Full Transcript for Oren Zeev's $2.7B Solo GP Playbook

Oren, welcome to the show. Thank you so much. You're probably one of the most unique venture capital investors. It's just one person. You have no team. You don't do meetings with all the other people on your team. You, I think the headline number, is it 2.5 billion? I think it's 2.7. 2.7. Okay. Important to get that on the record.

So how does that work? Because I thought you needed to have like a big partnership and a bunch of people on the team. Yeah. Turns out you don't. Why not?

Why, yes. You know, it turns out that many people think of this as, yeah, people actually, now less so because now there've been many examples, but maybe if we go back 10, 15 years ago, people, including myself, did assume that you needed, because why? Because everyone does it. So probably that's the way, I mean, we tend to assume whenever we wish to something.

Yeah. that somehow the fact that you have a partnership and different partners and everyone weighs in, and supposedly everyone adds value when you have an office and you have processes and all that, somehow it necessarily helps the cause. And my experience has been that not necessarily, and not only that, many times it's the opposite. Absolutely.

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I mean, that's, you would think everyone kind of paratist, like we add all this value where we roll up our sleeves, you do all this research, like you're probably harder to do that if it's just one guy. Yeah. But I don't think that's the word. So, okay. So let's break it. Let's pick it up for a second. Yeah. Break it down. Sorry. So first of all,

most partners don't, add very little value to each other. So what's an example of that? Like, how does that play out? Because like having a team, right? Like, doesn't a team work better than an individual? No, it doesn't. I think in my experience, I think there is,

let's start with the most obvious things. I think speed is super important.

And by definition, where by yourself, you can

be faster than anyone. Number two, at the end of the day, the

result of what we do is a function of access and judgment. Now, or the ability to see and win deals and judgment. Now, you know, see deals, I'd rather source the deals myself. I don't want to rely on another partner. If they really like the deal, they would pursue it themselves and not most of the time.

But so I don't think that in terms of access, you know, let me actually, let me take it back. When you have a partner, you look like a thousand other partnership. When you operate the way I do, you're the unique. And differentiation is always better than better, you know, as the saying goes, right? So

So I think even in the access, it adds uniqueness. It adds differentiation. It adds speed, which is a huge differentiator in winning a deal. Also, the founder, it's a better experience to the founders because the founders meet me. They know I call the shots. I make decision. I fall in love. I make often, most of my investment I make within 24 to 48 hours.

It's a wow experience to the founders. the typical

alternative experience is to go through a process where the partner pursuing the deal needs to

convince their partners. So they need to write, first they need to communicate to their partner. So they need to write a memo that takes time, ask all sorts of questions and diligence that they don't necessarily think is important, but they need to show that they did the work because someone on the investment committee might have a question.

And sometimes in those meetings, like you need to be able to ask, like if you're pitching it to me, I'm like, I need to ask questions. So I need to come up with things to have you then do work to answer my questions. Right. Exactly. Which they might not be important. Absolutely. And then, I mean, I've gone through it because my first 12 years in venture, I wasn't in a traditional partnership.

And Generally speaking, my partners added zero value to my deals, zero.

Negative value to the decisions because...

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So how does that play out in practicality? And you know, there's another actually interesting insight that most people don't think about. Our business, as you know, our business is not symmetrical. Mistakes of

omissions are much worse than mistakes of commission because if you do a deal that you shouldn't have done, you lose your money. But if you don't do a deal that you should have done, maybe you lost 100x the money or 200x the money that you could have made. And your partners, even if they happen to be smart and even if there's no internal politics, which is two very big ifs,

They are never going to push you to do a deal that otherwise you would not have done.

They would push back against deals that you want to do. And the thing is, even if they are right nine out of 10 times. It's enough that one time, because of they pushed back, you couldn't do a deal that you wanted to, and that deal was a hundred X, that the whole thing wasn't worth it. You know, that you would have been better off doing the nine deals that day, the bad deals that day, thanks to them you didn't.

but you missed one because of them. And this asymmetry is why I think that the notion that a decision by committee is necessarily better than a decision by an individual is wrong because a committee necessarily would gravitate more towards consensus, whereas an individual can just go with their gut and do something that maybe is a little bit out of context.

So it's easier to be contrarian when you're operating on your own because there's no one, you know, you need to persuade.

And I think that's an advantage too. So overall,

I don't think I would have been better off if I had people, even if they were great people. Obviously, I don't think I'm the smartest necessarily. And, you know, obviously there are many people who, but...

I've done the partnership route for 12 years, my first 12 years in venture. And

it's also less fun to me because right now I 100% control my schedule. I don't have all sorts of meetings that are essential if you're trying to manage an organization. but I find total waste of time personally. So anyways, these are. Someone who's never been in that role before and they, let's say you just suddenly you're like plopped into a venture partnership and there's like 20 people.

What is your day usually fill up by that a founder might be like, oh, I didn't know that you had all that going on? Well, I'm not even talking about the fund. The fund maybe doesn't care, although they should because you have less time to also help him or her. But there's so many things. First of all,

every investment that you do make, including the ones that you couldn't deliver, is so much more work. Because you have to, then there are all sorts of internal coordination meetings. You know, there's status meetings, you know, every Monday at the very least. Now, you don't want to look like you're a slacker. So you probably are keeping deals alive longer than you should have.

Even if you're never going to do them, just to show that you have five, six, seven, eight things that you're doing, as opposed to show up on Monday and say, I'm not working on anything, you know?

I definitely have days like that. As a solo GP, I'm like, I'm just not really that excited about anything right now. Exactly. But if you were in a partnership and you were a little bit less... secure about your position in the partnership, you know, you have to be very gutsy to come to the partnership and say, ah, this week I'm not working on anything, you know, and just, no, you know, yeah, this, this, this, this, and you stop, you know, I've, again, been there, done that.

I saw how I behaved and how my peers behaved. And then you have... You know, you have to manage the people if you're a little bit more senior. You have to appraise them, manage them, help them develop whatever. You're expected to do all sorts of things for the firm, this event, that event, all sorts of things, you know, and you find yourself...

producing in the production business of all sorts of things, of events, of this or that, or you feel the need to be, I don't know, all sorts of things that do not. So, so many things that, It's not even a 10x difference. It's a 100x difference in terms of how productive I am versus when I was in a partnership, I find. Do you have an AGM? Because that's one thing a lot of people...

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No, no, no. And I tell LPs I'm not in the returns business, not in the production business. I don't want to produce events. Yeah, I don't have AGMs. I don't even have... I don't have any events. I don't have any periodic... I mean, I do have... quarterly reporting, but it's all numbers that I, there's an outsourced CFO, just the numbers. I tell them, okay, this is the value.

Look, in five minutes, it takes me to go over the...

5, 10, 15 minutes to go over the companies and just this

evaluation process for the purpose of the quarterly report. And that's it. I don't write stories because LPs don't read it anyway. But every VC that I know...

is writing all sorts of, you know, summaries on the portfolio companies every quarter. And I say, you know what, I don't believe that, I don't believe that anyway, all reports or whatever, I don't know. And by the way, if an LP is interested in those things, they're just going to opt out because I tell them ahead of time, this is how I operate because I want to filter them out if they expect things of me that I don't want to change for them.

I guess it's like you have more time than to find and help the best founders because you're not writing a thing. My day actually is really, really, my days are really empty. My calendar is very empty. Okay, so what do you do on a daily basis then as a solo GP? Like average week, what does it look like? Let's pull up the calendar. Yeah, pull it out.

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Thank you, Flex. And now, let's jump in. Because like a lot of people, you know, when you talk to other investors, they're like, I talked to eight founders today. Exactly. Not me. That's insane. Many VCs also, once you start measuring, I don't measure it. Once you start measuring it, then you're trying to optimize for whatever you're measuring.

