Avi Eyal: Making $2.3BN on Monday, Stripe & PillPack from Entrée Capital MP | E1173

Avi Eyal 0:00 Since the beginning of Monday, we invested approximately $15 million. The distribution from that was over one and a half billion dollars. I'll tell you that the next 10 investments that were successful didn't equate to the gain on Monday. You don't have to win every deal. You just have to win enough of the good deals.

Harry Stebbings 0:17 Ready to go? Avi, I am so excited for this, dude. Listen, we've been friends for many years. We get to do this in-person, which is so much more special. So thank you so much for joining me.

Avi Eyal 0:39 It's lovely to be here. Thank you for having me.

Harry Stebbings 0:41 Not at all. Now listen, man, I think childhood shapes a lot of who we are and how we think. And given we know each other, and we've been for walks in the park, and we have that relationship, I thought I'd just

Harry Stebbings 0:51 dive straight in. M- my mother's MS and actually my bulimia really shaped a lot of who I am today. When you think about maybe hardships in your childhood, what was the most prominent that shaped how you think today?

Avi Eyal 1:02 So, I didn't have a, uh, extremely challenging childhood. Um, but, uh, I was born in Israel at a tough time, and, um, I grew up in a lower middle class family with a father who was mostly away in the military. At the age of five and a half, I was whisked away by my family, my parents, my, uh, to South Africa, and, uh, pretty much dumped in a school, um, and left, uh, left to figure out a new language, figure out new friends, things like that. And integrate i- i- into, into a new environment. So it caused me to become very independent at a young age, um, and I had to figure out what w- what needed to get done, so I worked hard and, um, and I tried to get results in. And I think that shaped

Avi Eyal 1:51 me.

Harry Stebbings 1:51 So funny. You know, one of the biggest commonalities in successful entrepreneurs is they moved in childhood. Because you're forced to assimilate with new people, new environments, new cultures, and you have to make it work. And very much like a business with teams, you have to adjust and develop with everyone. And so it's a really interesting kind of commonality. I think there's a question of luck versus skill in this business. I think we're often too fake humble, if I'm honest. (laughs)

Avi Eyal 2:17 (laughs)

Harry Stebbings 2:17 Um, where like, "Oh, it's, it's mostly luck." How much of your success would you give to luck versus skill, and how do you think about that?

Avi Eyal 2:25 I can't lie, I have some skill. Um, I was a serial entrepreneur, um, I started a bunch of businesses. Um, but nothing came easy. Um, when my friends at school were surfing and going to the beach on holidays, I was working part-time jobs. I strongly believe that the harder you work, the luckier you get. I would say it's, uh, 20、30% luck.

Harry Stebbings 2:50 What do you think is the luckiest moment that you've had?

Avi Eyal 2:53 Not business-wise. You're wanting a business answer, I'm not gonna give you one. Um, I'd say it's, uh, luck of having my dive master scuba diving skills, uh, because that led me to surviving, um, that led me to living, because I survived a tsunami in 2004. Ko Phi Phi, where two-thirds of the island, 2,000 people died that day, and I had, um, amazing luck to be able to save myself, save a couple of people-

Harry Stebbings 3:23 So sorry, what, you sc-

Avi Eyal 3:24 ... who were drowning, and-

Harry Stebbings 3:25 Wha- what happened? You scuba dived away from s-

Avi Eyal 3:28 No. No, just the fact that I had scuba diving skills, because I was trapped in a, in a hut underwater, um, and I managed to get out and save a couple of people in the process as well.

Harry Stebbings 3:39 So I want to move to venture. One thing that struck me and always kind of came across in the references was like the speed of conviction that you have. (laughs)

Avi Eyal 3:46 Mm-hmm.

Harry Stebbings 3:46 You know, whether it's been, um, a designer fund who was like, with the Stripe, uh, deal, you were like, "Yep, yeah, done."

Avi Eyal 3:52 (laughs)

Harry Stebbings 3:52 Uh, I remember with Alex and Cazoo, you were like kind of, "Yep, done" on a napkin. Um, how do you think about your ability to get very convicted very fast?

Avi Eyal 4:01 I think you need to have a, some sort of method, and then that method, it becomes trised and, tried and tested. Um, at Entre, we have something called the four T's, which is, um, technology and team multiplied by timing to the power of the team. You need those elements in place, um, and-

Harry Stebbings 4:23 What does that mean, if you unpack that? Sorry. Technology and team, so that's like the core product and the team that's built it, and then the timing of which it's coming to market-

Avi Eyal 4:32 Yeah.

Harry Stebbings 4:32 ... multiplied by the team again? What does that mean?

Avi Eyal 4:34 No, no. So, so the formula is, you take technology and TAM-

Harry Stebbings 4:38 Yeah. Oh, and town.

Avi Eyal 4:39 ... put a bracket around it-

Harry Stebbings 4:40 Ah.

Avi Eyal 4:42 ... to the power of the team.

Harry Stebbings 4:43 Yeah.

Avi Eyal 4:43 And you multiply that whole, uh, algorithm by timing.

Harry Stebbings 4:48 Okay.

Avi Eyal 4:48 So the key thing is, one, in, in terms of priority, one is team, two is timing, and then technology and, and TAM.

Harry Stebbings 4:56 Okay. Super interesting. So, uh, if we just unpack those, when we think about, like, timing, uh, will you take market timing risk?

Avi Eyal 5:03 Yes, we do.

Harry Stebbings 5:04 You do?

Avi Eyal 5:05 Market timing risk is, um, is, is a function of, uh, patient capital.

Harry Stebbings 5:12 And you are the most patient capital?

Avi Eyal 5:14 I think one needs to understand that you're not building, uh, for today. I think you're building for a, for a much longer

Avi Eyal 5:22 period of time.

Harry Stebbings 5:23 How do you think about, though, the ability to sustain a company through multiple droughts of financing? So I, I get you in terms of patient capital and in terms of waiting, but companies run out of money, and if the market doesn't come into fruition in the way that you think it will, you can't carry a company forever. Or can you?

Avi Eyal 5:39 Well, no, you, you certainly can't carry a company forever. But, uh, if you have conviction, and you're a salesman, and y-... a company plans properly in terms of its finances, there are milestones along the way where you can take different decisions. And so you can conserve capital, um, or you can spend capital more quickly. And I think the, the trick is, with companies, is to figure out at where those milestones are and, and whi- which forks you are in the way and, and choosing the right fork. And then you need a fair amount of luck, because there, uh, you know, there are a lot of investors out there, and it's a, it's a challenge. But you can plan on how to approach which founders, uh, w- which, uh, VCs at which time, or which strategic investors at, at which time, to get, um, to get funding to, to hopefully

Avi Eyal 6:34 succeed.

Harry Stebbings 6:34 On the team side, wi- with it being number one, I'm always interested, do you prefer insiders to a market who know it brilliantly well, or do you prefer the outsider who's got a wonderful naivety to their approach? What's worked for you and what are some lessons for you from those two different camps?

Avi Eyal 6:50 I think I prefer folks who have an intimate knowledge of the industry that they're going to tackle. Um, and I think they have a greater chance of succeeding. Practically when I look at it, you take Roy Man from monday.com or you take Idoh from Riskified, TJ Parker, who we backed at PillPack, um, who as a teenager used to ride his bicycle delivering from his dad's pharmacy, um, drug store, you know, around town. Or Ran Korber, who, um, is an environmental engineer who created BreezoMeter, which, um, uh, we can talk more about. It is, it's a company that struggled for six years until it suddenly didn't struggle (thumping sound) and eventually was a big success.

Harry Stebbings 7:37 When we look at those deals, like, if we say, take a PillPack, and I may be diving in too deep and you can tell me, "Oh, down, down, tiger." You didn't have a huge amount of ownership there. Like, when, you know, I think it was that led the first round and then it fell.

