YouSaid · the spoken record

Saam Motamedi

lines on the record: 78
first: 2024-07-15
most recent: 2024-07-15
sittings or episodes: 1
sources: podcast

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“It's not correlated. Like, I have back great founders who did 12 references on me, and I've backed great founders who did zero references on me. And so for what it's worth in my data set, it hasn't been correlated, but I really believe people should be asking, like, what is the nature of how you work with the companies? And what would be different about your company without this person's involvement?”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“No, no, no. Harry, I mean, like when you have a term sheet out on a founder and the founder's evaluating whether he should work with you or three other great firms, how often do founders actually pick up the phone and call the CEOs you work with? A lot do, but a lot don't.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I think people don't ask enough how you actually work with founders. And I know that sounds so basic. Like I'm stunned by how few founders do references on VCs when they decide who to go with on a term sheet.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I think this is a misnomer. Yes, I think of markets as having concentric circles. The great things start with a really narrow concentric circle. Palo Alto started as an add-on to a firewall. There's intentionality from the founder and there's a sequencing of how that's going to build into bigger and bigger concentric circles. And they're swimming just to go back to the zip code parlance in zip codes that are really fertile.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I knew this when I started. I wish I knew how important it was, which is the importance of building large markets and that most markets just don't matter. You talked about Nakash from Palo Alto. I spent a lot of time in cyber, so I think carefully Apollo or CrowdStrike, both of which are now ballpark $100 billion market cap companies, they're operating in phenomenally large markets. And so I now am very oriented. Like if you're a new founder and you're going to spend the next decade doing something, let's pick something where there's no ceiling and where the growth can keep compounding because why not go build a 50 billion dollar company, not just a $5 billion company? And so I'm incredibly oriented on market size.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I have immense respect for many, but the first statement that comes to my mind is Gilly, who I think has been on your show, Gilly Ranan, and what he's done at Cyberstarts and the companies he's been a part of when helping initiate and get started. It's outstanding. I'm lucky to work with him at Upland and we at Greylock work with him on several companies. And I think he's a phenomenally smart investor and an incredibly impactful board member.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“12 months ago, I was of the mindset that the large foundation model companies would crush all of the smaller focused models. So if you were building a model for audio generation or voice synthesis, yeah, you might have an advantage today, but how is it not going to be the case that OpenAI two years from now is going to have this way better? And so we did invest in any of those. And I still hold the view that just on the raw, like generate a voice, the underlying large models will get better. But the thing I have changed my mind on is if you can start with a better focus model and then very quickly move up the stack into the application layer, it's actually a very good strategy.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“Broadly, I think incubations don't work for a number of reasons. I think most firms take too much of the cap table. There's negative selection bias where they don't get the best founders to want to work with them. They can't actually help. And so I broadly think incubations don't work. That said, some have worked out outstandingly. And at Greylock, Palo Alto Networks in Workday are two largest historical outcomes. My partner, Sheema and I were fortunate to help incubate a company called Abnormal Security I mentioned earlier that is on its path to be a company of that elk. And if I think about those businesses, they had amazing founders. They picked really large markets. And then they worked really collaboratively with their venture partners around recruiting and customer development to build the right team and initial set of customers out of the gate and others like the folks at Centerhill have done that really well. But broadly speaking, I don't think incubation's work.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“So, there are many, Harry, but the one I would mention actually talking about Brain Trust is the founder of Brain Trust, my friend Ankar Goyal. So Ankar's someone who I've known for a long time, he was the first VP of engineering at a company called Single Store, then went on to start Empiria, which Figma acquired in our portfolio, ran the AI team at Figma. But when I met up with him last year when he was getting brain trust started and he painted a vision of how people would actually build AI applications and everyone's debating where's the value going to accrue the tooling layer, the model layer, the app layer. And he's like, Som, I was at Figma. I know the team at Notion. I know the team at Zapier. Here's what actual developers care about in their pain points. And here's how I'm going to go build a solution. There was such clarity in the way he spoke about an emerging market. I watched out that first meeting. I texted my team. I was like, we are immediately investing in this man. I'm glad we did. Now all of those companies are customers of his.