The Peel
@ThePeelPod
Exploring the world’s greatest startup stories. hosted by @TurnerNovak. Watch full episodes 👉
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.@mmurph on why SaaS-era VC's weren't technical enough for AI:
"If you look at SaaS applications, there wasn't really a lot of technology under the hood.
You had to build some things efficiently/ But you used AWS, and you were building really cool workflows and interfaces.
Now, if you look at these AI companies, whether it's Legora or Lovable, there's huge amounts of technology under the hood.
The investors who thrived in the SaaS era were not as technical as those needed to thrive in this environment.
And that's just on the application front. On the infrastructure front, its the same thing.
So we hired @timt, who was the CTO of Splunk for a long time. @mejoff, who was the chief product officer at Atlassian. Matt Kraning, a PhD in machine learning from Stanford, who sold his company to Palo Alto Networks. @deedydas, who was the founding PM and engineer at Glean. @amywumartin, who had been in venture and at FTX, interestingly.
All this team came together over a period of 3-4 years. Much more technically oriented. They understand developer communities, and the things that are really flourishing right now."
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Most surprising part of my conversation with @aydin was when he said @felicis likes to put more money in after a portfolio company has a bad quarter.
"Sometimes founders wanna do crazy things. And the investors are like, 'That's batshit crazy.'
Sometimes what they really want is one of the investors to say, 'You know what? That is batshit crazy. But you should absolutely do it. I trust you, and you will do great. And I will prove it. I will put even more money in the company.'
There's been a number of situations, like n8n or Semgrep. The company's doing really well, and inevitably there is a little hiccup.
As soon as the first hiccup happens, people start getting agitated. 'Oh my God, we missed this quarterly goal and this one stat.'
We do something very unusual.
We're like, 'Yes, you had a bad quarter. Maybe you had two bad quarters. But the main trajectory of the company is going to a really great place.'
The numbers were off because we have a very small n.
Every startup, when they're starting, there's not enough deals. There's not enough people. One thing is slightly off, and it derails the results.
You have a deal that closes in July instead of June.
But that's the point where the founder is really vulnerable.
So we're like, 'We'll give you more money. We'll give you support. We do believe in you.'
And the founder is like, 'Wow. This investor is not just telling me things. They're also willing to back it up.'
They wanna put even more money in the company at a moment where things seemingly were not that great.
That part is very unique to Felicis.
If we exist 20 more years from now, one of the key reasons will be that we've done right by the founders.
Without that, I don't think we even have a 1% chance of persisting through the next two to three decades."
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Really enjoyed this one with Aydin!
New @ThePeelPod with @asenkut
Aydin started @felicis 20 years ago with $4M of his own money after every LP told him "we don't back people like you." Today, Felicis is investing out of its $900M Fund 10.
We talked through the journey of building Felicis to $4B of AUM, why success is the most dangerous moment for an investor, how to keep your edge raising bigger funds, why a generalist approach is best for catching new technology waves, and the 10x rule he learned from Larry Page.
Full episode here + links below.
Timestamps:
0:00 Why success is the downfall of a good investor
2:04 Catching waves from YouTube to AI, chips, and defense
4:47 Is AI a bubble? How to tell what's real
6:17 Silicon Graphics: the company with no second act
7:33 Why AI infrastructure spend isn't hype
12:00 7 emails, no reply: how he met Tobi at Shopify
15:30 On adding value: "Just ask the founder"
17:30 The founder pledge: vote with the founders
18:26 Fund 1 was $4M of his own money
21:01 Find LP's preconditioned to believe in you
22:07 Venture is a people business
23:05 Raising Fund 2: the endowment’s "CIA interview"
26:48 Why outsiders bet on outsiders
28:23 Turner's rejected podcast audition
30:46 LP pushback on Fund 2 and Fund 3
32:56 Why he hired a CFO at Fund 3
35:04 Feedback founders can't argue with
37:21 Founders forget the clock is ticking
40:43 Backing founders through the first bad quarter
42:34 Does a 250x bigger fund lose its edge?