Avi Eyal 7:49 Correct.

Harry Stebbings 7:49 How do you think about the importance of ownership then, given the fact that some of your biggest winners, uh, PillPack maybe, um, you didn't have the biggest ownership.

Avi Eyal 7:58 One doesn't need a large ownership in large outcomes when you have a small fund.

Harry Stebbings 8:04 How big was that fund?

Avi Eyal 8:06 Th- that fund was an $80 million fund.

Harry Stebbings 8:09 Uh-huh.

Avi Eyal 8:10 And I think our proceeds from the sale was $15 or $20 million gain, something like that. It was a contributor to the fund, and I think that when you look at, uh, fund portfolio construction, you build your fund not by trying to have, uh, complete home runs on every deal. But we like to call it angel and core deals, where angel deals are deals where you could have a smaller check deployed or a smaller ownership, and you have optionality to increase it with pro rata over time, or to continue. But a bunch of these smaller deals generally can get you significant returns, which can bring you, uh, a 1X return on your fund. And then the big, the big ones, the hit it out the ballpark ones are the ones where you get the extra multiples.

Harry Stebbings 9:05 I love this. So how many angel deals do you have? Like just say, like proportion wise, is it like 30 angel deals and 15 core deals?

Avi Eyal 9:12 So typically, in, in our funds, um, uh, certainly the earlier funds which were, you know, around the 80, $100 million mark, uh, we had 10 or so angel deals and 10 or so, uh, core deals. Again, like angel deals you spend-

Harry Stebbings 9:29 Is that enough?

Avi Eyal 9:30 ... less time on, because core deals you're spending more time on. You don't want too many deals, because our model at Entre has been, we add value, we actually work the companies.

Harry Stebbings 9:40 We'll, we'll get to the value add element.

Avi Eyal 9:42 (laughs)

Harry Stebbings 9:42 Uh, is, is that enough, dude? Like, I was always trained on the like, oh, you need 30 at seed. Like d- uh, Avi, I am not that good a picker to do 10.

Avi Eyal 9:50 I think the, the largest fund, um, the largest number of companies we've had in a fund I think is 23, 24 companies in a fund. We different.

Harry Stebbings 10:02 (laughs) So, uh, you said you're just a better picker. Okay, that, that makes no- can I ask, how do you get around the element of like other VCs saying,

Harry Stebbings 10:10 "Oh, well, Avi has angel deals. Just take him for an angel deal and let me lead the round."? 'Cause that's a concern that I have.

Avi Eyal 10:17 We do angel deals where, um, we believe that the fund leading is a good fund and can drive the business forward. Um, a f- it's a fund that will listen to our opinions. Um, the business obviously has b- has to pass muster. We kind of view angel deals as it's a, generally a deal we wouldn't have won. We couldn't have led.

Harry Stebbings 10:43 Why don't you win deals?

Avi Eyal 10:45 You don't have to win every deal. You just have to win enough of the good deals.

Harry Stebbings 10:50 (laughs)

Avi Eyal 10:50 Um, and you have to, and, and under our formula, you have to participate in, in, in, in enough good deals. So, at times we c- we don't win, uh, deals. We probably lose most of the, the deals that we want to do. Um, I think we get our fair share. Many a time, we don't have perfect conviction on a company, so we'll do an angel check, and then in the n- as we see that, um, the company proves the, the data points, the, the questions we had, we'll be very early in trying to lead a, uh, the next round or, or put in a say or trying to up our ownership before the next round.

Harry Stebbings 11:32 What is an example of where you had, mm, lukewarm conviction, and then gained conviction seeing execution?

Avi Eyal 11:40 You know, I think, uh, BreezoMeter started off as, as one of those, where we didn't lead the pre-seed round. We put a small check.

Harry Stebbings 11:48 Small check is like 250K, if I remember?

Avi Eyal 11:50 Yeah, something like that. And then we...... saw a bit more conviction and we laid the seed, and, um, and then we continued into the A and, you know, uh, continued into the B. And then eventually, uh, we sold the business with, and, and we had the, I think we had the largest ownership in the company. We had-

Harry Stebbings 12:10 How much was the business sold for?

Avi Eyal 12:11 ... 17, 18%. $250 million.

Harry Stebbings 12:13 $250 million?

Avi Eyal 12:14 Yeah.

Harry Stebbings 12:14 So that was an angel deal that was in the kind of-

Avi Eyal 12:17 Yeah.

Harry Stebbings 12:17 ... Core camp, or graduated to the Core camp?

Avi Eyal 12:19 It graduated to Core and ...

Harry Stebbings 12:20 Oh, okay, gotcha.

Avi Eyal 12:20 Yeah.

Harry Stebbings 12:21 And that returned $30 million back?

Avi Eyal 12:23 So that return gave us around 30, 30-something million back, yeah.

Harry Stebbings 12:27 Okay, got you. There's

Harry Stebbings 12:29 this idea that you're not able to concentrate capital into your winners. It's like, I, I often hear it, which is like, "Well, that model doesn't work, because if it's really working, Sequoia or Andreessen or whoever will just come in and just take the A and you won't see any of it." Is that incorrect, do you think?

Avi Eyal 12:45 I don't think it's entirely incorrect. I think today, you want to generally get the next round done by a fund that can do that r- the round after that. So if you get a fund in to do the A, you want to know, as a founder, that the fund that's doing your A can do your B, can lead your B. Because you don't know where the world will be in two, three years later, and you want your investors to be able to continue. And also continue when the chips are down, when, when things aren't great. And, and what we've found is that many times, we've led the seed and led the A in companies that, that weren't executing at, at, at the best, uh, at the best time. Um, but naturally, what happens is that if you are, um, doing extremely well, then inherently, you'll gravitate to tier one funds who want to lead and who'll write a bigger cheque and, you know, um, and will carry on. And, and we k- kinda feel that, um, playing together i- is better in the long term of, of the, in the long-term interests of the business.

Harry Stebbings 14:01 Avi, is signaling risk real? You know, tier one fund does the seed and then doesn't do the A. Is the startup dead or challenged or actually-

Avi Eyal 14:10 I think the startup is challenged, of course. A- and that's part of the challenge with, um, what's happened today within the insti- what I call the institutionalization of VC, where Andreessen, Sequoia have g- have become such big funds, they, investment managers, um, you know, their multiple targets are different, their RR targets have changed. It's almost like a BlackRock for, for startups. And so it's very easy for them to write that very early cheque, um, because it's such a small fraction of their fund.

Harry Stebbings 14:42 And that large cheque, that five on 25 is actually, what, effor- uh, let's just say-

Avi Eyal 14:46 Uh, more like 20 on 40, or things like, you know, like big cheques, you know, that, that's what's happening. And for them to write a $20 million cheque is like for you or I to write a quarter of a million dollar cheque. You know, I mean, that's, you have to look at it in, in that context. So, so I think that's, it doesn't matter to them, uh, maybe reput- reputationally it matters to them, but, but I think that from a, for when a startup starts, it, it needs to think about these things.

Harry Stebbings 15:15 I think people have short memories, actually. And, uh, you know, Flow was $300 million cheque from Andreessen, and I think people kinda forget pretty quickly these days, so I don't think even reputationally it's that challenging, unless it's really, really fricking bad. And even then, it's kinda forgotten. A question that I have on the back of that is, five on 25, I think price matters. I'm old school, Avi, despite my youth. And, you know, Peter Fenton said before on the show that price is a mental trap, or valuation is a mental trap. Saul, who's on your team, said to me that price and valuation is something that you have spent a lot of time kind of, uh, disciplining him on and talking about. How do you think about price sensitivity today in valuation?

Avi Eyal 15:56 I don't like, uh, expensive deals.

