
Invest Like the Best with Patrick O'Shaughnessy
Neil Mehta - Finding Future S&P 500 Companies - [Invest Like the Best, EP.419]
Tue, 15 Apr 2025
Today's guest is Neil Mehta, founder of Greenoaks Capital. In 2012, aged 27, Neil left D.E. Shaw to start Greenoaks with his friend Benny Peretz. One of their first investments was in Coupang, a South Korean e-commerce company led by founder Bom Kim. Neil was so convinced of Coupang's potential that he invested 40% of their initial $50 million fund into the company—a bet that eventually returned about $8 billion. Over its first 13 years, Greenoaks has backed legendary companies like Figma, Wiz, Carvana, Stripe, Discord, Rippling, and Toast—generating over $13 billion in gross profits with a 33% net IRR. Henry Kravis, one of Neil's early investors, describes him as "extremely disciplined" with "exceptional timing" who has "gone against the tide many times." Greenoaks operates with remarkable concentration: just 55 core companies across nearly $15 billion in assets, managed by only nine investment professionals. Their approach reflects their singular pursuit: finding companies that will become a meaningful part of the S&P 500. In our wide-ranging conversation, Neil shares this mission along with his framework for identifying exceptional founders, his concept of "jaw-dropping customer experiences," and how his grandfather's gun shop in India shaped his appreciation for builders of all kinds. Please enjoy my excellent conversation with Neil Mehta. Neil Mehta's Profile in Colossus Review. For the full show notes, transcript, and links to mentioned content, check out the episode page here. ----- This episode is brought to you by Ramp. Ramp’s mission is to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. Go to Ramp.com/invest to sign up for free and get a $250 welcome bonus. – This episode is brought to you by Ridgeline. Ridgeline has built a complete, real-time, modern operating system for investment managers. It handles trading, portfolio management, compliance, customer reporting, and much more through an all-in-one real-time cloud platform. Head to ridgelineapps.com to learn more about the platform. – This episode is brought to you by AlphaSense. AlphaSense has completely transformed the research process with cutting-edge AI technology and a vast collection of top-tier, reliable business content. Invest Like the Best listeners can get a free trial now at Alpha-Sense.com/Invest and experience firsthand how AlphaSense and Tegus help you make smarter decisions faster. ----- Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com). Show Notes: (00:00:00) Welcome to Invest Like the Best (00:06:32) Connecting Craftsmanship to Career (00:07:45) The Concept of Jaw Dropping Customer Experience (JDCE) (00:09:48) Building a Successful Business: The Coupang Case Study (00:17:26) The Importance of Founders & Business Models (00:30:05) Greenoaks' Unique Approach to Venture Capital (00:37:54) A Memorable Encounter with Henry Kravis (00:40:52) Early Career and Lessons from Hong Kong (00:44:53) The Partnership with Benny (00:50:28) Navigating the Competitive Landscape (00:59:14) High Conviction Investments: TripActions, Rippling, and Carvana (01:07:00) Investment Strategy and Company Evaluation (01:13:23) Adventures in Emerging Markets (01:17:09) Challenges and Lessons Learned (01:26:16) Personal Values and Community Impact (01:32:16) The Kindest Thing Anyone Has Ever Done For Neil
Chapter 1: What is the focus of Neil Mehta's investment philosophy?
Something I speak about frequently on Invest Like the Best is the idea of life's work. A more fun way to think about it is that I'm looking for maniacs on a mission. This is the basis for our investment firm, Positive Sum, and it's the reason why I'm so enthusiastic about our presenting sponsor, Ramp.
Not only are the founders, Kareem and Eric, life's work-level founders, certainly maniacs on a mission, they have created a product that is effectively an unlock for founders and finance team to do more of their life's work by streamlining financial operations, saving everyone their most precious resource, time. Ramp has built a command and control system for corporate cards and expense management.
You can issue cards, manage approvals, make vendor payments of all kinds, and even automate closing your books all in one place. Speaking from my own experience using Ramp for my business, the product is wildly intuitive, simplistic, and makes life so much easier that you'll feel bad for any company who hasn't yet made the switch.