45:53 a16z, OpenRouter, Cursor, and big fund returns
47:30 Why deep tech needs huge rounds
50:57 Trillion dollar markets, billion dollar contracts
53:36 Why SpaceX and Anduril alumni will crush it
56:34 From a $50k first exit to "off by three orders of magnitude"
58:17 The software mindset in hard tech
59:38 Google's duct-taped servers
1:00:56 Scanning every book in the world
1:02:37 Larry Page's 10x rule
1:04:54 Outsider founders: Shopify and Adyen
1:07:17 Why Silicon Valley VC's miss companies outside the Bay Area
1:08:16 Generalist vs. specialist: 55 unicorns, no subject experts
1:12:17 Category winners sit between sectors
1:14:59 Don't obsess over entry price
1:17:24 Paid 700x revenue for Supabase, it grew 1000x
1:18:33 Notion, Canva, and the one-button product
1:20:27 The "OpenAI is about to collapse" crowd
1:21:41 Inspiration from Benjamin Franklin
1:23:47 Funding the twinkle in a founder's eye
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"If you were late to AI and you weren't a top firm, I don't know how you recover."
@mmurph on why VC firms tend to decay over time:
"The first is poor handling of generational transition.
The bad way: people hang around too long, and younger, talented partners leave.
Or, let's just say you don't have as much alignment in the firm.
Some of the best decisions we've made are because we had incredibly high alignment within the firm to do something that at the time felt like, 'Why are we doing that? It's a little off-spec for us.'
If you don't have a high-trust organization, if people are fractured and doing their own thing, when somebody comes in with an exception like that, it's, 'That's not what we do.' So you start creating false guardrails.
A lot of those dynamics can happen even if it's not a generational issue. People are practicing the business too much as individuals. You're not getting that collective strength that makes you better as a firm.
Another massive one is missing a technology wave. If you were late to the AI game and you weren't a top firm, I don't know how you recover.
If you're a top firm, you can recover because of your reputation. But you're still playing catch-up."
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Early Anthropic investor @mmurph reveals why most neolabs won’t make it:
"There's 70+ neolabs now. We're in 10 of them.
There's two strategies. One is an alternative universe, where the model is super strong.
We did Skild for robotics. For robotics, it's how you train the model and what it does. It's dealing with things like gravity. They're just different physics.
Chai Discovery for drug discovery. Chai has their own models to develop antibodies and things like that. Or Axiom Math, which is math-oriented models.
Or look at Suno. Mikey and team built their own audio models to make that experience magical. They built the model to enable the service. Same with Wispr.
We have one called Inception that does diffusion for text, which makes it super fast for things like coding. We've got another one that does continual learning.
Then there's a bunch of models that are highly complementary to existing foundation models.
We're not saying, 'This is going to go right at Anthropic and take revenue from them.' It's more, where are the adjacent opportunities that can benefit from a complementary model?
Now, with 70 of these, and many of them raising a billion as an A and then two or three billion as a B. That's clearly not going to end well.
But right now, with the desire for the technology and the talent, there's going to be some amazing outcomes.
Like Fei-Fei's company, acquired for $8 billion before it really had any revenue traction.
If frontier intelligence is the product, that product is incredibly valuable right now if you don't have it.
So we will see some spectacular acquisitions and outcomes. And we're also gonna see a lot of big craters in the ground."
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Google took 19 years to hit $100B. Anthropic will do it in a third of the time.
@mmurph on investing in both before they had revenue:
"Earlier in my career, I sat in all the board meetings from the time we invested in Google at Kleiner to the time it IPO'd.
Still today, people probably think of it as the fastest growing business ever. I think it was zero to a billion in five years. Zero to $10 billion in eight years. And then $10 billion to $100 billion in 11 years after that.
So you're talking 19 years to get to $100 billion.
It's tremendous. But then you have a company like Anthropic that comes along and can do that in a third or less of the time.
That puts in perspective how quickly this company is growing, and what a different phenomenon we're in with AI."
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Databricks just passed a $7B run rate, growing 80% YoY.
@bhorowitz first recruited @databricks CRO Ron Gabrisko when it was a tiny company.
Ron told me the pitch:
"He said, I have this little company. It's probably smaller than any company you're looking at. But it's got the most upside of any company in my whole portfolio at a16z.
It's called Databricks. Maybe you can meet these guys and recommend someone they should hire.