Harry Stebbings 15:59 (laughs)

Avi Eyal 16:00 Um, what can you do? High-priced deals with h- with a large amount of capital early in a, in a startup's life, um, closes opportunities for it. I think it creates, um, a situation where you're not really running the business as lean as you could be. Uh, you're not making the decisions that you should be doing at the earlier stages. I think it leads to bad decision, uh, and I think it, it narrows the, uh, permutations of future fundraising down the line. Having said that, in Israel, you know, there's, there's a big challenge where the, the top deals are typically $6 to 12 million on a, anything from 15 to 30 or 40 pres. And, and, and I suppose that Entre has done, uh, at the bottom end of it. I mean, we've written some cheques at, you know, six on 12, six on 15, things like that. But we generally don't write the bigger, y- the bigger cheques. We, we definitely don't. Um-

Harry Stebbings 17:03 Why do Israeli companies dilute so much so soon? It is astonishing.

Avi Eyal 17:07 So I'm not sure that they're diluting so much-

Harry Stebbings 17:09 Well, six on 12.

Avi Eyal 17:10 ... because it's, you know, six on 12 is-

Harry Stebbings 17:14 I mean, do you want my wife and child too?

Avi Eyal 17:15 ... is, is four on eight, is, you know, uh, the question-

Harry Stebbings 17:18 Yeah, but they never see four on eight, Avi.

Avi Eyal 17:20 But it's the amount of capital, and, and I don't like that dilution. I don't like that valuation. I think that you can do more with less.

Harry Stebbings 17:27 Yeah.

Avi Eyal 17:27 And I think it sets the business from the start on the wrong path. Now, bear in mind if I'm building the next GPU, my seed round has to be $15 million. They're a different type of business. But for asset-light businesses, for businesses that today you can get, um, MVPs out the door in three months, where, you know, three or four chaps, uh, can sit in a garage and, uh, or a basement and can write some code and, and get some POCs with initial clients, uh, at very little, um-... cost, real cost to themselves. I think that, uh, you know, six, eight million dollar rounds is just unnecessary. It's unnecessary risk to take, unnecessary dilution to take. I think you can do a heck of a lot more with less.

Harry Stebbings 18:12 A- l- listen, I totally agree with you in that respect. So how do you determine when to pay out versus when not to? And does that mean that you don't do US deals as much anymore?

Avi Eyal 18:21 We go through phases. We, we do deals that we like to do. Um, and I think we, we concentrate on different places at different times. So from, from our perspective, eh, you know, we w- we like to do the deals that we like. We, we don't feel that we're burdened by, um, doing, uh, you know, 15 deals or 20 deals in two years and then raising another fund.

Harry Stebbings 18:49 You don't feel you have to play the game on the field?

Avi Eyal 18:52 No. Uh, you know, our view is we are one of our own largest, um, LPs, who, who our personal money is probably first, second, or third in size in, in, in our various funds. And, and so it's our money and, uh, and, and it's... A- and we wanna make sure that we invest it correctly. You know, in cricket terms, it's not a one-day game.

Harry Stebbings 19:17 What does that say about how you invest when most of it's your money?

Avi Eyal 19:20 Um, responsibility, uh, shared, um, shared risk, shared alignment, alignment with our LPs. Uh, we pay management fees. Um, so we, we've pretty aligned with, with our LPs, um-

Harry Stebbings 19:35 Do you think you go slower because of it?

Avi Eyal 19:37 I think we go at our own pace, which sometimes it's slower, sometimes it's quicker. Uh, it- it's just our, our own pace. Um, w- we don't need to build AUM. We don't need to build management fees. Um, so, you know, from our perspective as a fund, we, we focused on the businesses. And we don't wanna do too many companies at the same time, because we find that the more we involved with our core companies, uh, the luckier those companies get.

Harry Stebbings 20:05 We're gonna get to value added and the post-investment.

Avi Eyal 20:08 (laughs) .

Harry Stebbings 20:08 The other one, though, was TAM. I, I find TAM a wonderfully, um, misleading topic, um, because the greatest markets often start off as toys, or the greatest products start as toys. The greatest markets don't exist.

Avi Eyal 20:20 Sure.

Harry Stebbings 20:21 How do you think about TAM? What have been some of your biggest lessons in how to, uh, analyze markets when entering a business?

Avi Eyal 20:27 Massive markets are great, but, uh, not every market is massive. You find great founders, and those great founders are not necessarily running after massive markets. But if that founder and the business opportunity they have can be number one or number two in a, in a smaller market, um, then... And, and when I say number one or two, I n- I mean it in terms of revenue, profit, then people will want it and there'll always be an exit path for it. Um, as I said before, more capital reduces the options. So in massive markets, you have to deploy generally bigger capital, larger amounts of capital to, to fund because there are more competitors and there's, you know, um, and other things are happening. But we don't shy away from smaller markets. Uh, we wanna make sure that you, you can absolutely be number one or number two in that, in that market. And then, you know, you'll get a reasonable return. And three reasonable returns

Avi Eyal 21:27 make a fund.

Harry Stebbings 21:28 Do you like competitive markets? Like, e- uh, people argue with me on the show about this. I hate competitive markets. You don't have pricing power, your CAIs are high, your retention's low, product marketing's harder. But then people say, "Well, any worthy market is competitive, Harry." So, you know, nice thinking, which I think is bullshit. Um, h- how do you think about competition in markets?

Avi Eyal 21:50 Competition is great when you're on top, right?

Harry Stebbings 21:52 (laughs)

Avi Eyal 21:52 Um, but, uh, I suppose competitive markets, people invest in, in those markets many times, uh, more vanity than sanity is, is kind of ruling the investment. Nothing wrong with competitive markets as long as you can have a good handle on your costs, uh, and you can win. I mean, if you, if you take a company of ours, SeatGeek, as an example, highly competitive market, uh, difficult margins, and yet they've managed to carve out a vertical offering within that market where, uh, they've gone deeper into the ticketing systems of, um, of the clubs, uh, and of the event spaces. Um, and so they've... The- they make money on, you know, like StubHub on selling tickets, but, but they do so much better because they're starting to control, uh, the ticket generation, the tick- price optimization, you know, all kind- all kinds of things like that. So, um, I'm not afraid of big markets, but I'm weary of big markets which are competitive.

Harry Stebbings 22:57 I totally agree and, and get you there. Would you ever back a founder where you think the founder's great, but the market's horrible?

Avi Eyal 23:03 I would, um, try get that founder to understand why I don't like the market. Um, and if I can, and that founder chooses a different market, then I'll try back them. In some cases, like in SeatGeek, they, they started selling tickets and then they found a wedge of getting in... They bought a company out of Israel called Toptix which, uh, which provided software for, uh, event spaces and clubs to manage their ticketing. And that wedge, uh, got built into a big business. Here again, monday.com is another one where they, they went after kind of a general market, right, but they figured out a wedge. You know, that was a wedge, and now the big businesses in that is Monday Dev, which competes with Jira and things like that, and Monday CRM, which competes with Salesforce and Pipedrive and things like that, and they've built

Avi Eyal 23:58 big markets.

Harry Stebbings 23:59 So the reason I asked that question was 'cause I just backed a founder in the CRM market, and I freaking hate the CRM market. It's just like... I mean, when you did Monday, different market, different competitive landscape, but now, I mean, it's just such a crowded, competitive market. But the founder's incredible and it was a pre-seed, and so it's like, you know, write the check if the founder's amazing, and so I did. But I do wanna talk about Monday because I spoke to Eran before the show.

Avi Eyal 24:24 Wonderful guy.

Harry Stebbings 24:24 Fascinating chap. Yeah. Um, and...I'd love to just start with that. Like-

Avi Eyal 24:29 (laughs)

Harry Stebbings 24:30 ... how did you build conviction in Monday when, respectfully, SMBs was like, "No, that's not a good market."

Avi Eyal 24:37 (laughs)

Harry Stebbings 24:37 CRM was like, "No, that's not a good market." How did you see goodness when everyone else saw unattractive market?

