YouSaid · the spoken record

Sumeet Gajri

lines on the record: 50
first: 2020-01-17
most recent: 2020-01-17
sittings or episodes: 1
sources: podcast

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“Forever because I think actually the idea that you are going to be around for a long time will change the way that you act and you behave with other people. And I always tell founders and empty public to invest in or even not invest in that, you know, I'm making these decisions on the assumption that in 70 years time you and I will be sitting down talking about this day. And I do the right thing. And that's why I think founders will actually trust me from very, very early stages, which is because you may know I'm trying to make a decision that will be right 70 years time in terms of our personal relationship and how I acted when I was with that person versus what's the best thing for me to do right now in this moment in time because I think if you take that short-term view, you're going to make decisions that you'll regret in the future. I think if you make decisions of a long-term view of being judged on those decisions, you think about the world a little bit differently.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I actually go for life as if death is not a possibility. I think at the end of the day, humans are wrong about a lot of things. And, you know, if you look at the last 200 years, one thing people have been wrong about quite a lot is lifespan. And so you should make decisions in life as if death is not a possibility. And the reason I take that approach is humans over the last 200 years have been wrong quite frequently on a number of issues, but lifespan and being wrong on it is one reason a lot of governments, a lot of people, a lot of businesses have gone into trouble with just being able to run their own business is the reason that all these governments are racking up all of his debt is because they got the lifespan of their citizens wrong. And so for me, I don't know what's going to happen in the future in terms of medical advance and I don't know what's going to happen in the future with regards to people being able to merge themselves with technology. And so I take a different approach where I think a lot of people will say, yeah, you should live today like it should last. And I say, oh, we should live today like, you know, you're going to be around.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Returns do require an aspect of courage or the ability to take a leap of faith where oftentimes data may not support your decision at all.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Is hard because most people predict the future using models that incorporate data from the past. A non-consensus event is by definition something most people fail to predict. And this means it most likely breaks from historical data that you have accumulated. So actually the idea that these non-consensus events which will occur in the future can't be predicted that well using historical data. And then the second thing is the more different something is in terms of how it differs from the present, the harder it will be for someone to believe or act on. And for me, this guessed at the crux of why most investors miss out on the best investments, which is typically, you know, there is a leap of faith you often have to make to get involved with a company which is connecting people on campuses and building a social network or investing in a new payments processing network when you already have all these existing players. I think Howard Marks so well articulates and saw Bill and what Peter did as well is just the idea of a lot of these non-consensus outcomes which drive huge”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Two pieces of literature that have had the biggest impact on how I think about company building and investing are zero to one by Pierre Thiel, which took away a lot of the conventional wisdom I had accumulated for college in the early part of my career. I think what Peter does well is that he places an emphasis on courage and optimism, which I had certainly underappreciated until that point from a conscious perspective. Those weren't traits are views of a world that actually fought differentiated people and be it founders or yourself. So I think, you know, zero to one does a really good job in terms of taking away a lot of conventional wisdom you may have. And the other is actually a memo by Howard Marks, which is titled The Value of Predictions Our Weird All This Brain Come From. And the emphasis of a memo is that the only way to have involved market returns is to make non-consensus decisions and be right. I think what Howard very concisely is able to convey is making non-consensus decisions.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“If there's a larger fund that has shown that they have a track record of being dedicated to founders of Invest in any stage, I don't think you can go wrong by taking very capital Iber”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Think it's a fun to fund consideration. There are funds out there are large funds that they take for received commitments just as seriously as Univer Stage commitments. And I think those are the funds who are still very disciplined about the number of investments that founders make for years. So you look at the likes of Andrea Horowitz or Sakaya, our Founders Fonds, for example, they're pretty disciplined in terms of the absolute number of investments they make per person. And so I think it depends honestly on the fund and the fund that you're going to be working with. I would say yes, it's true. In many cases, it's just optionality for later stage funds to be doing these earlier stage rides. And we're looking at it as a way of trying to keep optionality to deploy larger amounts into you. And in those cases, I would recommend, hey, it's a bunch better to go with a dedicated seed stage or pre-seed