Oren Zeev
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The Peel with Turner Novak · Oren Zeev's $2.7B Solo GP Playbook
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How Did Peter Thiel Get Oren Zeev to Raise a Fund?
Peter Thiel got Oren Zeev to raise a fund by offering, in a meeting Zeev thought was only a comparison of notes, to be the limited partner and treat it as an experiment. Zeev had left Apex thinking he was finished. He had made enough money, the partnership had been a hard place to work, and he was worn out. He spent 2007 trying other things, including teaching high school math. In 2008 he came back to investing and refused the normal structure. He calls that choice post-traumatic, not a strategy. He would not join a partnership or start one.
For seven or eight years he invested alone, led every deal, wrote seven-figure checks, and did about two a year because that was all he could afford. H
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Where Do Oren Zeev's Deals Come From?
Oren Zeev says about 80 to 90 percent of the deals he ends up doing come from other portfolio companies. He has no associates out hunting. A portfolio CEO introduced him to the founders of Descartes less than three years before this conversation. He took the Zoom the same day. There was no finished plan. The idea was to optimize inference: the founders could program low-level GPU code, including CUDA for Nvidia chips, and it was not clear whether they would sell to businesses or to consumers. What was clear to him was that the founders were exceptional.
They had a legally binding agreement in less than a day. He met them in person a week later. The introduction and the decision both happene
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Why Did Oren Zeev Hold Navan Stock After the Lockup?
Oren Zeev held Navan stock after the lockup because he thought the share price was far too low and that selling then was not in his limited partners' interest. Over the last two or three years, limited partners had become extremely focused on DPI, the cash a fund has actually paid back. Some would count only that cash. A manager with a good portfolio can manufacture DPI by selling shares in the secondary market at a discount. His early funds were already far beyond the record he needed in order to raise again, so the discount would have been easy. He did not take it. Until a year or two before this conversation he still did not have good DPI, and he knows he lost limited partners over that.
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Why Does Oren Zeev Invest Across Funds?
Oren Zeev invests across his funds, which he says most other managers will not do. The objection is a conflict of interest. If a new fund puts money into an older fund's company and it fails, it can look as if the new fund was used to bail out the old one. If it succeeds, it can look as if he took advantage of the first fund's limited partners. His answer is that those backers have to trust him. If they do not trust him, they should not invest.
He says he will not use a new fund to rescue an old one, and he will try to get the best deal for the new fund. The company takes the money only if the deal makes sense for the company, so the CEO, not the manager, looks after the older fund. He does
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What Does Oren Zeev Do in a Typical Week?
Oren Zeev's typical week is a board meeting or two, a few founder calls, and long open stretches, including time in the ocean. He does not count the meetings. Told about investors who talk to eight founders in a day, he calls that insane. Once a firm measures deal flow, it starts optimizing the number, including the boast that it saw 8,000 companies and did one. He tries to see as little as he actually needs to see.
Monday on the week he described was yoga and one board meeting. Tuesday was a company call, a CFO candidate, time helping a founder, a surf, and one more call. The day of the recording was two board meetings, a call about an investment he was making, and this conversation, done
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Why Does a Venture Committee Miss the Best Deals?
Oren Zeev says this business is not symmetrical, and a missed investment is much worse than a bad one. A deal you should not have done costs the money you put in. A deal you should have done, and did not, can cost 100 times or 200 times that in gains that never arrive. Partners, even smart ones and even without internal politics, do not push you into a deal you would have skipped. They push back on deals you already want. If they are right nine times out of ten, one blocked deal that would have returned 100 times still wipes out the nine bad deals they stopped.
A committee is not necessarily the better decider. It moves toward consensus. One person can follow a gut feeling and do something
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How Does Oren Zeev Run a Venture Fund Alone?
Oren Zeev says most partners add very little value to each other, and a team is not automatically better than one person. Speed matters. Alone, he can be faster than anyone. He would rather source the deals himself than depend on another partner, because a partner who really likes a deal usually keeps it. A partnership also makes the firm look like a thousand others. Operating his way is the unusual version, and he thinks being different beats being a bit better. Speed is a large part of winning a deal.
Founders meet the person who decides. He calls the shots, and he makes most of his investments within 24 to 48 hours. The ordinary path is slower. The partner on a deal has to explain it to
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Why Is the Israeli Connection Network Exclusive?
Oren Zeev says the Israeli Connection Network is exclusive because when you try to help everyone, you help no one.