Avi Eyal 24:45 Starting off with Monday, um, the last business, uh, that I built myself was a SaaS product for the GRC market, Governance and Compliance market, and I wanted to build it very open. But then we were using Microsoft SQL Server, you know, it was the early 2000s, AWS wasn't around, you know, there were so many limitations on our ... And- and we built a successful business which we sold, but my vision was to build it in such a way that it wasn't vertical, uh, it would start vertical in GRC but move horizontal to other areas. And then Monday came along, and I saw Monday, and in that I saw everything that I wanted to build but- but fleshed out so much better, and no limitations because of AWS and things like that. And other VCs, other people saw Yammer or Slack or- or s- something like that, um, and so, um, we were in- in- in the first round of- of Monday, and-

Harry Stebbings 25:45 How big was that round?

Avi Eyal 25:47 Um, one and a half million dollars.

Harry Stebbings 25:48 Okay.

Avi Eyal 25:49 You know, the old-

Harry Stebbings 25:50 The old days.

Avi Eyal 25:51 ... the old good days (laughs) . Um, and where others around the table didn't see it, I slammed my hand on the table and I said, "There's no way. I'm putting in a save. I'll fund you, let's carry on, we're gonna build a great business." And- and I was very involved in kind of the day-to-day, almost, o- o- of the business at- at some point there. And then, if memory serves right, we- we put another save in, and then we led the A. Every time, no fund, no tier one or tier two VC wanted to back it. They- they just didn't see it. There was always the argument of, "But, uh, you don't have enough enterprise clients." "But, um, this is Yammer," or, "This is Slack," or, "This is this," or, you know, yeah.

Harry Stebbings 26:32 Did someone not show up to lead the A and then fell away, and you had to, like, step in?

Avi Eyal 26:37 So there was a potential, um, of, um, Sequoia and Israel doing the A, um, but, uh, I- I- don't wanna say what the reasons were. He- it ended up that, um, uh, we had to step up and- and make it happen.

Harry Stebbings 26:57 And so you step up and make that happen, and you wrote a what cheque in that place? Like a $6 million cheque?

Avi Eyal 27:02 No, no, it was m- uh, the round was $6 million. We, I think we wrote one and a half or two million of it.

Harry Stebbings 27:07 But that was-

Avi Eyal 27:08 It was a real, you had to get- dig around and get, like, a bit of cheques from everyone else to- to make it happen.

Harry Stebbings 27:14 Was there ever a time when Monday didn't look good? Was it just a rocket ship from day one?

Avi Eyal 27:19 No, the first- the first eight, nine months of Monday, we- we didn't have product market fit. I remember we had, like, six customers, and we had six months of cash left, and, um, and- and- and then there was the breakthrough of- of, uh, hitting product market fit. Um, but then again, everyone shied away because of, uh, the market segment. They weren't going after enterprise first. And- and- and in retrospect, we should have gone after the enterprise maybe a year earlier-

Harry Stebbings 27:49 Mm-hmm.

Avi Eyal 27:49 ... than we did. But once we started the initial touchpoints of doing, uh, enterprise, then we did the B, which Geoff at Insight had the foresight to lead. And it was a runaway success from there, but- but even going to the C, the D, the E, the- the big funds, the- the- the tier ones, so to speak, were- were always elusive. They- they, uh, there was always a question. And- and I think, um, that's how we ended up being such large shareholders of Monday and fortunate enough to be with the business along the way. Um, initially spending a lot of time with the business, but as it- as it grew, spending less. But- but being around the table, and I- I'm extremely fortunate-

Harry Stebbings 28:32 How much was-

Avi Eyal 28:33 ... to be a board member of- of Monday as a public company today.

Harry Stebbings 28:36 How much was your position in Monday?

Avi Eyal 28:39 We had invested over the period, since the beginning of Monday, we invested approximately $15 million.

Harry Stebbings 28:46 And that position is?

Avi Eyal 28:48 The distribution from that was, um, uh, over one and a half billion dollars.

Harry Stebbings 28:56 Fuck (laughs) . Wow. Dude, that's- that's real money (laughs) .

Avi Eyal 29:03 Yeah.

Harry Stebbings 29:03 That is impressive.

Avi Eyal 29:04 Yeah.

Harry Stebbings 29:05 Okay, so w- I'm- I'm just fascinated that when you think about that, and I- I mean this in total respect to like, you know, TJ and PillPack, but like, and then the $15 million that you get from like a PillPack style, d- does that not just prove the complete outlier nature of venture, and does it not just prove, like, the only thing that matters is being in your next Mondays?

Avi Eyal 29:22 Um, we're extremely fortunate and lucky to make two million on a deal or one and a half billion on a deal. It's- the- the point is, for us, it's a passion, and for us, it's the ability to work hard, and sometimes I'll get a bad rep because sometimes I can be a bit, uh, harsh with- with- with my founders and- and things like that. But we live it, we breathe it, we love it, we have passion for it, and we do it out of love, and- and we think that the- playing that game with- with that kind of passion is- is something that maybe sets us apart from some of the other players. It doesn't make us a pure financial player. Uh, we're looking for the business to succeed. We're looking for the business to do well, uh, ahead of the financial return we get. We kinda think that if the business succeeds, we'll be okay. Um, and- a- a very different

Avi Eyal 30:24 approach.

Harry Stebbings 30:24 You mentioned that distribution. I think I said this to, um...... the Forbes journalist. But I remember saying to him, like, "Avi is just a fucking master at making money."

Avi Eyal 30:35 (laughs)

Harry Stebbings 30:36 No, no, really. Like, and it's a hard thing in venture. Again, we've been tr- we've trained a generation that's all about getting in, and it's not. It's about getting out as well. And that is a very hard thing that I fucked up on in the last vintage, admittedly with a very (laughs) small fund, so at least my learnings are, you know, contained. What are your biggest lessons on when to start selling down and how to sell down?

Avi Eyal 30:57 So, lessons learned. Um, I, y- we, w- when we started Entre, w- we put down, uh, seven or eight principles. And one of the principles that we put down was, um, how do we not fall in love with the value we see on paper? And so we decided that the minute that the price per share of a current round is, um, uh, I won't tell you exactly, but, uh, six or eight times your, your price that you came into the round, uh, try sell a third. And when you get to the pre-IPO round, or in the IPO, across tho- that kinda timeframe, try sell a third. And when the lockup expires after an IPO, sell everything, and, or distribute the, the stock. The, the idea behind it is that in the context of VC, we are private investors, we're not public investors. We're not, uh, Goldman Sachs or BlackRock or State Street or, y- et cetera. We're, w- th- our, our competence is getting the business to a, to a place where there's liquidity and it, and it's successful. From that point on, it's someone else's opportunity. I- we've kept to that, and, and that's managed to save us, both in the case of Cazoo, where the valuation got to two and a half billion pounds, uh, I think it was pounds, you know, um, two rounds, the round before the pre-IPO, and we sold a bunch. And then-

Harry Stebbings 32:41 At two and a half billion?

Avi Eyal 32:42 Yeah.

Harry Stebbings 32:42 Right.

Avi Eyal 32:42 Um, and when the r- and when the company went s- public, we sold a bit. And when the-

Harry Stebbings 32:48 Were you able to sell?

Avi Eyal 32:50 Yeah. There w- there were challenges because how much you could sell.

Harry Stebbings 32:53 Mm.

Avi Eyal 32:54 Um, but, you know, so we didn't sell a third at the IPO. We sold, I think it was 10% at the IPO.

Harry Stebbings 33:00 Mm-hmm.

Avi Eyal 33:00 But, um, and, and then when the lockup expired, it was distribute. Um, it wasn't, "Oh, the price is at $5 now, or $4.50 or $5, it's not at $10." But at $4.50, $5, it was still, you know, two-and-a-half-billion-dollar business. Um, and so, you know, and, and so that's what informed-

Harry Stebbings 33:21 How much did Cazoo return for you?