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I love Pat, and there are many amazing people that you and I both know who I learned from. So it's hard to pick one name. But I'll go with Alad. I think Alad Gil is just an outstanding thinker and investor. You know, we've worked with him closely over the years. I have the good fortune of working with him at BrainTrust, which is a company in the AI developer platform space. And his ability to do everything from help initiate new companies like Braintrust, delete Series A's to do terrific growth rounds. He's a thinker that can extend across all stages in a single person. And I'm just very impressed by him.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I think investors can help companies in the pre product market fit stage. I think there's a conception that finding product market fit is magic, and I disagree. I think if you're an investor, you can be a thought partner to the founder on how to segment customers, how to orient on an ICP, you can sit in customer meetings and give real feedback. And I've seen it have real impact.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“And all these great businesses, I'm going to meet the product managers, the directors of engineering. I'm going to know everybody in the next generation of fintech. And a year from now, that's going to result in me meeting Sally coming out of Stripe six months before every other venture firm. And that's going to enable me to win or help our firm win that opportunity. That's the type of thing that I think a thoughtful young investor who really wants to build a lane for themselves that a firm should be focused on. And Harry, I actually think we're saying two sides of the same coin because you become known for something. And that's something both helps your sourcing, I would argue, and it helps over time your ability to win the best opportunities.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“Think it's both Harry. I think her point's fair, but I think it's both. By the way, I don't just mean it because of servicing. I just think it is the case that entrepreneurs fundamentally, in my mind, make decisions to work with ventricolists, and they have the power, and they choose who they want to work with. And by the way, that might be they have six term sheets. It might be that you're trying to preempt a series A and a company that doesn't need to raise. And the founder, of course, is excited about the capital, but also has to be excited about you. And again, Harry, it doesn't mean that you're going to come on the board and drive a ton of value. That's one flavor of it. There are different reasons why a founder might want to work with you. You might have a great brand. You might have great distribution. Like, there are great reasons, but there has to be a reason. I fundamentally believe that. When we add people to the team, we think about telling them, hey, what's your reason going to be? And Harry, often that will also connect to sourcing because your reason might be I'm going to go become an expert in fintech and I'm not going to be focused on like what's the deal I bring in this week, but I'm going to take the bet that over the next 10 years, FinTech is going to be important. And the next year, I'm going to go map out Stripe and Square and Clark.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I think at Greylock, like the lens we would take, why is this person going to have something to offer an entrepreneur? Like, why would any entrepreneur at some point want to work with this person? And if you don't have a really good answer for that, I think it's really tough to be successful, certainly at Greylock.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I think you're right, that does happen quite a bit. I hope we don't ever hire anyone at Greylock who's wired that way. But you are right that that does happen.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I think most young investors make a big mistake, which is they think too much about themselves and not enough about the firm. I'll give them the benefit of the doubt. Maybe it's not their fault. And what I mean by that is a young investor shows up at a firm, and classically the way they think they can have impact on the firm and progress themselves in their career is by sourcing great investments. And so they start sourcing investments and they come to their partners and their colleagues and they say, hey, this is a great company. That's a great company. All of these things are great companies because in their minds, they just want to make investments happen. And I've seen many people, including people.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a good point. You're right. There are many great examples of investors who don't do the servicing, and there are many founders who don't need that. But I think the hardest and most important is sourcing. I believe like you are only as good as what you source. It is incredibly difficult to stay relevant, to understand where the new pockets of entrepreneurs are going to be and to see them before anybody else. And we have a nine-person investment team at Greylock, and we're competing with people with 50 investors. We have to be on top of our game and we care about sourcing tremendously. That would be my answer for both what I think is hardest and I think what's most important because if you find the right founders, you could argue you don't need to do any servicing.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I think all three are important. I don't want to give you a non answer, but I think one of the hard things about venture capital is you have to be good at all three, especially if you're playing at a seed in series A firm like I am”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“Minutes with this guy, and it is very clear to you that he is of the making of these very, very, very special entrepreneurs. But when he pitched us on his seed round, he was building a completely different company idea. At the time of his model inference, which ironically now turns out to be a great idea, but several years ago, you know, there wasn't a lot of demand for. And so we made a mistake of not trying to compete to invest in his round.