stage fund. There's a lot of great funds out there. You guys at stride, Manukamura, K9, Homebrew, there's a lot of great early stage funds. You can partner with. At the same time,”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think there are probably elements of this perception which are true, but I would say that I'm not seeing a lot of founders bypass seed rides in the early stages. I think what I am seeing though is the time between those seed runs and the series A's getting compressed. And as a result, I think founders are actually choosing to, in certain cases, bypass seed funds that can only diver seed round and really go target early stage funds to do series A's and Bs. And those funds will get involved to these companies at seed stage. and then double down quite quickly to do series a or after. So I'm seeing more of that in the market than I am with companies just completely avoiding seed stage drives. And yeah, I think the people that are missing out on occasion are seed funds that have ownership requirements and are unable to get involved in some of these rounds, which are being led by typically later stage firms.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Not just investors and finders, but also finders and employees. And so I get concerned when finders are doing something which we're not opening up to, for example, their employees. So for me, a fairness question, but B, is this founder really aligned for the long term in terms of solving this problem, this pain point? And if we're taking too much capital off the table too early, that might scare me off from being an investor in a company like that.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's a very personal decision for the founders to be making. I know that in the market today is becoming more available as more fund and seat to get positions in some of these companies. I think depending on the context and the founder situation, it can be okay to take some money off the table. Like, you know, you've only held salary jobs up until that point and you would like to de-risk yourself. You would like to have some additional money in the bank for a rainy day fund. Take a small portion of your ownership off the table and get some liquidity. I think that can be quite healthy in many cases. I think where I do get concerned is like when you have these early series BC runs and founders are taking large percentages of our ownership off the table, that can be quite concerning because I think”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Because right now you're giving out your cheaply in the form of options, you're giving out to cheaply in the form of acquisitions that you may be looking to make. And so there are actually rational points in time when even if you don't need the money, it may make sense for you to go out and reprice your stock. But why I don't encourage founders to do is just to keep going out and raising for the sake of raising because the prep stacks do get high and investors because of a prep stacks can get some of their money out in a downside situation. But founders and employees who will lose out in a downside situation the most, then you should always be prepared when you go out to market that you're doing it for the right reasons and that you're accepting that after this next fundraise you've got to build an even bigger company because you've now got a bigger hurdle to clear to like you know deliver that return to your investors.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Company being successful, next valuation is going to go up a lot. And you see that in the market today with certain companies where, yes, the early valuations may be a little bit high, but they execute really well. And as a result, they're able to actually take the next rounds that they do and much, much higher valuation. So you have a choice. You ever get involved now or you pass and you wait for the next round? But if you were able to build that conviction, you can sometimes make that move a little bit earlier. In terms of how I advise founders when it comes to capitalizing their business, I do actually promote the idea of look at what your company is worth today. If you don't need to go out to market to fundraise, I wouldn't just do an opportunistic round. The only reason I would do opportunistic rounds would be take a SaaS company, which raised it, call it Far EX forward multiples 12 months ago. If suddenly 12 months later, you're trading at 10 times revenue, which we all know is very low compared to even public multiples. I'll advise founders that this may be a good opportunity for you to go out and reprice.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Course. So when we're making investment decisions, as I mentioned previously, we're typically going into the runs where we're deploying the most capital with a high degree of conviction. We can't control where the price for Iran lands. So, you know, if market comes back to you and says, hey, like, you know, if this run is going to get done at $100 million for Series A, you as a fund have a decision to make, which is, hey, like, you know, this company is not worth $100 million and is out of lack of market multiples. So we're going to pass in this one and maybe we'll take a look at the next one. The other way of looking at it is if you actually have high degree of conviction as founder or in this team and the pain point that we're solving and the valuation is six or 12 months ahead of where it should be, I think that's just your choice to defend in this decision that we sometimes make, which is we have conviction, this conviction probably isn't going to change a lot between this round and the next round because it's already very high. You know, we'd rather pull a trigger and go in in this round because at the end of the day, look, if this works and more of a market buys into this kind of”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so do you