I met the founders and just hit it off. These guys are smarter than anybody on the planet. Their brains work in a different way. And they just understood the space.
I thought data and AI was the future. So I decided to take a big swing at it.
Ben was super funny. He said, these guys invented the greatest piece of software on the planet, and gave it away for free. I need somebody to come in and help them build a business out of it."
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Anthropic's S-1 just revealed only 250 customers are spending over $10M on AI:
Early Anthropic investor @mmurph at @MenloVentures on why we're at the "very tip of the spear" of enterprise AI adoption:
"It shows you the value of the technology. If that happens at some large company, you're like, 'Why isn't that happening at more large companies?'
Probably because they haven't tried it out enough. They haven't enabled their organization to do it. They haven't re-platformed all their existing applications.
Think about this market and how big these companies have become in such a short period of time. Then you look and you're like, 'Wait a minute. How penetrated is the technology in the Fortune 5000?'
Almost none.
Okay, so they're doing some coding and some productivity. How many of them have really re-platformed their whole application stack?
Nobody.
We're at the very tip of the spear on all the re-platforming, all the new internal productivity apps these companies are going to build, and their comfort level and understanding of AI.
The whole next leg of this wave will be spectacular."
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SoFi just posted a record Q3.
$1.37B revenue, up 44%, with 17.1M members.
A couple months ago, @Figure CEO @MBTannenbaum, who joined SoFi at ~75 people, told me why it worked when the other fintechs didn't:
"SoFi was one of the unique fintechs at the time, focused on a mass affluent customer.
Almost all the fintechs of the 2010 era, LendingClub and Prosper, a lot of these emerging online lenders, were focused on a down-market customer. But here's SoFi, refinancing the student loans of people who had graduated and were less risky.
People miss this, but if you're trying to do financial services for consumers who don't have a lot of money, you're capping the amount of money you can make.
If someone only has $20,000 to spend for the year, you have to capture all of it to make $20,000, which is impossible. If someone is making $120,000, that becomes six times easier."
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Navan is a $7B public company today. I asked @orenzeev about watching it go from a $90M run rate to zero the month COVID hit:
"That never happened to me in my career. In February 2020 they were about a $90M run rate, growing like a rocket ship. By April it was zero.
Business travel went to zero, and it took much longer to come back than consumer travel.
One of the reasons I have so much confidence in Navan is that they survived this. What doesn't kill you makes you stronger. I've never seen a business go from a rocket ship to zero with no visibility on when it comes back."
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One fund. Five companies.
@orenzeev on why diversification is overrated:
"From the LP's perspective there's zero value in diversification. They're already diversified across managers.
And from the manager's side, you don't need 30 or 40 companies.
If you invested in 10 and the results were bad, the problem wasn't that you did 10 and not 20.
The problem was elsewhere. A bad vintage. No real edge in access. Poor judgment.
I had one fund with only five companies. Two were huge home runs. It worked."
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.@darraghbuckley on why you want your banker to be as bored as an air traffic controller:
"Imagine your friend is an air traffic controller, and they show up to coffee saying, “I had the most exciting day at work.”
You'd say, no. I don't want excitement from my air traffic controllers. I want, “it was so boring, nothing happened today.”
I'll make the same statement about your banker. You want your banker to have an uneventful day.
You want them to actually enjoy uneventful days. A quiet satisfaction in reliability. In regularly getting things done as expected.
The biggest events in banking aren't the ones you want happening daily. Like the underlying utilities of society, electricity, water, it's good when they're uneventful.
Any sort of infrastructure, you want no events. It just works, all the time."
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From @mmurph on bending the rules to back Anthropic pre-launch at $4 billion:
"I know a lot of people today it's like, oh, $4 billion, isn't that kinda common?
But if you roll the clocks back to '22, '23, there were no companies like that. Exiting at $4B was literally a spectacular exit in the entire history of venture.
And now that was the entry point.
Then you've got issues like, well, what fund does that go in? How does a venture fund do that?
And because it's pre-revenue and pre-launch, how does a growth fund do that? So we were caught in the middle.
I'm glad we had a partnership that was all in on AI. This was at least the second best company in the category, with the best technical team. The models were benchmarking really well, and it was a massive market.
So we bent the rules a little bit to say, 'Let's participate in this round with a goal to lead the next round.'
