YouSaid · the spoken record

Kareem Zaki

lines on the record: 95
first: 2024-10-08
most recent: 2024-10-08
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Shocked if that's the last product that they launch. We're going to see more and more, and because of the scale of the platform they built, the ability to launch so many things into space and start to open up an imagination in ways that we don't know, we're going to see more and more built on that. And I think similarly with OpenAI, I think it's easy to put a ceiling on OpenAI because it's so impressive. But come on, it's been two years since they launched a product. To say that there's a ceiling on the company to just try to cap what we're looking at now doesn't really resonate. It's like being in 97 in the internet and thinking what you know what it's going to look like. We're just seeing the pull so aggressively in the market, a company that's innovating. The idea that their innovation is just going to stop because we're so impressed about where it is today, I think as some people's natural reaction, but that wouldn't make any sense. Or that we've seen the balloon in AI and we got the hype. And of course, things aren't going to always translate on a perfect line. And there's going to be overhype cycles. But to say we've thought...”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“There's two things there. I think we look at these companies, and I think our gut reaction is $200 billion valuation, a $50 billion valuation, $100 billion valuation. Oh, man, that's so big. How could it get bigger from here? But I think we're just anchored to the past. And the reality is just we're underestimating the ability for technology to transform every industry. And so we just look at that and say, yes, these feel like high absolute numbers, but if you look under the hood, you'd say, wow, we're still really early in some of these trends. I think if SpaceX, on the same thing, it's almost hard to quantify where these things are going to go. And so we even look at the core and say, yes, they've accomplished a lot, but they've opened up a new frontier that really has no headwinds. Yes, a launch company, but they've launched Starlink. And I think they're going to reshape what telecommunications looks like. And again, we'll look at that because it's just so impressive. And I'm trying to put a cap on SpaceX.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Though we've seen that narrative a few times, I still think people really underappreciate that. And I think it's part of our early stage lens that we're able to sit with the founder, we're able to see the vision, we're able to think about the product surface area where they sit, the data gravity that they might have, the workflow and the engagement they might have, and what does that create over time. I think that was a big part of our insight into GitHub where it was clear they were dominant in the developer community. But we just thought it was a really strategic place to play. One, because developers were going to grow. Everyone was forecasting, I don't know, 5% growth for developers. Well, we just knew that everything was going to be built in a digital way. So that just didn't resonate or sit qualitatively with us. But on top of that, you just sat in a place where code was being created and collaborated on. What are all the downstream things that are going to be created from that? And I think you fast forward, obviously it was acquired by Microsoft, and it became an important strategic asset in terms of launching things in the cloud and all the downstream things that would come from owning the developer relationship.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolute numbers to visualize that and how it's going to play out. I think the second thing that I think is underappreciated in the market, and I think it's an advantage to us as both being early stage and life cycle investors, is the opportunity for a lot of these tech companies to take a product and build a platform. And I think being in the weeds with this company is understanding all those details. I think it's a different muscle in mind than historically traditional finance investors who know how to read a P&L, who know how to value the cash flows of a future company, but maybe underappreciate the strategic placement of a company and all the things that are going to come from that over time. And so we've seen those journeys with some of the first wave of these companies. Obviously, Amazon's become much bigger than it ever was. Meta and Facebook has evolved in multiple dimensions. Google's evolved in multiple dimensions. More recent companies like a ServiceNow are at Lassen. You just see the compounding of layering on products.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's two things. One is what you called out. I think the market underappreciates the scale of where these opportunities can go. I think if we went back a decade ago and I asked you if there was going to be a trillion dollar company, you'd say no way. And then if I asked you five years ago, if there's going to be a three trillion dollar company, you would laugh and say no way. And I think we have three of them now. And so I think we're underestimating the impact and the transformation and the returns to scale of a lot of these companies. Talk about Stripe. We're looking at the round. When we led after COVID, Stripe has been working at it for over a decade. It's this really established company. It's a category leader. You go look at their market share. And I think it was like 2% to 3% globally. And if I tell you that are more things going to be bought online versus less things, you'd say absolutely. Even then, e-commerce, 30-year trend, we're 20% penetrated. And so you just look at that, is that 2% or 3% market share for Stripe going to go to 5%? Going to go to 8%. But I think we struggle at some of these high...”