Avi Eyal 33:24 Um, we did well.

Avi Eyal 33:26 We did well. (laughs)

Harry Stebbings 33:28 (laughs) You can't blame me for pushing. Um, you did. Th- that's a fascinating one. What's your take on Stripe? Ben told me to ask about this, like-

Avi Eyal 33:38 (laughs)

Harry Stebbings 33:38 ... getting in and getting out.

Avi Eyal 33:40 Uh, Ben's the closest to the scene.

Harry Stebbings 33:43 (laughs)

Avi Eyal 33:43 Um, but the one thing that I've, um, discussed with Ben and that we've worked on together, uh, is, is the same principle. And luckily for me, uh, um, we're investors in Ben's fund as well, uh, Designer Fund, which is a great fund. Pitch for Designer Fund. If you're a designer, go see Ben. I, you know, I think he, he took our advice well, you know, in, in the process, and, and I think we've, together, I think we've both exited, um, close to 50% or just on 50% of our, our holdings in Stripe to date.

Harry Stebbings 34:23 You mentioned when it, like, lockup expires, you sell everything.

Avi Eyal 34:26 Mm-hmm.

Harry Stebbings 34:26 Yeah, quite a lot of investors have the idea that they have asymmetric information. They've known the founder for a long time. They've known the company for a long time, and actually, they're best positioned to know what to do with that public stock. Why is that not the right case?

Avi Eyal 34:39 Bullshit.

Harry Stebbings 34:40 (laughs)

Avi Eyal 34:40 It's a public stock. So you have inside information, you know, then you run a risk. Um, the fact that you've known how the company operates in the private sector does not mean that you know how the company trades in a public market, where it's at the whims of trading machines, of hedge funds, of, of other people that can manipulate the stock price, um, and can move the stock price very easily. Um, when you're a private company and you miss your quarter, it's fine. But when you're a public company and you miss even by 1 or 2%, you've seen situations where share prices can go down 25%, right? So-

Harry Stebbings 35:28 I saw Salesforce, yeah, have a $40 million revenue miss, and it dropped 20%. I know it was not that. People really fucked up on the analysis of that one, though. I, I r- listened to the-

Avi Eyal 35:36 But you can't control that, right?

Harry Stebbings 35:37 You can't control it at all.

Avi Eyal 35:38 And, and then you're in the public market, and you can't tell Capital One or any other fund, uh, public fund, uh, or, you know, or, um, others wh- what to do with their, with their stock. So it's not your opportunity. The point of VC is to get companies to an exit or to, uh, get public. The point of a VC is not to, you know, it's venture capital. It's not private equity, it's not, uh, long-only funds, it's not hedge funds, it's not asset, public asset managers. That's called VC for a reason.

Harry Stebbings 36:16 Doug Leone said on the show and to me that, um, the venture business has transitioned from a boutique, uh, kind of cottage industry to an institutionalized, commoditized asset class. Do you agree with that?

Avi Eyal 36:32 As I said earlier, I think that the Andreessens and the Sequoias of this world, um...... um, have become more institutionalized because of the large size of assets they manage. And, you know, when you're managing tens of billions or hundreds of billions, it's- it's- it's hard to manage single-digit millions or- or 10 or 20 million, uh, with the same, um, attention, uh, uh

Harry Stebbings 37:00 Mm-hmm.

Avi Eyal 37:01 ... a- a- and the same oversight that you have on managing a 500 million or a billion-dollar position. Um, and I think that therein is the opportunity for artisanal or- or boutique or- or smaller VCs where it does matter to them. And, um, and a partner can bring the required attention for the required period of time to help you buil- build your business.

Harry Stebbings 37:27 Do you think founders want your help? I remember Jason Lemkin said on the show-

Avi Eyal 37:31 (laughs)

Harry Stebbings 37:31 ... "No, no, founders just want you to give them money and sod off."

Avi Eyal 37:35 It's great to have founders who don't need you. Um, in other words, you know, they come to you for advice every now and again. It- it's great because, you know, uh, from the perspective if they know what they're doing and they're building a great business and it's, uh, and it's going great. So, you know, case in point, when you look at Monday at the beginning, we were very, very involved. And if you look at Monday once it got to the C or D or E, it was a meeting every month or every, you know, something like that. It just changes. And then they just need course correction sometimes, or a bit of mentorship or a bit of, uh, alternative advice. But I think, by and large, um, when you start a business, um, you can use help. I was a first-time founder as well, and I made many mistakes, and- and the one thing that made me make many mistakes and yet still succeed was- was that I had someone with more experience who was a mentor and- and- and could help. So, um, I wouldn't, um, be so bold as to say that everyone needs us, um, but it's good to have a partner along the

Avi Eyal 38:48 way.

Harry Stebbings 38:48 One- one thing I do think that people disagree with me on is I think actually VCs can be helpful pre-product market fit. I think this is something we drastically underestimate, which is like I think a lot of founders don't have a tight enough ICP, the product marketing isn't quite right, they're too diversified on channel acquisition, and actually, you can actually say, "Hey, we need to be tighter, we need to be more focused," and you can really direct the, kind of, acquisition of product market fit by having those lessons.

Avi Eyal 39:15 I tend to agree with you. Um, I think there are... founders, um, you can't always have everything complete. Uh, you know, everyone's got challenges, everyone's got weaknesses. Um, you, me, e- everyone. And so, you know, some founders have a challenge in understanding how to raise money. Um, you know, we've got a- we've got a founder, and he's an ex-Google fellow, he's got 40 patents to his name, uh, he's just the most unbelievable, unbelievable guy in terms of the technology side of the business. And what we've done is we've helped him, and he- he couldn't hire for shit.

Harry Stebbings 40:01 (laughs)

Avi Eyal 40:02 And- and- and- and what we've done is we've got an organizational development specialist on our team, and, um, and she's helped him recruit unbelievable sales channel, you know, around him. And we've got a- another person on our team who's been very involved in helping him understand how to raise his Series A, which he did successfully, but on the basis that we kinda gave him a path and we showed him how to pick which VCs to go to, when to go to them, how to go to them, and he did the work. But- but there was just that element that- that added that necessary gap that- that he didn't have.

Harry Stebbings 40:38 Do you think the best CEOs are the best fundraisers?

Avi Eyal 40:40 No. I think it's a- it's a great advantage to have as a CEO. Um, but I don't think it's the... um, I- I don't think that if you can't raise, you're not a good CEO. I think there are, depending on the business again, there are businesses where, you know, the- the primary day-to-day job is not raising money. The primary day-to-day job is building a product, um, and closing customers. And raising money is a necessary evil that needs to happen every couple of years. So, uh, so I don't think

Avi Eyal 41:14 that.

Harry Stebbings 41:14 I agree. I also think people often come like, you know, if you think about your s- you sell to three people, your customers, your team, and- and investors, and people are like, "Yes, they are, because you need to be able to sell to those three." But selling to customers and team is very different to selling to investors. Often it takes a different investor language, mindset, knowing what these-

Avi Eyal 41:31 Correct. Correct.

Harry Stebbings 41:32 ... compared to the other two. And so you can be great-

Avi Eyal 41:34 Correct.

Harry Stebbings 41:34 ... at those two, but not that.

Avi Eyal 41:35 Yeah.

Harry Stebbings 41:35 My mistake in the past cycle has been not selling when I probably could've done. Um, so when that's my biggest mistake, what's your biggest investing mistake?

Avi Eyal 41:46 Well, my biggest loss as an investment was very early on, where we invested in a Boston-based company called Harvest Automation, and bunch of really clever guys out of, uh, iRobot.

Harry Stebbings 42:00 How much did you put in?

Avi Eyal 42:01 Over the period of time, put about four and a half million dollars in.

Harry Stebbings 42:04 Wow.