So you want to show the LPs that you, you know...

you have a broad deal flow. We saw 8,000 deals this year. Exactly, and we only did one out of that. No, I try to see as little, as true as possible, you know? Yeah. Okay, let's, I'm checking now. Monday, okay. Monday, 7.30 yoga, 9 a.m. I had a board meeting. That's it. Oh, nice. It's okay, that's okay. Two hours, yeah, that's it. Then Tuesday,

Um, seven 30, a call with one of my companies, uh, eight, uh, a candidate for CFO candidates for one, one of another company. Um, nine 30, I had to an hour window and nine 30, I had, uh, just advising a founder who wanted some help. And then I had a board and from 11.30, totally open. At 4.30, I had another quick call with another founder.

In between, by the way, I went to the ocean. So I surfed on Tuesday. That might get scrutinized if you've got to run that through the partnership. Yeah, I mean, again, I'm not going to hide. Yeah, I'm just doing my thing. Today, as I failed today, I had two board meetings in the morning. Oh, wow. And another call with an investment I'm making now.

And then I drove here, and I'm doing this with you. And I have another meeting in San Francisco, and that's it. But at 3.30, I'm finishing today. Okay. Tomorrow, I don't have any. I have one board meeting at 7, and then everything is... I have a haircut at 2.30, and that's it. Nothing else. probably go to the ocean, depending on conditions.

And then Friday, also I have one call at 7.30. By the way, on purpose, it's at 7.30, so that I don't want to, you know, I don't want to, you know, because I do want to keep the window open in case there are good conditions in the ocean. So, yeah, at 2 p.m., I'm talking to some other VC who just invested in one of my companies. 3.30 and 4, I have two meetings, and that's it.

So super empty, real super empty, which really allows me to be super responsive to founders because every day on top of this, there would be like five or six founders who just sent me, hey, do you have five minutes? Can you have a word? And I'm always, they always tell me I'm by far the most responsive because typically within minutes or seconds, I respond.

So like a lot of people would say, it sounds like you're not actually doing any real work, quote unquote. They would be right. I'm not doing work. It's a hobby. I just take it seriously. But of course it's not work. Work is something that you do because you have to do, because you want to provide for your family. And I don't have to do it.

So of course it's not work. It's just a pastime. It's what I love to do, but it's not work. Yeah. And I think, so this whole concept of like solo capitalism, the solo GPs. Mm-hmm. When you first did it, it was like kind of unheard of almost. Today, it's a little bit more popular. There's a trend. Yeah. So what do you usually see? Like you said, you give some advice to people.

So what's the advice you typically give? Like if I came to you and like, hey, Oren, I want to start my own fund.

What happens next? No, it's not like I have a recipe. It depends what they're asking about. But usually they ask more pointed questions and then I try to answer whatever. So being a solo GP, are there any things that I should be thinking about, like common failure modes? Are there any big mistakes you've made since you started doing this? No, but one thing, but no, I cannot think of anything.

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No, no, no, no, no. I made mistakes in decision, you know, specific investment decisions, of course. But in terms of the setup, no, I don't regret anything. But one thing I would say is that

you want to set expect, with LPs, for example. Yep. If I did have,

for example, lengthy written reports and an AGM, it would be very difficult after fund three or four to say, okay, from now on, we're stopping it because, you know, everyone got used to a certain setup. What are you talking about? Et cetera. And, you know, so basically I tell them,

try not to commit to things because it's very difficult later to change. If you set expectations day one, it's fine. And by the way, you'd be surprised that LPs care about these things much less than you think they do. In fact, in my experience, they don't, or most of them don't. But of course, if you start in a certain way, it's difficult later to change.

Yeah, so if you really care about something and have the courage to just say, this is how I want to do it. But again, for me it was easy because I really, if I had to do things differently in order to raise money,

I would rather not raise money. It was real, it wasn't a bluff or something. It's not like I was committed to raising money. I said, look, if I can continue to do, if I can continue to behave as if it's my own money and be able to leverage other people's money, that's great. I don't see any reason to. If I can't, I'd rather just not do it.

And, you know, you just use my own money. And so for me, it was very, very easy to, you know, to draw the line in the sand. It wasn't difficult. And I can understand if someone really wants to raise the fund, and they don't have the option of doing it, you know, with their own money, I understand that it's an advice easier said than done.

And I understand that, you know. You kind of have to mold your strategy into what the capital providers want you to do, really.

Which I never did need to. So if you can avoid it, it's great. Because you don't want to do things because you're expected to. You want to do things because you feel that right now it's the right thing to do. And

that's why, by the way, I also try not to... Tell LPs I'll do this, I'll do that. I never present a single slide to any LP, ever. I never, you don't have a deck at all. No, I don't have a deck. I never, not a single slide. I never, I never told them this is my strategy or that is my strategy because you know, what if I change my mind in a month, you know, or two.

So, uh, uh, only to the extent that they asked me, I answer and then I tell, but I can feel differently about it, you know, in next month, you know, I, I, I went and we, for me it worked, you know, I'm not necessarily, uh, advising it because maybe it wouldn't work for someone else, but for me it worked. Yeah. So I feel like you meet an LP, like step one is like, oh, cool.

Let me check out your deck. So like, what do you say when they say, send me your deck? I never had a deck. This is my 11th fund and I never, never ever in any of the funds had a single slide. And they accept it. Honestly, you'd be surprised. You know what? Not only do they accept it, I feel that they often find it refreshing. Really? Yeah.

But don't they need to like, look at some stuff to make a decision? The only thing that I have is a spreadsheet that has all my investments,

everything. It's very detailed, very detailed cost, you know, cost basis, dates, which class of shares was bought at what point, you know, like very, very detailed spreadsheet of everything that I've done. And really, That's it. Whatever they do with it, I don't know. They probably now tell Claude to analyze it and tell him- Come up with some questions I should ask.

Exactly. I don't know what they do with it. But yeah, no. So all the information is there. What is not there is the packaging of the information in slides and this and that. And no, this is a spreadsheet. All the information, I'm not hiding anything. And of course, if they have questions, I answer the questions. I'm not being cheeky about it or anything like that.

But no, but I'm not trying to like, yeah, come up with some fancy slides that, well, this is fancy this or fancy that. And just being very authentic, just like I'm speaking with you right now. I'm not thinking ahead. I'm just, as you know, I have no idea what you're going to ask me. Yeah, you're actually one of the first people, I mean, maybe the first person actually, because usually I'm like, hey, I'm starting to plan some stuff out.

Anything you want to talk about? And I think you responded in like a minute and you're just like, I don't really want to prep anything. Like, I don't need to. Like, oh, okay. So I'm the same with the whole piece, you know? Luckily, I'm in a profession that I guess doesn't require preparation because if I was, I would probably be toast. So, I mean, if I'm an LP, though, I'm saying, okay, what's your strategy, your portfolio construction? What kind of sectors do you like? They like to see all that stuff.

Yeah, yeah. No, Tom, listen, I focus on where I have it. I focus on the Israeli ecosystem, not exclusively, but I really focus where I feel I have an unfair advantage. I'm less focused on... you know, any thesis driven or anything like that. I'm very flexible. I want to see something that I, a minute ago, I wouldn't have even thought about and all of a sudden make sense and be able to pursue it.

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So I don't want to necessarily have a pre-planning, you know, thought out ideas, what I'm looking for. There are a few things that I, don't do, historically I haven't done, so I'm probably not gonna do. For example, I never did healthcare. I just feel that I don't have the intuition. I'm pretty allergic to all this crypto stuff, so I'm not looking for opportunities there.

Try to stay away, for the most part, from hardware, although now it's all the rage, so maybe it's a mistake.

and try not to go where everyone else is going. By the way, one reason why I don't like thesis-based investing, at least not for me, I know for other people it works, but it's because, you know, for the most part, every single fund will have the same thesis, so everyone is chasing the same opportunity. And I want to just be a little bit more...

independent in my thinking. And honestly, you would think that this would be more of a challenge. The way I describe it, it sounds like it would be more of a challenge with the LPs. I haven't found it too much

of a challenge, to be honest. Now, I may not know things. Maybe people never even reached out to me

I doubt it, but, you know, maybe people who didn't invest after a meeting, maybe that was a factor. After all, they don't tell you why they don't invest. They usually say, like, oh, it's not a good fit for us right now. Yeah, or whatever. And I don't really ask. But in the end, it doesn't even matter if it hurts me or not because I really prefer not to have LPs or not aligned with how I operate, you know, at the end of the day.

