YouSaid · the spoken record

Jake Saper

lines on the record: 123
first: 2025-03-10
most recent: 2025-03-10
sittings or episodes: 1
sources: podcast

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“Notions, the ironclads, like the companies that are above 100 million ARR are growing nicely and still dynamic and young enough to make changes, but they're not startups anymore. I sort of segment the world into those three kind of buckets just way over simplifying. The biggest thing I've changed my mind around in the past 12 months relates to that, to this question, which is I was fearful when the power of LLMs came out that most of the value would accrue to the incumbents because of their data and distribution advantages. What I underappreciated, which is just the recurring lesson of startups, is the value of focus. The reality is like, it doesn't matter how much distribution Salesforce has, how much data they has. If you are a startup who's just focused narrowly on solving a very, very specific problem, if you're unify, you know, helping with the go-to-market stack in much more narrow way than Salesforce is, you're going to run just way, way faster. And customers are going to want your product more. We're seeing that play out. And so the thing I've changed my mind on is I'm less fearful.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a third category, and I don't know how to describe it, but we talked about a bit earlier, which is like these growthy stage companies. Which”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“It depends on pricing. So, this is a really interesting question. So, if you're pricing on labor basis, which is generally how most services are priced today, you in some ways are taking the risk upfront, right? Because you're saying like, okay, it'll chart. If it's going to take me this long, then I'll pay you.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“There are certain situations, so the easiest form of outcomes-based pricing today in AI is AI-enabled services. And this is a business that takes on the whole delivery of a product. So they say, not I'm going to sell you an AI tool to help you do support. It's I'm just going to do all your support. I'll do the people. I'll do everything else. We invest in a company called Mechanical Orchard that does this moving mainframes into the cloud using AI. They built a tool that's basically cursor for mainframes. But what they don't do is sell that tool to Bank of America and say, hey, use this tool to move all of your, use AI to move all your stuff into the cloud. What they instead do is they sell a service. So we say, we're going to use this really cool AI tool we built and we're going to move your product into the cloud. It'll take 50% as long and we'll charge you only 80% as much as the incumbent. And if it doesn't work, you don't pay. And that's outcomes-based pricing. So if you're moving kind of in that direction, it's easier to establish outcomes-based pricing because there's no questions. Did you do it or did you not do it?”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. So I think that the direction that this world moves over time is solution granted. I've spent a bunch of time learning about the FIN approach. It's hard for now. And the reason it's hard for now is a few reasons. One is back to the accountability part. It's hard to establish causality. If many support tickets, particularly higher level support tickets, have multiple touches, right? Like so someone, you know, a bot touches it and then maybe a human weighs in a little bit over here. And then how do you establish who was the winner? You don't want to create an antagonistic relationship with your buyer. If you're like, okay, I did all this and they're like, no, no, you only did some of this. I'm only going to pay you this. And all of a sudden, instead of having like a monthly, like an easy bill, it's like you're negotiating every month with the customer. That sucks. I think that like over time, we'll start to figure out some of those hiccups and bumps, but I think we're still in kind of early land on outcomes.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. I think there's a spectrum of pricing. So you have the classic perceit, then you have usage models, which look like all sorts of things. And then you've got true outcome space. I think we're sort of in a world right now where most of the forward leaning AI providers are experimenting with usage-based. And that could be usage-based, obviously, on how much tokens you're using, et cetera. But it could also be if you have an AI agent like we work with a company called Assembled in the support AI space, and they'll charge you based upon basically how many interactions the support bot is having with your customers. Then over time.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Also, make it harder to maintain, right? So you could spin up something and bolter lovable or with cursor, et cetera, yourself. And that thing becomes out of date in six months or even faster. And so unless you have someone and some process to constantly keep it up to date, the software is out of date immediately, which is often why enterprises start with build and then go back to buy when they realize, oh yeah, we built it, but we can't maintain it. But the third and most important reason why I think software vendors still have a role in the future is because the buyer wants a throat to choke. Ultimately, when you buy something from a vendor, I am getting a guarantee that you will serve me well, that the software will not have downtime. You'll be there when I have questions around support. And perhaps that you'll guarantee some outcome. And this starts to move into the world where software pricing is evolving and could look more like outcomes-based pricing over time.