Avi Eyal 42:04 Um, and we lost money.

Harry Stebbings 42:06 All of it?

Avi Eyal 42:06 Uh, all of it, to the cent. (laughs)

Harry Stebbings 42:08 (laughs)

Avi Eyal 42:09 Um, and as an engineer, um, 'cause I'm- I'm an electronic engineer by, um, you know, by profession, not profession but- but study, but as- as an- as an engineer, I fell in love completely with the product and what they were building, and robotics, and this was in 2010, 2011. Um, but I didn't have a clue about agtech. Um, and so I didn't understand that these robots, uh, they were gonna run around, understood they're running around the field and they're moving pots and things and, you know, et cetera.

Harry Stebbings 42:45 (laughs)

Avi Eyal 42:46 And I thought, "Wow, we can do this." You know.

Harry Stebbings 42:48 (laughs) Awesome things.

Avi Eyal 42:49 And that was... You know, we had, like, um, Lidars on these things and, you know. And Lidars were like, at that time, I think it was the most expensive piece of the robot. I think it was like $12,000 for a Lidar, you know. Today, a Lidar can set you back $150 kind of thing. Um, and, and kind of, um, I fell in love with the product and with the engineering, and, um, I completely was green and didn't understand that th- the founders weren't suited for this, and, um, the market wasn't suited for this. And so, you learn your, your lessons as you go along.

Harry Stebbings 43:30 When you don't believe in a founder anymore, what do you tell them?

Avi Eyal 43:32 I've had, on occasion, the situation where, um, I've had to have a heart-to-heart with a, a founder, and-

Harry Stebbings 43:41 What's the benefits of telling them, is the question that I ask myself. 'Cause it's like, it's just gonna hit that they're not gonna say, "Oh, you're right, I'll stop. I'll give all the money back to all the investors."

Avi Eyal 43:51 No, I think it's, I think it's, it, it allows you to reset your relationship with the founder and reset their expectations from you, um, as a fund and as a person who's either on their board or, or person involved in their business. And I think that's important because I think it's important to explain and, and put your position forward. Um, hear them out, and I'm sure that in many times they, they have their rationale. But it, it, it kind of allows you to then be honest with them, um, and, and move on from that. Um, you know, uh, they don't have to carry it, you don't have to carry it. It's much easier for everyone, just being honest.

Harry Stebbings 44:36 Monday, one and a half billion. What was your second-best return?

Avi Eyal 44:40 Hundreds of millions, so m- much less. Uh, I'll tell you that the next ten investments that were successful didn't equate to the gain on Monday.

Harry Stebbings 44:49 (inhales deeply) It's just-

Avi Eyal 44:50 Outliers.

Harry Stebbings 44:51 It is an unbelievably strange business, huh?

Avi Eyal 44:54 It is, it is. But, um-

Harry Stebbings 44:56 I always say to my mother, "Can you imagine a chef when 99 of the meals that they cook suck and people hate them?"

Avi Eyal 45:02 (laughs)

Harry Stebbings 45:02 "They leave the restaurant. But one is the best in the world for that, and then they are the best chef in the world." It's a bit-

Avi Eyal 45:09 No, I think, I, I think a good restaurant is you have a few outstanding meals that happen on a night, and the bulk of the other meals are good. And that's like a good restaurant. Um, and hopefully-

Harry Stebbings 45:23 Germany zero-

Avi Eyal 45:24 ... only one or two people leave the restaurant, uh-

Harry Stebbings 45:26 Germany, Germany zeros.

Avi Eyal 45:28 Do we have many there? So, this is, uh, it's kind of interesting because one of the funder funds looked at our portfolio, um, a couple of years ago, and, and they said to us that they couldn't get, couldn't get us. And their rationale was that when they put us on their, on their chart of evaluating, they said, "Your returns are top fifth percentile VC returns, but your losses are, uh, private equity losses." And they tried to argue to us that we actually don't take enough risk.

Harry Stebbings 46:04 Yeah.

Avi Eyal 46:05 You know, our losses at maturity, in other words, we're now tell you we've got three funds that are over 10 years old, are two are 12 years old now, 13 years old, and, and one is about ni- ten years old. And, and at that stage, you know what the l- you've pretty much the loss rate has matured, and the loss rate has been around 15%, 12. One is 12%, other is 15%.

Harry Stebbings 46:30 Do you think you take enough risk?

Avi Eyal 46:31 I hope so. Um, clearly I'm told not enough. But, you, you know, it's kind of in a public company, you know, they're right at the be- at the bottom of the quarterly, they, they, they write there that, uh, past performance is no indicator of future returns. So, it's easy to sit here and talk about the last 12 years. What keeps me up at night, what's, what's gonna happen with the businesses now over the next ten years, because, you know, we have tens of businesses that are, you know, pre-seed, seed, and, um, and A, and they have to get somewhere, right? They have to mature and they have to grow and they have to succeed. You know, you're only as good as your last deal or you're only as good as your next, your next exit, right?

Harry Stebbings 47:14 What's the DPI on your best-performing fund?

Avi Eyal 47:16 38X.

Harry Stebbings 47:17 38X?

Avi Eyal 47:18 Yeah.

Harry Stebbings 47:20 (inhales deeply)

Avi Eyal 47:20 But, but the next-

Harry Stebbings 47:22 How big was, how big was that fund though?

Avi Eyal 47:22 But the, but the other two funds, uh, small fund, it's $45 million fund. But the other two funds, which are $80 million funds, the DPI is around 5, 6X.

Harry Stebbings 47:32 Pretty good.

Avi Eyal 47:33 It's, yeah. Yeah, it's reasonable.

Harry Stebbings 47:35 There's one thing that frustrates me though, which is, like, there's a generation, I know I sound so freaking old. Bill Gertey calls me Boomer, uh-

Avi Eyal 47:41 (laughs)

Harry Stebbings 47:41 ... which, you know, coming from Bill. (laughs) Uh, but I hate the way that so many, like, younger investors are like, "I don't know if it's, like, gonna be a, a 20X fund, but will definitely be a 8 to 10X fund." And you're like, "Do you know how to fucking-"

Avi Eyal 47:52 I don't, I don't look at that.

Harry Stebbings 47:54 Yeah.

Avi Eyal 47:54 I don't look at that. I kind of look at how many Xs is the fund after year eight or year ten? Before then, it just doesn't, doesn't

Avi Eyal 48:02 count.

Harry Stebbings 48:02 Sourcing, selecting, servicing. Three core tenets of venture.

Avi Eyal 48:06 Yeah.

Harry Stebbings 48:06 How do you think about what you're best at and what you're worst at?

Avi Eyal 48:09 Outsourcing could be much better. Um, I think we, we're very good at servicing our, our companies.

Harry Stebbings 48:16 Where are you weak as an investor today? Or where would you like to be better?

Avi Eyal 48:21 In everything. I wanna be better in everything. Um, for better or worse, uh, one of my characteristics is that I always think that I'm not good enough, um, and I always have to improve.

Harry Stebbings 48:34 Where does that come from? I understand-

Avi Eyal 48:35 I think it comes from my childhood. I think it comes from, you know, having very strict parents. (laughs) Um, having expectations, uh, you know, uh, by your parents. Um-

Harry Stebbings 48:48 Did your parents tell you they were proud of you?

Avi Eyal 48:50 Not enough.... not enough.

Harry Stebbings 48:52 Did how your parents parent you impact how you parent your children?

Avi Eyal 48:56 I try to take the good, um, and avoid the bad. Um, I hope that one day my kids will come back to me, when they're much older, and say that we did a good job. (laughs)

Harry Stebbings 49:08 (laughs) I had a brilliant one the other day which is like, success as a parent is when your adult children choose to spend time with you.

Avi Eyal 49:13 Yeah, that's true. That's true.

Harry Stebbings 49:13 Like, they actively want to hang out with you. And another brilliant one is when you have well-behaved grandchildren.