And I think one thing that you do that's kind of different from a traditional fund, like I think there's a bunch of research, like academic papers that say venture portfolio should be very diversified to spread out the risk. What's your opinion on that? This episode is brought to you by Clerk. When I had Clerk co-founder Colin Sidoti on the show, we talked about why authentication keeps changing.

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No, I don't agree. First of all, from the LP's perspective, I think there's zero value in diversification because they're diversified anyway because they invest in multiple managers. And from the manager's perspective, you know, obviously you don't want to put the whole fund in one company because how, you know, you can never be so certain that, you know, on one single thing.

But if you really, you know, if you, but you also don't need 30 or 40 companies, I think, you know, in my opinion, if you've invested in 10 companies and, And the results sucked. The problem was not that you invested in 10 and not 20. The problem was elsewhere. Maybe it was a terrible vintage. Maybe you don't have any advantage in the access.

Maybe you have poor judgment. So yeah, I wouldn't put the entire fund in two companies. But I actually did have one fund that only had five companies. And it worked. Wow. It worked. How did it work?

Two clear home runs. Another one, which is still TBD. And another two, which probably are still, by the way, alive, but probably not going to work. but overall having two out of five was huge home runs. One of them was Next Insurance, which got bought, which I did the first month. I led the seed like at incorporation and was acquired

nine years later for 2.7 billion by Munich Re. And the other one is Navan, which I led the seed in the A, but from the fund that I'm talking about, I led the, as you know, I led the A from the fund because I had led the seed personally, even before I had that fund. And

that was also a huge winner, much more than 100X. And as you know, it's a public company now worth $7.5 billion. And I originally invested at $10 million pre. So even though there was a lot of dilution, it's still... Still worked out. Yeah, I think the headline that I saw was you invested 50K and made a billion or something like that. Is that math right? No, I never invested 50K.

So I don't know why. No, the part that makes, yeah, my stake is worth more than a billion, but I invested a lot more than 50K. So, and I don't do these amounts anyway. So I don't even, yeah, yeah, yeah. Well, it's probably maybe the personal check that you wrote or you wrote more than that initially. Oh, I know. I know where it comes from.

I put 50K in their previous company. Oh, that's what it is. And that's personally, and that created the relationship. And then I invested in Navan and yeah, yeah, yeah. So the 50K indirectly led to the billion plus, but it wasn't, yeah, yeah. And so, I mean, that's an interesting story. So you met them, I mean, you probably invested in before they started this new company because you knew them, you had the relationship, like, oh, I'm in.

Yeah, originally, I was a chairman of some company that eventually failed, but I was trying to find VP engineering for this company. And that's the context that I met the technical co-founder, sometimes Elon, in 2013. And he basically said... thank you very much, but me and my friends, we plan to start a company. So no. And then I, and then, but I really liked him.

And through this, I met his friend Ariel and they started a company called Stream Ones. And I really, at the time, I wasn't, I was only doing consumer and they were doing B2B. I didn't understand what they were trying to do, but I really liked them. So I said, you know what, I'll put, by the way, this is before I even had the fund. You know, I'd put 50,000, which, by the way, even when I didn't have a fund, I was writing seven-figure checks personally.

So this was not even... When I wrote $50,000, basically it means I'm not making an investment, but you know, I like something about it. That's a lot of money for me, personally, but I get it. So anyway, so I invested $50,000 in their company. And six months later, it turned out that I was the only one who didn't understand what they were doing.

They too didn't exactly understand what they were doing, which led them to the smart decision to sell it.

to Jive. So they sold it maybe for 15 million, which was fine because they only raised 2 million and, you know, it was a nice, yeah, it was a nice, I don't know if it was life-changing because by the time they were able to, you know, Jive stocked then Tank because they got stocked. But anyways, it wasn't, but you know, they made whatever, seven figures, low seven figure each.

Yeah. but it gave them the confidence the next time after they finished the two years of jive to start um to start um trip actions and i was uh i basically uh i have a photo also from the from the decision to go for it when the whole company is just the two uh the two of them and myself there's no one else at that point i i i said i would uh uh lead their um uh their um

seed round, the seed round. This is before I had a fund. So I put a million and a half myself, personally, out of four million. So I led the first round, I brought the rest, and Lightspeed also joined with a million. But I led it with a personal check of a million and a half, that was the seed. And when they did the A, that's when I raised the first fund.

And so I also led the A from my fund. And so I led the first two rounds. And so how did that company go? It was a software for managing your travel at your company, essentially. Not even software. It was actually what it is today. It was basically on the travel agency, the online travel agency, but a modern one. I think the big innovation, it's a little bit qualitative, but I think this is really what made them successful is that up until then, it's not, as if they weren't, um, it looked like actually no, but no VC would have had travel B2B travel as a thesis in 2015, because people assume that this problem is solved because you had concur, you had, um, you had, um,

Egencia, which was part of Expedia. You had, uh, uh, uh, uh, American express, um, forget the name of their subsidiary. And I had other companies, um, And their big

insight was that this market looks like it's done,

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but everyone hates their travel solution. Because when these companies were built, the first generation, let's say early 2000s, they saw the customer as the CFO. they didn't see the individual employee who travels as a customer. And so they didn't cater to the needs of the travel. So they built a piece of software that maybe had the control and visibility that the CFO wanted, but was a nightmare to use for the travelers, you know, for the employees.

But the travelers had to use it because the CFO just said, this is the software we're using, go use it. Yes, yes. But they went rogue because they hated it. So they, 50% of the time, they would find excuses. Why? I couldn't find this flight. I couldn't find this, this, this. So... And that's a huge problem because if 50% of the time people don't use the software that they're supposed to use, then you don't have the control and visibility that you thought you had.

Yeah. So you're using a shitty product that doesn't even give you what you're getting. If you remember, at some point, maybe 10, 15 years ago, people started to talk about consumerization of the enterprise. But this... But the first generation of this software was before that. And really people did not think of the user experience when they sold to companies, you know, 20 years ago, 25 years ago.

Today it's changed, obviously. So their real insight was these things suck. And, and, companies don't really have a lot of loyalty to their travel solution provider. Because luckily it's not too integrated with other critical systems. So it's actually not very difficult if you come up with something superior to get it switched. And that the fact that they cater to the needs of the individual travelers is also a huge selling point to the CFO because then you can reduce the leakage, you know, the amount of travel that doesn't get captured by the app.

So what did they do? How did they? So basically they just thought about the consumer, you know, they thought, you know, they had, you know, and they, They built something

that was more comparable to using Booking or .com or Kayak or Expedia as a consumer than it was, you know, that it would take you three minutes to book a flight in a hotel as opposed to an hour, you know? No, no, it was crazy. It was crazy. By the way, to this day, you know, Concur, Amex, all these things are still, you know, they still haven't been able to innovate.

Now, the other core idea that they had, which today's a feature, it's not that emphasized, but in the beginning it was a much bigger part of the story, is the idea was, let's try to

incentivize the employees to think as owners. And how do you do that? Basically, if the budget, the budget for the trip is $400 a night, okay? But they actually stay for hotel, but they actually stay at the, they decide to stay at the $200 hotel.

Let's split the, let's share the savings. Let's give the employee maybe a third of what they saved versus the power value for whatever, the expected value for this trip. So all of a sudden you had, because before that, the employees had no incentive to make- You're traveling on a company car. Of course. Get good dinner. You would get the most expensive thing, whether it's worth it or not to you.

But if you can get a third back- So that was a key feature in the beginning. And today it's also a key feature, but it's a feature. It's not the main thing, you know, today. But because companies that use trip actions are now Navant, they do save significant amounts on the travel because, not because they forced, before that people try to control the behavior of the employees with,

with policy. You know, this is what you're allowed. But it's much better to, instead of trying to control behavior, try to influence behavior by changing the incentives. So that was, again, today, less of an emphasis on it. In the beginning, it was much more important. But anyway, this was the original idea. And, you know, the funny thing is it's not that different today.