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I have a strong take on this, and I realize that it is a self serving take in that I am an investor who invests in B2B software vendors. And so I obviously hope that B2B software vendors continue to exist in this world. But I believe that B2B software, I believe software vendors have an important role in the future, even if the bolts of the world, the curses of the world make coding cheap, easy in some cases free. And there's three reasons why I think that's the case. The first is when you're buying software from a vendor, you're not just buying the code. You're buying an opinion on how to solve a problem. And that's a really important point. Like ultimately, if there's a software vendor who has dedicated their lives to figuring out the best way to solve a problem across a bunch of different use cases, they're going to have a lot more insight on how to solve it. And they're going to have that proprietary data, sort of like I mentioned in the mortgage use case than a closed source model is not going to have, that you can't just get off the shelf. So that's the first reason you're buying it. You're buying an opinion perspective. The second is the very factors that are making this software easier to build yourself.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Or not. And then based upon those outcomes, it makes better recommendations to anyone else in that situation in the network. So we call that coaching networks. The reality is co-pilot is a term that took off. But what's cool about that is it's domain specific. And if you build domain-specific large language models using that data, you're going to have insights that even an open AI won't be able to have.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I can't speak for Anthropic, and it seems like Dario is focused more on the long game of how do I do this AGI thing safely? And so my guess is his ambitions are focused there. But I do think that you're going to see a lot of specialized LLMs. And I think that a lot of them will come from open source back to the earlier point. You're going to see people who say, you know what, I'm trying to solve a problem in the mortgage world and I'm going to build on top of an open source LLM a tool that helps me analyze and make recommendations on how to write the best mortgages in a very specific way. And the cool thing about that, and this ties into, so we had a thesis back in 2017, my partner Gordon started it called coaching networks, which was a poorly branded but I think correct insight that the way AI will take place in business software is as a coach that'll show up and say, hey, I see that you're about to write this mortgage. Here's all the data you should actually be using and here's some suggestions on how to do it. It learns on what actually happens. You write the mortgage, you don't, does the person take it or not? Do they pay their loan?”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Part of it is like if you can build something that people use every single day. Like if it becomes part of their way they go about their lives. I think it's part of the reason why OpenAI is powerful, right? Because they've built a little bit more on the consumer side of things, but they built a situation where like you kind of.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“And so this is interesting. And this is why adding AI into SaaS has differences, there's a lot of learnings from the previous SaaS eras that we have to take into this next era, one of which is workflow is sticky, right? All of those lawyers who the majority of them will exist, at least in the medium term, are if they spend their day in this piece of software, it's really hard to rip out. Salesforce isn't the best CRM now. And I say that with a lot of love as that was our first investment and love of love for Benny Off. The reason why Salesforce is dominant is because there are tens of millions of people that work in that thing on a weekly basis.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“And has a unique insight on how to take advantage of it. So I would use Maple's framework, and I care a little bit less if it's a replacement or a new market.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“What I want. So I borrow this from Mike Maples, our mutual friend. So I read his book, Pattern Breakers, which I highly recommend. One of his core insights is that you should be looking for a business that itself has a unique insight on an inflection that's happening. An inflection could be a technological inflection. It could be, for example, open source LLMs are a thing. And so what is together AI's unique insight on how to deploy that? And I won't go into the specifics, but there's just really about how you maximize inference within that context. But in Zoom's case, obviously, there was an increase in the use of video conferencing. There was distribution of mobile. You could actually run the stuff on the application, on the, you know, on the computer itself, on the phone itself. Eric had a unique insight on how to actually put the model, or rather Eric had a unique insight into how to distribute this stuff with a codec on the product. It's a long way of saying, I think in both replacement markets, which Zoom was and in new markets, which together. is, you can find a situation where the founder is playing off of some sort of inflection happening outside of their business.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. And it's also a function of how good together gets at helping companies spin this up, like how painless will it be? If it becomes really painless, that 10 could be the whole world. You're right.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“That might be the right way to put it. So that's why I use the word dominant. You need to be a dominant part of the market. It doesn't necessarily mean it's the majority, but if it's 1% of the market and not 20% of the market, then the outcome looks different.