mind if I take this question a little bit differently, Harry? So if I Yeah, because I'll get to how much to raise. But when I start working as a founder on a fundraising, it's typically call it six to nine months before they actually want to go to market. The two things that we're trying to sort of decipher first is, hey, who are the investors that you'd most like to work with? Like in a perfect world, who do we think today just looking at the ecosystem out there? Who would be the best partners for you if you're building this business? And we identify and we will start to build relationships with those investors from that moment in time. The second thing we start to”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“In the early days, I don't think metrics matter that much. I think as you get larger, you should feel comfortable talking about these because it should be second nature to you in terms of building your business and conveying your confidence in the building that your business that you are building.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I always tell founders that it depends on the stage of your business. If you're an early stage company and you're still looking for product market fit and you're trying to figure out what the best KPIs and metrics are but represent your business, it doesn't really make as much sense to talk about that when you meet with investors. I think a lot more about what you need to focus on is your approach to market and the narrative in terms of the company that you're trying to build. And that's why it's important to communicate. At the same time, but like once you're a company at scale, call it series D, Series E, the metrics are just table stakes at this point, which is you're going to communicate them to people and oftentimes there's an expectation if you meet with people, like, you know, you have discussion around that because it shows how a bit of a handle you have in your company and your ability to influence it and pull levers and grow it. And I think that's what, and especially late stage investors look for, which is if we put $100 million check in this company, is this team, is this founder going to be able to like, you know, take this capital and apply it and make best use of it. And so I think it really just depends on the stage you're company.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“That ability to go back and forth prior to a fundraising rand and sort of narrow in on what is that narrative that you want to use when you go out and fundraise. So I think the concerns really do stem from founders outside the fundraising cycles around investing the time in building relationships with people. And advise out with founders I work with, by the way, that you should always have a subset of investors that you're communicating with, that you're getting to know outside of fundraising cycles because I think it's generally valuable for both sides and you obviously can't deal with all investors at Vera, but at least being in the market and talking to a half dozen to a dozen investment firms on a regular cadence, I think that you can be quite helpful.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Fundraising timelines Ambassadors and vice versa to really build that relationship. So, I think there are occasions in the market today where people are making decisions in compressed timeframes. I don't know if it's unique to this environment, though, because, you know, even if you go back 15 or 20 years, call it the hottest companies have always had very quick fundraising cycles. And so I don't think it's actually unique to the time we live in today. I think while I do see a lot more Naivo is founders that will not talk to investors until their point of fundraising. And I think that's disadvantageous to both them and the investors that I'm getting to know because at this point in the market, there are a lot of investors. In the US today, there's over a thousand different venture funds. And if you don't spend some of your time getting to know the market, investors are either. And the only time you come out to market is when you are fundraising. I think that is the big disadvantage for you as a founder because, you know, you've not had the opportunity to get to know these people that you're going to be in business for a potentially long period of time. And at the same time, you haven't been able to communicate your narrative and your story to people and sort of”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Is by having a search bar. I mean, Dion, he came into the industry with that much pedigree, but he had realized some unique insights just for other products and companies that he'd worked at where, in his opinion, if you really wanted to solve the problem of enterprise search, it was actually, you go narrow, not broad. Search isn't actually a text box anymore. It's the interactions that people internally or externally are having with the information held by a company. And so if you're able to then build a product which is able to go silo by silo in terms of different information sources inside of companies, so support, sales, et cetera. And then also a lot of the interactions that you're able to pull the information to not come from to searching in a box, but the ways that customers or employees communicate with a company, which is things like email are for chat, that's how you would actually solve the enterprise search problem, which is you have to be able to honor key insights and information in real time when it's needed in the context it's needed. And so, you know, it varies. Like you have different founders that have different”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, of course. So I think it really depends on does this person have some novel insights which other people don't have? And it can come from someone that is fresh to the industry and very here because they noticed something different. And at the same time, it could also be someone who's been working at this very 15, 20 plus years, has developed that experience, have built like, you know, the V1 and the V2, and now we're coming back to build the V3. And, you know, an example of a founder of it has done it that way would be like an Arguine. I don't think anyone would do that, but his industry expertise wasn't helpful to him in building Zoom. At the same time, I'll point to Henry when it comes to being able to actually outlook a different founder since I've been using Henry a lot. I'll point to Dion, who is the founder of Four Technologies, which is going after enterprise search. I think the traditional perspective on how you solve enterprise search is you need to get all the data inside of an organization. You have to be able to service all people at all times in the way that you're servicing everyone.