Now, today, everything is AI-driven and all that. That's the main difference. But it's still the original, at the end of the day, it's the original thesis that they built. So I'm super curious then, what happened during COVID? COVID hit, people just stopped traveling. I mean, it wasn't a public company yet, right? It was pretty large. So what happened when COVID hit? That never happened to me in my career.

Because basically, they were like a rocket ship at this point. And they were, in February 2020, probably about 90 million run rate. Like a rocket ship going very fast. And by April, it was zero. Like no one traveled? Zero. No one. Because you know what? Even consumer travel... There's some rogue consumer people. Some people did travel. Business travel went to zero and it took it much longer also to recover than consumer travel.

Oh, wow. And so people, you know, rightly so, talk about Airbnb as like what a hero thing

um response they had which they did but at least they had some business you know some people went you know uh traveled like uh not like like uh rented a month or two months like they went from short term to long stay they were kind of doing like covid um yeah like there was a different yeah yeah yeah for nirvana zero and uh and i think that i have so much one of the reasons why i have so much confidence in the van is that if they You know, what doesn't kill will make you stronger.

And if they survive this in flying colors in the end, then I can talk about it and what they did exactly. But, you know, this is like the worst curve ball that you can think about in a business. I've never seen a business go from really rocket ship to zero without any visibility when it's coming back. That's quite crazy. Okay. So I do want to talk about what happened.

So how did they navigate that? Because it's a public company now worth, I think you said $7 billion. I don't know. Market cap now. Yeah. But back then it wasn't public. So how did they navigate it? So a host of things.

First, they were the very first company to fire people and got a lot of grief over it because we fired over Zoom and we got grief, especially from the Israeli media that we fire over Zoom as if there was any other way to fire people. Because back then it was like, if you made eye contact with someone who had COVID, you would get it, you would die.

So like we didn't like that. Exactly. So like within a week now, so first of all, cut expenses. And

second thing is try to rethink. Second thing that we did was we already had at the beginning of an expense product. And expenses, people would buy even during COVID. So we switched resources and really the expense part got a boost because we- Expense reimbursement. Expense management. Yeah, yeah, yeah. Expense management, reimbursement, all that.

Just to be like, I'd go and get coffee for work. I'd pay with my car and I need to get reimbursed from the company. Yeah, yeah, yeah. Yeah, or a chair for the office. For the whole office. Now, the synergy is that 70% of the expenses are related to travel, but there's 30% that's not. So at least you had something to sell. So that was another thing we said.

So like change, even within the travel product, we, you know... changed the importance of introducing new features. For example,

there's more of a risk in this route than this route, for example, COVID-related. So expense-wise, they made changes very rapidly. Product-wise, funding, luckily, we were not... We had raised a few months before COVID, so we're pretty well off. However, in April, Ariel managed to do another 100 and something million dollar round, which was amazing.

In April of COVID? Yeah. How did he do that? It was structured. Okay. You know, he... was able to convey the confidence that just a matter of time. So if we survive this, we're going to actually come out stronger because it's not that the business went away, it's going to come back. And we need to decide. So this was a round done by Green Oaks.

There was no way to price it because how do you price it? So it was very structured, but in hindsight, they did a good deal, but they deserve it. Like they needed big balls to do it and really kudos to them. And kudos to Ariel for pulling it off. And there were a host of other things. The main thing, though, was what was the real risk? Once we did the round in April, there was never any imminent risk of running out of cash.

And we at least, I mean, I know some people believe that maybe travel has changed forever. We didn't believe that for a minute. You know, we believe that it's temporary. At some point, we don't know when, but at some point, it will come back. What was the real risk though? The real risk was talent, and not the travel talent. The travel talent had nowhere to go.

So we were not worried about them. But engineers and go-to-market people, it's very transferable. And more or less, so in March and April, that was not a problem because everyone froze. But come June, some companies were starting to dramatically grow. You know, if you remember, and you had Snowflake and you had Zoom and you had the Databricks, all these companies in 2000 are just growing.

growing like crazy. And they knew we had good talent in engineering and in go-to-market. And they were targeting us like crazy, which again, I don't blame them for because we would have done the same thing. And I think at some point, Ariel may be the only person employing the company who did not get an offer.

And so I think the biggest thing, the biggest success of Navan during 2000 and 2001, and this is 100% in my book, like the ultimate test of leadership,

The fact that we manage by, for the most part, keep our talent. The fact that it was able to inspire the confidence needed for people to still stick to it and say, no, don't worry about it, when they had great alternatives. Now, it's not that we didn't lose anyone. Of course, we lost some people we didn't want to. But actually, if you look at the top executive team, we lost no one.

And if you look at the engineering organization going to market, maybe you lost 20% that we didn't want to lose. But for the most part, we've been able to hold, and this to me, I don't know how we did it, but this is to me the ultimate test of leadership. I think it's world-class leadership. How do you keep the best talent in a situation like that? Because, you know, if I'm competing CEO, I could be like, you know, your company's dead.

Come on, what are you doing? Like your stock's worth nothing. Just come over here and work for me. We have a great product. So somehow he was able to inspire the confidence that it's temporary and we're going to come out of it stronger. And this is why I called leadership, because I don't know that I would have been able to do it, but he managed to do it.

And I really think that it's, again, it's world-class feat to be able to keep the talent. And that was a real risk. If we had a weaker CEO, Weaker leadership. I think they were a very strong group to begin with. They liked working with each other. That helps with strong culture. But at the end of the day, it's culture. And it's the leadership, it's cultures, all these words that you don't think matter, but they do matter.

Yeah. Do you feel like you could have sensed this or picked up on this back when you first met them? No, not really. Honestly... When I... Obviously, I knew them well when I invested, but at that point, they had built a company to a six-person... Like, the first company was sold when they had six people, before they had revenues. So to say that I somehow looked Ariel in the eye and knew that it was going to grow to a world-class leader would be, you know, would be stupid.

I mean, some VCs will say that. Yeah, some VCs would say that. I am not going to say that. I didn't. No, but... Luckily, in this case, it worked out. Yeah. So what do you look for then when you're meeting a founder and you're trying to figure out, like, can they build this thing to go the distance? I'm going to give you a bunch of money. Yeah.

So in their case, for example, and then I'll generalize. In their case... I knew that Elon was a world-class engineering lead, meaning that he's super smart on the engineering side, but he also understands business. So he can really build the technology that also makes sense from a business standpoint, not just for technology's sake. And I knew that Ariel was an exceptional product person and very driven.

So basically, I had the two things that I care about at the early stage, engineering and product. And because, you know, sales and marketing, you can get later once you have, you know, once you have something to sell. So in the beginning, the most important thing is engineering and product, you know, world-class engineering. And that I knew I had.

Now... To say that, the other thing that's super important, but I don't know that there's any way to know at this point is whether the CEO can grow to be a huge, an amazing leader of one of the company's few thousand people, for example. That I didn't know. But basically, to me, it's enough. If I think, if the idea makes sense, and I think that the team is great in engineering and product, that's a good enough reason to bet.

And sometimes it's going to work. Sometimes it's going to work spectacularly well. Sometimes it's going to work in a modest way. Sometimes it's not going to work. But that was, to me, an easy bet because I had all these ingredients. Now,

the more general rule that I use is I really judge founders by what they've accomplished so far. Or

If it's a brand new idea, then basically what they've accomplished before. And if I, again, I don't, I'm not a psychic. I don't believe in like somehow guessing just from the way they speak or whatever, how they're going to, you know, at least I don't know how you...

So based on what they've done in their case, first of all, they already started a company and sold it successfully. A small deal, but still started a company. I mean, 99% of the people don't start a company and sell it for $15 million. Probably 99.99%.

And even before that, by the way, both were executive in an Israeli, original Israeli software company called Mercury Interactive, which at the time was the biggest that came out of Israel. Very successful, very strong. Yeah, yeah. Which was ultimately bought by... HP for four and a half billion. But before they were about four and a half billion, they were worth 20 billion at some point, you know, and in the previous bubble.