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“The clearest way you have to believe for that investment was that open source LLMs will be a dominant part of the market over time, that enterprises that businesses are going to want to buy and use open source models and not just anthropic open AI and the closed source ecosystem. And the reality is we made the bet, like that was trending positively. I think it's trended more positively, but it's still frankly a little TBD”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Over I don't know if this is a commonly held belief or not, but I and I think we in general are not super concerned about the margin that OpenAI and the closed source models are commanding for two reasons. One is there's a lot of competition amongst the closed source models and you've already seen pricing decline a lot. So most of our application layer companies that are providing applications on top of these products are seeing gross margin increase over time because of that competitive dynamic. The second reason I'm not that concerned about it is Open source LLMs are really, really good at getting better. And so the reality is if you're an application provider and let's say for whatever reason OpenAI comes to you and says, you know what, it's 10 times the price and that eats into your gross margin, you now have a credible ability to go and spin up an open source model and have almost no basically have 100% gross margin. That's actually what together.ai does. So part of the reason why they've grown so quickly is because companies are like, you know what? Actually, we'll spin this up on my own. I'll have complete security, data.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think that, like, if these companies prove to have net dollar retention of 120% or above and maintain this growth, these are generational companies.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so there's different ways to calculate it, but in general, the way to think about it is if I had a dollar from a cohort of customers that I sold last year, then when they renew this year, they're at $120, they're $1.20. The customers that churn from that cohort are outweighed by the customers that upsell. So the net there would be 20 cent growth.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“So, what's changed? So, market pull has changed, and I think you're right that if we tell founders that the top decile is triple, triple, double, double, it's just not true anymore. It's more like the great companies are quadrupling year over year. But the thing that we, the rooster that hasn't come home to roost yet, which I think is, I don't know if that's right way to say it or not, is retention, right? We still don't know for many of these businesses because they haven't had year two, three years of retention data, how that's going to look. And so if I were to posit a replacement for the triple triple, double, double phrase, maybe it's something like quadruple 120. And what I mean by that is, yes, you should be growing very quickly, perhaps quadrupling you over year, triple, quadrupling, et cetera. But you should also have a net dollar retention of 120% or above.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, there are certain founders who aren't looking for the product we sell, right? We sell a low volume, high touch product. There's some founders who really want that. And there's some founders who are looking for a high volume, low-touch product to get out of my hair. And I think the nice thing about our diligence process is it actually selects for the right founders.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“The thing actually that made it worse, and you can see how fair my skin is. I didn't put on sunscreen. So we're in this field and Denver's at altitude, and I didn't put on sunscreen because I hadn't been outside in like a year. I didn't remember sun. And we're walking through that we do this like four hour hike through literally a field outside of the Denver airport. And I get completely just like horribly read, terrible. But like the good thing was I really, I really got to know Alex's vision. I got to really understand him as a person. I think vice versa. And we made the investment. I think the other thing that really helped with that that given that my partners weren't able to take that same sunburn walk with me is Alex and Rebecca, his co-founder, did one-on-one Zoom calls with every one of my partners. And so it was like a”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“So I'll tell you kind of a silly crazy story. So there was a series A in a company called Regal.ai. It was very hot. I think he had six term sheets from top venture firms. The company had grown from zero to, I think it was one and a half million in a year, which pre-AI was like very, very good. And founders were really credible, just great company. So a consensus deal. We got to know the founder relatively late in the process, but really clicked with both of them, but felt like we needed to spend time in person to really like get there, both on both sides. But it was the heat of COVID. So like you couldn't find a way to do it. To make things worse, it's not like they were in San Francisco and I was in San Francisco. We go to a park and like walk around. The CEO was in steamboat springs, Colorado, and I was in San Francisco. It's not an easy place to get to. So what we agreed to do, Alex Levins' name, what Alex and I agreed to do was fly to the Denver Airport and meet in a field outside the Denver Airport and go for a long walk.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. So we do record the calls. We also send out really detailed notes from every conversation. And then every night we send out an email with a summary of what's going on. So it's like, here's what we learned today. Jake did this call. Harry did this call. We talked to this customer. Here are the outstanding questions. Here's what everyone needs to dive in on. We need to help with, et cetera. And so it's this constant stream of information that's bookended with these nightly emails. The other thing we do is we have a lot of calls at night. So one thing we realized is that if we're having these diligence calls, particularly the internal calls we're processing all the information, if we're doing that during the day, they get compressed because we have 30 minutes and we're just getting into the meat of it in minute 27. And then we have to go do something else. The reality is like, if you do the call at night after kids go to bed after you've had dinner with someone, whatever, you have theoretically an unlimited amount of time on the back end, which means like the reality is we do a lot of late night calls discussing what we've learned and trying to synthesize the day.