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“We kind of leaned into it and we've seen how that's played out. And I'm just excited that more and more of the markets going there. And we're realizing that a hard thing, a capital thing, might actually not be a bug, but a feature of a great opportunity”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Like, no way you could sell defense to the government, or no way you can achieve AGI. That just seems crazy and a fantasy. And in 2050, not 2030. And then these companies kind of quietly build as OpenAI has done since being founded in 2015. And then they have these light bulb moments, and then everyone's playing catch up. And so that's exciting to us. And it's something that we love to lean in. We love that more founders are doing. It's been part of our DNA from the beginning. I think being based in New York, we were backing some of these more service capital-intensive businesses, whether it was Josh starting Oscar or us starting a PBM in right way to go after the big three PBMs that control 80% of the market and have 200 billion of enterprise value or backing a lot of the fintech companies that you had to have a balance sheet or you're regulated like a Robin Hood or a firm or a new bank. And so those things were scary to people.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“In 10 years. And I think the great thing about that is usually also those aligned with great financial outcomes because you end up banding together a really talented team. Again, these big problems sometimes seem scary, but I actually think it's probably easier to go build because you end up attracting way better talent. I'm glad that the market's catching up now, that capital is actually going to these great ideas instead of being crowded out by SaaS. Also, when you're working on these things, there's less competition. And so to the extent you're able to succeed in what you want to do, you're in a position to go capture that value, whether because you're the only person, you know, SpaceX famously, they don't really have competition as today to know some people are inspired now is what they've seen with SpaceX, but they were building for two decades, no one was really paying attention to what it seemed like they're doing is crazy. And now they've built almost an insurmountable elite in our view to go do that. And I think more companies are starting to think like that, like an Androil, like an open AI. Companies that have a long-term vision, they're going after these crazy problems, which the first couple of years.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. I think you articulate really well. People just want to work on real problems. They want to work on things that, if it works, are going to have impact in the world, are going to feel meaningful. And I think maybe we lost sight of that over the last couple of years because it was just too easy to build a company. And so everyone kind of want to launch something. Every employee at a corporation had a corporate card that they could just buy some piece of software. And I want a calendar app that's blue instead of red, so that's why I'm going to pick this one. And that just, I think diluted us or confused us from what actually would be meaningful in the world. So we looked at revenue traction and said, that's a great company. And when you step back, great companies solve big problems. And I think that people are being grounded back into that. And we're coming out of the lead up to COVID and the rise up of all these tech companies and the ease of capital that went around. And now people, I think, are reflecting to be like, what do I want to work on? What's meaningful? What do I want to talk about with my families? What am I going to feel proud about?”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Companies with Brex, Ramp, and Divi, and Divi got acquired by Bill.com. Having that insight in the room, I think really added a texture to the conversation. And so I think the other thing is I think you'd be surprised by the nature of the conversation, contributions from people who aren't just investors, that adds a richness to the decision making in the debate.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Room, and you'll just see a smile go across Nathan's face because clearly he understands some case or some market or seen it a hundred times and worked really struggling with it because we think it's the first time that this has happened in the world. And just his insight that he can drop in that situation to make it even tangible when we were looking at ramp, at the time you had companies like Ramp and Brex and Divvy and five or ten other players. lots of corporate cards in the market. And we were excited about RAMP not just because they were corporate card, but because their vision to automate finance and all the elements in the products we're going to launch over time. And the North Star felt different than every other company that was maybe focused on easy access to credit or awards. And so we're debating, how's this market going to play out? There are going to be 10 people in this market forever. How's it going to go? And Nithan just goes, it's going to be three companies. And one of them's going to get acquired. This is just the nature of consolidation in markets. And lo and behold, a couple years later, there were three companies.