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there's two learnings there for me. One is Arvind is an iconic founder. He had a long tenured career at Google, started rubric, which has gone on to just went public recently. He became the defining company, the next generation of ransomware protection and data backup. And when you have the opportunity to work with someone like that, you don't overthink the dynamics around the market because he for sure understands it better than you do. That's number one. And then number two, I think the thing we also fail to see, which I think was hard to see at the time, but we failed to see it because this was a few years before ChatGPT, was that the rise of generative AI would fundamentally change the way search in the enterprise worked and what would be possible. And Arvin and his team were the best positioned to take advantage of that and build truly transformative experiences. So that's one. And then the second is a company called Codium. It's a company in the code generation space. We've known the founder of Rune for many years. In fact, he was a Greylock fellow when he was still a student in college. You spend 30 years.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“There are many, right? The two that first came to mind. The first is glean. We had Greylock of Nun Arv and Jane, co-founder and COLEEN for a long time because we were the series B investors of Rubric at where he was one of the co-founders. And so have known him for a long time, have thought super highly of him. When he started Glean, I took the meeting on the, I think the series B, the round that General Catalyst ended up doing. At the time, and still now, but at the time, you know, it was an enterprise search company, enterprise search as a market was littered with so many people who had tried and had been unsuccessful and who hadn't been able to crack enough end user value to get recurring user love. And, you know, the business was early. And so we made a really bad decision, which is we didn't try to win the right to invest. And today, I'd say Glean is on its path to being an iconic company. In my view, it's one of the most important AI application companies. And I think anyone who's not using it should immediately start using it. If you're a large enterprise. And so if I reflect back on like what was the learning?”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't. I think playing the game on the field would have cost you dearly at many different periods in time, both in the generation that you and I had been investing in and the generations that predate us. So I think you've got to be really cognizant. And if you're not playing the game on the field, you better be right. But I think you have to have independent thinking.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“And Pat's obviously one of the all time great growth investors. And so to your point, I think it's interesting that that's what he's doing when many others are playing the quote-unquote game on the field and paying up for these B's and C's.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“Again, Harry, I come back to unless you're betting that public market multiples are going to re-expand or that the growth durability of these assets is a lot stronger than what we've seen in the past, the vintage writ large is not going to perform. It does not mean that there won't be outstanding Series B investments made. There, of course, will be. The vintage in the basket overall, I don't think, will perform well.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“That's what I thought too, but I think the thing maybe we both missed is those players would leave the market, but there's a new set of players. And those players are the early stage platforms that have raised these massive growth, global growth, et cetera funds, incredible amounts of capital and dry powder at these platforms. These platforms have all hired a lot of new partners who need to come out of the gate swinging. And because those platforms don't have public market teams, they don't have to face the harsh reality of where public multiples are the way if you're at a ko-2 or a D1, you're thinking about every day. By the way, that can also be an advantage because you could argue it allows you to be longer term, blah, blah, blah. And those players are competing for a smaller set of companies. Because in 21, so many SaaS companies were growing from like 1 to 4 to 12. Yeah, all those companies got funded at big prices, but there were a lot of them. Now there's fewer. But the ones that have it, you overlay that with all of this demand. The pricing is exuberant. I mean, I really want.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. You nailed it. And it comes back to the power law, right? Which is very few companies matter, but the ones that matter become much bigger than you think. If you're a company that's building something secular, maybe it's AI enabled, maybe it's not, by the way, you have great growth, great market dynamics, this is going to be controversial. I think the series B market may be even frothier than it was in 21”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“More likely to do it at seed. But even at seed, that's been where we've made some of our biggest mistakes. I'd say at seed our biggest mistakes where we have not pursued the investment has been where we've met someone truly iconic and we did not like the idea. And by the way, Harry, often we were right. Often two years later, the founder was working on something different, but we should have been in business with them.