And I had a lot of friends in this company, so I also knew them. I knew them, I knew how they did at Mercury. I knew how they did at the start, you know, with the startup that I invested in once. But of course I couldn't have known that Ariel would grow to what it did. Noriolan, you know, also amazing growth. So, and that's the other thing I think in some companies,

founders, in the successful companies, one thing that I can say is different, but only in hindsight, you know, between successful companies and less successful companies, let's compare two companies that both accomplished product market fit. Because most companies fail because they never accomplished product market fit. But

Within the ones who do, the real difference between the ones who become great and the one that's less so, I believe, is whether or not the founders are the same founders you started with or they have grown tremendously during the journey. And Ilan and Ariel are in the camp that they've grown tremendously. There is no comparison between, like it's Ariel today and Ariel when I backed him in 2013 with Stream Ones in 2015.

Yeah. Yeah. So how do you pick up on... Because that seems like an important part. No, but only in hindsight I know. But only in hindsight I know. You almost want to try to suss that out ahead of time. Yeah, I know. But look, I can think of situations where that was not the case. And Yeah, I know. If someone has a way to assess it, great.

I don't know that I do. I know it after the facts most of the time. Maybe I have good intuition about it, but it's not foolproof. And so I think we first started talking about Navon in a sense it was like a big chunk of one of your funds. No, no, a big chunk, a huge chunk on multiple funds of mine because I invest across funds. And that's like a big, and a lot of people are like, you shouldn't do that.

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You should just like... You can't cross. Yeah, I know, I know. That's another thing I do, which others don't. I do cross fund. So what is the reason that people say you should not do that? Well, the reason why people say you should not do it is because there is, or there could be a conflict of interest. Because you're like propping up a previous portfolio company and they're not in that fund and they're paying for it.

Well, in both directions, you know, if you could, let's say a new fund invested in an older fund investment and it failed. it could look as if you tried to bail out. You used the new fund to try to bail out and it failed, you look bad. The other direction, let's say it's succeeded tremendously. Maybe you took advantage of the LPs in the first fund.

So in theory, LPs can feel a conflict of interest.

And my answer to this is, if someone raises it is,

Basically, trust me, bro. That's my answer. Because that's my answer. Because listen, if you don't trust me, just don't invest. Because there may be

conflicts, but the counter is, listen, if there is something great... It would be stupid not to use the new fund. I'm telling you, I am not, you have to trust me that I'm not going to use the new fund to bail out the old fund. I'm going to try to get the best deal from the new fund.

The company, if they took the deal, it means that it made sense for the company because they don't know, I'm not going to force them to take money from the new fund. So by definition, the interest of the old fund are protected because the CEO of the company is going to take care of that. And the new fund interests are protected because I'm going to take care of that.

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But at the end of the day, So if anyone came to me, nobody did, but if anyone, for example, LP came to me and said, you know, it's okay that you do it, but only if there is also third party money on the same terms or something like that. I say, no, I don't want any rules. You know, most funds have a thing called LPAC, LP Advisory Council, I think.

I don't. So most companies, to the extent that they do cross-fund, they need to bring it for approval. And they get the approval. But just the fact that you have this process already reduces the motivation to do it. So I don't have this friction. And at the end of the day, LPs who back me, they just trust me and I'm not going to betray the trust.

I'm not going to betray the trust of LPs. I'm not going to betray the trust

of the founders because it's going to be self-destructive. You can only betray other people's trust once, right? Yeah, and then they're never going to trust you again. Yeah. And I think you said something kind of interesting. You just, it is a little bit earlier in the conversation, but you just like invest, like it's your own money. 100%.

So you're just thinking like, I'm just trying to make as much money as possible. This is the best opportunity to make money. I'm just going to use the current fund to make money. First of all, it's easy to treat it as my own money because in many ways it is because I'm a... Typically, I'm close to 15% as an LP. So you're usually one of the biggest LPs.

I'm always the biggest LP, always. I don't have a single fund where I wasn't the biggest LP. So I'm always the biggest LP. And I have 30% carry. So between the two, I'm over 40% of the economics of the fund. So of course I treat it as my own money because it is my own money, you know? That's number one. Number two, and another way to say it, which I sometimes say, you know, most VCs or all VCs are anywhere in the spectrum between, on one hand, in every substance and the other end is perception.

And Like when they make decisions, the appearance, I should say, not perception, you know, appearance versus substance. And for example, sometimes you make a decision because you don't want to, that maybe suboptimal because you don't want to appear this way or you want to appear the other way. And sometimes, The way I operate is 100% on substance.

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And by the way, it has costs. I'll give you an example where I paid the cost. So I was not, like, as you know, in the last two or three years, it became very, very, very...

LPs became extremely focused on DPI. Some LPs went so extreme to say, oh, we don't believe any of the DVPI, we only believe in DPI, only DPI matters. Now it was, you can always, generate DPI, if you're willing to, assuming you have good, you know, a good portfolio, you can always generate DPI. I could always sell secondary, for example, a discount or something just to generate the DPI.

And I had, especially the early funds, they're so good. You know, the DPI is so much... higher than I would ever need for fundraising, that it's easy to take the discount and trade it for some, for in-person DPI. And yet, and I didn't have, until a year or two ago, I didn't have good DPI because only now when the fund is public and next insurance was,

And so for sure it hurt me. I know I lost LPs over this. And this, you know, I, okay. You know, that's what I'm, that's the price that I'm paying for being true to what I'm saying, that I'm training as my own money and I'm making decisions based on substance, not appearance. I'm not making a decision in order to improve my, the way I look to potential LPs or existing LPs, just don't, you know, and I take the chance of looking and I take the, oh, yeah, this is an example.

I have other examples, but yeah. Any other examples? Well, another example is, for example, some LPs could, by the way, it never happened to me. I know it happened to other VCs. Once a company is public, you know, they have a good case to say, you know, we don't pay you to hold the stock. Please distribute it. Then we'll decide if we want to keep it or not.

Yeah. And in general, I actually agree with it. But when the lockup expired in a van, for example, I thought the price was stupid, you know, stupid. It was way too low. I thought that the market didn't understand the company. I thought that I understood the company better than the market, which could come across as pretty arrogant to say.

You've known this company pretty closely and the founders for over a decade. Yeah, but it still may be, but, you know, many times, because on the other hand, maybe my judgment is clouded by wishful thinking, et cetera, but I felt so strongly about it. I didn't distribute, even though, and again, it was still 50X on the cost and all that. It's not that it was, it would have been a good result, you know, even at the low price, but I felt it would be crazy to distribute shares.

And by the way, The LPs, I'm doing them a favor. Because 90% of them are going to sell because they don't know anything. Why would they necessarily keep this stock? So now it's almost 4x what it was four months ago. So

And by the way, I still plan to distribute slowly because I want to benefit. So that's something that if it went the other way, I would have looked really, really badly. And I took the chance because I thought it would be stupid. I thought it would not be in the best interest of the LPs, but I took the chance that I would look very stupid.

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So fortunately in this case, it didn't materialize. But in other cases, maybe it did materialize that I made a decision I thought was good. And in hindsight, it doesn't look good. And yeah, I'm willing to take it. Yeah. So there's another company that you have that it's called Descartes. There's been some headlines about Descartes. So what's the story with that one? So I saw, I met them less than three years ago.

One of the portfolio CEOs made the connection, which is by the way, how pretty much 80, 90% of my deals happen. That's probably like a big LP question. It's like, hey, you don't have any associates. Where do you get your deals from? Yeah, yeah, yeah. So most of the deals I end up doing are actually from other portfolio companies. But anyways, I immediately took the Zoom meeting.