Avi Eyal 49:19 I think as your, your kids get a bit older, y- I've got twins who are now 20 years old and, and one who's 15, and I- I think that as they get older, they come to you for wisdom. And I think maybe, uh, I'm sure other parents are, are guilty of this, as I am guilty of this, is that unfortunately it takes us time to learn that they're coming to us for wisdom, and, um, many times we inadvertently take it as an opportunity to control. Um, so many times the advice we give them or the thi- or the things we tell them is more about us con- trying to still control them, uh, or have some level of control over them, versus, um, trusting them that, that we've instilled the right values in them and, and hopefully giving some of our wisdom that w- that we've learned

Avi Eyal 50:13 over the years.

Harry Stebbings 50:13 When we think about, uh, misses, I do think misses also shape mindsets. What's a big miss that you have, and how did that shape your mindset?

Avi Eyal 50:23 So I'll tell you, a lot of the misses that I've had, um ... Misses are good to have. Misses are, are things that, you know, i- it's, it helps shape you, it helps you learn, and it helps you ... And, and you can't win everything, right? But misses that you learn from, um ... I'll give you two examples. There's o- one example where, um, at Lemonade they had done the A, and I remember I was driving home and I was speaking to the founder of Lemonade, and we didn't do the A. And I said to him, "Well, you know, can I give you a, uh, can I give you a safe? Um, because we wanna be involved with you, we wanna be in the business." And he said, "Yeah, you know, let's, let's meet and talk about it, and I'm open to it." And I said, "All right, fine, I'm going, I'm leaving, I'm going overseas, I'm back in a week, you know, we'll set it up, we'll do it." And, um, in the rush of things, I forgot. Never invested. Um, so, you know, uh, learned a lesson from that. Funnily enough, it's the same year-

Harry Stebbings 51:22 Was that at the A?

Avi Eyal 51:23 Just after the A. Um-

Harry Stebbings 51:25 Oh, no.

Avi Eyal 51:26 ... now, I don't know that he would've taken it, and this and that, and et cetera, but, you know, uh, my mistake.

Harry Stebbings 51:31 So what did you learn as a result? Like, if you're in that, you cancel the trip and you do the deal, you write the safe when you're on the plane? Is there anything you would do differently having had that?

Avi Eyal 51:39 No, just, uh, I, I, I think, um, be more, uh, determined. Uh, you know, be more action-orientated, where you have an opening, put it in your diary. You know, don't leave it for, "I'll remember." You know, that's like y- you have to ... Uh, I kinda tell a lot of founders that there's three Ws. Uh, who, what, and when. That everything they do has to be who, what, and when. So, when you start a business and when you're running after your client and, or trying to get a customer or trying to develop a feature or everything else, it's very simple. Who's gonna do it, you know, what are they gonna do, and by when are they gonna do it? And if you instill that kinda principle, um, through your managers, and they do that to their employees, then the culture that you develop in a business is that much stronger.

Harry Stebbings 52:31 I love that. Okay, so that's one. You said there were two?

Avi Eyal 52:34 The second one was literally a repeat of the first one. And then there hasn't been a third one.

Harry Stebbings 52:40 That fucking memory.

Avi Eyal 52:41 (laughs)

Harry Stebbings 52:41 I should give you a memory game. That's like ... (laughs)

Avi Eyal 52:43 (laughs)

Harry Stebbings 52:44 Yeah. I love that. Um, well, yeah, that's a pain in the ass. You know what I do? I send, uh, emails to myself with like subject lines, "Send safe to Lemonade." (laughs)

Avi Eyal 52:54 (laughs)

Harry Stebbings 52:54 Um, is there anything that you know now that you wish you'd known when you started Entree? Final one, and then we'll do a quick fire.

Avi Eyal 52:59 The experiences is something that you, you should go through. Um ...

Harry Stebbings 53:05 (laughs)

Avi Eyal 53:05 You know, do I wish that I had acted differently at different points along the way? Um, I suppose so. I suppose we all make mistakes. It, it's not about making the mistake, it's kind of learning from it and, and dealing with it. And sometimes you have to learn how to deal with things differently. Um, so, so I think it's, uh, life lessons. Um, but would I have it any other way? Um, uh, I'm, I'm, uh, I suppose I'm at peace with, with, um, with what we've done and, and, and what we've

Avi Eyal 53:37 built.

Harry Stebbings 53:37 But you decided to be more public, um, in terms of fighting for Israel's right to protect itself and against, you know, global antisemitism. I spoke to Sean Maguire actually about this, um, and he said how amazing you've been and how you'd built your friendship kind of on the back of this in many respects. Why did you decide to be so actively public when it is easier, bluntly, to, to shy away and keep your views private?

Avi Eyal 54:03 Sean's a wonderful guy. Um, I wouldn't say that I'm, I'm very public. Um, uh, you know, I work more behind the scenes. So, so there's two questions here. The first is, um, the new government that came into power in Israel in 2022 and the events that led to the October 7th, uh, Hamas attack on Israel and Hezbollah in the north, which are still in play today, um, um, I find that Israel civil society's broken today.

Harry Stebbings 54:40 Why is it broken, sorry?

Avi Eyal 54:41 Con- So, so contributions by one segment versus the expectations of another are misaligned in Israel, segments of the population. Um, and as a nation, and as being a Jew, I, I feel we, we held ...... to, I'd like to think we held to a higher standard. Um, so, and- and- and I find that our nation, that- that, as- as regards our nation, Israel, um, our ego, our self-interest, um, coupled with things like corruption, are affecting our daily lives, and- and have been for- for over a decade. And it's gotten to the situation where, um, government services, like education and things like that, are breaking down, and that in turn is breaking, uh, down our- our social fabric. And there's enough blame to go around. Uh, you know, the biggest consequence of all of this is October 7th. Um, and- and I really fear that very little has been learned, um, from- from the 7th of October and the events leading to the 7th of October. We've cr- we've reached a critical juncture, uh, as a society and as- as a nation, and things need to change. We need to change to empathy, to tolerance, to self-awareness, um, and- and- and- and the r- restoration of, um, our collective morality.

Harry Stebbings 56:12 Uh, it for me to ask, like, the tides seem to have turned against Israel, where it's like incredible empathy and sadness for the terrible attacks, to a belief that actually, the response is not aligned.

Avi Eyal 56:26 So, you know, so we need a new generation of leaders, um, in Israel.

Harry Stebbings 56:30 Is that- is that how Israelis feel?

Avi Eyal 56:33 Uh, I hope they feel that way. I- I think a fair amount do. Um, but we need a new generation of leaders. You know, Israel is, it's a young country. If you look at the bell shape of Israel versus other countries, given the high birth rate in Israel, um, um, it's a young country. And so there are probably about two-and-a-half million people, just over a quarter of the population is under the age of, is- is kind of between the ages of 18 and 30. In other words, voters. And they're the future, and they can create a new bloc and- and most of the 120 members of Parliament, members of the Knesset in Israel, should go home. Um, and like I told you, the comment about the kids and wisdom, I think that the older folks, like me and others in Israel, can provide wisdom and can provide management skill and things like that. But I think the decisions are for the youngsters in Israel to make. It's always been a nation that's driven by the young- young folks with great vision and great ideals, historically, like the kibbutz movement and- and kind of the early '60s and things like that, and we need to go back to that. And I think there's a big bloc of youngsters that can go out and vote. And- and all this leads to, uh, and that's the first part. The second part is the issue of antisemitism. You know, no one around the world likes when a minority group raises its head too much. Minorities are great when- when they are a minority.

Harry Stebbings 58:04 A minority.

Avi Eyal 58:04 Right? Um, and- and we see that-

Harry Stebbings 58:09 Do you think we've always had this undercurrent of antisemitism? You see it in the US collegiate system.