That worked out fabulously. As soon as we invested, we had a different type of relationship with the company. We worked with them on recruiting, talking to customers, and a lot of strategic issues that come up early in a company.
Then we saw them put together the deals with AWS and Google, and the revenue flywheel started to spin.
The company went from zero when they launched in April to, it's been reported, something like $85 million at the end of the year. We saw that happening in September, October, and jumped on it to lead the round.
Unless we had made that small initial investment, we wouldn't have had the relationship to see all of this. Or earned the trust with the team to lead that round."
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New @ThePeelPod with Matt Murphy @mmurph at @MenloVentures
We go inside Menlo's pre-revenue, pre-launch Anthropic investment and how they emerged as a top AI firm.
Matt might be the only person who invested pre-revenue in both Google and Anthropic, and we talk through when to break the rules in venture, the three LP's that made over $1B each on the $500M Anthropic SPV Menlo raised without being able to show a single financial, Menlo's barbell investing approach, and why today isn't like 1999.
Full episode here + links below.
Timestamps:
0:00 How to read Anthropic's S-1
1:21 Do AI companies actually make money?
2:23 Google didn't want ads. Anthropic didn't plan on enterprise.
4:51 Bending the rules to back Anthropic pre-revenue, pre-launch
9:50 You can't be a leading AI firm without a top model company
12:00 Leading the Series D at $18B six months later
14:22 Why the best researchers chose Dario
15:25 Menlo's first-ever SPV, nearly the size of the fund
16:44 The LP meeting that sparked a $500M SPV
19:18 Raising at $18B without showing financials
20:04 Three LP's made $1B+ each
24:23 Why Matt joined Menlo in 2015
26:00 Rebuilding Menlo over the past decade
32:49 Venture as a team sport
35:45 How to keep a challenger mentality
38:15 Why VC firms decay
41:31 The Anthology Fund: OpenRouter, Wispr, Goodfire
42:27 Ownership vs. backing the best
46:10 Why this isn't 1999
48:06 Frontier vs. open weight models
51:29 The barbell portfolio strategy
53:54 Avoiding the messy middle between early and growth
55:07 How to spot a category leader
57:18 Fortune 5000 AI adoption: "almost none"
59:06 Menlo is in 10 of 70+ neolabs: Skild, Chai, Axiom
1:02:13 Where $1B AI startup raises actually go
1:04:18 Phase 1 vs. Phase 2 of AI
1:06:26 What the AI IPOs mean for venture
1:09:11 What Matt does differently after 25 years
1:10:52 The Alex Smith lesson
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Oren Zeev (@orenzeev) got his first fund out of one random meeting with Peter Thiel (@peterthiel), per his chat with @ThePeelPod.
▫️ After 30 minutes, Thiel suggested he raise a fund and offered to be his LP
▫️ Zeev asked for carry only, zero management fees, and Thiel said yes on the spot
Today Zeev manages $2.7B across 11 funds as a solo GP.
Thiel knows what a great fund looks like. Founders Fund II turned $220m into $37.4bn, 183.5x per dollar at risk.
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.@kevinhartz once told me what made the PayPal Mafia so special that he invested 100% of the cash from his first company in the seed round:
"The things they did to win were just above and beyond. They outsmarted everyone on every plane when they were expected to not be able to do that.
And when you look at the caliber of all those people, they're all extraordinary in their own right. It was a special period having them all together
PayPal launched at the end of '98, pivoted a few times, and really took off in '99.
When they were really cranking, it was '99, 2000. The internet economy was in overdrive. You could do no wrong.
And then the bubble burst. They were counted out. People thought they would go out of business.
When in fact, it was a very substantial business. It was growing so fast, and doing so well."