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“In a way that's special. And I think one of the things we've really benefited from by having an impact team and having world class operators across finance and talent and data and communications and research is that we have contributions in a much richer color of these companies for the deal I was talking about this morning. News, who leads a lot of our portfolio impact and leads a lot of the product managers and engineers here spent over 30 hours with the founder working through different things over the course of months being invited to help him think through different dimensions. been able to get insights from people who've operated in certain dimensions. And those opinions, I think, add a richness to the conversation. I think the best representation of that is also Nithan, who's our executive chairman. He was the dean of HBS for over a decade. He's a confidant mentor, thought partner to so many of the leading CEOs, and brings in such a richness of case studies to all our conversations that really enhances it. Some of my favorite moments is we're having an intense debate in the room.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“How much trust we have? There's not that many of us, but I'm excited to get the feedback of my partners to help me make the right decision and they're willing to push me in that way. I just went through that this morning on a deal and just the process and the vulnerability helped. I even walked into the room sharing a little bit of, hey, this is where I'm thinking. And this is where I'm honestly very conflicted, which the more I understand is pretty rare. I think the last thing that's kind of interesting at Thrive is obviously we're an investment firm, but there's so many contributions for people who aren't investors at Thrive, and I think it really adds a richness to the conversation. And it's funny because a lot of investment firms are mostly just investors. But if we looked at a startup and it was a product company and all there were engineers, you probably would not say that's not going to be the best executing company. And of course it's a product company. You got to go build that. But the finance team and the sales team and the communications team and all those elements really come together to create a symphony and play music together.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“In that. The second thing is this idea of not asking for permission. Well, because we're small and we have a lot of trust with each other, I'm going into that room knowing I can do the deal if I want to do the deal.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Investment Committee is more political than it actually is truth seeking because trying to make this pitch, you're really trying to get permission to go make an investment. And I look at that and say, what a wasted opportunity to not really leverage the brain power of your partners, the people presumably that you think most highly of in the world, in the space that you're operating with, oh, and understand you so well to not really get their full under varnished view about what you're doing and to be vulnerable in the room, to have unfiltered feedback through that. And so a lot of times it's not that we're asking for permission, we're inviting participation in our journey to go make the best decision. And I think we're able to set that up because precisely we do have a small team. One, we have deep relationships with each other. So we know that any ideas aren't personal. We're really all just trying to achieve the same goal together. And we can engage the substance on the page without the person feeling personally attacked.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“How's this company going to look? How's the S1 going to read? How are the big incumbents going to respond? How could this be one product and become a platform over time? Which I think gets us to imagine to believe if the founder's in the room with us were starting to dream with them in the pitch and see, do we have alignment around where this is going to go? Can we see the future together? Do we see the steps that can get us on that journey? And are we inspired by that? I think we look at that room and the more animated it is, the more creative it is, I think the better investment decision we're going to make. I know I keep repeating it, but the small ideas attract a lot of competition. There's something fresh about the big ideas that when they come into a room that I think get people excited. And I think so qualitatively we lean heavily there. And then we're obviously investors. So then we think quantitatively, okay, this narrative plays out the way that we see. Are we going to be rewarded for this investment in the way that makes”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think you'd see an interesting blend of right and left brain thinking, which I call out because I think people think about investors and say, oh, left brain quantitative. But I think you'd be surprised at the creativity and elements that shine through. I think internally we kind of refer to it as a blend of East Coast and West Coast thinking thrives based in New York City. That's really important to the roots. I think it led to a lot of independent thinking. But we have a deep admiration and passion for creativity, these big projects, these magical products that can transform an industry, which I think the West Coast and Silicon Valley have famously invested aggressively behind and created some of the greatest innovations that we see today. And so if you're in the room with us, I think you'd be surprised at how much we lean into the creativity, the magic that's being built, trying to imagine the world five or ten years from now, not just the next one or two years, even we're looking at seed and series A companies. A lot of times the conversation would be like, okay, I see where the next two years are going to go. But 10 years from