The Ramp team is relentless, and the product continues to evolve to save you time that you would never have dreamed of getting back. To me, there is nothing more interesting than technologies that reduce friction for other entrepreneurs to be able to build the thing that they want to. So much attention has gone to cloud computing, APIs, and other ways of making life easy for founders.
What Ramp has done and is doing is build yet another set of tools in this category. To get started, go to ramp.com. Cards issued by Celtic Bank and Sutton Bank, member FDIC. Terms and conditions apply. As an investor, staying ahead of the game means having the right tools, and I want to share one that's become indispensable in my team's own research, AlphaSense.
It's the market intelligence platform trusted by 75% of the world's top hedge funds and 85% of the S&P 100 to make smarter, faster investment decisions. What sets AlphaSense apart is not just its AI-driven access to over 400 million premium sources like company filings, broker research, news, and trade journals, but also its unmatched private market insights.
With the recent acquisition of Tegas, AlphaSense now holds the world's premier library of over 150,000 proprietary expert transcripts from 24,000 public and private companies. Here's the kicker. 75% of all private market expert transcripts are on AlphaSense and 50% of VC firms on the Midas list conduct their expert calls through the platform.
That's the kind of insight that helps you uncover opportunities, navigate complexity, and make high conviction decisions with speed and confidence. Ready to see what they can do for your investment research? Visit alphasense.com slash invest to get started. Trust me, it's a tool you won't want to work without.
Ridgeline gets me so excited because every investment professional knows the core challenge that they solve. You love the core work of investing, but operational complexities eat up valuable time and energy. That's where Ridgeline comes in. Ridgeline is an all-in-one operating system designed specifically for investment managers, and their momentum has been incredible.
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Chapter 6: What lessons did Neil learn from his early career?
You have to do it from a customer-centric perspective. You have to really figure out what the customer pain points are. You could ask some customers, but usually customers can't even articulate all the pain points they're facing. They just know they're frustrated or this experience is suboptimal. We're lucky at Green Oaks over the last 12, 13 years.
We've been lucky enough to partner with a number of companies that have built jaw-dropping customer experiences. I'll tell you where we created the word. I created the word after spending a lot of time with Coupang right at the beginning of Green Oaks. And in the case of Coupang, so Bomb started a business that was just starting to sell products like any other online site would sell products.
It was really a marketplace. And he made the decision in 2013, 2014, that he'd start to transition that to building one peak capability, meaning that he could pick, pack, ship, and deliver a wide variety of SKUs, everything from soap to tissue paper to golf clubs to fresh groceries over time.
And the early days of that, if you asked people around Korea, they would tell you, we don't need faster delivery. Everything shows up here in two and a half to four days. It's great. It's totally fine. And his view was actually, it's consistent, reliable, fast delivery. You get the stuff you ordered on time, usually within 12 to 24 hours. And that sounds obvious today.
You order something 12 hours later or 24 hours later, it shows up at your door. Now it's called the rocket experience at Coupang. But at the time, building that, it sounds easy. Open a warehouse, put a bunch of stuff into that warehouse, hire a bunch of drivers, work with those drivers to fill up their trucks, deliver it to the door, take it off.
Now, there's a bunch of stuff that breaks when you actually try to build that experience step by step. First thing is the unit economics completely break. Second, to actually drive throughput through these, do you buy from manufacturers? How much do you buy from manufacturers? What do you do about your inventory turns? How do you service the right stuff on a website?
It is extraordinarily hard to go build all that stuff. And it took years. It took two to four years to really start to build that flywheel so it worked. And what did it entail to build a jaw-dropping customer experience? It took new technology. Coupang built not just a new warehouse management system, from what the consumer touches on a website, all the way down to new routing software.
FedEx famously never wants a driver to take the left turn because it takes a little bit more time. It was like that kind of optimization. It was infrastructure. It was building warehouses that were the size of football fields in place that doesn't have a lot of space, by the way, in Korea.
It was building delivery camps and it was building localized distribution points where you have thousands of apartments to be able to make sure you could have even people run up and down the apartment to deliver something. It was making sure that you had the right packaging so that didn't get stuck with lots and lots of boxes.
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