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“So there are ways in which our process hurts us there, and there's ways in which it helps. So, it hurts obviously because you have to coordinate lots and lots of schedules. It helps because we can do seven diligence calls in the same slot. So if you just have one person or two people doing diligence, then yeah, their calendar is booked out. But if I have seven of my partners plus principals and senior associates and associates and everyone working on this, you can do an incredible amount of work in a day. I've been amazed at how much work we've been able to do in a day when you have seven people doing it or 12 people doing it and you have one quarterback who's the diligence lead, which is the role I played at Zoom pulling it all together. What it requires is trust. It basically means if I come in with a founder and you meet the founder for an hour, but you don't know anything else about this person or the deal, you have to trust me that there's enough there. You are willing to blow up your schedule for the week, even though it's not your sponsored deal.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Much more an associate and a partner doing a bunch of work and then defending their investment against an onslaught of questions and doubters. And then if you survive that onslaught, you get to do the deal. Our process truly is a process of seeking truth collectively that I think allows us to pick better. And hopefully once we make the investment, help the company better.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Everyone's calendar gets blown up. Everyone's weak. Whatever you thought you were doing, you were now doing something different. It basically means everyone is focused on doing diligence for this deal. So what it means is that for every investment we make, every partner does reference calls. Every partner calls customers. Every partner calls management references. Every partner does back channel references. And many partners do on-site visits where we actually go and we spend time with a team. We see what's happening in the kitchen. So we kind of pick up on all the less structured data points. And by having multiple people make that trip, multiple partners make that trip. you're collecting a bunch of first party data. So then when it comes time to make the decision, when you're staring at that what you have to believe sheet, it's not just two people in the firm who have made this what you have to believe sheet. Literally everyone has contributed to that. And one person can say, you know, I heard this customer say this and the next person can be say like, yeah, but this customer I heard in their voice, like they sounded a little more wishy-washy. And then there is this process of seeking truth. In contrast to most firms, and I've worked in other places, which tends to be...”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, yeah. So let me explain the diligence process, but let me just finish that last thought. I really do believe this helps change outcomes. So we just raised our new fund. And as part of that, we did this analysis on how have our deals fared in terms of like certain graduation metrics relative to market. Nine out of ten of our deals are early stage investment seed series A, have gone on to raise successful fallen rounds. One out of five have gone on to raise rounds at north of a billion dollars. One out of ten of our early stage investments have gone public. So we're good at picking, and I also think we're good at bending the odds of success. And I think part of it comes back to this model, the fact that we do the work together as a team. And so back to your question, the way we do the work together as a team, we have the founder come in and present to our partnership relatively early in the process. And also all the partners get to know the person, the founder. And then we have this discussion afterwards, like, is this something that we're excited enough about to make a priority deal? And those are holy words with an emergence. When you say the word priority deal.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“And assuming I've done the I and we have done the diligence well. And also, back to the bend, the odds of success, I genuinely believe this in some other VCs more skeptical will doubt me on this.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“That's correct. Yeah. That does mean I haven't taken enough risk. And that's something I talk about with my partners a lot. Some of them may still go to zero. But you're right. I think part of it is we're investing in B2B software businesses that have recurring revenue models. And so in general, right?”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Potentially, yeah. I think the good news is we've expanded our partnership, so we now have seven partners. And so we have more shots on goal. We have like when you think about it, less about me as an individual, just more as a firm. We're taking a little more shots, which I think helps us with the averages. But the reality is like it's been.