now,”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“They have less capital, they have fewer resources, they have fewer people, they have less time, honestly, to go after these markets. And so they needed to be changing so that the incumbents, especially in these more calcified large markets, have less to be able to compete them on. They need change. And so we really pay to what is the change catalyst that's going to drive it in a given market. Because if you look at Amazon and how they beat Barnes& Noble, If in a different narrative in an alternative universe, Amazon just built bookstores. I think they would have lost to Barnes& Noble, despite how smart those people are. Because Barnes& Noble has been doing that for a long time. People are really good at that and they have a lot of resources pointed at that. I think Netflix would have lost to Blockbuster if they just decided they were going to build a bunch of stores and rent DVDs and videos because Blockbuster was very good at that. They had it really honed in. So that's something that we really look for, again, what's the change that's happening, especially if it's these well-established markets that have incumbents.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“By whatever it was, a billion dollar taxi market made no sense. Something growing that fast isn't going to be so constrained. And then if you zoomed out a bit, if you looked at tangential markets, well, transportation's a massive market. And so we look at it if is there speed in the market and is there obvious tangential areas of spend that could be represented in what's happening? And then some categories, I think, are a little easier to define and think about, which are these old categories that are going to be turned over. financial services well we can look at the banking sector we can look at the brokerage sector we can look at the credit card sector and get a thought about that or the healthcare market where obviously we can look at where all the spend's going i just think what's really important when we look at these old defined markets even though it's more appealing because we can neatly put it in a box or put it in an investment memo how big it is is this emphasis on where's the change in the market our partner miles has a good longs like startups need to be change seeking and i think where it really comes from is startups have so many disadvantages”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“And then to the separate point on market. I use a couple things that really show up as we look at categories. Back to this point that no company is big enough to create its own wave, we really need to see change happening in a market. And ideally, it's not a ripple. It's going to be a tidal wave, especially when it's a new market that we haven't seen before. It's hard to tell for sure, but we're really looking for obviously one scale of vision. Some things just hit you as big, some feel small. But then you're also looking for the velocity of the market in those early moments to tell you how long it's going to run. A couple years ago, when we're looking at AI, obviously the market was small, but you just saw the pull and obviously it wasn't hard to imagine how all of work wasn't going to change this way. And so we're not going to get the forecast in 2030 right. But you just look at the pull of the market and you can kind of imagine it being very large. The famous example of Uber where everyone undersized the market, because again, these new markets are hard to predict. But if you looked at Uber, it was growing insanely fast. So this idea that it was going to be capital.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Even though we know we're probably losing money on this hot dog and soda for $1.50 or whatever it is today, I love that. And so we see that in a lot of our companies. Actually, a fun anecdote about Robin Hood. When we invested, they were only an equity platform. We had this meeting and talk about all the other things that they were going to launch. And one of the things we had on the page was, well, there's all these robo advisors that seem to be getting traction. You should just bundle that in to the product. And the reaction was interesting because they were like, no, if we're going to do something, it's got to shock the consumer. And that was just so core to their DNA, these really frictionless, amazing value products when they first launched. Obviously, they shocked the consumer. $0 trading. No one could believe it. Everyone's like, how they're going to make money. And obviously they had a plan and they delivered on that. And it persists to the company today where they launch a credit card and it's 3% cash back and no one can believe it. And those are some of the unreasonableness that these founders bring. I think you can have it across one or two dimensions if you have too many mutations. You become an alien and no one knows how to work with you. But we usually see some of that really shine through.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know what the exact word it is, but they almost have an unreasonableness, like a mutation in them that makes them uncompromising around some dimension that you wouldn't necessarily expect, but makes the company really special for Stripe and Patrick and John Carlson. I mean, it's just a push to simplicity. How do you take something so complex and arcane as payments, make it as simple as possible for developers? Ramp, we've been talking about the velocity and just the speed to kind of push. We're going to be uncompromising about responding to customer needs. I saw them post recently. They responded from a customer request to new product feature in five hours. I mean, that's just where there's being relentless and uncompromising about doing that. I mean, that even scales outside of tech founders. Costco, just unreasonable at giving value back to the customer. I love that they make fun of a CEO there for refusing to change the price of the hot dog and the soda. Because I think it's just so emblematic of what they're delivering to the customer. And we're going to be uncompromising about that.