Avi Eyal 58:13 Yeah.

Harry Stebbings 58:13 And I look at that, and I'm like, "I didn't think a lot of these students were always antisemitic." It's just that, sorry, it sounds awful, but the topic du jour, like climate change riots are in Oxford Street and we hate fast fashion, and people just join.

Avi Eyal 58:26 I think antisemitism has always been there. You know, since literally the birth of Judaism over 3,000 years ago.

Harry Stebbings 58:33 Mm-hmm.

Avi Eyal 58:34 Um, the oldest religion in the world. The o- the oldest nation, living nation, which can trace its roots 3,000 years or more. Um, Jews were- were hated for being Jews. They were hated for being segregated. They were hated for being, uh, different. They're, you know, uh, in the Middle Ages, um, Europeans didn't want Jews to, uh, sorry, Europeans didn't- didn't like to handle money because they thought it was dirty, and so they made the Jews deal with it, and then, you know, 100, 200 years later, they say, "Jews finance the world, and, you know, are the root of all evil." You know, now, what's become is that you hate, not you, the- the folks hate Jews for having a country, as small as it is. I mean, it's one-tenth the size of the United Kingdom, all right? Um, out of six, seven billion people around the world, there are maybe 16 million Jews. There are fewer Jews today in the world than there were in second, at the beginning of the Second World War. All right? At the start of the Holocaust. Um, but Zionism, which is self-determination, that's all it is, is just simply a step too far. And so the antisemitism today is about, uh, is about Israel, is about Jews having a country, Jew- Jews having self-determination. You know, there's- there's, um, there's Rabbi Sacks, Lord Rabbi Sacks, who was one of, probably the greatest philosophers of the 21st century, said that, "In- in history, hatred starts with the Jews, but never ends with the Jews." All right? And so Western society needs to get a wake-up call. Um, Israel and antisemitism are, uh, we're- we're the canary in the coal mine. We- we're the front line. Um-

Harry Stebbings 1:00:23 I remember the ............................

Avi Eyal 1:00:24 It starts-

Harry Stebbings 1:00:25 And then, uh, and- and, you know, it kind of ends with, "And then they came for me."

Avi Eyal 1:00:28 Yes. And so it starts, uh, it starts there, uh, but never ends there. And, uh, you know, and- and you've got to take a stand.

Avi Eyal 1:00:37 You've got to-

Harry Stebbings 1:00:38 So final- final- final one, then. What- what actually happens from here? Do you not just breed a generation of Palestinians that continue to hate Israel and- and Jews?

Avi Eyal 1:00:45 There has to be a change, you know. Uh, Israel has to have fixed borders, um, because, um, setting fixed borders, uh, enables you to operate legitimately, um, in a-... as a nation state, right? Um, and I think that the Palestinians need real leadership, and I think the world needs to u- stop using the Palestinians as a scapegoat. Um, and, and I think that everyone has to be a bit mature and, and, and come to agreements, whatever they are, um, that, that will promote peace. I'm a patriot. I believe in my country. I'm a, I'm a Zionist, um, and I have to take a stand. And if I don't, who will? Um, and, uh, and in humanity, humanity's progress is us leaving, uh, for the next generation the world which is slightly better than the world we found. Um, and so, you know, that's what we want to do, and that's why I hope, um, uh, and others like me help, uh, folks and help, uh, the evacuees, the, you know, the hostages, the, um, uh, you know, the soldiers' families, the, um, building resilience, um, trying to protect our country better and, you know, helping the army if, if it needs help. We've got to get to the next step. And, and, and this, you know, and that's why I say to you, anti-Semitism, the first part of the answer I gave you about Israel's society and the future that we want for our children, you take these thr- three circles and you put them... there, there's an overlap in the middle somewhere, and we need to find that, and, and you need real leadership, and you need real, uh... on, on both sides, you need real leadership. And, and you need real vision, and it's not clear to me today, sitting here, what it is (laughs) . Um, I wish I knew.

Harry Stebbings 1:02:50 Wide-ranging discussion.

Avi Eyal 1:02:51 Yeah, much deeper.

Harry Stebbings 1:02:52 Not Monday dis- Monday distributions to like, the future of humanity and progress.

Avi Eyal 1:02:56 Not Quant20.vc, yeah. Yeah, no Quant20.vc. (laughs)

Harry Stebbings 1:02:56 I do wanna do

Harry Stebbings 1:02:57 a quick-fire there, Avi. So I say a short statement, you give me your immediate thoughts. Does that sound okay?

Avi Eyal 1:03:01 Sure, let's do it.

Harry Stebbings 1:03:02 So what have you changed your mind on most in the last 12 months?

Avi Eyal 1:03:05 That the world has become a far more dangerous place.

Harry Stebbings 1:03:07 What's the biggest misconception of the Israeli startup ecosystem?

Avi Eyal 1:03:11 That it's done for, that it won't bounce back.

Harry Stebbings 1:03:14 Michael Eisenberg said on the show the other day it's already bounced back, cash is already flowing in faster than ever. True?

Avi Eyal 1:03:20 I think it's starting to. I think there's a long way to go.

Harry Stebbings 1:03:25 What's the best investment advice you've ever received?

Avi Eyal 1:03:27 It's only your psychology, and, uh, complacency is the ultimate killer.

Harry Stebbings 1:03:34 What are y- your views on some of David Sacks' views?

Avi Eyal 1:03:38 So I don't know David Sacks personally. Um, I've had one or two interactions with him in the past but nothing that, uh, that you can point to as being a, a relationship. But, you know, honestly, for the life of me, I can't work out what he believes America stands for, if it stands for even anything. You can't look after your own interests and not understand that the world is connected. Um, and others, you need to find commonality of interests, and sometimes to promote others' interests because the net effect down the line is, um, is supportive of your interest.

Harry Stebbings 1:04:13 What's the biggest piece of BS advice that you hear given most often?

Avi Eyal 1:04:17 Contracted ARR (laughs) .

Harry Stebbings 1:04:19 (laughs) Yeah, unpack that.

Avi Eyal 1:04:21 Folks tell you how they've, they've signed a, a client, a, a customer which has given them like 50 users or, you know, or, or 50 deals, but that customer represents potentially 500,000 deals, or it represents 20,000 users or something like that. And so they write down the contracted ARR is the sum total of all those users. Um, it's just another community-adjusted EBITDA.

Harry Stebbings 1:04:51 (laughs) Tell me, what is the biggest mistake that you see first-time founders make?

Avi Eyal 1:04:55 Underestimating burn and over-estimating their capabilities.

Harry Stebbings 1:05:00 Biggest sin of the ZIRP era.

Avi Eyal 1:05:02 Uh, zero interest rates, venture debt, and capital raising with no thought about how money gets returned. Most people think capital is sunk cost, almost like a grant, but capital needs to be returned. It's a soft loan, needs to be returned.

Harry Stebbings 1:05:22 Where will you be in 10 years? What do you want for Entre? What do you want for yourself, Avi?

Avi Eyal 1:05:26 I wanna be on the beach with my wife, with my grown-up kids, Hannah, Aria, and Michal, and my two Shih Tzus, Ralph and Charlie.

Harry Stebbings 1:05:34 I know you. That wouldn't be you. You'd be bored after a while.

Avi Eyal 1:05:38 (laughs)

Harry Stebbings 1:05:38 I know you would. You'd be like, "Where's the next deal?"

Avi Eyal 1:05:41 I look forward to being-

Harry Stebbings 1:05:41 "Harry, where's the deal?" (laughs)

Avi Eyal 1:05:42 I'm looking forward to being bored.

Harry Stebbings 1:05:44 (laughs) Dude, thank you so much for doing this. I've loved having you on-

Avi Eyal 1:05:47 Thank you.

Harry Stebbings 1:05:47 ... and you've been amazing.

Avi Eyal 1:05:49 Thank you, I really appreciate it.