The original idea was to help Israeli companies in Silicon Valley with guidance and connections. Five or six organizations had the same mission before the Israeli Connection Network. They were all very open and inclusive, and none was very effective. He was a very hands-off chairman. He helped with advice and some connections while someone else built the organization. Being exclusive lets the network curate the other side too: the best investors, the best corporate executives, and potential customers. An inclusive group is a lot of noise for the investors and executives. An exc
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How Did Israel Seed Eight Venture Funds?
Oren Zeev walked through a program that sponsored eight funds of $20 million each. The sponsor put in $8 million and gave the other LPs an option to buy the $8 million five years later at basically cost, which leveraged the investment. Managers still had to raise $12 million from LPs. People needed the initiative to raise a fund, and market forces decided who could do it.
The design created a positive effect without distorting the free market. No bureaucrat decided who would be a venture capitalist, and no corruption was involved. The eight funds are the basis of the industry today, and some still exist in later incarnations. They started operating in late 93, a great vintage with time to b
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Why Does Oren Zeev Skip a Limited Partner Advisory Council?
Oren Zeev skips a limited partner advisory council because he wants no extra rules and no friction around cross-fund deals. Most funds have a limited partner advisory council. Firms that do a cross-fund investment bring it for approval, and they receive approval, but the process already reduces the motivation to do the deal. He has no council.
Limited partners who back him trust him. He will not betray limited partners or founders, because betrayal is self-destructive. A person can betray other people's trust only once, and afterward they never receive trust again. He treats each fund as his own money because in many ways the capital is his. He is typically close to 15 percent of the fund a
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Why Was Early Corporate Travel Software a Nightmare?
Oren Zeev says first-generation corporate travel software, built in the early 2000s, maybe had the control and visibility a chief financial officer wanted, but it was a nightmare for employees who travel. Builders treated the chief financial officer as the customer and ignored the person on the trip. Travelers still had to use the tool because finance ordered them to.
They hated it and went rogue. 50% of the time they found excuses, including that they could not find a flight. When people skip the software half the time, the company loses the control and visibility it thought it had. A bad product fails to deliver what the buyer expected. People started to talk about consumerization of the
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Why Does Diversification Inside One Fund Have No Value?
Oren Zeev says diversification inside one fund has zero value for LPs, because they already invest in multiple managers. A manager should not put the whole fund in one company, and he would not put an entire fund in two companies. A fund also does not need 30 or 40 companies. When 10 companies produce bad results, the problem was not investing in 10 instead of 20. The problem was elsewhere, and he floats a terrible vintage, no advantage in access, or poor judgment as the open possibilities.
One of his funds held only five companies, and it worked. Two were clear home runs, one is still undecided, and two are alive but probably will not work. Two out of five as huge home runs carried the res
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Does Oren Zeev Start With a List of Ideas?
Oren Zeev does not show up with a pre-planned list of ideas he is looking for. He has never done healthcare because he feels he lacks the intuition. He is allergic to crypto and is not looking for opportunities there. He tries to stay away from hardware for the most part. Hardware is all the rage now, and in his view staying away might be a mistake. He also tries not to go where everyone else is going.
He dislikes thesis-based investing, at least for himself, and knows it works for other people. For the most part, every single fund has the same thesis, so everyone chases the same opportunity. He wants to stay more independent in his thinking. Describing the approach makes it sound like a bi
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Does Oren Zeev Use a Pitch Deck?
Oren Zeev never presents a single slide to any limited partner and has no pitch deck at all. He answers only what they ask, and he will not tell them a plan is his strategy, in case he changes his mind in a month or two. He adds that he can feel differently about an answer the next month.
New managers should not commit to extras such as lengthy written reports and an AGM. After fund three or four, backers are used to the setup, and stopping it is very difficult. Expectations set on day one are fine. In his experience, most limited partners do not care about the extras. He would rather not raise than run the fund any other way. The goal is to behave as if the capital is his own while still u
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How Does Oren Zeev Report to Limited Partners?
Oren Zeev sends limited partners a quarterly report made of numbers only. An outsourced CFO supplies the figures, and he spends 5, 10, or 15 minutes going over the companies to set values for the report. He does not write stories, because limited partners do not read them.
Every VC he knows writes summaries on the portfolio companies every quarter. He does not believe in the reports. He tells limited partners ahead of time how he operates, and anyone who wants narrative updates opts out. He uses that warning to filter people who expect work he does not want to change for them.