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“We want to go to Mars. Amazing. Well, you're starting to see how all those steps have been planned out over two decades of first being able to launch into orbit. And now we have Starlink and all the things that they're building on top of that. We have another company in our portfolio formation bio. They're a full stack pharma company. We invested with them in the early days. But even then, when they were just”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Think you talk about these great investments without talking about the founders? They're the heroes of the story, they're the ones that create and push boundaries and push farther than our imagination. And so it really comes with one does the founder have a big vision to start? Beck's idea that small ideas have lots of competition. When a founder comes in and lays to you a big vision, just rewires the way you used to think about the world, it really hits you. It feels fresh. It feels different because you see lots of pitches that look similar that play out. I think a couple years ago famously, we saw so many SaaS companies being pitched just across the board every vertical. That's not an insult to the category, but I think there was a moment of time where that just felt so easy that we just saw so much of it. And so the first is a founder who's willing to zoom out, rewire your way of how you're going to think about the world, but also can get into the details and connect the dots of what that's going to look like. And a big vision without a plan, it's just a fantasy. And so famous example, SpaceX.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“A founder. Another thing about being life cycle investors and also just being the individuals, even when we don't invest, being able to have seen a founder from the seed, series A, series B, and then maybe we'll invest in the Series C, we get a chance to invest behind a line and not a moment of time because you're able to connect the dots, see how they've evolved, see how they've grown, see how they've delivered on what they were going to do. And so when we talk about wanting to invest through the life cycle of companies, we really anchor to be as early as possible. When we co-found companies. So we meet lots of founders even before they have a pitch deck or an idea because we might build something together. We've done it over a dozen times here at Thrive. But as we see that journey gives us much more confidence to lean in in a concentrated way because to that point, we don't view investing as like an option call or a lottery ticket, as sometimes early stage investing could be. We're going to be emotionally invested in this. We're going to invest meaningfully from a capital standpoint and lean in. And so being able to have seen people multiple times, I think really helps.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, there we go. Bustaba booming. I love that. But that just means that the market is there in a way that the company doesn't have to be perfect. And it's not the founders aren't great. It's just the market's willing to pull ahead of them getting to the roadmap, getting to their plans, getting to launch that. And when we see that, we know there's a lot of room to run. And it's hard to have that feeling and texture without being close to the company. So that's something that we indexed to. The second thing is usually multiple acts. Seeing how the team's executed. how they're moving towards those, their ability to launch new products, scale new products. That's something where we get a little bit more texture being close by going back to some of the examples we're talking about with Stripe and Ramp. We're close and we understand what they're launching. We know what's happening. We know what the initial customer pull is. We've seen RAMP execute and launch product after product. We know their roadmap. We know their ability to be able to push this to their customers. We see how customers respond. And those are all things that when we see gives us a lot more confidence in a way that's really hard to tell from a pitch deck or a first time meeting.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the big thing is it brings the pitch deck to life. Everything looks great in a PowerPoint. Everything looks great in a slide. And the reality is the great iconic companies usually have two things. One is that their core engine can go for a long time. And when you're looking at a pitch deck, you're looking at a company at its prettiest moment. Everything's been dressed up. Everyone's been prepped. The pitch has been rehearsed a hundred times. And I think there's a rawness in being a partner to the company that we're able to see what's happening. And when you look at the core engine, when we're inside a company, and I don't mean this an insulting way, but when things aren't going perfectly, but the metrics look amazing, that to us is a great signal because there's such a pull in the market that you didn't have to be perfect. You didn't have to be optimized. Sometimes we call it margin for forgiveness.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Through some experience, I think we have a little bit more confidence when we see it, and we want to lean in in bigger ways with those founders.