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“It's really hard, Harry. I think the only things I can offer as learnings I've had, and I've made so many mistakes, so many mistakes on this exact question, it's painful, is one, like, you've got to be really honest with yourself. Like, is this truly an iconic founder, right? Is this, you know, the next George Kurts at CrowdStrike or Nirza Palo Alto Networks? And that's a really high bar. So one, that. And then two, I think we are more likely to do it if we think the general zip code is good. So like, if you're in a good zip code, but the street you've picked to build your house on is a bad street, that we're more willing to get behind because we're like, hey, Harry's smart. He's going to figure that out. He's going to shift streets before he starts construction. But if you're in a totally wrong zip code, it's hard for us.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“Think it's a little bit of a philosophical debate. I mean, yes, I think the best do. There are many examples, but I think you make the odds just lower by picking the market incorrectly. And maybe the best teams are able to pivot. But there's so many things that can go wrong as part of that process. It's like, hey, why not just get it right from the beginning?”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the way you just articulated that is spot on, and I'm going to steal that because it's very clarifying for me as I think about how we look at C's versus seeds. You're mostly right. There are two exceptions. One is markets have gravity. And I don't think even the best founder can overcome a market that has the wrong dynamics when it's too late. What do I mean by too late? If you start a SMB SaaS company that sells to other startups and you start flying the plane and the plane gets to 50 million of ARR, but the overall market is a hundred million, it's really hard at that point to re-engineer the plane and to go after some other segment. And so as these companies get more baked and valuations go up, we pay even more attention to is this really one of those markets that matters and not just matters, but has the right dynamics to support a new company.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I think for Greylock writ large, and then I'll give you a couple concrete examples for myself personally, we are willing to invest behind great people and great markets when the traction data is not there, often when others would pass. For instance, we were fortunate at Greylock to initiate a company called Abnormal Security, which recently announced they've crossed 100 million of ARR growing north of 100%. You know, it's one of the fastest growing private companies today. We did multiple rounds in that company before it was clear that there was repeatable product market fit. But we had really deep conviction in the market and in the founder's evidence, Sanjay. You know, we mentioned Upwind in the large cedar, and I'm sure many people looked at that and were like, wow, these guys are smoking something, 26 million dollar seed round. It's like, no, Amiram's amazing. He's going to be an iconic founder. That company just started sales. It's one of our fastest growing new companies. That's the form of risk we're willing to take. And I think any investor has to be willing to take some type of risk that the market writ large is not willing to take.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I agree with you, but I would say that great money is made being contrary and being right, right? And there are multiple ways to do that. I think the common way people do that, and congrats to you on those companies, is they find companies or markets that others aren't all over, and they invest in them, and then a year later it's clear that things really working and they benefit from cheap follow-on capital. But another way you can be contrarian is, right, is to take a really competitive situation and say, hey, I'm willing to pay twice the price anybody else is willing to pay. Because I actually am such a believer in this thing that I'm willing to price it at twice the price you are. And again, I come back to the Wiz Series A, right? That's a good example. I think at the time, the price was astronomical. I'm sure many people passed due to the price. Credit to the people funded it. They were right.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“And the business is going to be worthless. Or turns out you don't really believe it's a superstar founder. And conversely, we did invest in this company at the Series A. We fortunately invested later in the growth rounds. We take whiz, I'd argue Wiz is one of the most important privately held companies today. Wiz, when they raise their Series A at a $500 million valuation, had zero in AR. But what did it have? It had an amazing iconic founder and was going after the cloud security market at a time of dramatic transition. And look, 500's a big price. Most of them don't need to be that high, but I would much rather take that shape of bet and bet ahead on the AR than be happy that I'm getting into a business with a couple million of ARR, but where I'm in a stunted market where I don't believe I'm backing an iconic founder. And so it's not that I don't look at ARR. I look at it. It's an important proxy for product market fit. But I always start with who's the founder and what's the market. And then I go to ARR as a secondary consideration.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“This reminds me of what we were just talking about when an investor says I like something at 20 and not at 30. So it drives me crazy when I hear investors write these blog posts, your checklist for the Series A, number one, a million dollars of ARR. Why does that drive me crazy? Because for you to make money on a Series A, and let's just take SaaS Enterprise software to simplify, you've got to get into a business that gets into the hundreds of millions of AR because that's the only way you can become a public company. And so if your goal is to get into the hundreds of millions of ARR and your main thing that you're looking at is, is this a company at a million or two million of ARR? Harry, how many companies get to a million of ARR that don't get to 10, that don't get to 50, that don't get to 100? The vast, vast majority. And so my argument is like, I don't get why that's the primary thing that people look at. I really believe it's misleading because you might look at that and be like, oh, this thing's at 2 million of ARR. It's great. When it turns out that the market's super capped and it's going to grow to 20 million and then massively decelerate.