can then export and serve the entire of the European Union without having to go market by market. I mean, they had to go market by market eventually to kind of give local eyeballs and go deeper, but they could start offering the basic product across Europe with just that one license, and that's what really gave them the scale and and, you know, and the geographical expansion to kind of, you know, keep growing and and and and growing faster and and compound, you know, over time. And I think that's why, why is it important? I think it shows that when you give European founders one unified market to compete on, there, you know, they can be as big, if not bigger than anyone in the world. And I think Revolut is probably, you know, one of, if not the best new bank in in the market in in many ways. It's, it's, I think better than than anything, you know, in the US.

The thing I always find quite funny, which is like the US always bluntly laughs at the size of our companies. And I'm like, well, banking, one of the biggest industries in the world. We [ __ ] on your neo-banks.

Yeah. And and and but I think that's, I think that's Europe, the European Union should look and really study that example. Okay. What are the other, what are the ways we could replicate that and really have a unified market? And obviously, you know, we're very involved with with EU Inc., which is this initiative to have one kind of single unified status and a super simple way for companies to expand across Europe. And I think that could be an absolute game-changer.

Do you think Revolut will win the US? I think the pathway to $500 billion will be largely dictated by US expansion. Do you think they will win the US?

I don't know what winning the US means. Um, that's.

Gain meaningful market penetration in a way that others haven't in the past.

I think they will.

My bet is never bet against Nick.

Exactly.

Nick and Elon are too. That's the other way to put it.

What do you think makes him so special? I've interviewed him several times for years, not nearly as well as you have done. So I know mine. Why do you think he is?

It's, you know, I will say it again. It's the first principle of thinking. It's the fact that he, he never takes anything for granted. Like, he never, he never listens to conventional wisdom. If you tell him, "Oh, that's how it's done," he will challenge that. What? Why? You know, and then he will think about it himself, really break it down into small pieces, solve that problem, and then he will come up with his own answer. He will use experts to kind of inform his his thinking, but he will never just take things at face value. And the result of that is that he then comes up with very original ideas and original ways of of working. I mean, he does have some inspiration. I mean, you know, Ray Dalio is is obviously one, and the way he runs Revolut has a lot of similarity with with Bridgewater, but I think that's that's what's made him so special. And then you add that to an incredible, you know, intensity and and ability to maintain that intensity at over time, over a very long period of time, in very difficult situations. I think that that's what, you know, really, you know, sets him apart. And then the scale of the ambition, you know, I think that's something that a lot of founders, they want to win something small, and he doesn't. He, he, he never, there is nothing that is that is too big or too complex. Like, you know, eventually he thinks he's convinced there is there will be one global money app, and that he can be that one global money app that could be better, you know, bigger than than, you know, when we first met, he wanted to be bigger than JP Morgan. There's still some way to go for sure, but that's how big he thought from the get-go. It wasn't something that came over time. That was because he thinks about it rationally. He's like, "Why wouldn't it? There's no reason. There's no law of physics that says that it can't be as big."

Final one before we do a quick fire. When you think about your investor self, what tool in the investor armory do you not have or do you feel weak on that you would like to have or be better on? You can think about it. Pause. Totally.

Yeah, that's a, that's a great, that's a great question.

I think about it a lot for myself.

And for and for us as a firm. Like, why did we hire JC? Because our customers are are founders, and some founders want people who scaled products to millions of people and thousands in team members. We didn't have that as a fit in the team before, and he brought a very different customer product that we didn't have. You know, I'm a generalist in terms of sector focus, but if you, you know, going very deep on a specific sector's, uh, uh, nuance, that's not that, you know, that's not my, uh, my, my strengths. And also, you know, I haven't been an operator and a founder. So, I, I, I won't try to, you know, I will never be on a board, a board meeting, and and kind of go super deep on your product. I will try to again go, you know, go to the level that is generalizable and help share what I've seen in other places, but, you know, instead of just going super deep and owning that one thing.

When has not being deep hurt you?

I think there are some certain investment decisions that had I known more about a certain industry, you know, I probably, you know, wouldn't have, you know, made the investment.

Uh, listen, I want to do a quick fire round. I say a short statement, you give me your immediate thoughts. Does that sound okay?

Let's do it.

So, what one thing do you believe about venture that other people will think is crazy or strange?

It's not a career. It goes back to, uh, one of the early points, which is, I, I don't think people should want to have a career in venture. I think that's the wrong motivation. I don't think it is like an investment bank or like a consulting firm where you join and you can move up the ranks and that's kind of a well-established thing. I think there's a part of.