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Everyone can recite the power law, but you're out there and you see good opportunities, or maybe it's a good deal. I think one of the worst traps in venture is a good deal because you look at it and you think you can put on paper and it's going to play out the way you hoped. But then you step out that business building is really hard. And sometimes these small ideas, while they seem really tractable, small ideas have lots of competition. The opportunity to go after big things and the companies are able to get that scale, they're not that many. So maybe let's say 10 to 20 in any given year, you start to feel that a little bit viscerally. And so I think we'll probably have more confidence when we see that than we did when we first started at Thrive. And so maybe that's given us more confidence to lean in the big ways that we've had to support across multiple funds. And so as we're talking out, that's probably the biggest sense of feeling is you never want to believe in your abilities too much. You want to constantly be challenging and questioning that. But I think rightly,”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Big part is that we just have felt underpowered relative to our vision to really support companies through this journey. Some examples, we've been investors in Stripe for over a decade. We were able to support and lead around right after COVID, a $7 billion round. We invested nearly $2 billion between us and our LPs to support that company in a crucial moment that we've been on that investors for over a decade. And we're excited to continue to do that, ramp a company we've been invested in since the Series B, similarly after COVID, we were able to lead around and support the business. You mentioned OpenAI, we've supported that company through multiple rounds and been partners of the company through multiple rounds. And so I think as we look at it, the strategy has been the same. We've just not been able to support in the fullest sense that we've wanted to and really concentrate these category defining names. I think if anything, maybe the feeling that's a little bit different is it's just hit viscerally how few great companies there are. And so when you start investing, you know that. Everyone knows the power law.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“I know my answer is going to sound silly because when you frame, you started with $40 million, now you have $5 billion, it's got to feel different.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“That we've thought of a structure that I think hopefully keeps us loyal to that mission in the journey for the next decade to come as it's done for the last one. But the how of we're going to do that, I think, evolves over time. And that's a big part of constantly challenging here, constantly need to improve. One of our values is there's no such thing as perfection, just the pursuit of it. I think that's a mentality that comes through in lots of the ways that we approach building thrive.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“For lack of a better word. And I think the last thing on the builder's mentality, which drives a lot of aspects, It's really around this idea that, yes, we literally build companies, so we co found things, and that gives the DNA, I think, to be better thought partners. I've personally been a part of starting four companies here at Thrive. And that's really helped me mature and be a better thought partner of the companies I work with. But we also think about building Thrive, which I think historically maybe hasn't been a mentality inventure. I think a lot of times romanticized that it's only a handful of partners in a room, and that's just how it's done. And I think that can work for some people, but I think we've learned a lot from our founders in seeing some of the best companies operate and thinking, why don't we apply that to Thrive? And so I think that's allowed us to improve every dimension of what we do. It's allowed us to expand our capabilities to support founders in new ways to really be in the trenches with them and support them across all the important functions of business building. And I think it's allowed us to constantly challenge what we're doing. So I almost reject this idea that things are static here. And the mission's going to stay constant.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Intimate and deep way. I mentioned we want to back category defining companies. The second part of that is being the most meaningful partner. If we have a thousand portfolio companies, it's just impossible to do that. When we have a narrow set, and if you look at most of our funds, the vast majority of our capital is concentrated in 15 names. So we're talking about dozens of companies that were really leaning in to support were able to be there in it with them. I also think there's an important emotional component that's hard to separate because for the founder, building a company, this is everything for them. They put all the chips in the table to go build this. To have an investor who's like, this is one of a bunch of bets. If it works, amazing. If it doesn't, I'll be fine. I think being concentrated binds us a little bit closer to the founder to really be in it in the highs and the lows with them. And I think we just enjoy that. It feels much more aligned. It feels like we're really part of what they're building. And that's just not speak financially. We're committed to you in a way that we've burned the bridges.