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think one thing which I underappreciated when I got into the operating side of things was I thought that you build a product and become, I was very much of a product innovation mindset. So actually learning how you build distribution, how you leverage a company's existing distribution in order to figure out what the next products that you should build are, but then also to adoption. That's been very helpful for me so far in a lesson I've been able to apply across a lot of other companies. I'd say the second thing is the people matter a lot. Oftentimes when you're thinking about additional product lines that you're trying to get into and scale a company, I think it does matter that you have the best people working on these products and projects. And I think oftentimes when companies”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Sustainable, and actually that's the reason a lot of these companies that you see today have uncontrollable burn rates because the only way that they are growing is spending money on customer acquisition channels that they don't actually have a lot of control over. And as a result, their growth is very expensive versus companies that are able to build one product and then go for their own distribution channels to sell a second product and a third product. Their customer acquisition cost is close to zero because I already have a relationship with the customer.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, honestly, the biggest and best companies I've ever generational businesses today, the Cisco's, Facebooks, Apple's, Amazons of the World, they don't rely on those channels very much. Like, in fact, they do become those channels. You look at Facebook, Google, Apple, Amazon. Those are the channels that everyone else that doesn't have a distribution advantage trying to use in order to get distribution. And the real unique companies that go on to become enduring and generational, let's pick an example like Salesforce. They have an initial product, but they get so good at then being able to sell additional products to their customer base and then cross-selling products across different product lines to their customers. That has a unique distribution advantage. And then you're able to then build additional advantage by then becoming the ecosystem itself for whatever market you're in. I think that's pretty unique. If you're trying to get distribution through social media or traditional advertising, it's a tough way to build a business. And if you're already in a market where the product is commodified, like at some point, your CAC has just been to be on.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Which is our ability to actually go to market and scale them very quickly is going to come from the fact that we now already have these relationships of affirmative eventure ecosystem in the US and we're adding a percent of the ecosystem a month to CARTA at this point in the US. And that's what I mean by focus on distribution led versus product led when I'm working with founders, which is, you know, I get your skill set is building product. Now let's mix that with a little bit of, hey, like once you have a product with stakes, how do we bend things in our favor and make sure that other things that we build over time win as well? And it's not going to be because of the individual product. It's going to be because it high into distribution that we've already built.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“All these cap tables we've mapped up the network for 20 plus percent of venture back companies in the US between investors or shareholders and our employees. It became pretty clear over time that the next product would have to be investor-centric, but the product that we build, it went from zero to $10 million of revenue, I mean under 14 months. It honestly had very little to do with the product itself. You know, it was probably as good as ever things in the market, but I wouldn't say it was 10x better. What we had was we had this data advantage in terms of we already had the information we gathered from having managed a cap tables for these companies already. And I meant the product that we then had had had had a data advantage and we were able to offer things that other people just weren't able to do. And then by targeting funds that had a larger percentage of portfolios already on Carta, we're able to convert people very quickly and just get distribution for that product at a much faster pace. And as we're building a lot of our financial services products this year, but we're going to start launching over to next for each six months, it's the exact same thesis.