It wasn't even an idea. It was, oh, we'll just optimize. It was just, you know, the founders were very smart, which they are, will have access to great talent, which they do. In hindsight, I know that they did. And we know how to program in low-level GPU like CUDA, for example, for NVIDIA GPU. So we can

really optimize all the inference algorithms. And it wasn't even clear at that point whether they're going to sell a product or whether it's going to be B2B or B2C. I mean, you know, a lot of, it wasn't like a fully baked idea, but it was clear to me that the founders are exceptional. Clear

as a day. And within less than a day, we had a legally binding agreement. And

a week later, I met them in person when they visited, because this was done over Zoom. So that was three years ago. And the funny thing is that in the three years, they drifted here and drifted there at some point. But in the end, they got back to the original thesis, which we're going to optimize. Yeah, we're just really good at being vertically integrated so we can run these inference algorithms so much faster than, like orders of magnitude faster, right? And more efficient.

And because of that, and because where AI today is, they are an extremely, extremely, extremely,

I would say coveted platform company by the big ones, by many of the big ones. Now, in the press, and I cannot really, I obviously cannot really say

anything beyond what's already in the press, but according to the press, then the process of being acquired, there were all sorts of names being mentioned,

the biggest, or the Right now, the story in the media is that it's being acquired by Anthropic, by a lot of money, which is, again, if true, unprecedented in terms of, in less than three years, it's unprecedented so fast. zero to seven billion based on the headline in three years. Yeah, six, seven billion. And then, by the way, entropic stock, which hopefully...

Might get a little extra kicker, hopefully. Yeah, exactly. Now, again, it's not necessarily a done deal. By the time this is... Who knows? I may look stupid, you know, by the time this is announced, but... Yeah, who knows? By the time this is broadcast, published... We're live right now. No, I'm just kidding. no but i didn't say anything that's on the press you know and i'm not confirming anything but um we'll see whatever happens this is right now at least they have something that is amazing because the stakes are so high so it's it's not just anthropic all the big guys you know if they can get a real advantage by having this talent and technology and having uh this is

extremely strategic. So I'm very, very happy about it. But we'll see. It's not done. Obviously, it's not done yet. Yeah, I have a similar situation with Anthropic where they acquired a portfolio company and I've got some Anthropic shares. That's amazing. I'm just kind of like... Jesus, take the wheel. Let's see what happens with this company at this point.

By the way, the earlier you got it, the better, right? The earlier you got the Anthropix stock, the better. It was like the end of the year last year. So it was like pretty nice. I've got like a night, I think it's up like... Is it before or after the age round? Before the... It was whatever one was... The 845 or 945 or whatever. It was the one before that.

It was like 300 or something. Oh, yeah. So early 3X. Yeah, it's like an extra 3x. I'm seeing headlines that people are saying it's going to be worth $2 or $3 trillion. By the way, in the secondary market, it's already more than that. In the secondary market, not more than $2 or $3 trillion, more than the... Oh, 1.2, I think. Yeah, yeah, something like that.

Yeah, who knows? But best of luck to you. Best of luck to you, too. And hopefully to me, too. We'll celebrate together. Yeah.

So one interesting thing we could talk about, the Israeli tech ecosystem. Yeah. So not just Dakar, but also coming like Wiz also. Yeah. I think in five years. Yeah, in five years, 30 something billion. Yeah, 33 billion. Amazing. So you've been a part of the Israeli tech ecosystem for your entire career. My entire career, yeah. So what was it like back when you first started? Like was there? Very different.

Yeah, very different. So I would say that...

When I was a kid, the biggest export of Israel was oranges. Are they still a pretty big export? I don't know, but I'm sure it's dwarfed by... I mean, the brand exists and stuff, and maybe they did well since the 70s, but on a relative basis, it's insignificant. It first started with American companies starting development centers in Israel.

For example, I started my career with IBM Research

as a research staff member. In Israel? In Israel. What were they doing? And I personally was working on, believe it or not, image and video processing and then on also chip design. But we're doing all sorts of projects. We had like five, six groups and each of us actually were pretty isolated because each of us worked with a different group at IBM.

So I don't even know what the others were doing. uh by the way yeah and um um and uh similarly intel at that point had already at this uh chip design facility in israel when i was a student in in double e you know and the techno in the 80s and by the way in all these cases by the way it wasn't it wasn't a decision by an intel on ibm oh Israel is an interesting place.

Let's start something there. And it wasn't an acquisition either in most cases. So some of them were. In most of these cases, it was like one really good person

working, Israeli, working for IBM in Israel, sorry, in the US or for Intel,

The IBM guy's name, this is past now, but his name was Joe Raviv. The guy from Intel, his name was Dov Fruman. Basically for personal reasons, decided to go back to Israel. And IBM or Intel didn't want to lose this person. And they said, you know what? We'll let you work from Israel and we'll even let you hire two or three people. And it grew from there.

So it was very organic. And so that was the very start. Oh, I should say that there were good universities and technical schools in Israel, good education, good talent, but zero understanding of market or anything like that. So that was the first exposure. And then sporadically there was one tech company here, one tech company there. Like they were related to IBM and Intel in some capacity? Not necessarily, but for example, this company that I mentioned before, Mercury Interactive, I think started in 89.

I remember because I was on 90, a friend of mine, because I graduated in 1990 and two friends of mine from school got hired and then they became very big shots there. But the real change was,

The real game changer was, believe it or not, thanks to the government, which is shocking to anyone who believes in free... Yeah, there's like...

He's an oxymoron. Exactly, exactly. Like Reagan said, one of the scariest words in the English language, I'm from the government, how can I help? They made one brilliant decision. It was in 1993.

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They made a decision to kick off or start a venture industry. But the way they did it, they didn't try to guess to hire managers or put money in direct. No, what they did was very, very smart. They said, we are going to, they called the program, they called Yozma, which means entrepreneurship. And Basically, we're going to sponsor eight funds of $20 million each, where we're going to contribute $8 million, and we're going to give an option to the other LPs to buy our $8 million five years later at basically cost.

So basically lever the investment. Okay. But the managers chosen to be the managers of this, still needed to raise 12 million from LPs. So they allowed the market forces and obviously not everyone can. So it's not that the government decided you're going to be a venture capitalist.

You know, people had to have the initiative to raise a fund, raise 12 million. They had the kicker of the leverage, you know, the 8 million that you can buy, but they still had to raise 12 million. It was still free market. It was still free market. It was a way to have a positive effect without distorting the free market. That was so brilliant about it.

So it's probably like these eight would have raised maybe anyways. Maybe not. Or maybe they wouldn't have been able to raise. Who knows? But you didn't let some bureaucrat in the government decide you're going to be based on whatever. Like my cousin likes computers. Exactly. Like there was no corruption involved. And This is the basis of the industry today.

These eight funds, some of them still, in some incarnations, still exist.

Now, it helped that by the time they started operating in late 93,

If you think about it, that was a great vintage because they had all the time in the world to benefit from the bubble of the 90s and exit before the bubble burst. So it was a brilliant decision, but also brilliant timing. And so this cohort actually did really well, which allowed them to raise a second fund of 50 to 100 million, let's say around 96, 97, most of them.

this time without any government help. And basically, the flywheel was in action, and basically everything was built upon it. Now, over time, if you look back now, personally, I entered this industry in 94, and I was hired not by one of these funds, but the first fund that actually was, I guess, after this program, which was Apex deciding to start, a global firm deciding to start something in Israel.

They hired me and someone else to start their operation in Israel. Now, In the 90s,

the stereotype, which was correct, was that Israelis may be good in technologies, but they have no idea how to talk to customers. Well, they know how to talk to customers, but they have no idea how to listen to customers.

They understand nothing about marketing, sales, even less so in consumer. Of course, they don't understand anything. So if they understand anything in And the first success stories were chip companies where it's more about building technology than, you know, the psychology of the consumer. And telecom equipment, you know, which was big in the 90s.

And data networking equipment. The 90s were all about data networking, telecom equipment. chips, et cetera. That's generally the companies that did pretty well in San Francisco, too. Like in the Bay Area. Fair, fair. You know, in many ways, I think Israel is an extension of the Silicon Valley. What happens here happens there. And even the cultures, you know, at this point are pretty similar.

So I see Israel totally... Like, it's not... The market is the same. The market dynamics is the same. So anyways...