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THE SCALE MAFIA
one of the most special parts of starting a company is watching the people you fought and bled with in the early days go out and change the world.
the Scale crew was supernatural. @scale_ai was one of the first companies to IOI and IMO-maxx, and the magic of Scale was that all of these geniuses gave a shit and ran through walls. it's no wonder that the Scale mafia is the first true mafia of the modern tech era. just to name a few:
- cognition founder @stevenkplus1 & president @russelljkaplan
- modal founder @akshat_b
- tech & science advisor to POTUS @mkratsios47
- claude code head of product @_catwu
- kpcb partners @LM_Braswell & @nayakkayak
- bun founder @jarredsumner
- tbd head of product @lindugong
- netic founder @melisatokmak
- cobot founder @BradPorter_
- secureframe founder @shravvmehtaa
- paramount skydance cfo @DennisKCinelli
- thinking machines gc lauren lennon
- partner at greylock @sophia_luo_
- liquid ai coo jeffrey li
- gallatin ai founder @agilemofo
- tbd safety @_julianmichael_
- center for ai safety president @devindkim
[photo courtesy the beautiful wedding of @thenateherman (who in many ways was a cofounder of Scale) and @ChristinaG325]
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.@orenzeev on how Israel went from exporting oranges to building the biggest tech companies:
"When I was a kid, oranges were the biggest export of Israel.
Israel’s tech ecosystem started with American companies opening development centers there. I started my career at IBM Research in Israel. Intel already had a chip design facility when I was a student at the Technion in the '80s.
And in most cases, it wasn't some corporate decision that Israel was interesting.
It was one really good person working for IBM or Intel in the US who, for personal reasons, moved back to Israel. The company didn't want to lose them, so they said, work from Israel, hire two or three people.
And the ecosystem grew from there. It was very organic."
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New @ThePeelPod with @orenzeev
He manages $2.7B across 11 funds with no team. He has no meetings, doesn't write investment memos, and has never shown an LP a single slide from a deck.
We get in to the 30-minute conversation that turned into his first fund, why most partners add negative value, the days his calendar is empty enough to surf on a Tuesday, his fund that had only five companies (and why diversification is a lie), how Navan went from a $90M run rate to zero in a month (and survived), why he does cross-fund investing, refusing DPI when LP's want it, and the 30-year history of Israel's startup economy.
Full episode here + links below.
Timestamps:
0:00 Running $2.7B with no team or partners
1:58 How one person can beat a team
4:43 Omission beats commission: why committees miss
7:13 What really fills a partnership's day
9:23 The returns business, not the production business
10:58 A week in his nearly empty calendar
16:49 The mistakes new solo GP's make
19:34 Eleven funds, zero slides
22:09 No thesis
24:28 Why diversification doesn't work
27:14 The fund with only five companies
30:44 TripActions insight: everyone hates their travel software
34:59 Paying employees to spend less
37:34 COVID: $90M run rate to zero
39:24 How Navan survived
41:34 A $100M round with no way to price it
44:29 Keeping the team: the real test of leadership
46:04 What Oren looks for in founders
50:39 Cross-fund investing, and "trust me, bro"
53:59 Always his own biggest LP
55:14 The DPI stand that cost him LP's
58:54 Decart, and the Anthropic deal
1:03:54 Inside the 30-year rise of Israel's tech ecosystem
1:07:19 The Yozma program that built an industry
1:11:59 Why Israelis build now instead of selling early
1:14:39 Moving to the Valley in the 2002 nuclear winter
1:17:19 Audible, and why the first home run matters
1:19:29 Leaving Apax, and going solo
1:22:04 Peter Thiel and a fund raised in 30 minutes
1:24:24 The second fund: 48 hours, still no deck
1:25:49 ICON: helping Israeli founders crack the Valley
1:30:29 The leader he admires most: Anwar Sadat
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Israel's entire startup industry was kicked off by one government decision in 1993.
From @orenzeev:
"The real game changer was, believe it or not, the government.
In 1993 they decided to kick off a venture industry. But they didn't try to pick managers or invest directly.
Instead, they sponsored eight funds of $20 million each.
The government put in $8 million, and gave the other LPs an option to buy the government's stake five years later at cost. A free kicker.
But the managers still had to raise $12 million themselves. So the market decided who was real, not a bureaucrat. No corruption.
Those eight funds are the basis of the whole industry today."
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New @ThePeelPod with @orenzeev
He manages $2.7B across 11 funds with no team. He has no meetings, doesn't write investment memos, and has never shown an LP a single slide from a deck.
We get in to the 30-minute conversation that turned into his first fund, why most partners add negative value, the days his calendar is empty enough to surf on a Tuesday, his fund that had only five companies (and why diversification is a lie), how Navan went from a $90M run rate to zero in a month (and survived), why he does cross-fund investing, refusing DPI when LP's want it, and the 30-year history of Israel's startup economy.