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Are both going to be successful, but you look at what, as Mark and Driesen says, the general model for successful tech companies is that they become distribution-centric rather than product-centric. And so when I partner with founders, the goal is like, look, you've got product market for this first product. So the goal is very simple. Let's blow this initial market up and go and get as much market share as possible in this. But if you want to build an enduring generational company, we do have to start putting in the foundations for our distribution. And that can be building out your direct sales team, your channel sales team, building out your capabilities when it comes to things like product marketing. But at the same time, it's also then starting to build those next set of products, which are going to have an advantage not because they're always the best products, but because you have now built this distribution system that you're able to push them further. And the example I can give you is Carton started off as a cap table product. And, you know, when I went there first year and was spent actually working on, it was product number two. Like, what's the right product market fit? Because we have this advantage where we have”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, of course. So I think if you look at Silicon Valley over the last 20 years, founders and CEOs have changed quite a lot. In 1999, there was a good chance for the CEO of a given tech company. Wasn't the founder, her background was business orientated. Fast forward to 2019, your typical CEO probably is a founder and they likely come from a product engineering background. That often means that they have had less go-to-market exposure and therefore business is not in skill set. It doesn't mean that they can't pick it up over time, but it does mean that there is a gap in the market, in my opinion, for when you partner with founders to help provide a lot of expertise across things like go-to-market and scaling up our businesses and then fundraising. A lot of founders that come from product or engineering backgrounds, the thing that they put the largest emphasis on is product-led innovation. Like, hey, we're going to build one product, then we're going to build another product.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I think we do need to have a unique value prop. There's a lot of capital in the ecosystem today. And what most LPs want to know is given that there's so much capital out there, given that the best funds will always have an advantage in terms of they get to see more deals in an emerging fund manager. What is your unique value prompt, which is going to help you get into companies and get funders to want to work with you and over time drive a fund which is top quartile or an outlier fund? And I think if you have a eloquent explanation as to why you have an advantage there, LPs are going to want to partner with you. And oftentimes it is going to be you have to talk to a number of LPs, find the ones that align best with you. But again, if you have a unique value crop, you're always going to find people that will want to put money behind you. If you can't really differentiate yourself, then yeah, you're going to have trouble. And those are the funds which I think have the hardest time to raise capital.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Is we can SPV after we hit that 20% threshold into the company. So, in a way, reserves are basically an artifact of, you know, hey, you're using a fund to do your investments versus we already have pre-existing understandings over LPs where we'll deploy the fund first. But look, if we have a winner and keeps fitting our 10 and 25 thresholds, the LPs have opportunities to come back in over time and put more money.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“So we actually don't have a reserve policy. And I think, again, this goes back to how we're structurally set up against a lot of other funds, where most funds will raise $200,000 to $300 million. They'll invest in an initial set of investments into 20 furry companies. And then you have to look for the winners and then double down behind them. And that strategy works where you do have a single fund and you're typically trying to deploy that font. Our approach is a little different where we are able to make concentrated bets in these companies that we build a lot of conviction over. And if a company hits a three criteria that we're looking for to make an investment and then on top of that, we built a lot of conviction behind. It wouldn't make sense from our fund model to deploy capital over multiple rounds. And we should try buy as much of a company in that initial investment. And the goal is until we hit the constraint of 20% in the fund, we keep going and putting more money into that company as early as possible. And the other advantage we have.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“My model probably isn't right for you, but if you're looking to invest in emerging managers and you're looking for something different when other funds are getting started in a very similar way, a lot of the LPs I've spoken to find this model attractive just because it is different and return profile so far I think makes it very attractive as well.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“As a result of actually building that close relationship, we're de risking it together. And because of my model where I actually go and work with these companies and spend a lot of time with them, I'm also able to de-risk other risks to other funds can de-risk, which is the free things that help companies live are like building out GTM, scaling their org, and then also fundraising. And Friends Free mechanisms, which I think help de risk the investment. It makes more sense for me to then be able to make concentrated bets because I've built this deep conviction about these companies, things which are maybe seen as risks if you're using a traditional venture model, I'm able to de-risk to an extent. And so the LPs that get really enthusiastic about working with me are able to see the results that I've already driven so far, are able to get a references from the founders and the companies are performing so well. And as a result, there's a good subset of LPIs out there that are enthusiastic about what I'm doing. It's not for everyone. If you're a university endowment and you want to find a fund manager that you can deploy $500 million behind over a 10 year period.