Over time, however, and also the other criticism of Israeli tech back then was that Israelis sell very quickly. They don't build big companies. They're good at starting companies, sell quickly, but they don't build companies. That was true in the 90s and maybe in the 2000s. But over time, you know, every time there's a new generation of founders or entrepreneurs who are so much better and more sophisticated than...

my generation or that even the generation, you know, and when I look today and I speak and I talk to 26, 27, 20 year old founders and I scratch my head and say, wow, you know, I was so close when I was their age, you know, like there's no comparison. Yeah. And also the thresholds, because people are competitive. So if you could sell a company in 97 for 50 million and be a hero of your town and everyone knows you, of course you would do it.

You would take the money. But today, if you can sell a company for 800, but the guy who sat next to you

in this company or in the army or whatever, already sold the company for a billion and a half, you feel like a loser, you know, you're going to shoot four more. So every time... you know, a whiz happens or the cart happens or something else happens, the bar keeps rising. It's the same dynamics, I think, also in the Silicon Valley. I think that it is, you know, the Silicon Valley, it's probably a similar story 20 years, started 20 years before, you know, maybe 20, 25 years before or whatever, but

it's a flying wheel. And that's why the Bay Area, You know, so many times I heard that, oh, the demise of the Silicon Valley is the center because one time it's because of this and one time it's because of that. And now it's because everything's remote anyway, you know, whatever. And somehow, you know, before AI, people starting, oh, you know, now you can start a company anywhere, et cetera.

Turns out the biggest value Creation is still happening in the Silicon Valley, by far, 10x versus anywhere else. And I think on a smaller scale, Israel benefits from the same dynamics. If this deal, supposedly in the papers, of Anthropic starting

their first engineering center outside the US, it really positions Israel as the most important country for AI outside the US and China, which is huge, right? Distant third, okay, but still ahead of 200 other nations. Okay. Yeah, there's a lot of other, I mean, Israel is one of the smallest countries, so they're way above their weight class.

Oh, for sure. And so you joined Apex to lead the- Not lead, I was the junior guy out of two. But then you actually moved back to, you moved to Silicon Valley. Not back, not back. Okay. Moved, not back. You never had been in San Francisco, Silicon Valley. Well, I visited. I never, you know what is fun? When I was in sixth grade, I lived in Davis for one year because my dad was a professor, also a double E professor, and he was on sabbatical.

So I actually spent time one year in the U.S. as a kid, but that's it, you know? And maybe when I was a VC, I visited here every now and then, but I never lived here. And I always wanted to, because I always felt that when I was in Israel, I felt that Israel is great, but it's not the major league. You know, it's...

you know, I felt that, you know, the Silicon Valley, I wanted to be in the, you know, in the center, you know, not the periphery. And I felt that Israel with all the, you know, it's still the periphery, it's still, you know, not the Silicon Valley, it's still not the Bay Area. Not then and not even now. And so when there was an opportunity, but it's not, by the way, it's not that easy to move because

because of, you know, it's not easy to get a visa. But the opportunity, basically, Apex acquired what was called Patrickoff in the U.S. Patrickoff? Yeah, Patrickoff& Co. was a VC firm, well-known back then. That's a great craft founder. Yes. Okay. Alan Patricoff is also the great craft guy.

And anyway, at that point, we were part of Apex Europe, and we acquired the U.S. And they were kind of thinking it would be a good idea if someone moved to the U.S., you know, help with the... you know, integration, et cetera, whatever. Although it didn't play out that way exactly. And I was like, hey, hey, hey, I would love to go if there's an opportunity.

And that was the opportunity. So this, thanks to that, I got the L-1 visa. Thanks to that. And I moved, this was 2002. So 24 years ago, more than 24 years ago. And it was an interesting day. And I had a great time because you don't want to hit the ground during a bubble. Yeah, you would like... Things had settled where everyone's like, oh, shit, it popped.

Oh, there was a nuclear winter. It was much worse than anyone who hadn't lived it can imagine because it's not even close to what happened in 2008 or... Like, it was total nuclear. Well, yeah, because 2022, we kind of have just roared right back. Yeah, yeah, yeah. So it's just four years later. No comparison. Like, we went to two months that looked...

No comparison. Now, like... there really is no comparison and everyone, every VC was shell shocked. And actually my first deal off the bat was a great home run. It was audible.com. And the only reason why, two reasons why I was able to do it. One reason is everyone was shell shocked. Uh, and every, every, any company that ended with a.com, uh, you would look like an old idiot to invest in, in, um, um, And the reason it was a little bit easier for me is because when I moved, I also got rid of all my, because everything I did in 99 was shit.

So when I moved, I got off all the boards now. So I didn't have the burden, the mental burden of every board meeting to come in and come out depressed. And whereas I can imagine then every single board meeting that you go to is,

is like total depression. It's very hard mentally to muster the energy to invest in a new company. So that was one advantage that I had. The other advantage that I had was that two of my partners are on vacation, because there's no way I would have been able to get it to prove-

So the two that would have blocked it were on vacation. So that was the other reason why I was able to do it. Anyways. Were they pissed when they got back? No, they were, you know, it was behind us. But I bought 40% of the company. It was an amazing deal for nothing. And it was a very quick home run. And this is really what really, really in a way made me, because you know, the first deal is the one that really legitimizes you.

Like the first home run is the one that legitimizes you. Because before that, even the exit that I did have in Israel, first of all, they were base hits and not home runs. Plus nobody here cared about it, knew about it. You know, it was really what really established me, gave me...

you know, that was a very, very important deal. And to this day, by the way, I'm in touch with the founder, you know, he's a close friend and, you know, other people were on the boat with me on it. Cause you never forget the first, the one that made you, you know? Yeah. And so I think it was like 2007 ish. When I left. Yeah. So what happened? Why'd you decide to leave? Well, I decided, but also Apex decided.

So it was a mutual decision. Apex basically decided, and it was the right decision for them to focus exclusively on megabytes and get out of venture altogether and shut down California. So I really didn't have a job. And they actually asked me to fire everyone else and then myself and find the sublease for the office and, you know, and just

and clean everything up. Now, unbeknownst to them, before I got fired, I had already decided that I was going to leave. So I was actually really happy about it because I got a better deal thanks to the fact that they fired me.

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And when I left Apex, I actually thought I was done. I made enough money.

So I was finished independent. And I didn't feel the need. And I was so worn out. Because it wasn't a nice environment always. It was a very difficult work environment. And so I was, you know, disenchanted with all this VC stuff. You had a partnership and team. Difficult. Very difficult partnership dynamics. And... but I had no idea what I was going to do, you know? So I took a year, 2007, pretty much, to figure it out.

And I tried all sorts of things. For example, teach math in high school. And in 2008, I got drawn back to investing, but I was very committed not to do it the conventional way because I was post-traumatic. And it wasn't a strategic decision or economic decision. It was, I just didn't want to It was a post-traumatic decision. And over time, I actually learned that there are all these advantages about doing it, including for the founders.

But initially, that wasn't the drive. The drive was, I just don't want to, you know, I don't want to join a partnership. Definitely don't want to start a partnership. And, you know, and... And for seven or eight years, I did it on my own, but I was behaving as a VC. So I never called myself an angel or a super angel. Every deal I led, every deal was seven figures.

And I only did like two deals a year because I couldn't afford more. But I had a very, I did Nevada, I did Tipalti, I did other well-known names. So I had a very good hit rate, but... And I was happy, you know, things are working. I didn't want to change anything. I had an empty calendar like today. I said, this is how I want to do it. I don't want to change it and go back to the way I did it and more.

And then I had a random meeting with Peter Thiel.

all random just from my perspective was just get to know the guy and compare notes and maybe i'll send him later stage deals to founders fund later and you know we talked 20 25 30 minutes and after 30 minutes he asked me why don't you raise a fund and that in itself was not that unusual because people had asked me before yeah um and um And I said, I told him what I told the others.