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“The prioritization. And I think it's something that founders are expecting more and more of because even from day one, they're planning for a decade long business arc because they've seen what Amazon's done and they've seen what Facebook's done and they've seen what Stripe's done and they want to build the next one. And so to have an investor who's able to see that with them, not one whose vision ends at a series A or ends at a series B and then you've got to go past that along. But that can be in the trenches and scale with the founder as the founder needs to scale is something that I think we've built. And then the point on concentration, which I think is pretty counter to how people classically think of venture, which is make 100 bets, hope that three of them work and forgive all your sins. We've just taken a different approach. And again, someone could probably convince me mathematically that the other one is better, but I just think we want to be high conviction when we meaningfully invest. And we think concentration drives conviction, which is better decision making. But also I think it sets us up to support companies in a more”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“And we could probably see that going for another few decades. And so this idea of being generalist, again, not that the firm is maybe generalist, but the individuals are so that we're flexible and nimble and move across opportunities, I think has been intentional decision that we've maintained through that's allowed us to pursue this mission. I think the second thing being life cycle investors, which more commonly known would probably be multistage. I think it's an idea that we're not here to invest in series A companies or Series C companies. We're here to invest in great companies, period. And if we're going to be a great thought partner to founders who are building a company, then we need to be able to understand the whole life cycle of a business. And so again, this isn't, we have a growth team and we have an early team. We also co-found and build companies. We don't have a separate team for that. It's really every investor is really trained to really think about what does a life cycle look like for a great company. And that's really important even at the early stages because the DNA of the company is really set in those founding moments where you set the team, you set the vision.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know, 2012. Some of the largest companies were created in that period. And then since then, I don't know if there's been a single large social network created. And so that would have been a flourishing time. You could have raised your hand, started a social network fund. I'm sure someone did. And then you would have had a decade plus where you had no investments to make. FinTech, where I spend a lot of time in, there was a really flourishing period between probably 2010 and 2015 where all these iconic consumer fintech companies got started like Newbank and a firm and Robin Hood and Square and Venmo. Honestly, it's been a little quieter on the consumer fintech side. And so you see these ebbs and flows of markets. And so again, if we're committed to backing category defining companies, pre-allocating a lot of our dollars to certain sectors or certain spaces before we know what the real winds of change are going to be because no company's big enough to create its wave or create a market. Great companies ride these big, enduring tailwinds that can go for a long period of time similar how Stripe is rid in the e-commerce wave. That's a 30-year tailwind that's going to continue to go.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely. And I think it's had been a deliberate decision as we've grown. Because when we were first small fund, we were a small team. And everyone was heroing it and figuring it out as we went and we kind of react to what's happening. And then as our fund size grew, I think we had to make some really intentional decisions to maintain that purity of mission that we were committed to pursuing. A lot of things make Thrive Special, but if I had to really summarize it, I think it falls in four pillars. The first is that we're committed to being generalist. We're committed to being lifecycle investors, concentrated in our investments, and builders. Now, last points of a mentality that flows through all of Thrive. On the generalist point, this is really the idea that we're not going to constrain ourselves to certain sectors or spaces, even though sometimes there's a pull to do that because it's neat to put these things in boxes. And it really stems from the fact that we don't think technologies uniformly through every industry at the same speed, at the same time. If you look at social networks from 2005,”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think over time, as we've gotten the words, we've set up a structure at Thrive that I think allows us to execute on that strategy, a strategy without structure, I think, doesn't allow you to actually push forward on that mission.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“To that, we'd actually run this internal analysis here at Thrive. And if we looked at when Thrive was founded, and we ran it up to about five years ago so that the cohort of companies can mature, there was 120,000 companies that were founded in that period. And then of those companies, I think 3,000 or so are now worth $500 million. 2,000 are worth more than a billion. But when we looked at that list, we probably count $100 to maybe 200 as real category-defining companies. And so all those 3,000 companies, all those 2,000 companies, those are probably good or great companies. Smart investors think that they're going to make a return on it. But just mathematically, if you spend equal time trying to chase those opportunities, then as those 100 or 200 companies, you'd spend 95% of your time on those deals. I think that very deliberate decision from the early days of Thrive when I joined through today has been one of the things that has really carried us through and has allowed us to do what we want.