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, of course. So I think typically when an LP thinks about diversification, it comes from the construct of how most funds typically operate, which is they get to know companies at the points of fundraising and they have to make a decision and you don't have usually the opportunity to build that relationship with a company and fund or before you pull the trigger oftentimes. And in order to sort of diversify your risk from having to make your decisions in that way, yeah, you'll typically make 20 to 30 investments in a fund and over time you'll be able to double down on companies that look like you're winners. And I think that's the way that venture has worked for the most part of the last 24 years. When I talk to LPs, while I emphasize to them is the places where I place a majority of my capital are not founders I met last week. The place where my capital goes is founders where I've already been spending time with them solving business problems and we've already been working together before I've ever usually written a dollar into the company.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Try to rebuild what exists in the public world, in the private world. And that opportunity is huge. And so for me, it's always the market size only matters negatively if you don't have the ability to go beyond it. And it doesn't matter if there is that clarity of vision as to what's next.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I think market size both matters and doesn't matter. I think it matters in the sense of if you have a single product company and the market opportunity here is constrained, Fifth Founder isn't able to eloquently tell you what's next if they win this market. It makes it difficult to put money in because then it's unlikely that 10x threshold is unlikely to hit a 25x threshold. And so that's where market size matters. Where it doesn't matter is where you have a company like Cargo where initial market size is small, but that's actually a good feature of this because it means that you can dominate that small market very early. And when finders have clarity and vision around all the other possibilities that lie ahead of them, if they're able to dominate this initial market, it makes it possible to then buy into the idea that there's a larger market. And, you know, in the case of Carta, it was always dominate cap tables. You're able to labor foundation for a new financial market infrastructure. And then you're able to go.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Because I'd been looking for people that were trying to get these entry points into private markets when I met Henry and heard his approach to tackling the market and his approach to building both product, but also getting distribution advantage, it just made so much sense that he had that clarity of thought going forward like 20 years where he has his ambition and his view of how he's going to rebuild financial infrastructure here in the US and eventually globally to where you just know it's the right founder to place a bet on after you've had the opportunity to see what's out there in the market.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so for me, and this may come across as somewhat controversial statement. And sometimes you meet them in the first six months when you're ever trying to look for someone solving those pain points. Other times you'll wait years and years before you meet the right person. And so I think because I have a perspective on the market itself, when me and the founder are getting to know one another, you start to realize, I mean, the things that you start to focus in terms of like, does this founder know the best way to go win this market? You get a sense for their clarity of spa, you get a sense far. You didn't have any secrets that other people don't know about these markets. Do you even have approaches which are not just product innovation led, but also distribution led, which can help win these markets? And so for me, like by having an opinion on the market first, that allows me to figure out, hey, is this the right founder to then go it back? An example I'll use of Henry where he didn't start a first cap table company and nor was he actually building a cap table company from day one. And there'd be a dozen or so companies over the last two decades that been started to go after this problem. Henry started a financial infrastructure company and”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“I've done multiple rides in between traditional venture financing rides to get a placeholder in these companies and start working with those finders more closely. And so I think part of it is differentiation of model where I can be concentrated because I'm looking to get into companies outside of traditional rands. You know, I'm able to double down in companies in those traditional runs once I've already shown value and gone a place. And so there's just differences, which I think make my concentrated approach a little bit different to, you know, if you're taking a more diverse approach.