Been there and done that. I don't need the brain damage. I like my life as it is. I don't want to complicate. I like simplicity. I don't want to complicate it. Everyone before him always said, okay, if you're being LPs, right? If you ever raise a fund, let us know. He said, why don't you let me be your LP and we'll treat it as an experiment and see, maybe you can have the cake and eat it too.

And when he said, it's so, I never showed him, I never even thought about him, because I didn't know at the time. Now I know that he also invests in other funds, but I didn't even know that he invested in other funds at that point. I didn't think of him as a potential LP. Um, I never showed him a serious side or anything. And when he made it so easy, you know, I said, wait, why not? You know, let's give it.

So on the spot, I told him, okay, I don't want any management fees. Cause at that point I didn't feel that I, I don't want a 10 year fund or whatever. Cause I, you know, I wanted to stop it at any time, uh, only carry. Uh, and basically I left and immediately said, yes, there was no, uh, no negotiation. Um, and, uh, And I literally left the meeting with a fund.

I didn't know I was raising an hour earlier. I didn't even know I was meeting a potential LP an hour earlier. So now today he's not involved and he hasn't been involved. First of all, his involvement was always just as a passive LP, no more. And today he's not even an LP anymore. But I give him credit for giving me the push to start the adventures.

That was my first fund. My first fund was just him. He was the only LP and myself with my GP commitment. And then six months later, I realized that it's working in the sense that I can really continue to behave exactly the same. Yeah. But have the leverage of other people's money. And then I raised the next fund and the next fund, now on fund 11.

So no, now it's 2.7 billion later, but yeah. And so when you started to then raise from other LPs, you probably got, I mean... Peter Thiel's a pretty just like, I get this, I get what you're doing. But there's probably a lot of people that are like, oh, we need some slides. No. So, okay. So I joke that the second fund was 50 times,

100 times, let's call it, 100 times more difficult to raise because the first one took me half an hour and the second one took me 48 hours.

Because basically, I added three LPs. All of them had known me for many years before. All of them had told me, when you ever raise a fund, let us know. And I didn't show up with slides. I told them, this is what I'm doing. You're raising a fund now. By the way, I didn't even use Peter's name. Because at that point, he asked me not to use his name, and I didn't.

I said, okay, this is what I'm doing. And to the credo, I never talked to anyone else, as far as I recall, other than these three. I don't remember getting a no from anyone for the second. I got many nos later, but for the second time, I don't remember getting a no from anyone. Uh, I, I talked to these three, they, uh, and, you know, and I had a fund within 48 hours.

Um, and now, and then every fund I added more, some dropped over the years, some, you know, over since then, you know, I, I have more right now. It's more normal. Like, you know, we have people. Yeah. But, uh, this was the, the first, this was the first one in the second fund. And so one thing I wanted to ask you about, uh, you started a nonprofit called icon.

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Yeah. I helped start it. Yeah. You helped start it. Okay. Yeah. So what is that for people who've never heard of it before? ICON stands for Israeli Connection Network. The original idea was to help Israeli companies

in the Silicon Valley. Help them with guidance, help them with connections, things like that. That was the original idea. And

again, the best decision was to ask someone by the name of Yasmin to run it because the very same idea would have had a very different outcome if we had someone else to start it. And she basically built it, okay? That's why when we say you started it, she started it. You know, I was, you know, no, but I was the chairman. She was the, she was the, she built it.

I was a very hands-off chairman. So really, and, you know, I helped, advice and some connections. But basically what we built is an organization that really is actually exclusive. This was actually important because the intuition is you want to help the ecosystem, you want to help everyone. You don't want to be exclusive. Yeah, you should be open.

You want to be open. And I actually felt strongly that although this is conventional wisdom, when you try to help everyone, you help no one. Because there had been five, six organizations with the same

um, mission before icon and they're all very open and inclusive and very, and, and none of none was very effective. And the reason is when you are exclusive, you can really curate the other side too, because basically what we're trying to, uh, help them connect with the best investors, with the best, uh, uh, corporate executives and, and, and, and potential customers, et cetera.

Um, If it's inclusive, then it's a lot of noise for these people. If it's actually exclusive and it's curated, then they have an interest. So like spend your time on this and like all the people in the group are amazing. Exactly. So having a high bar, which is, you know, difficult to maintain. You're trying to be objective. But

Um, and the success has been great. So basically our activity, we started with an annual event and then we, uh, which was a huge success. We were able to, over the years, we were able to get amazing speakers like Peter, like, um, um, Peter Benhowitz. Uh, I mean, so many Safra, um, uh, from, um, uh, cats from, uh, Oracle and many other names, amazing names that, uh, that, uh, uh, join our conferences.

And, um, And then we added theme-based events, like an event for cyber, event for this, event for that, event for marketing, event for sales. And at some point we added programs. We called SV101. We, you know, we choose, you know, we get many applications. It's like a YC basically, except we don't charge anything. And we bring them for a few weeks here and we give them a lot of content and, you know, get to meet a lot of people.

And they become a very, it's a very bonding experience for them. So there's also, you know, there's also the element of, you know, the core of the spree of these companies. And now we have another company for earlier. Anyways, there's a lot of activity. Now at some point a year ago, Yasmin handed the torch to someone else who was also very capable.

and I'm still involved. And I think that technically maybe now Yasmina is the chairman, probably. Probably I got demoted. I'm not even sure, but probably because anyway,

now that Yasmina is no longer the CEO, but no, but I'm still involved. But again, hands off. I'm not a very, I'm not a micromanager anyway. By the way, the same with the companies. The same with the companies. I want to be as available to them as they want me to be, not... not force my opinions and spend time with me and I got to give you feedback on this, on that.

If they want the feedback, great. If they want to spend time with me, great. I'm available, but I'm not trying to force anything or I don't have a template that, oh, we're going to spend an hour a month or whatever. So one of my favorite things is like asking people if they have a favorite founder, CEO, I don't know, other investor, historical figure that they've gotten a lot of inspiration from or learned a lot from.

Is there anyone like that for you? Historical figure. Unrelated to anything, but

you know who one was that that was? He was the

leader, I forget, probably president of Egypt in the 70s. And he's the one who initiated the peace process with Israel.

And it was really his initiative. So I give him 90% of the credits. I give the Israel leader at the time 10% of the credit, but I give him 90% because it was a super brave thing to do. And really, it's amazing how one person can really break a cycle of violence in one brave decision. By the way, which he paid dearly for, because three years later, he was murdered by, assassinated by a Muslim Brotherhood person.

So he paid the ultimate price. But yeah, I mean, and 50 years later, this peace accord still holds. So more than 50 years. So...

No, not more than four, sorry, 46 years. But anyways, yeah. Maybe it's like the courage to just do, be disliked, make a hard decision. Yeah, yeah. And, you know, I could have chosen also Nelson Mandela, also someone that's wow, or Churchill, or, you know, leaders that really are, under very difficult circumstances,

took on missions that were... felt unwinnable and un... unfathomable maybe you know when Nelson Mandela in South Africa you can tell that I like history and also that in the Middle East and yeah so these are definitely I mean I could probably think of other people but you know this is what came to mind again I didn't come prepared maybe if you give me time I would come up with other people but you know Well, it's kind of, I mean, it's like starting a company is like a, kind of like a crate, one of those like crazy endeavors.

You go against probably some conventional wisdom. For sure. And you take a significant risk, a lot of bravery. It takes like courage to do it. So. Yeah. And make unpopular decisions, not being led. I mean, too many politicians today, uh,

basically they're based their opinions on based on polls. They're basically appalling the public. And based on that, they make it, that's where they go with. So they're led, they don't lead, they follow, 100%. And I think most of them, you know, in this country and other countries too, you know? So it's seeing leaders in other countries, you know,

that we actually led, you know, is inspiring. Yeah. Well, talking about inspiring, this has been an inspiring conversation. Thank you so much. Thank you. I enjoyed it. It was great. Thank you so much. And thank you so much to this episode's sponsors, Monaco, Flex, Clerk, and Numero. If you enjoy this, it's actually a huge help to like, comment, subscribe, and leave a review or share with a friend who's thinking about starting their own fund.

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