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“We don't have a super formulaic perspective. Like, we at a portfolio level think about it. We reserve a lot generally because we invest in things early. We're fortunate that at least to date, a good portion of them have had the chance to go long, which means even just the parada dollars really add up. And so as I said, it's not uncommon for us to start with a $5 million position. It yields a $70, $7,500 million position. By the way, the other thing on reserves, which nobody talks about anymore, is like reserves aren't just when things are going great. It's also for when companies hit an air pocket. And many of the great companies we've been a part of have hit those air pockets. And we've had to step up and we have gladly done that and led inside rounds, not out of offense, but out of defense. And we won't have the capital to be able to do that. So I'd say we run a relatively high percent of our fund in reserves so that we have ample opportunity to play offense and defense for our companies.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“From someone who's going to show up to board meetings once a quarter and not do anything. Like, I'd rather give the capital because number one, we can do it at a better price since we already have an existing position in the company. And number two, let's keep the company tightly held. Why not? It's better for the founder.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“An enterprise where I play on the early stage side, I have a lot of respect for Pat. I love Eric at benchmark. I'm on a board with Ravi at Light Speed, who I think is excellent. I'm on a board with Ted at Kleiner, who's excellent in security. Like, there are names, but it's not 50 names. It might be five to 10. And I think the names vary a lot based on the domain that you're in. I can't talk about this company yet, but there's an exact one where we led the seed. We bought that list. We would have loved to lead the Series A. The founder went, pitched the three names on the list. All three of them wanted to invest. He picked the one he liked the best, and we invested as well. Do we own a little bit less than we would have if we had led the A? Of course. Is that the right thing for the company? Of course. Because that person's going to be additive to the business. And if that makes the company bigger, like, we'll all do better. And so we're not in the business of we want to own 40% of companies and do every round. We're more than happy to own great businesses, but we first always ask ourselves the question, is there someone out there that could actually be additive? And if so, let's go get that person. But if we're just going to go get capital.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so a couple of things. One, I should say if we own 20% of a company at seed, like we will view that as kind of being in our core ownership bucket. And so it's less likely we will necessarily have to lead the next round. Whereas if we own 10%, it's a different equation. You know, Harry, like on every round, we sincerely ask what is the right thing for the company? And our view is most people in venture capital are not helpful. They're not additive. We don't think founders need an incremental brand when they already have the Greylock brand behind them. And so we challenge founders and we say, hey, build the list of people who if we get them on the board, they will actually change and have impact on this business. It's a really small list. Every time I do this exercise with the founder gearing up for a fundraise, I'm disappointed by how small the list is. I mean, you mentioned our shared friend Pat earlier. He's on that list, but there's not a lot of names on that list.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“Never been an issue for us. Harry, I'll give you an example. Like, I led the Series A in a company called Crusta, right? I may have mentioned it earlier, Contact Center company, Sequoia led the B. Company's doing great. And Dreason had done the seed. And I remember when we looked at the company at the A, I was like, hey, why isn't Andreessen doing the A? They probably passed. I mean, I still did this date, don't know, but I assume they passed. Doesn't matter. We evaluate the company on the merits of the company. We love the founders. We love what they're doing. And, you know, we did the A. And I'm just picking, I mean, that's the first example that jumped to my mind. There's so many ones where we did the A where someone else did the seed. We just look at it as independently, especially with some of these global platforms that are doing 50, 60, 70 seed deals a year. I think it's hard for them to even keep track of what companies are investors in. And so I'm not going to let that get in the way of backing a great founder.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe I misunderstand the signaling argument, but my view of the signaling argument is like, hey, if I raise my seed from Greylock and Greylock doesn't lead my series A, is it less likely that another investor will lead my Series A?”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and of course, everyone sells their own product. So at risk of sounding like that's what I'm doing, there's different ways to cut this, Harry, but I'd say I have never seen a situation in our portfolio where it has mattered. And actually, it's the flip, where the seeds we've done, many cases we lead the series A's and many cases we help the founders land tremendous series A's. And I know some other funds run these stats, they publish them on Twitter and all the rest. I don't have the exact data, but I can tell you that our seed companies almost always raise series A's and the conversion rate to A is much higher.