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Funds outside of having a diverse portfolio construction is that they will spend a lot of time getting to know a lot of companies because then they really have to invest in companies when the opportunity arises. My approach is a little different because I spend all of my time trying to figure out, hey, what are the 10 to 20 companies of this generation that are going to matter? And then I spend a lot of time and energy again to know those founders, adding value, and eventually earning a way onto their cap table. For example, founder of Instabase and Nun, he and I got to know one another over a four-year period. We probably met over a hundred times before we decided to formally partner together. And the way in which we partnered together wasn't actually even in a formal fundraising round. It was between a series A and a series B. And that was a way that we sort of got going. And I think my mechanism that I can deploy are similar to like, you know, I've done at companies like Carta is I don't have to wait for a fundraising round. If I can build a relationship with a founder where, you know, they have conviction that I'm going to add value to their company. I have conviction that this could be a very special company.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, of course. So, original capital, we have a very simple objective to be the highest returning venture capital fund in the world. And I think there's a lot of literature out there which talks about how to drive returns, but the crux of it usually is the same, make power law investments, as you just said, which those outliers. And I don't think there's one particular path to building an outlier fund. If you look at Andreessen Horowitz, Sakaya, Union Square Ventures, and Benchmark, they've all built funds which apply diverse fund structures and portfolio construction. And they're extremely successful. And if my fund could be as good as them or better, that'd be wonderful. They also have, I think, different models as to how it operate their funds versus who I do, where they're looking at companies and points of fundraising. We get to know companies before fundraising, but I think a lot of companies will go to a series A, they'll get to know these funds, want of these funds will win. And oftentimes these funds will not be able to investigate until the company comes back to the market for Series B. And so as a result of that, the business model, which is implied by a lot of these”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“That percentage of investment yielded more than 20 acts. So statistically, very few companies will ever meet these thresholds. And so we spend a lot of time upfront focusing on whether or not this company has the opportunity to meet those thresholds, potentially be an ILR. And companies that hit all three of these points, which is actually very far and few between them, we get excited about a little look to partner with the company. And I think the companies that hit these direct and others are the ones where we'll make very, very concentrated bets into.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“That point. And another way of saying that, and while we're trying to get the decor of is it, has this team built a product that meets the need in the market? And you know, team, product market are three things that most investors spend a lot of time thinking about, but we've tried to condense that into MBI derivative of this intense pain point where if you get a sense of this company solving an intense pain point, you get that from the customers, you get that from the users or using it. It makes an interesting candidate to dive deeper into. Number two, is there a base case where valuation can increase 10x and free? Is there a potential for unbound upside where valuation can increase over 25x? And on those last two points, I think it sounds super simple, but the framework should eliminate most opportunities we see from consideration. And if you look at work done by the folks over at Correlation Ventures, they publish some research a couple years ago which looked at over 21,000 financings and their eventual exits over a decade. What they saw was 4% of investments yielded more than a 10 extra turn and only 1.5%.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so the similarities end from a fund size perspective. So, we're similar size to many of our micro funds. However, whereas most of our microfunds will target seed stage investments and make investments in a 250k to $2 million range, where stage agnostic and we've written checks as large as $8 million, and a lot of microflunds will take an approach of being diverse in the investments they make and consistent check size. We take a different approach where despite the fact that we've written over 50 checks a day and made investments in 42 different companies, FIOs companies account for 93% of our capital today. So we're pretty different structurally when it comes to our fund. And also in terms of how we think about individual investments, we have free criteria that we look at when we're trying to make decisions as to whether or not we should partner with particular foundering company. You know, number one, is the company solving an intense pain point? We spend a lot of time looking into that. And, you know, oftentimes like we'll spend six months plus as we're going to know a company.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“As not the first interaction I have with them in my lifetime, but founders start multiple companies, investors, you will co-invest with them multiple occasions, you kind of want to be in a position where like even if you don't partner this time around next time around, the founder will remember the interactions ahead of you and want to partner with you. And I actually had that experience very recently where I met the founders of Paribus a couple years ago prior to her acquisition by Capital One because I was focused on investing in growth stage companies at the time. I wasn't able to partner them at the time, but I think I left them with a really positive impression. We built trust and a good relationship to where when they started their new company ramp that recently announced Fair Raise led by Keith Founders Fund. I was able to get into that despite it being very competitive. And I think the reason that they let me in a fortunate partner with them was because they remembered the interactions that we had had over three years ago.