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“A silly anecdote that just came to mind my wife or Kell and I, we have three kids. Our oldest son, Raf's five years old, and I saw an awesome orange bird fly past our window, and I was like, oh, Raf, let's go look at it outside. And so we couldn't place it right away. And I'm looking for a minute or two. And as five-year-old boys do, they get distracted and he started chasing some bugs. And then a butterfly. And then I saw the bird again. I was like, oh, Raf. And I look back and he's not there. He'd run around the corner to chase a lizard. And he missed it. And obviously lizards are cool. And that was fun that he got to chase that. But he obviously missed a bird that we don't get to often see. And that was pretty rare. And sometimes I think it's like that with investing where you could spend all your time looking at good deals, interesting things. But because you're spending all your time there, you might miss that rare thing that really shapes the industry and financially actually defines a lot of the returns of what play out. Even to put quantitative numbers.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“Bit, got more excited about Thrive, and then joined 10 years ago, and we've been able to do things in a different way. And I think we've been able to be very pure in our mission to back these category-defining companies with long-term tailwinds. And while I say that strategy, I know a lot of investors might listen and be like, of course, we want to back category defining companies that are amazing with great founders. But if you're fine investing in good and great companies, it's not an insult. If you're fine just investing meaningfully in a company because it might be a two and a half X or it might be a 3x, it actually dilutes your thinking and your aperture to be able to identify these really great iconic companies that are about to change a face of the industry. Or you might just be spending time on something else.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“And so I went around the river, and I was right. It was empty except for one person, it was Josh. And he was starting to think about the idea of Thrive. And we connected on it. I didn't totally connect the dots at the time, but him and I started to chat and realized all the mutual friends we had. And then we reconnected a few years later when I was at Blackstone. And the vision of Thrive was coming through. And again, it wasn't crystal clear in the way that a lot of these stories can be even at the earliest moments, but there was the idea of Oscar and transforming an industry. And I spent a lot of time in healthcare and financial services, so that deeply resonated with me. It was the idea that tech was going to transform every industry. And there was this big sweeping force, this tidal wave that was going to come through. And so to see that energy and passion from someone who was young at the time, I think 27 or 28, he started thriving when he was 26. And as a 25-year-old, coming from a great institution like Blackstone, but feeling that we were with these big companies, but maybe not the world-changing companies. And so I got sucked into the Oscar Orb.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“And that we were going to do it across stages, that we're going to do it in different ways. And by the way, we're going to be really close, meaningful partners to companies across those journeys. And we've obviously sharpened the language around that. But even if you look back at a $40 million fund, we were doing growth rounds in Instagram or a $150 million fund, you were doing growth rounds in Spotify and Twitch and Slack and Stripe and GitHub. And so the core DNA of our strategy was, even from the outside world, you would have looked at us and said, oh, that's a seed series A fund in New York City, and they're building something around that. And that was the energy that first attracted me to Thrive. I was working at Blackstone, a large private equity firm at the time when I reconnected with Josh. Actually, the first time I really spent time with Josh, we both went to school at Harvard. I was a senior in undergrad, and he was actually at the business school at the time. And it was finals, and all the undergrad libraries were so full. And I was like, where could there be an empty place to study? And I was like, probably the business school library.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source
“What is so interesting about the Thrive stories, if you looked at us from the outside and our first fund being a $40 million fund all the way now to our most recent being $5 billion, a lot of different sized funds in between, you'd look at it from the outside and be like, wow, things have changed a lot at Thrive. And there's definitely some things we've gotten better at and we've grown up and been smarter about certain things. But if I actually look back to the early days joining Thrive about a decade ago and we had a $150 million fund, I'd actually say the most surprising thing about the journey is just how consistent the strategy has been. But Josh in the early days, even with Princeton, which was our first institutional investor, and we had a $40 million fund, was talking about Thrive being a firm that wanted to back these category-defining companies that were really shaping not just tech, but every industry. Now that's a common idea that every industry is going to change my tech over a decade ago. That wasn't a common idea.”
2024-10-08 · Invest Like the Best · Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392] · IDENTIFIED FROM THE TRANSCRIPT · source