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“It is if you build the founder relationships early. In this case, we got to know these people when they were still full time employees elsewhere and were helping them before the company even existed. Actually, I think something like 80% of our investments, they're of that flavor where we met the person before the company existed. And that's not to say we don't sometimes make decisions in 48 hours. Sometimes we have to, but that's our orientation. And so that six and a half million dollars might grow into $50 million over time. And if you look kind of over our more recent funds, whether it's a Figma, a rubric, an abnormal security, a Discord, many of these companies we've put real capital to work over time and we've earned the right to do that with the founders, but they all started as really small checks.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly Harry, we make very few investments at Greylock. Each partner might make one to two investments a year, and many of them start as very small checks. The last two investments I made over the last 12 months, one was a six and a half million dollar check and the other was a $5 million check. But our constraint is not the capital. Our constraint is our time because when we make these investments, we sign up to be accountable in service of the founder forever. Like it's not an option for us. And so we actually on the six and a half million dollar check, I spent 90 days getting to know the founders in our offices before we wrote that investment, whereas working with them every single day.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it all depends on the founder. It just all depends on the founder. And the more I do this, the more I come back to everything is about the founder. I can tell you, Harry, their situations in our portfolio where we've done large seed rounds and where the velocity and desperation and paranoia is unlike”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“It varies Harry, and we're not as religious about that as we once were in many of our companies we own in those ranges or more. Now, the reason why is because we're willing to give founders more capital early when there isn't proof, because we have belief in them. And so we are willing to do things other people may not do.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. That's an excellent point. And that's why we maintain two truths in our head to use your parlance. One is for the right situations, the rules don't matter. And then the other is at a portfolio level, the rules do matter. Because if every investment in your portfolio is an exception, then there's no actual portfolio construction rules that you're enforcing. And so for us, we're investing our 17th fund. It's a billion dollar pool of capital. We are more ownership sensitive than price sensitive within a range. And so the lens we take on our kind of core early stage positions is how many of them are there where we have adequate ownership. And we think of adequate ownership as 20 to 25% plus, right?”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“So, in that case, the valuation was not that high, and I agree with you, I think you have to have a ceiling on valuations you're willing to pay.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“Of risk. And so I agree with you, Harry, generally speaking, but I would say we just have to look at the specifics of each situation. And I would argue there are many situations where the expensive seed round is a lot less risky than people think.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“And this is where it probably comes down to like the specifics of the situation, and it's maybe harder for us to reason about generally, because I would argue that in many cases you are being paid for the risk. I'll give you an example. Like we backed a team coming out of NetApp where they had previously built and scaled a business and they sold it to an app for half a billion dollars and they're building a new cybersecurity company called Upwind that's off to the races and we led a really large seed round. In fact, I think the seed round, the round size was $26 million. Now, you could say, hey, Som, that's crazy. You're not getting paid for the risk, but I take the counter and say, hey, I'm getting in business with a team that has built a business to 100 million of AR before, understands how to build products, sell product, scale management teams, think about how little risk there is on so many dimensions around that project. And so I'd much rather do that than do a $2 million seed round where I'm backing team where I don't know if they actually know how to build a product, sell to the enterprise, recruit a VP of sales. There's so many layers.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source
“And those teams are really scarce. So, when you find one of those teams, I really don't believe you should be passing on price in those ranges. Because whether you do it at 20, 25, 30, 35, 40, if that company goes on to get to 100 million plus of ARR with high growth, you're going to be very happy as an investor. And if it doesn't and it has an intermediate or mediocre or bad outcome, you're going to be unhappy. And maybe you're slightly less unhappy if you paid 20 than 30. That's not the thing to optimize for.”
2024-07-15 · The Twenty Minute VC · 20VC: Why We Are in a Bubble & Now is Frothier Than 2021 | Why $1M ARR is a BS Milestone for Series A | Why Seed Pricing is Rational & Large Seed Rounds Have Less Risk | Why Many AI Apps Have BS Revenue & Are Not Sustainable with Saam Motamedi @ Greylock · IDENTIFIED FROM THE TRANSCRIPT · source