Do you think I was wrong then? And I don't mean that badly, but like, you know, I watched The Social Network when I was 13, saw this intersection of finance and technology that I loved and thought, "That is something that I have to be a part of."

No, I think that's exactly the right reason to do it. What I'm saying is not that. What I'm saying is people shouldn't join venture for the status that it brings. I think that's, that's what that's what I mean by that. Like, you didn't do it for the status. You did it because you thought this, you were extremely excited by the technology, by working with with founders, and just to your point, being part of it. And whether the which title and which fund and which didn't matter to you. You know, what mattered to you was working with with with the founders and being part of that movement because you couldn't think of anything else to do in your life. That's the right motivation to do it.

Dude, 11 years ago in Europe, it was not like a status game being invented.

Exactly. Exactly. You know, it was the same for me 15 years ago.

Totally agree. Okay. You can, uh, choose one partner who is the best picking partner in Index. Who is it?

I'd say Yan is probably the, the strongest. Yeah. I mean, if you look at, if you look at his track record, you know, the consistency, um, and some of the incredible winners that he has, um, I think he's a, I think he's a great picker.

Which competitor do you most respect?

Sorry. Which competitor do you most respect and why them?

Um, so like for me, it would be 0.9 with Kristoff. I think the, the discipline, the focus, how incredibly articulate they are around what is and isn't, that type of deal.

Yeah, I, you know, historically I've always, um, I've always admired USV. You know, I Fred Wilson's blog is the reason why I joined venture, to be honest. You know, I think what he did there in terms of, uh, educating people, explaining how venture works, explaining how entrepreneurship works, his level of sophistication in understanding and explaining business models, in picking the right themes early. So I think historically I would say Fred and USV are they were huge inspirations. And when you, you know, I spend time with them now that I'm in New York, and the way they operate, um, this very unique way, very collegial, the way that they've decided to stay small against the grain, and of the industry, um, always being against the current, I, I really, you know, I really, I really admire him. Um, yeah.

If you can invest in on seed fund, which seed fund do you invest in?

Um, I like, uh, I like Nico at Adjacent a lot. I invested personally, and I think he's a, I think he's a very unique, um, I think he's a very unique investor.

I totally agree. I love Nico. What's the single most memorable first founder meeting and why?

I still remember meeting, uh, Hano at Personio. Um, that first meeting where it was, and I think it's actually the case with most investments where it's, it's a yes immediately. Like, you meet the person, you hear them talk for five minutes, like, yeah, that's, you know, we should do the deal. You know, if I had done that with every investment, I would probably, you know, done a lot better than I have, um, and not overthink it. But yeah, you know, like the.

The clarity of the vision.

Sorry, I'm interrupting. You know, my biggest [ __ ] lesson is, I didn't meet many companies. And so if I had said yes to every company I invested in, I would have made more money.

Because I would have done the deal pre-seed, the venture pre-seed, and the flexible.

Yeah, exactly. I mean, and we, we had the same, and we run the same analysis where if we had said yes to every single company that had come to present at the partnership, we'd have done a lot better than we have, simply because it goes back to the parallel, like, you miss one, you know? And we missed a few. I mean, just imagine, just Spotify. You know, that's it.

Is that the one in the firm that everyone goes, "Ah, that's the"?

Of course. Yeah.

Yeah. Yeah.

Listen, dude, it's only $148 billion. So, you know.

You miss out on a double-digit ownership. It's fine, dude.

Exactly.

But you know what? You would have sold incrementally. So, it's not $148 billion.

Absolutely.

What's one book that you really freaking loved and you're just like, "Everyone should read this"?

I just, I finished "A Gambling Man" about Masa from SoftBank.

Oh, this was, um, what's his face from the FT? Yeah, I forgot the name of the of the line.

Yeah. Yeah, Lionel. Um.

Yeah, I'm with you.

[ __ ] it.

Barber. No.

Yes. Leo Barber.

Yeah. Well done. Was it good?

It's, it's amazing. It's amazing. It's, um, the is is such a unique. I mean, it, it's bigger than, it's bigger than.

Underground golf course.