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“I think a lot of this comes from mindset. I think if you're talking to a founder and they realize that there's no empathy for the founder, that you're there to solve your own needs, which are, you know, you have capsule and you want to invest it versus, hey, like this is a founder. There's more founders in the world that you can help than you can actually invest in practically. If you go into those meetings, and I think that you're focused on helping to find yourself their problems and looking for ways in which you could be value add, I think just sets a tone from the very beginning and you want to do what's best for the company and the founders versus what's best for you. And if that's what you can relay in early conversations, I think it helps build trust a lot faster. I think another mindset I have is I always try to make decisions in anything I did in life as if 70 years in the future, if I were to look back, I wouldn't regret the decision. And so for me, like I look at these interactions I have with founders, with other investors, the ecosystem, with just people in general.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Experiences that our founders over time have had in the great companies that most investors have been a part of helping to build. And so for me, if I could accomplish working with great finders, finders I got to pick and then helping them build their businesses and hopefully his business would go on to be generational companies, it would set a path for me one day to return to venture full-time. And that's how I ended up combining both.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“I was 24, 25, and those job offers were not coming for those types of roles. And secondly, there had been this long held debate, I think, in BC circles as to, hey, what's the best path if you want to be an investor? Is it to just be an investor? Is it to be an operator? And I felt like there could be an opportunity to do both. So what I started doing was talking to founders about the possibility of, hey, what if I was to come and help you solve these business problems that you have at your companies, but we won't call it a four-year gig, we'll call it something which is shorter, call it six to 12 months, in return for me coming and helping you solve operational problems, I get to invest in your company in lieu of taking options. And I thought that would be my way of fretting both being an investor, getting to pick your own investments, but also building that operational expertise and working with founders because ultimately at the end of the day, I think the common theme across the best investors in the valley over time is that they're actually just people with founders want to work with based on”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I spent three and a half years working in growth equity in the York where I had a good fortune of learning the tools of a trade or re-established firm and then also got to me over a thousand founders in that time frame. It was during those meetings of founders, I got more clarity on what I enjoyed, which was working with founders closer to the point of creation and something which I had just started doing on the side when I was working was actually spending time with the lobby's founders I met and talking about company building and actually just helping them with problems that are coming up in their own businesses. And I got to the point where I decided I wanted to move to the base so I could be closer to a lot of these companies that I was talking to and the initial plan was go interview at firms in Sando Road and go work your way up the ladder. But there'd be a couple things which I had realized in my journey so far, which was if you want to pick the people that you get to work with, you have to be more of an junior member of the investment team, typically if you want to pick the investments, you have to be a voting member of EIC.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“And then one day in CareerNet, I came across an opportunity at Growth Equity Firm based in New York and they were willing to sponsor me. So I applied, I got a first round interview, and as soon as I got it, I stopped going to class for a week. I read everything I could on growth equity and venture capital because I had never heard of it before. And that was my first introduction to the industry. And I remember thinking as I read all the materials, this sounds like the best career in the world. And I have to do everything in my power to get it because A, like I get to stay in the US and B, this seems like the best career someone could have. So long story short, I got a job and that was my star into tech investigating.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, of course. So, my entry into venture capital came from a process of figuring out why I didn't want to do versus knowing what I'd wanted to do. I grew up in Scotland and originally came to the US to go college and my moved to the US coincided with the financial crisis. And at that time, my parents had a family business which got wrapped up in a dispute with a lender bank. And since I was unable to work in the US because I was saving up my workout eligibility for after I graduated, I ended up managing that dispute on behalf of my parents for the best part of four years. And the reason I bring this up is the only employers at that time who were recruiting at my college and were willing to sponsor foreign students were banks. But it was safe to say that my love for banks at that moment was pretty low and I actually made an intentional decision to avoid banking as a career path. The downside of that was I'd essentially eliminated any chance I had of finding a job to remain in the US because at that point no one else was recruiting and sponsoring international kids at my school.”
2020-01-17 · The Twenty Minute VC · 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta · IDENTIFIED FROM THE TRANSCRIPT · source