Full episode here + links below.
Timestamps:
0:00 Running $2.7B with no team or partners
1:58 How one person can beat a team
4:43 Omission beats commission: why committees miss
7:13 What really fills a partnership's day
9:23 The returns business, not the production business
10:58 A week in his nearly empty calendar
16:49 The mistakes new solo GP's make
19:34 Eleven funds, zero slides
22:09 No thesis
24:28 Why diversification doesn't work
27:14 The fund with only five companies
30:44 TripActions insight: everyone hates their travel software
34:59 Paying employees to spend less
37:34 COVID: $90M run rate to zero
39:24 How Navan survived
41:34 A $100M round with no way to price it
44:29 Keeping the team: the real test of leadership
46:04 What Oren looks for in founders
50:39 Cross-fund investing, and "trust me, bro"
53:59 Always his own biggest LP
55:14 The DPI stand that cost him LP's
58:54 Decart, and the Anthropic deal
1:03:54 Inside the 30-year rise of Israel's tech ecosystem
1:07:19 The Yozma program that built an industry
1:11:59 Why Israelis build now instead of selling early
1:14:39 Moving to the Valley in the 2002 nuclear winter
1:17:19 Audible, and why the first home run matters
1:19:29 Leaving Apax, and going solo
1:22:04 Peter Thiel and a fund raised in 30 minutes
1:24:24 The second fund: 48 hours, still no deck
1:25:49 ICON: helping Israeli founders crack the Valley
1:30:29 The leader he admires most: Anwar Sadat
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.@orenzeev has raised $2.7B across 11 funds without a deck:
”I've never shown an LP a single slide. And they accept it.
You'd be surprised. They often find it refreshing.
The only thing I have is a spreadsheet with every investment I've ever made. Cost basis, dates, which class of shares I bought, and at what point. That's it.
What's not there is the packaging. That same information, but turned into slides.
I'm not hiding anything. If they have questions, I answer them.
I'm just being authentic. The same way I'm sitting here with you. I had no idea what you were going to ask me."
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New @ThePeelPod with @orenzeev
He manages $2.7B across 11 funds with no team. He has no meetings, doesn't write investment memos, and has never shown an LP a single slide from a deck.
We get in to the 30-minute conversation that turned into his first fund, why most partners add negative value, the days his calendar is empty enough to surf on a Tuesday, his fund that had only five companies (and why diversification is a lie), how Navan went from a $90M run rate to zero in a month (and survived), why he does cross-fund investing, refusing DPI when LP's want it, and the 30-year history of Israel's startup economy.
Full episode here + links below.
Timestamps:
0:00 Running $2.7B with no team or partners
1:58 How one person can beat a team
4:43 Omission beats commission: why committees miss
7:13 What really fills a partnership's day
9:23 The returns business, not the production business
10:58 A week in his nearly empty calendar
16:49 The mistakes new solo GP's make
19:34 Eleven funds, zero slides
22:09 No thesis
24:28 Why diversification doesn't work
27:14 The fund with only five companies
30:44 TripActions insight: everyone hates their travel software
34:59 Paying employees to spend less
37:34 COVID: $90M run rate to zero
39:24 How Navan survived
41:34 A $100M round with no way to price it
44:29 Keeping the team: the real test of leadership
46:04 What Oren looks for in founders
50:39 Cross-fund investing, and "trust me, bro"
53:59 Always his own biggest LP
55:14 The DPI stand that cost him LP's
58:54 Decart, and the Anthropic deal
1:03:54 Inside the 30-year rise of Israel's tech ecosystem
1:07:19 The Yozma program that built an industry
1:11:59 Why Israelis build now instead of selling early
1:14:39 Moving to the Valley in the 2002 nuclear winter
1:17:19 Audible, and why the first home run matters
1:19:29 Leaving Apax, and going solo
1:22:04 Peter Thiel and a fund raised in 30 minutes
1:24:24 The second fund: 48 hours, still no deck
1:25:49 ICON: helping Israeli founders crack the Valley
1:30:29 The leader he admires most: Anwar Sadat
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