Yeah. Like, it's everything is just, it's a life that is bigger than fiction. But I think what's what's amazing with him is this ability to, again, talking about ambition, he could have been the king of Japan and, you know, just run a very successful company there. But no, he, he thought global from day one. It was nothing that was too big for him. He went out to raise $10 billion and then on the go decided to raise $100 billion and become the biggest and most successful. That was the target, um, to be the biggest and most successful investor, you know, in the world. So he had no limits. He took very, you know, and he keeps on taking, you know, extremely big bets. And he, he lost it all multiple times, but never stopped and just went back at it. And I think when you read these kind of stories, it shows you that a lot of the limits, they're in your own, like, you make your own limits. You, you know, you could, oh, if you fail, like, oh my God, I'm bad, you know, it's never going to work. He never thought that way. Okay, like, you know, let's get back on and move on to the next one, and then let's focus on, let's launch the next business and and make it all, you know, make it all back. And it came from, you know, from not much, and it's like, just the story is incredible. I think it's just a such a lesson in in the power of ambition and hard work and and thinking big. Uh, I thought it was really, I thought it was really inspiring and a fascinating story. Everyone told me about your marriage and your weddings. Um, weddings. Uh, not not to different women, to be clear. To the same woman, multiple events. To be very clear. That sounds terrible. Um, what's your biggest advice?

That sounds terrible. I wouldn't judge them.

Well, I mean, having several, like a portfolio approach in a short period of time might be challenging. But, um, what's your biggest advice on marriage and having a great marriage? You know, when I met my wife, I, um, wasn't my wife at the time, obviously. I, I wasn't, I was an anti-wedding. I wasn't sure I wanted kids. Um, so, it took me a long time. We only got married, I think, 11 or 12 years in. So, so, you know, it took me a little while, and we already had kids sooner than that.

Yeah. So, it, it took me a little while, and, um, and I absolutely, you know, I absolutely love it and recommend it. I think it brings a level of commitment that is that is amazing. It kind of grounds you.

A level of commitment that you don't have with not being married.

Yeah, exactly. Uh, obviously, you know, having kids is part of, you know, like really helps with that, and you start thinking as a family instead of as an individual. And I think that's, that is so powerful. You know, it changes your relationship with your parents, with your, you know, I mean, you, you don't see yourself, the spotlight is not on you anymore. You know, you start to think in a, in a longitudinal way. You start thinking generation, which is very different, much more long-term, um, which I think is, is, is incredibly powerful in terms of, you know, in terms of getting married. Um, we are very, very different. We come from very different cultures, very different families. You know, I'm an only child, she has three brothers and sisters. You know, she comes from Congo originally, so it's very communal, always a lot of people. Mine is, you know, very different. And so at first, I was pretty judgmental. Um, and I was like, "Oh, you know, it's different from what I know, and it's, you know, I have the truth, and that's how things should be." And and you know, and she, it was so different, and I didn't, yeah, totally French, and and I, and I didn't fully appreciate it.

And then now, you know, I've learned to appreciate and value those differences a lot. I think she's right on most things. Um, and I, and I think we're trying to bring and build a culture in our family that is kind of a mixture of of both of our, you know, our respective cultures. And, um, and so, yeah, I think that, that lessons of, uh, appreciating people's differences and how they make you, how they make you better, and they challenge your your set minds, I think is is great. And I thought, what I love with this job, you know, in some ways, when you meet.

A challenge about you that was maybe uncomfortable for you to appreciate.

The importance of family is a, is a, you know, is a big one. You know, the importance of the beauty of having a large family, the beauty of having kids. Um, I mean, I was, I was close to my, to my parents, but I never thought as, as a, you know, in such a communal way.

I worry about kids that I will be less on it and like obsessed about what we do. How did having kids change how you are as an investor?

It is true that it has an impact. I think I think you shouldn't, you know, we shouldn't lie. I mean, I think you, you are, you're obviously more focused, uh, and again, you're more long-term thinkers in many ways, but, uh, it is true that, you know, you don't have as much time. So, so you, you have to limit what you do and really, really, you know, prioritize. It makes you, um, well, I think the first thing that's amazing is that it means that whenever you come home, you have this unlimited amount of love and purity. And so no matter, so it makes you, uh, you become a lot more relativist, uh, versus what's happening at work, you know, where you come home and, you know, that there is these people who don't care about any investment. Like, it's so, especially when you talk to young kids, and you try to explain what you do as a, like, my oldest is eight. He's going to turn eight soon, and he still doesn't fully understand what I'm doing. So for 10 years, they won't understand. Then you realize if you can't explain it to your child, and they don't fully get it, then it's, it's quite abstract, and it's not really, you know, it's not the true reality. You know, it doesn't really impact people's lives so much on a concrete basis. So it makes you just a lot more, I think it's easier to distance yourself in, in many ways. I was to a $100 billion founder the other day, and he said, "You know, the thing I love about kids is like, you know, in, in my day job, I'm a $100 billion founder."

