Neil Mehta

These are just adjectives we use to describe the characteristics of a business that allow it to produce unfair amounts of free cash flow over a sustained period of time. I tell this to our team all the time. I think with Buffett, you could sell 30 points of IQ and still be great. I think with us, you could sell like 40 to 50 points of IQ. It is not complicated.

These are just adjectives we use to describe the characteristics of a business that allow it to produce unfair amounts of free cash flow over a sustained period of time. I tell this to our team all the time. I think with Buffett, you could sell 30 points of IQ and still be great. I think with us, you could sell like 40 to 50 points of IQ. It is not complicated.

It is the discipline of only looking for those types of businesses and those types of founders. There is no secret sauce. It's just consistency, consistency, of doing that over and over and over again across thousands of companies.

It is the discipline of only looking for those types of businesses and those types of founders. There is no secret sauce. It's just consistency, consistency, of doing that over and over and over again across thousands of companies.

Yeah.

Yeah.

I think what's happened over the last 10 years in particular, but it's been happening for a while, is when I grew up in the industry and you drove down Sand Hill, there's like six firms. And the way the process worked is you'd walk into someone's office, and usually someone was famous. You'd be a no-name entrepreneur. You tell them your idea. They kick it around for a while.

I think what's happened over the last 10 years in particular, but it's been happening for a while, is when I grew up in the industry and you drove down Sand Hill, there's like six firms. And the way the process worked is you'd walk into someone's office, and usually someone was famous. You'd be a no-name entrepreneur. You tell them your idea. They kick it around for a while.

They do three more meetings or maybe four more meetings. There's this great Elon Musk quote, which is, Every manufacturing process is wrong. Every production process is wrong. Every design. Yeah, I won't get exactly right. Every design process is wrong. It's just a question of how wrong.

They do three more meetings or maybe four more meetings. There's this great Elon Musk quote, which is, Every manufacturing process is wrong. Every production process is wrong. Every design. Yeah, I won't get exactly right. Every design process is wrong. It's just a question of how wrong.

Because the likelihood we could have envisioned all the available capabilities that we have today when we design that process is zero. Like, you know, so many things have changed. I think our industry is a little bit like that. You're going from this process where people would take a little bit of time. They wouldn't really know your company when you walk through the door.

Because the likelihood we could have envisioned all the available capabilities that we have today when we design that process is zero. Like, you know, so many things have changed. I think our industry is a little bit like that. You're going from this process where people would take a little bit of time. They wouldn't really know your company when you walk through the door.

Now, we've gone from a cottage industry into a large-scale asset class at this point. And I think there are a lot of firms, correctly so, that believe venture at scale, venture with lots of capital, lots of companies, lots of coverage, lots of AUM, lots of people, is the right way to prosecute it. And I think they're right because...

Now, we've gone from a cottage industry into a large-scale asset class at this point. And I think there are a lot of firms, correctly so, that believe venture at scale, venture with lots of capital, lots of companies, lots of coverage, lots of AUM, lots of people, is the right way to prosecute it. And I think they're right because...

I'll get to why we're doing it differently, but I think they're right because why should people have earned 35 net IRRs for the course of many decades? That's too high for any asset class. It should be in the teens. And usually you could deploy a lot more capital and a lot more people and bring down to the teens and still have lots of people excited about the way you invest.

I'll get to why we're doing it differently, but I think they're right because why should people have earned 35 net IRRs for the course of many decades? That's too high for any asset class. It should be in the teens. And usually you could deploy a lot more capital and a lot more people and bring down to the teens and still have lots of people excited about the way you invest.

I think that has resulted in essentially the private equitization of our industry. I think of a lot of our brethren and these are friends of mine. I really like them and I think they're doing a great job, but they essentially have like a matrix. They have industries on the top and I don't know, maybe geographies or stage on whatever their matrix is.

I think that has resulted in essentially the private equitization of our industry. I think of a lot of our brethren and these are friends of mine. I really like them and I think they're doing a great job, but they essentially have like a matrix. They have industries on the top and I don't know, maybe geographies or stage on whatever their matrix is.

Something comes into their firm, they serve it to that part of the matrix, that little box of people goes and chases after it. And what they've done is they've said, listen, Everybody has a slide which says, what are the series A's or series B's or series C's that happened this quarter? And what percentage coverage did we have?

Something comes into their firm, they serve it to that part of the matrix, that little box of people goes and chases after it. And what they've done is they've said, listen, Everybody has a slide which says, what are the series A's or series B's or series C's that happened this quarter? And what percentage coverage did we have?