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Super Yeah. Well, it's important to understand that in the context of emergence and how we operate So, we're a focused firm and we're focused in three ways. The first is in what we invest in, the second is in terms of how we invest, which relates to this question, and the third is how we grow our people. On the what we invest inside of things, all we do is B2B software. It's all we've ever done. It's all we ever will do. The first investment 20 years ago with Salesforce, then the vertical SaaS thing happened. We did Viva. Now the AI thing's happening. We did together and bolt and blend and unify a much of others. So we're very focused thematically. And all of us just do that work, just focus on B2B, which means we are uniquely able to invest collectively as a team and have everyone do the work. So on the how we invest, how we're focused side of things, this is where this comes into play. Every partner on average makes one investment per year. So we are super focused in terms of the amount of investing we do, which is obviously very high risk, but it's high conviction. And if it wins, it returns the firm many times, fund many times older, which we've had lucky to do with a number of funds. That approach allows us to work collaboratively as a team when you're only doing a relative.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“After you have the pitches, like after you've spent some time with the founder and you've looked at the materials, you have some hypotheses as to what those could be. And then as you're doing the diligence calls and doing the actual work itself, you're refining them. And importantly, you're gathering the data to help support or negate each what you have to believe. So every diligence exercise results in a chart. And the chart is, what are the three to five what you have to believe? What is the data supporting this what you have to believe? And what is the data negating this what you have to believe? And then we can all stare at this and say, hmm, on balance, do we believe it?”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, we do. So the framework we use internally to figure out if we should do the investment, it's called What You Have to Believe. The framework basically means you try to identify what are the three to five things that are specific to this deal that you have to believe for this investment to return the fund. And there's a bunch of things that go into that. Like if you think of, if you unpack that, there's things like dilution. How much additional capital will they have to raise? Will the founder be able to raise that capital as well? There's obviously questions around defensibility, questions around market. There's questions around competition. There's questions around team. And all those questions depend on the company. So when we do the analysis, they're always unique to the investment opportunity and to the fund we're investing out of. So when we're doing diligence, what we're trying to do is identify what those three to five, what you have to believe are specific for the company.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“No, I don't think so. Viva wasn't competitive. There is still a world where you have a unique insight that other people don't believe in and or you get to the person first where you can have a better deal. Most of my competitive deal.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“They are not always expensive, but they are often expensive. So if I look back at our portfolio, Gusto was expensive, Zoom was expensive, Yammer was expensive, ironclad was expensive, but some of them weren't. Viva wasn't expensive because that was non-consensus at the time. Sales Loft was also non-consensus at the time and was not expensive. More recently, my partner Loti led an investment in a company called Federato, AI software to help insurers underwrite better. But she made that investment before the Zeitgeist, before people were like, oh, this is obvious and this is going to happen. And to her credit, there was a lot of questions and she pushed through and she got that deal done and she got it done in a pretty good price. And then the zeitgeist hit and the companies of Series B at a much higher price. So I do think that it is possible still in this world to be non-consensus and right and get a good price, but it is also true that there are increasingly higher more and more and more consensus deals and you want to be in, you want to be in both.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“There will be no more Harry Steppings. I will crush them. I'm worried for the world. If there is more Harry Steppings. Yeah, that was the thesis. I mean, remember in the peak of COVID, you were making assumptions around how the economy would look going forward. And the reality is it's hard to forecast. And there was a world where people would be remote, you know, indefinitely and we wouldn't be back in more concentrated areas. And we made some bets that focused on that future. We made some bets that focused more on in office future. That's our job is to call the future.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“So, if you think about this more broadly as a creator economy tool, like if you think that there's going to be more Harry Stebbings of the world who are 16 in their rooms who figure out, I want to start my own business and you provide a business in a box for them, that's potentially interesting.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“It was a series A. I think we put in like nine. We ended up getting most of the money back because the founder to her credit realized when the market pull declined and shut down the business and returned the money.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“It's kind of like that. And my mom has been teaching this since before I was born, and she's still teaching it. The woman's almost 70. It's amazing. So I have a soft spot in my heart for aerobics instructors in general. But the thesis was during COVID, everyone's working out from home and these people need a business in a box to help them run their own show so they can do it on Zoom, et cetera. And the reality is there was market pull briefly for this product. And then when people went back to more normal life post-COVID, you know, the gym teachers often went back to the gym. And so there was less market pull.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, I've got a good one. So we made an investment during COVID in a company that helped exercise instructors go out on their own, like and build their own thing outside of their own thing. You're laughing because it's not.