When I come home, one, my baby does not care, and two, my baby shits on me.

Exactly.

So, it is, it is very humbling. Um, yeah. And then I think you just, uh, you don't, yeah, you don't waste time. You know, you have, you have even, I know you are very good at prioritizing and and managing your time, but I think having kids makes you even less tolerant of wasting time, because any moment you spend on the road, at a conference, at an event that you shouldn't be on, it's time you're not spending with, you know, with the most important people in your life.

Final one for you, dude. It's kind of a horrible one in some ways because it's just like obvious and [ __ ] but we spoke about kind of people's ambition, Nick's ambition. What's your actual ambition? Like, do you want to run Index when Danny hands over the mantle?

Well, first of all, there's no one running Index, and Danny doesn't have a mantle. Um, you know, it's a pure, purely equal partnership. If you look at, I was looking at the data. So we.

Is it an equal partnership like?

Yeah, it's a very equal partnership. And you know, even in terms of performance, so I mentioned there's like eight companies that represent, uh, the, you know, the largest share of of of return, they've been, uh, there has been involvement from seven partners for these eight companies. Uh, and so the performance is totally spread across the partnership, and the responsibilities are totally spread across the partnership as well. We don't have a CEO, we don't have a managing partner. So we do make, you know, collegial, uh, decisions. So the, you know, I have no ambition of becoming Index CEO because there is no Index CEO. For me.

When you look at the 8 to 9, sorry, you've got Revolut, Figma, Wiz, Scale, and either.

Yeah, Datadog, Roblox.

Yeah, I think that's pretty.

It's pretty nuts.

[ __ ] well done.

Yeah. Um, I don't know if that's eight, but that's, I think that there should be.

You know, in 30 years' time, I so hope that we can have a portfolio airline.

But yeah, they're all, you know, all from, you know, from seven different partners and from five different locations too. You know, they're not all in the Valley. Like that was always kind of the key focus at Index, as I was saying, is, you know, entrepreneurs can come from anywhere. And that's, you know, there's Amsterdam, there is London.

But the distribution of value across the partnership is really rare. We know the concentration, that's that's nuts.

So, so that's not my, that's definitely not my ambition. I, I, I, I will keep doing this job.

Who did Roblox?

Uh, Neil.

Wow.

Yeah.

Um, I will keep doing it as long as and for as long as I, as I can, to be honest, because I, I love it for two, two main reasons. One is, one is the people. And I mean, and again, you know, Index is all about the people. And people is both the founders I work with. I mean, it's obviously pretty incredible to see them, you know, seeing Nick at at seed versus Nick now, you know, Will at seed and Will now, like to, it's, it's just, I love seeing them becoming so successful and wealthy and established and transformed as leaders. It's, it's just incredible to to witness, and I, you know, I learn so much from them, and I'm, you know, so grateful to to be part of that. Um, but it's also the people at Index. And the good thing when you've been around for a long time is that pretty much everyone who works at Index have had a part in, you know, in hiring at some point. So, it's only people I really enjoy being with. Um, and it's also just people in the ecosystem. I think what, what's very special about venture, and that you, there's a lot of beef on Twitter and so forth, but if you compare with any other industry, it's nothing. And most of our relationships are very cordial, and they're very cooperative because we're creating value. There's so much value creation that happens that you don't have to, of course, you compete to win a deal, but then you can still go on at the next round, and it's, it's okay, you can still make a really good return, and and you, and you will end up working closely with so many different people, and I enjoy most of the people in in the industry that that I work with. And then the second thing is more philosophical. You know, I'm kind of a techno-humanist in in many ways, where I think, well, I don't think, I think it's a fact that technology is so critical to alleviate human suffering and pain and disease. And imagine a life without technology, how exposed you are to wild animals, to the elements, to, you know, we forget about that. But, but our life was [ __ ], you know, we would get sick, we would get eaten alive, we would get, and everything that we've done is to extract ourselves and escape that condition. And to me, that's still what we're doing today. We're just want, you know, we are building the tools, and in our case, as investors, we are helping founders build the tools that will make our lives less painful, longer, happier, you know, more meaningful. And I think that's, and that's, and every technology will come with its downsides, but then you have more technology to solve the downsides, and then keep that wheel going. And I think that's an incredible human adventure, and I love being, you know, a very small part of.

Dude, I, I cannot thank you enough for being a friend for many years. I so appreciate you. I so appreciate Index paving the way for firms hopefully like mine and and like Nico's. And so just so grateful to you and thank you for doing this, man.

No, thanks. I really appreciate it.