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“This is what the founder comes in, right? So, like, if you were to ask me to rank founder versus market versus traction, hypothetically. The first one is market pull. Like, that is the most important thing, I think, when you're evaluating a potential investment or starting a company. The second is the founder because it's the founder's job to figure out how do you build something defensible in that world of market pull. It's not enough to just build something, obviously, without that's just tapping into the zeitgeist. And that's particularly true with a lot of the voice AI companies that are coming out right now. There's a lot of market pull for those companies, but their job is to figure out how they can parlay that landing wedge into something more durable. And different companies have different strategies for this to go back to the bolt example, the thesis we underwrote to is that Eric and his team had built this technology called Web Container that allows you to host a web app dynamically in a really robust way. And we thought that was going to provide some defensibility to the business. It's still very early, so we have no idea how that's going to play out. But I think when you're making an investment, you have to have a hypothesis about how the founder is going to build defensibility if he or she hasn't yet done it.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“B2B company. So when you talk to users or prospective users, when you talk to users of the product, the things I want to hear are things like if my boss stopped paying for this, I'd quit. Or if my boss stopped paying for this, I'd pay for this out of pocket. When you hear phrases like that, you know, like, holy shit, this has changed someone's day-to-day life. There's real market pull for this.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“You want people desperate for your product. That's something that is so overlooked when someone's starting a company. I think particularly when someone's starting a company because they want to start a company, not because they're trying to serve a specific need. You want people who have tried desperately to solve this problem themselves. It's not a desperate problem if someone hasn't, if your buyer hasn't tried to hack together something on their own to solve it or if they haven't bought an inferior product to solve it, or if they're not spending countless hours themselves dealing with it. Otherwise, it's nice to have. So you need something that is just like, oh my God, this is a massive problem I need to solve.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Parker's a monster. Like, there wasn't a bad bet. Obviously, things happen to that company that made it not a successful outcome. We had just invested in Gusto, which was a competitor that was growing not quite as quickly as benefits, but the reality is Gusto has endured and become a massive company and Xenophon's didn't. Now Parker went on obviously to build his own business that's doing quite well. Now, as we all know. But the broader point is just because something is a breakout right after you invest or early on doesn't guarantee that it's going to win. The breakout can indicate market pull, which is the most important thing of all, but it doesn't necessarily indicate an enduring company.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Poured a ton of money in and he was my tenure, I think I was a principal or something at the time. So really putting your neck on the line to really put a lot of money into it. And he was like, I just made, you know, this is going to be it.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Humility point is a conversation I had in 2015 with a peer investor at another firm. I remember he came to my office and he said, I just made my career defining investment. And I was like, ooh, please tell me what it is. And he goes, Xenophon's. This is a moment, obviously, where Xenophonites was on an absolute tear”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“So, it's not always obvious. And there's a lot of humility, I think, that is important in this industry for lots of reasons, but that's one of them. So bill.com, been around for a while. We were one of the earliest investors in that company as well. And that was not a straightening of the right company. So it grew nicely before the financial crisis. Financial crisis happens and the business starts to stall a bit. But then we help them figure out the channel partnership strategy. For them, partnering with banks, I think specifically Bank of America was the first one that unlocked, really accelerated that business to figure out like, oh, we can sell through these banks, whereas low ACB products. So doing traditional go-to-market can be expensive. We find a shadow partner, the whole thing can work. And that business absolutely took off and has been an amazing winner since then. That's a great example of one that wasn't necessarily like this. It's kind of like this and then this and then this. That is very possible. And that company made fun one for us. And that's part of the reason why that fund is so good. That's one example. I think another example that comes to mind around this.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“What the other fast growing players represent is market pull, right? It's that the buyer wants this. And so the burden on a company like Guru is to figure out how can I offer something that is different than what those players have, but still tap into that market pull. In Guru's case, it's we have knowledge management and the AI enterprise search. In Glean's case, where AI Enterprise Search only, and there'll be a bunch of people who just want that, and there's a bunch of people who just want this.”
2025-03-10 · The Twenty Minute VC · 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital · IDENTIFIED FROM THE TRANSCRIPT · source